False Choice

By James Kwak

The scene: Two well-dressed, fully employed people sitting at a table in the chic café at their workplace.

Martha: Do you like your health plan?

George: I love it.

Martha: How much do you pay for your plan?

George: About $550 per month.*

Martha: Do you have a deductible?

George: I have a $1,000 deductible for my whole family.

Martha: What about co-payments?

George: I have to pay 20% of the cost for hospital stays and outpatient surgery.

Martha: What if you just want to see the doctor?

George: I pay $25 to see my primary care physician, and $40 to see a specialist.

Martha: Can you see anyone you want?

George: I pay more if I see people out of network, but the insurer still pays something.

Martha: I’m thinking about switching to the new plan they’re offering. Have you heard about it?

George: No. What is it?

Martha: Well, it covers everything, including vision and dental. And you can see anyone you want.

George: How much does it cost?

Martha: Nothing. There are no premiums and no deductibles or co-payments. Well, you may have co-payments for prescription drugs, but there’s an annual maximum of $200.

George thinks.

George: I think I’ll keep my health plan. I just like it.

End scene.

Continue reading

Take Back Our Party, Chapter 4: Our Democratic Party

By James Kwak

Ever since I finished Economism (and the 2016 elections, which happened about the same time), there has only been one thing I have wanted to write. I tried in “The Importance of Fairness: A New Economic Vision for the Democratic Party,” and in “A New Economic Vision, in 27 Words,” and again in “Hey Democrats, the Problem Isn’t Jobs and Growth.”

I wanted to write this thing because it has become clear to me not only that our economic world is screwed up in all sorts of obvious ways, but also that the only viable path to fixing it runs through the Democratic Party. The Republican Party is what it is; even if it weren’t currently in the grip of a madman, it would at best be the party of Mitt Romney, Paul Ryan, Lindsay Graham, Marco Rubio, Ted Cruz, … you get the point. The 1% will always have their party. The problem is that the 99% don’t have theirs. The result has been the rightward drift of our entire political system, in which Republicans use their turns in power to advance their extremist agenda, and we Democrats use our at-bats to hold the line and nominate reasonable people to the Supreme Court.

So the important question is how the Democratic Party can be rallied behind a new economic vision that can both stem the rising tide of inequality and wrest control of the political landscape back from the conservatives. And that, of course, means we have to replace the economic vision of Clinton, Obama, Clinton, and most of the primary candidates today: the fantasy that private sector growth, aided by clever government nudges to make markets work better, can solve all problems for all people.

The working title of Take Back Our Party—the one I carried around in my head but was too embarrassed to tell people—was Manifesto of Our Democratic Party. (David Dayen eventually agreed with me that it was too presumptuous.) But they idea was very simple: They—the party establishment—have their Democratic Party; but we have a vision of a different Democratic Party. And ours is better. Hence the titles of Chapters 1 and 4.

Continue reading

Take Back Our Party, Chapter 3: Bad Politics

By James Kwak

Chapter 2 of Take Back Our Party made the case that the market-centric policies of the Democratic establishment have failed to do anything about—and in many cases have exacerbated—the rise of inequality. Chapter 3 continues the indictment, arguing that the “growth and opportunity” doctrine of Clinton and Obama has also failed as politics.

The New Democrats chose to identify themselves as the party of jobs and growth because they did not want to be seen as the party of redistribution and welfare. But in copying the Republican message of market-driven growth, they also lost the ability to differentiate themselves from those same Republicans. While conservatives promised that slashing regulations and cutting taxes would unleash the ingenuity of the private sector, the Democratic message was roundabout and equivocal: yes, markets are the source of prosperity, but sometimes they suffer from market failures, so cleverly designed government policies are required to make them work properly, etc. We may be right about the economics, but as politics it fails to establish a compelling choice.

But the bigger problem is that by not doing anything about inequality for so many years, the Democratic leadership frittered away the brand equity that the party had built up since the days of Franklin Roosevelt and the New Deal. Once upon a time, lower-income voters assumed that, at least on economic issues, the Democratic Party stood for them. As Bill Clinton and then Barack Obama did little that was recognizably, specifically for workers, they stopped believing that the party cared about them. Which brought us to 2016, when Donald Trump vastly outperformed Mitt Romney among low-income voters.

For more, the entire chapter is up at The American Prospect, as usual.

