Last year, the Democrats could not agree on a unifying message and they paid the price at the polls. Pulled in different directions by special interest groups, they ended up focusing on issues of particular interest to slices of the electorate but never found their voice on the kind of kitchen table issues that were once the Democratic Party’s strong suit. They were further hobbled by an inability to speak about the economy, which was obviously much better than it was in 2009 when President Obama was sworn in, but all the improvements – higher GDP and an exploding stock market – did not seem to effect most American workers, who wages remained stagnant as they have been for decades. The Democrats knew they could not pop the champagne corks based on macroeconomic improvements alone, but they had no real policies to address the on-going imbalances in our economy in which the rich and the uber-rich suck up all the increased wealth, the middle class find themselves trapped by rising costs for housing and food with no commensurate increase in their paychecks, and the working poor actually fall further and further behind.
This week, Congressman Chris Van Hollen of Maryland unveiled a proposal that addresses the kitchen table issues that concern most voters and provides the Democrats with the kind of unifying policy proposal that reflects the best traditions of American liberalism.
Van Hollen’s proposal has several key features. It’s centerpiece would limit the deductibility of bonuses for company executives over $1 million unless that company demonstrates that the wages paid to its employees also rise in conjunction with the company’s increased productivity and inflation. Any publicly traded company would be perfectly free to give its CEO and other chief officers bonuses that are as big as they want, but those bonuses would not be subsidized by taxpayers unless the company’s growth resulted in shared prosperity for all the company’s employees. Presumably, a company’s workers have something to do with a company’s performance, yes? They certainly will get pink slips if the company declines, why should they not also share in a company’s successes?
Additionally, the Van Hollen proposal would increase the tax credit for childcare from its current measly $3,000 per year to $8,000 per year, or $16,000 per couple. It would reduce the marriage penalty. It would reward work with an additional tax credit of $1,000 per year for all wage earners. It would encourage savings by giving a $250 “savings bonus” to anyone who can squirrel away $500 into a retirement account.
How to pay for all this? The centerpiece proposal would not cost the government anything. The tax credits would be paid for by closing certain loopholes for the very rich, loopholes that garnered them $66 billion between 2007 and 2010, according to the Washington Post. You read those dates correctly: In the middle of the worst recession since the Great Depression, the federal treasury was losing $66 billion in four years on account of tax breaks for people who were very, very wealthy. Van Hollen would also apply a tax on financial transactions of 0.1 percent. This is not just policy Robin Hoodism. Wall Street traders routinely make millions upon millions based on trades that do little to strengthen the underlying economy. As well, the stock market goes up and down based on a host of factors that have nothing to do with a given company’s performance. This “financialization” of the economy has been bad for everyone except the very few who profit handsomely from speculation and fluctuation in the markets.
In the Post story about the proposal, this paragraph jumped out at me. After noting that in the midterms, Democrats advanced a series of discrete proposals, such as raising the minimum wage and achieving pay equity for women, none of which combined into a cohesive and persuasive whole, the reporter states:
Individually, the policies polled well, but they were too narrow to inspire voters who were less interested in social justice than in broad economic advancement.
The fact that we live at a time when economic advancement trumps social justice with most voters is a regrettable political reality, but a reality nonetheless. It shows the degree to which market ideology has won the argument in the public square. But, the beauty of the Van Hollen proposal is that it brings the two together. It does not pit economic growth against social justice, but, instead, asks whether broad based economic growth is preferable to economic growth that yields benefits almost exclusively for the very wealthy. The question answers itself. A society of haves vs. have-nots is inherently unstable. And, a society in which the haves have everything is a recipe for social unrest.
This is not mere theory. Wages are subject to Social Security and Medicare taxes, while big corporate bonuses are not. So, giving more of the fruits of economic growth to workers in the form of higher wages will also shore up the long-term health of the America’s retirement programs. Making parents choose between work and staying at home with the kids because they can’t afford health care not only robs those parents of choices, it creates horrible stresses on a young family and potentially deprives the economy of the contributions of young parents. Certainly, the “pro-family” party should be able to support increasing the tax credit for child care and be willing to pay for it without hurting other families little able to absorb the hurt.
I am sure the Amen corner of the laissez-faire crowd will object that this proposal violates the pristine operation of the market economy. Bosh. Companies operate within a legal framework and they are not shy about requiring the long reach of the State to enforce contracts or to protect intellectual property. They deal with local zoning regulations all the time. This proposal does not create a big new government bureaucracy. It does not prefer certain types of corporate investment over others. It simply sets a different set of rules within which the economy should operate from those which exist today. That is precisely what government should do. And, it is only the true crony capitalists, those who benefit hugely from the current system and then use their ill-gotten gains to invest heavily in campaigns for those who depend the current system, who will be opposing it.
The Van Hollen proposal reconnects the Democrats with the most basic pattern of American liberalism. It is pragmatic yet rooted in the fundamental idea that the wealthy, who have every right to pursue their own interests, nonetheless fail to attend to other important social goods. I conclude with my favorite quote from Arthur Schlesinger Jr.’s “The Age of Jackson” a quote which continues to ground me when I wonder why I am still a Democrat:
American democracy has come to accept the struggle among competing groups for the control of the state as a positive virtue – indeed, as the only foundation for liberty. The business community has been ordinarily the most powerful of these groups, and liberalism in America has been ordinarily the movement on the part of the other sections of society to restrain the power of the business community.
The Van Hollen proposal perfectly fits that narrative, and it is still a narrative worth fighting for.
