Clinton, Sanders, and the “Progressive Give-Up” Formula (with Clinton’s Warning of a Grand Bargain)

[KoKo]

Clinton, Sanders, and the “Progressive Give-Up” Formula (with Clinton’s Warning of a “Grand Bargain” to Come)
Posted on December 28, 2015 by Lambert Strether of "Corrente."


This will be a short post, with the point essentially made in the headline. Let’s start by quoting Clinton from the last Democratic debate, the one that nobody saw because the DNC’s Debbie Wasserman Schultz scheduled it on the weekend before Christmas, when everybody was either partying, watching football, or both.[1] Not that, in this case, The Wasserman Schultz’s machinations matter all that much, as we shall see. Back to Clinton in debate; here’s how she frames her response to the Sanders single payer heatlh care proposal:

CLINTON: Your proposal is to go and send the health care system to the state. …. And my analysis is, that you are going to get more taxes out of middle class families. I’m the only person saying, no middle class tax raises. That’s off the table.

MUIR: Secretary Clinton, let me ask you about your tax plan because from the crushing cost of college education, the next question most families have; is will my taxes go up under the next president? You have said it’s your goal not to raise taxes on families making under $200,000 a year a goal. But can you say that’s a promise as you stand here tonight?

CLINTON: That is a pledge that I’m making. I made it when I ran in 2008.

MUIR: A promise?

CLINTON: Yes, and it was the same one that President Obama made. Because I don’t think we should be imposing new big programs that are going to raise middle class families’ taxes.

We just heard that most families haven’t had a wage increase since 2001. Since, you know, the end of the last Clinton administration when incomes did go up for everybody. And we’ve got to get back to where people can save money again, where they can invest in their families, and I don’t think a middle-class tax should be part of anybody’s plan right now.

Say, is there an echo in here? Maybe George H. W. Bush saying “Read my lips: No new taxes?” (Never mind that the OECD has recently found that “The paper also finds no evidence that redistributive policies, such as taxes and social benefits, harm economic growth, provided these policies are well designed, targeted and implemented,” and that “the United States, the cumulative growth rate would have been six to nine percentage points higher had income disparities not widened.”) It’s no wonder that some commentators have called out Clinton for using Republican talking points, not just in debate but on the trail generally[2]:

Instead of laying low and playing it cool, Clinton is running as though the race were very close, tax-baiting Sanders with Republican talking points… It’s a mystifying and risky way to run a campaign.

Not all that mystifying. The Democratic establishment hates the left. Which is fine; the trick is for the left to get the establishment to fear them. That has yet to be done.

Let’s run the tape. On policy, the Clinton campaign has been consistently tax-baiting Sanders over his support for single-payer healthcare and other moderate social-democratic programs. This not only plays into Republican narratives that taxes are always a simple decrease in income (rather than payment for valuable and desperately needed programs), but also boxes Clinton herself in on taxes. A promise of no tax increases means she cannot support Kirsten Gillibrand’s paid leave proposal.

Clinton’s stance also basically rules out badly needed increases in Social Security. At an Iowa townhall this month, Clinton spoke about the solvency of Social Security, and while she initially disavowed benefit cuts, she eventually ended up endorsing the possibility of raising the retirement age. Speaking about how it’s harder for some workers to keep working to age 70, she said: “If we could figure out how to do it, I would be open to hearing about it, I’ve just never heard anybody tell me how we could do it.”

In other words, Clinton is setting us up for a Grand Bargain fight again. Do we really want to go through that? But returning to the debate transcript, here is Sanders’ riposte to Clinton’s Republicans-style “tax baiting”:

SANDERS Now, when Secretary Clinton says, ‘I’m not going raise taxes on the middle class,’ let me tell you what she is saying. She is disagreeing [how, exactly?] with FDR on Social Security, LBJ on Medicare and with the vast majority of progressive Democrats in the House and the Senate, who today are fighting to end the disgrace of the United States being the only major country on Earth that doesn’t provide paid family and medical leave.

What the legislation is is $1.61 a week. Now, you can say that’s a tax on the middle class. It will provide three months paid family and medical leave for the working families of this country. I think, Secretary Clinton, $1.61 a week is a pretty good invest [sic].

Tactically, this is weak; picking a fight on “family leave” lets Clinton drag the argument onto her ground, as she responds: “I have been fighting for paid family leave for a very long time.”[3] And strategically, it’s weak, for two reasons. FIrst, Sanders assumes (“it will provide”) that Federal taxes pay for Federal spending; they don’t. Second, Sanders’ muddled invocation of FDR assumes (“pretty good invest”) the same “Can we afford it?” frame that Clinton uses. Unfortunately, this is the “Progressive Give-Up formula,” described by Joe Firestone as follows:

[A]ccepting the deficit hawk’s framing of the problem is to accept, for the indefinite future, the idea that every progressive Government spending initiative must be evaluated from the viewpoint of whether “we can afford it” or not, or whether it de-stabilizes the debt-to-GDP ratio, regardless of the benefit it will deliver to Americans.
Government fiscal policy and the ideas of fiscal sustainability and fiscal responsibility need to be viewed from the broad viewpoint of the employment of Government spending to fulfill America’s public purposes, and not from the narrow one of how Government fiscal activity will impact deficits, debts, and debt-to-GDP ratios. The reason for this is that for a nation like the United States with a fiat non-convertible currency, a floating exchange rate, and no debt denominated in any foreign currency, there is no risk of insolvency, however high the deficit, debt, or debt-to-GDP ratio may have grown in the past. Whatever the levels of these statistics are, the constitutional authority of the Government to spend on public purposes remains unimpaired and undiminished.

A concrete example of the “Progressive Give-Up” Formula in action was the 2009-2010 health care policy debacle, where progressives focused with laser-like precision on the CBO scoring for ObamaCare, proudly proclaiming that their bill would be “revenue neutral” (that is, cheerfully adopting George H.W. Bush’s talking point of “no new taxes”). This prevented any consideration of how health care policy would impact the country as a whole. So, even though single payer would have saved the country at least $400 billion a year (not to mention many lives), those savings didn’t show up in the Federal budget, and so single payer could not be shown to be revenue neutral. And so the “Progressive Give-Up Formula” produced a demonstrably worse — in fact, demonstrably lethal — policy outcome. As will any initiative undertaken by a President Sanders, if the Formula continues to be a part of Washington conventional wisdom.
http://www.nakedcapitalism.com/2015/12/clinton-sanders-and-the-progressive-give-up-formula-with-clintons-warning-of-a-grand-bargain-to-come.html