The Dems Should Wage All Out War on Our Gatsby Economy

This article first appeared on Verdict.

The one issue that has motivated voters—including plenty of former non-voters—over the last year is economic inequality.

This is hardly surprising, because inequality in America has become so extreme over recent decades that even the characters in The Great Gatsby would gape in amazement.

This distressing reality ought to present Democrats with a golden opportunity. As the party of working people, they can now more forcefully than ever highlight the Republican Party’s complete takeover by apologists for the wealthy, whose handiwork has made the lives of typical Americans worse and worse. And everything that the fake populist Donald Trump has done simply amplifies that.

Even so, there is still a powerful group within the Democratic power structure that clings to the supposedly “realistic” and “business-friendly” policies of the Bill Clinton years. Amazingly, those power players are still pushing their fellow Democrats to do everything possible to squander this moment of opportunity for their party.

This renewed push against progressivism in the Democratic Party is based on an almost religious belief that policies that would directly address income and wealth inequality must be resisted. Or, as the headline of a column by a credulous economics writer for The New York Times put it last month: “It’s the Economy, Democrats, but Inequality Is Not the Issue.”

GettyImages-1603636 People enjoy an afternoon at the Mercedes-Benz Polo Challenge July 21, 2001 in Bridgehampton, NY. The Hamptons, located at the east end of New York''s Long Island, is a traditional summer escape for rich New Yorkers. Spencer Platt/Getty

Not only are we told that addressing income inequality would be bad economically, but doing so would supposedly be “political suicide.” Why? It is never quite clear, but it seems to boil down to the simple idea that voters will naturally reject everything but what the center-right Democrats tell them they should want. Although that is a snarky way to put it, it is sadly not an exaggeration.

The current situation is extraordinarily clear. Inequality is a serious problem that presents liberals and progressives with the perfect opportunity to return to their roots, winning votes by championing policies that are good for the economy and that help struggling Americans. Anyone who tells Democrats to ignore that opportunity is either deluded or must want the Democrats to remain permanently out of power.

Hobbyhorses and Political Openings

In any political environment, it is tempting to use the current circumstances—whatever they are at the moment—to justify a long-held policy agenda. This is the political version of the old line that everything looks like a nail to a person who only knows how to use a hammer.

As I noted in two recent columns, for example, there is a group of NeverTrump Republicans who have been grasping for some kind of lifeline, claiming implausibly that people voted for Trump because they were repulsed by the administrative overreach of the Obama Administration’s anti-rape policies for college campuses.

That is neither a typo nor an exaggeration. These conservatives have apparently convinced themselves that people jumped on the Trump bandwagon when they found out that the government had told colleges and universities to use standards that are less likely to result in women’s accusations of sexual assault being ignored or disparaged.

I am not saying that there is no argument to be made from a conservative perspective that the Obama approach violated some ideal balance of powers between the executive and legislative branches. What I am saying is that it is ridiculous for any policy wonk, conservative or otherwise, to believe that their grand theory of government is what motivates typical Americans. What excites fellow bloggers at right-wing think tank lunches is not what drives real voters.

Even if a person is not willing to say that his pet cause is what truly motivates millions of voters, however, there is the further problem of using the emergence of every new problem as an excuse to push for the same old policy agenda. Motivated thinking can be a powerful thing.

This tendency to find self-justification in every tidbit of news need not be limited to overtly political actors. During the Cold War, nuclear scientists apparently were able to interpret any change in US-USSR relations as evidence that their weapons systems were necessary:

“Things are getting friendlier? That’s because our nuclear weapons are scaring them into cooperating. We need more!”

“Things are getting more hostile? That’s because we don’t have enough nuclear weapons. We need more!”

As I noted in my most recent column, Republicans’ obsession with tax cuts for businesses and rich people reached peak absurdity when a top House Republican declared in the lead-up to the second Iraq War: “Nothing is more important in the face of a war than cutting taxes.”

That claim was especially notable because, even if someone believed in general that cutting taxes was a good idea, going to war ought to have changed that calculus entirely. When a country goes to war, after all, its resources are being stretched beyond normal bounds, and the people can reasonably expect to sacrifice at least a bit in the name of the national interest. But for at least that one Republican, it was just another day at the office, looking for excuses to cut business taxes.

By contrast, consider a different policy idea, increasing infrastructure spending, which many on the left and center-left advocate consistently. There is, in fact, scarcely a circumstance in which liberals and progressives would not tell you that this is a good idea.

More accurately, however, I should say that there is rarely a realistic circumstance in which people on the left would not advocate increased infrastructure spending. That is, it is certainly possible to imagine living in a country where we reliably pursue high-payoff public investments, so that there would be no need for anyone to include in their party platform anything that says: “We must commit to more infrastructure spending.”

But we do not live in that world. The nation’s roads, bridges, airports, water and sewer systems, and electrical grids are literally trillions of dollars behind in simple maintenance, which says nothing of the new opportunities that we continue to ignore every year.

All of which means that people (like me) who say that infrastructure investment is a priority can reasonably argue that “now is the time” to take care of these neglected projects—no matter what is going on “now.”

Even so, it is possible that some situations are even better than others when it comes to justifying such spending. The Great Recession was an extraordinary (and mostly missed, sadly) opportunity to catch up on infrastructure spending, because we would have reaped all of the usual good effects of infrastructure spending and put people and businesses back to work during the biggest economic downturn in three generations. (Even better, we would have been able to so while borrowing money virtually for free.)

