Political debate is a contest between competing stories about,
as supply-sider Jude Wanniski once neatly put it, "how the
world works." Today, America lacks serious political debate
because Democrats are still substantially trapped in Ronald Reagan's
narrativethe morality play of the Individual against the Collectivist
State, in which virtue is identified with wealth, efficiency with
the unregulated market, and freedom with the opportunity to get
Bill Clinton claims he is telling a new storya centrist compromise
that deregulates the market and shrinks government to spur greater
economic growth, and then, through education and the celebration
of self-help, broadens opportunities to enjoy the fruits of that
growth. Policy insiders can still read the differences between
the Clinton and Reagan stories. But to most Americans, Clinton's
story line is muddled, its characterizations weak (nothing to
match Reagan's welfare queens, power-grabbing bureaucrats, or
hypocritical intellectuals secretly lusting after business wealth),
and the practical moral of his tale is not much different.
Assume you are a 50-year-old worker, laid off from the last decent-paying
job you think you'll ever have; or a single mother making $7 an
hour when it costs $10 an hour to live; or a college graduate
five years out of school and still struggling with loan payments.
You want to know why you are having such a hard time when the
economy is said to be booming. So you listen when you turn the
channel and see Newt Gingrich telling an updated version of Reagan's
It goes something like this:
We are entering the Information Agea time of change equivalent
to the shift from the Agricultural to the Industrial Age. The
resulting deregulated global economy is bringing freedom and democracy
to the rest of the world, and technological wonders to America.
But if you want to enjoy it, you have to compete against about
six billion people out there, most of whom will work for a lot
less than you will.
The price of labor is set in South China. If you want to live
seven times better, you have to be seven times more efficient.
You should get all the technical training you can get, pack a
computer on your back, and get out there and compete. If you're
a woman, you ought to think about getting married. As for the
government, the best it can do is cut your taxes so you have more
resources to compete with. You are on your own.
Not much comfort there, so you turn the channel to Bill Clinton:
We are entering the Information Age. It is a time of change equivalent
to the shift from an agricultural to an industrial-based society.
The resulting deregulated global economy is bringing freedom and
democracy to the rest of the world, and technological wonders
to America. But if you want to enjoy it, you have to compete against
about six billion people out there, most of whom will work for
a lot less than you will.
What you earn will depend on what you learn. You should get all
the technical training you can get, pack a computer on your back,
and get out there and compete. But we are Democrats. We believe
that government can help those who deserve to be helped. Unfortunately,
the government has this big deficit; we have to pay off the huge
debts run up by Ronald Reagan. So we don't have very much money.
And although we'd really like to, we can't really give you world-class
skill training, or help you live while you are being re-educated.
Or provide child care, or secure health care. So, unfortunately,
you are mostly on your own.
DEMOCRATS AS BIT PLAYERS
As long as they remain trapped in Reagan's story, Democrats will
be the supporting players in America's historical drama. Bill
Clinton has demonstrated that Democrats without a story of their
own can edit the Reaganite drama a bit, soften the insensitive
dialogue, and tone down some of the socially violent scenes. But,
however reluctantly, they are forced to move the conservative
plot forward to its climactic scenethe triumphant return of Social
The problem is not just in the White House. The reluctance to
challenge the Republican story of how the world works pervades
Democratic elected officials at all levels. Shortly after last
year's election, some Democratic politicians and liberal group
lobbyists met to discuss a program for the coming congressional
session. After an hour, only two priorities were clear: balancing
the budget and cutting taxes. A frustrated voice asked if there
was any chance to revive the issue of national health insurance,
now that more than 40 million people are without health care coverage
and complaints about the corporate takeovers of hospitals and
health care are endemic. Eyes rolled. A congressman with an impeccable
Americans for Democratic Action voting record finally remarked:
"As the President has said, the era of big government is
over." End of conversation.
Democrats can't become relevant again until they can muster
the courage to push past the conventional wisdom that stops nearly
every conversation among Democrats, traditional or new. The conversation
stopper comes in three parts:
- The people don't want big government.
- Even if they wanted it, they can't afford it.
- Even if they could afford it, the global economy will not
let them have it.
These propositions are not as self-evident as the conventional
wisdom would have us believe. The voters don't want big government.
Polls consistently show that voters want almost all of the big
things that big domestic government does, from Social Security
and Medicare, to protecting the environment and the workplace,
to building schools and damming rivers and underwriting research.
