The Word Hillary Clinton Didn’t Say
Hillary Clinton’s big speech about the economy on Monday generated a wide range of reactions from the punditocracy. The Times’s David Brooks thought it was politically clever: “She’s cleared the first political hurdle of the campaign,” he wrote. Vox’s Matthew Yglesias said that Clinton’s policy agenda amounted to a rebuke of neoliberalism and indicated a “paleoliberal revival.” Politico’s Ben White reckoned that the speech was a non-event. “The snap reaction among Wall Street investors, economists and ardent financial reformers who thrill to the soak-the-rich rhetoric of Bernie Sanders was a collective: ‘Meh. What’s next?’ ” he reported.
My reaction was that the speech suggested serious intentions to tackle the problem of wage stagnation and to boost middle-class incomes (“That will be my mission from the first day I’m President to the last,” Clinton said), while still seeking to hold the center ground of today’s Democratic Party, which has shifted to the left since the collapse of Lehman Brothers, in 2008, and the later rise of Occupy Wall Street. Compared to the starry-eyed supply-side revivalism of Jeb Bush and the relentless labor-bashing of Scott Walker, though, her speech was on a different plane completely.
In terms of policy details, it was pretty much as expected. Many of the proposals that Clinton outlined were part of a lengthy report on “inclusive prosperity” that was published, earlier this year, by the Center for American Progress, which was founded by John Podesta, her campaign manager. The C.A.P.’s panel of experts, led by Larry Summers, the former Treasury Secretary, and Ed Balls, the Labour Party’s top spokesman on economic issues, proposed boosting the minimum wage, investing in child care and education, setting up an infrastructure bank, changing the tax code to eliminate loopholes enjoyed by the rich, expanding tax breaks for profit-sharing and employee share ownership, and strengthening collective bargaining.
Clinton proposed all of these things. She also embraced President Obama’s recent move to expand overtime pay, called for more paid sick days and family leave, and promised to prosecute individuals and firms on Wall Street. (On my Twitter stream, that last pledge sparked some skepticism. One person sent me a link to an OpenSecrets.org page showing that three of Clinton’s top four campaign donors, in the course of her career, are Citigroup, Goldman Sachs, and JPMorgan Chase.)
One thing Clinton didn’t do was utter the “R-word”—redistribution—which would surely be a central element of any serious revival of old-fashioned American liberalism. Instead, she talked about encouraging “fair growth,” which is another term for inclusive prosperity. Speaking on this theme, she said, for example, “We have to get serious about supporting workers,” and, referring to the need for tax reform, “Those at the top have to pay their fair share.”
Clinton didn’t spell out how she’d revive labor unions, which now represent less than seven per cent of workers in the private sector. The only specific tax changes she proposed that would affect the very rich were eliminating the carried-interest deduction enjoyed by hedge-fund managers and private-equity managers, and enacting the “Buffett rule,” which would apply a minimum federal tax rate of thirty per cent to people earning more than a million dollars a year. These are two eminently worthwhile proposals, ones that President Obama has also endorsed. By themselves, however, they wouldn’t do very much to address the remarkable concentration of income and wealth at the very top of the income distribution.
To be fair to Clinton, nobody is quite sure how to tackle that problem. At the very least, it would require a three-pronged approach: far-reaching changes to the tax code aimed at taxing wealth and restoring the progressivity that was part of the code until Ronald Reagan came to power; reining in the financial sector, which is responsible for much of the rise in inequality over the past thirty years; and challenging the social norms and corporate-governance structures that facilitate the outlandish pay packages received by senior corporate executives.
Clearly, Clinton isn’t willing to go that far, although she did say that she’d get back to us with some proposals to encourage long-term investing over short-term trading. “The speech revealed a woman who does not have her heart in class conflict,” Brooks rightly noted. Like many centrist Democrats, she prefers to talk about expanding opportunity while proposing individual measures with a redistributive aspect, such as providing child care for working mothers and expanding financial aid for students from modest backgrounds. Over the past twenty-five years, this pragmatic approach has produced some major advances for Americans of modest means, such as the repeated expansion of earned-income-tax credits and the Affordable Care Act.
It is an eminently defensible philosophy, and Brooks may also be right when he argues that it’s more politically palatable to the American public at large than the fire-and-brimstone stuff that Clinton’s competitor Bernie Sanders is offering up. You have to wonder, though. Over the holiday weekend, I ran into a retired businessman who used to own a firm that employed more than a hundred people. I’ve never been an extremist of any sort, he said, but I’ve come to the conclusion that America, at this stage, would benefit from a modest dose of socialism.
Yes, you guessed it—he was supporting Sanders.