So there is no general rule saying that a person is being either wise or opportunistic when she argues that the current circumstances call for a long-favored policy. Either is possible. But what if a new problem directly implicates a solution that one political party could ride to electoral victory?

Inequality and the Poisonous Politics of the Moment

Today, we have a Democratic Party that is out of power almost everywhere. Although many pundits continue to overstate the extent of Democrats’ losses in 2016, all that really matters is that Donald Trump used his toxic version of populist politics to buy a non-majority Electoral College ticket to the White House.

What should Democrats do now? Even before Trump’s unlikely arrival on the scene, many commentators (including me) were warning that the extreme suffering caused by the Great Recession could very well lead to the rise of extremist political movements.

Where I went astray was in imagining that the eventual recovery from the ugly days of 2009 and 2010, as unnecessarily slow as it was, would spell the end of the danger of imminent political extremism. Not just in the United States but across Europe, the long-term effects of economic stagnation for the middle class continued to create dangerous political currents.

When people see their own situations deteriorating or standing still, while a fortunate few take all of the gains as the economy begins to recover, anger grows. Bigotry that might have been thought dead turns out merely to have been sleeping, awakening in the moment when a demagogue can blame “Mexican murderers and rapists” and Muslim refugees and immigrants for our problems.

This means that, no matter how many of Trump’s voters and continuing supporters are motivated by bigotry, we can blunt the effects of that hatred (and perhaps put it back to sleep) by focusing on the economic conditions that contribute to such backlash.

The emergence of unabashedly liberal egalitarian politics among some Democratic leaders is thus a healthy response to inequality. It is not merely that a progressive policy agenda happens to work even better than usual in the current environment. The best possible response—politically and economically—to the current environment is to embrace policies that fight against inequality.

In short, this is the moment when progressive politics is simply the best response, no matter what we might think in other moments.

The Tut-Tutting of the Triangulators

As I noted at the beginning of this column, however, there is a still-relevant group of Democratic power players who are scared to death of their party’s embrace of the politics of inequality. One of the most prominent of those groups is revealingly called Third Way, which continues to peddle Bill Clinton’s false claim that “the right and left are both wrong” and we must triangulate between them.

Shortly after The New York Times published the column that I noted above, which amounted to an unpaid advertisement for Third Way’s rejection of progressive policies, the group sent a blast email touting the Times column.

In that email, they also tried to take on the mantle of the underdog, claiming that they were fighting the “economic narrative around income inequality, which has become the establishment approach.” If groups like Third Way are anti-establishment, then I am a world-class sprinter.

But beyond their false political positioning, what is it about the “economic narrative around income inequality” that worries these people so much? It truly is hard to figure out what drives them. They talk about focusing on “opportunity” rather than inequality, but that could easily be included within any anti-inequality agenda.

Instead, the Times columnist tells us that a $15 minimum wage is “a bad idea.” No explanation. Just bad. More tellingly, this is the response to some Democrats’ call for free college tuition:

That can sound meaningless in the large swaths of the country where fewer than 30 percent of residents have a bachelor’s degree. Half of the people who start a four-year program do not finish it.

This is bizarre. The problem is that fewer than thirty percent of residents have bachelor’s degrees, and a part of that same problem is that half of people who start college do not finish. Why does this problem exist? In large part because college is too expensive! Precisely the people who feel hopeless and excluded are the ones who end up being among the 70 percent of people without college degrees.

This would be like saying: “Progressives want people to have access to a healthy diet, but that can sound meaningless to people who have never had a healthy diet and who are unable buy the foods that would extend their lives.” Restating the problem is not an argument.

In the end, this might seem like a minor intramural scuffle among the out-party’s factions. That is true up to a point; and as I noted, nothing that I have seen in the way of affirmative policy suggestions from Third Way-types is actually inconsistent with a more comprehensive progressive agenda.

But recall that the larger message—the headline that Third Way heartily endorsed and amplified—is that “inequality is not the issue.” That is much deeper than a merely technocratic argument over, say, how much to spend on free college tuition versus worker retraining programs.

If inequality is not the issue, after all, then Democrats should not groan too loudly when the Republicans pass “pro-growth” tax cuts that just happen to worsen inequality. Hey, maybe some of those tax cuts will trickle down! Who cares that the evidence tells us otherwise? Inequality, we are told, is not the issue.

The issues that could truly energize the Democratic Party and allow it to expand its appeal among disaffected voters are ultimately all about inequality.

Why should the Democrats oppose repeal of the estate tax, or reductions in top tax rates or the creation of loopholes to allow business owners to cut their taxes in half? Why should they want to keep Republicans from taking health care coverage away from thirty million people or more?

Why should they want to allow workers to be safe on the job, or consumers to buy goods that are not dangerous, or people with lungs to breathe cleaner air? Why should Democrats want to expand college opportunities all along the income spectrum?

The people at the top of the economic heap have all of those things. Because of growing inequality, fewer and fewer non-wealthy people are so lucky. It is the economy, Democrats, and it is very much about inequality.

Neil H. Buchanan is an economist and legal scholar and a professor of law at George Washington University . He teaches tax law, tax policy, contracts, and law and economics. His research addresses the long-term tax and spending patterns of the federal government, focusing on budget deficits, the national debt, health care costs and Social Security.

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