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The Economy Debates | The Nation

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The Economy Debates

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Seventy-two percent of Americans think economic conditions in the country are getting worse. That's because this economy isn't working for most Americans. The wealthiest few have captured the blessings of growth, while incomes are stagnant: Despite several years of growth, they still haven't matched the peak of 2000, before the tech collapse. And most Americans aren't keeping up with the soaring cost of basics like healthcare, energy or college tuition. Now the housing bubble has burst, and millions are facing rising mortgage costs, declining housing values and a spreading credit squeeze. Nationally, we're running a huge trade deficit and are paying more in interest abroad than we earn from foreign investments. But in the presidential debates thus far, the economy seldom gets much attention. Even as the mortgage crisis staggered Wall Street, ABC moderator George Stephanopoulos seemed almost apologetic when asking about the economy in the August Democratic debate in Iowa.

About the Author

Robert L. Borosage
Robert L. Borosage
Robert L. Borosage is president of the Institute for America's Future.
Katrina vanden Heuvel
Katrina vanden Heuvel
Katrina vanden Heuvel is Editor and Publisher of The Nation. She is a frequent commentator on American and...

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The Republican presidential contenders tout the Bush economy as, in Fred Thompson's words, "the greatest story never told." Four years of growth, low unemployment and inflation, rising profits and productivity--what's not to like? This affirms the candidates' faith in the conservative scripture: lower taxes, particularly on the wealthy; free trade; deregulation; privatization. Their one quibble with George W. Bush is that he hasn't been tough enough on domestic spending. The terror caused by the collapse of levees in New Orleans, a bridge in Minneapolis and a steam pipe in Manhattan, and the daily reality of overcrowded schools and kids without healthcare, take a back seat to their desire to cut domestic spending and roll back Medicare and Social Security to preserve tax cuts and a growing military budget. GOP front-runner Rudy Giuliani boasts that he is the true economic conservative in the race. His twelve "commitments to the American people" are laced with the usual bromides: "cut taxes," "fiscal discipline," "cut wasteful Washington spending," "expand America's involvement in the global economy." His stump speech, muscular on Iraq, terrorism and his "leadership" abilities, is strikingly anemic on economic issues. Giuliani clearly thinks it ain't broke and needn't be fixed.

In rare contrast, Mitt Romney has developed an activist growth agenda that mirrors advice proffered by former Treasury Secretary Robert Rubin to Democratic candidates. Romney embraces free trade but argues that because "design and innovation ultimately are done best next to manufacturing," "it's critical, therefore, that America maintain our lead [sic] in manufacturing." For Romney, this requires government to expand investment in R&D and education, cut healthcare costs by making it universal and achieve energy independence. The latter, he argues heretically, "can't be achieved by simply counting on the market to do its job." Government must provide investments and regulations. He supports tougher trade policies with China, but this is stock rhetoric, likely to be ignored if he's elected. Romney then contradicts this agenda by reciting the conservative gospel: lower taxes, less spending, removing "undue regulatory burdens." It's as if he can't resist flashing a little knowledge before moving into pander patter.

As David Sirota has noted, former Arkansas Governor Mike Huckabee presents himself as at least a half-bore populist, saying he's not a "wholly owned subsidiary" of Wall Street. Huckabee raised taxes and the minimum wage in Arkansas, and his heresies on trade were denounced as "class-warfare rhetoric" by the conservative Club for Growth. Huckabee argues that "we can't have free trade if it's not fair trade." However, he embraces such conservative follies as the flat tax, which would hike taxes on the middle class while lowering them on the wealthy.

The Democratic debate has been driven by the populism of John Edwards's "two Americas" rhetoric, as well as the boldness of his proposals on healthcare and energy. He argues, "None of this happened by accident. Washington is broken. The system is rigged. Cronyism and corporate interests prevail over fairness and the best interests of the American people. Washington puts Wall Street before Main Street. Pharmaceutical companies before patients. Agricultural conglomerates before family farmers. If you want to think about all this in a very simple way, it's that Washington values wealth over work."

The similarities between the Democratic candidates are more striking than the differences. All decry the stark inequality of the Bush era. All champion a more progressive economic agenda: rolling back top-end tax cuts and ending the Iraq War to fund healthcare for all, investment in new energy, education and vital infrastructure. All support reforms to help workers organize, to raise the minimum wage and to expand training and assistance to displaced workers. But most also promise to balance the budget, sustain most of the Bush tax cuts and increase military spending.

Some contrasts are worth noting. Only Edwards has challenged the Democratic fetish about balanced budgets, arguing that moving to new energy and providing healthcare are more important. In contrast, Hillary Clinton talks as if deficits were still a primary problem, and Bill Richardson has bizarrely espoused a balanced-budget amendment, the idiocy popularized by Newt Gingrich in last decade's Contract With America. All Democrats now question the corporate trade regime, calling for adding labor and environmental protections to future accords. Here Dennis Kucinich is boldest, vowing to repeal NAFTA and withdraw the United States from the World Trade Organization. Edwards has forced poverty onto the agenda, disdaining the conventional wisdom that the poor don't vote. Proving that no good deed goes unpunished, he has been rewarded by GOP and mainstream press gibes about his personal investments and wealth, as if a rich man is a hypocrite if he advocates for the less fortunate.

Clinton, dubbed Wall Street's favorite on the cover of Fortune, has taken on Rubin's acolytes as advisers. Yet she's combined a bold agenda with a cogent populist critique of Bush policies, railing against "tax breaks to oil companies, no-bid contracts to Halliburton, tax incentives to corporations shipping jobs overseas, tax cut after tax cut to multimillionaires." Barack Obama has thus far largely echoed the common Democratic themes.

The credit crisis--and the bailout of Wall Street's high rollers--will insure that the economy gets more attention in future months, even if we avoid a recession. Yet the stark contrast between the two parties is already clear. Republicans, with the exception of Huckabee, tout Bush's success; Democrats decry an economy that benefits only the few. Republicans embrace the conservative dogmas. Democrats support an activist progressive government on the side of working people, but thus far their policies still seem far more limited than the challenges we face.

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