The Crisis of the Democratic Establishment

By James Kwak

The Democratic Party is at a crossroads. On a host of issues, it is clear what we stand for and how we differ from the Republicans: minority rights, abortion, immigration, gun control, climate change, the importance of facts, and, of course, whether or not the president is above the law. On economic issues, however, the picture is not so clear. Elizabeth Warren’s speech at St. Anselm’s College on Thursday is an attempt to fix that problem—and also a shot across the bow of the Democratic elite. 

With each passing year, the widening gulf between the very rich and everyone else becomes more and more apparent. Even after ten years of economic expansion and with unemployment at historic lows, working-age adults in the bottom half of the income distribution make less than they did a full two generations ago, while the very rich now count their wealth with twelve digits instead of eleven. Yet the Democratic establishment insists that we must stay the course, and shared prosperity will be just around the corner. 

Elizabeth_Warren_Manchester_NH_October_2016

Elizabeth Warren campaigning for the Democratic establishment back in 2016 when everyone got along. Photo: Tim Pierce (CC BY-SA 4.0)

Ever since the rise of the New Democrats in the 1980s and the election of Bill Clinton in 1992, the party’s power brokers have preached the gospel of “growth and opportunity.” (This is the story I tell in the first chapter of my new book, Take Back Our Party, available for free at The American Prospect.)  All good things come from the private sector; government’s role is to help markets function efficiently, create the conditions for private sector growth, and help people participate in those markets. Hence welfare reform, financial deregulation, and Obamacare, among other things. Hence also the intense, coordinated assaults on Bernie Sanders in 2016 and both Sanders and Warren today.

Continue reading

Take Back Our Party, Chapter 2: Bad Policy

By James Kwak

78389258_115250926626517_1629993578354704384_n

Today’s installment of my new book, Take Back Our Party, evaluates the quarter-century reign of the Clinton-Obama axis over Democratic economic policy. (Chapter 1, if you missed it, is a historical account of the rise of the New Democrats and what they did once in power.)

The picture is not a pretty one, no matter how you look at it. This chart, for example, shows the distribution of economic growth across different groups in the income distribution:

kwak-chart2.2 (2)

Continue reading

Take Back Our Party, Chapter 1

By James Kwak

78389258_115250926626517_1629993578354704384_n

Chapter 1 of my new book is now available at The American Prospect. (If you missed the introduction, you can find all the chapters here as they are released).

This chapter, “Their Democratic Party,” is a brief history of the takeover of the party by the New Democrats in the 1980s and 1990s. It describes how, in the aftermath of the crushing electoral defeats of 1980 and 1984, a new generation of party leaders—including Bruce Babbitt, Chuck Robb, Lloyd Bentsen, and of course Bill Clinton and Al Gore—chose to run away from the historical Democratic legacy as the party of workers and the poor. Instead, they trailed in the rightward footsteps of the Republicans, associating the party with business, the private sector, finance, and economic growth.

Their economic platform was that markets are the sole source of prosperity and that government should limit itself to nurturing the private sector and ensuring that all people can participate in the benefits of growth. That’s why the principal Democratic domestic policy achievements of the past three decades have been welfare reform, financial deregulation, and a health care reform plan based on private competition and initially conceived by the Heritage Foundation.

This is still the dominant ideology of the Democratic establishment:

“Leaving aside the recent progressive insurrection … it is a party devoid of any compelling idea of how to address the fundamental economic challenges our country faces today: wage stagnation, the rising cost of health care and urban housing, the precariousness of most jobs, and extreme inequality. After defining themselves in opposition to old-fashioned government spending programs that smacked suspiciously of redistribution, after embracing the doctrine of market-based solutions, and after insisting for decades that economic growth would solve all problems, establishment Democrats today have nothing left to offer.”

Enjoy!

New Book — Completely Free!

By James Kwak

After Simon’s book with Jon Gruber earlier this year, it’s my turn to release a book. Take Back Our Party: Restoring the Democratic Legacy is now available starting today at The American Prospect. Actually, today the introduction is available. The remaining chapters will be released between now and Wednesday next week. As David Dayen (executive editor of the Prospect) said, now that we’re in the Second Gilded Age, we’re adopting one of the publishing models of the First Gilded Age: serialization in a magazine.

The book is a political sequel to Economism. The basic argument is that the Democratic Party has been taken over by market-oriented centrists who think that effective management of private sector markets is the best way to help ordinary people (think of welfare reform, financial deregulation, Obamacare, etc.); that they have failed, both as policy and as politics; and that the party should adopt an economic platform dedicated to ensuring that all people have the basic necessities of life in the twenty-first century, including healthcare, pre-K through college education, affordable housing, and adequate retirement income.

Enjoy!