In 1996, American voters re-elected a President who had risen
from the political grave by campaigning against Republican threats
to cut Medicare, Medicaid, federal aid to education, and federal
protection of the environment. He had vilified his opponents for
forcing a shutdown of the supposedly despised federal government.
To save themselves, vulnerable Republicans joined Clinton in passing
an increase in the federal minimum wagethat is, big government
ordering business to pay low-wage employees another 90 cents an
Moreover, the President took credit for reducing crime by providing
federal financing of 100,000 more cops on the street, forcing
manufacturers to put V-chips in their televisions, and requiring
insurance companies to maintain portability of health care coverage.
Small impact perhaps, but big government nevertheless.
True, Democrats did not win back the House. But they were in the
process of recapturing it a few weeks before the election when
the scandals over foreign contributions to the Democratic Party
broke, and the Democratic financiers diverted money from the congressional
to the presidential campaign. Even so, Democratic candidates for
the House won about the same number of total votes as Republican
candidates. The election could hardly be seen as a referendum
against big government.
Even after having facilitated the Reaganite welfare reform scenario,
which did involve a reduction in a big government program, the
President finds himself caught in the contradiction that there
are not nearly enough jobs to absorb the people being booted off
of the welfare roles. His solution? In his own words: "We've
got the deficit. We've got to balance the budget. We can't possibly
meet the hiring targets of the welfare reform law unless we organize
the private sector."
Organizing the private sector to hire people that it doesn't want
may mean government that's cheaper, but hardly one that's smaller.
But we have no money. Nowhere is the power of Reagan's
Magical Realism more revealing than in Democrats' obsession with
the federal budget deficit. Murray Weidenbaum, the first chair
of Reagan's Council of Economic Advisers, later recalled to journalist
Sidney Blumenthal the evolution of Reagan's views of the possibility
that his budget policies would create a string of deficits: "One,
they won't occur; two, they'll be temporary; three, when they
stick, they serve a good purposethey keep the liberals from new
The inherited structural deficit would have been a problem for
any Democrat assuming the presidency in 1993. But it could have
been used as an object lesson about the failure of the Reagan
story. Instead, the Democrats accepted Reagan's narrative of the
deficit as an emblem of incompetent and bloated domestic government.
As a symbol, the balanced budget has paralyzed Democrats beyond
Reagan's wildest dreams. Its magic is so strong that it made Clinton's
own real-world accomplishment in reducing the deficit programmatically
irrelevant. The deficit is now a minuscule share of gross domestic
product (GDP). But no matter; the majority of House Democratstheir
leader Richard Gephardt is a notable exceptionsupported a budget
deal that would further tighten the noose around the neck of progressive
To soothe their liberal consciences, Democrats beguiled themselves
with the notion that once the budget is finally balanced, they
will be free of Reagan's fiscal straitjacket. Right after the
budget deal was signed, New Democrat Rob Shapiro wrote that "a
balanced budget is conducive to activist government," citing
as an example the new program to fund health insurance for poor
children. But so long as the balanced budget is enshrined as the
fiscal deity, there will never be any room for the domestic spending
needed to stop, much less reverse, the steady impoverishment of
the domestic public sector. The current deal is front-loaded with
tax giveaways, and backloaded with a mortgage of unspecified cuts
that will require further slashing of domestic expenditures to
achieve balance. Moreover, the agreement does not address the
fundamental long-term problem of rising health care costs. If
the budget is truly balanced in the talismanic year 2002, the
next year, 2003, will require still more cuts in domestic investment,
as will the next and the next.
The promise of health care for poor kids was a sop to the liberals
to get them to support the compromise. Winks from the White House
hinted that this might be a "foot in the door" to national
health insurance. But as a block grant to the states, the program
has no more security than the rest of the domestic discretionary
budget, which as a whole must be further sacrificed if the 2002
goal is to be achieved. More thoughtful liberals might have pondered
the example of HeadStart, the popular program of education for
poor kids, which after more than 30 years still covers less than
half the eligible children.
Democrats have become so mesmerized by the Republican story that
they cannot recognize that the plot doesn't hang together. Witness,
for example, the budget projections of the Congressional Budget
Office (CBO), which are the primary source of the argument for
The CBO, under the control of the Republican majority, regularly
makes three long-term economic forecasts to the year 2050, varying
according to different assumptions about future budget policy.
The economic model on which all the forecasts are based conservatively
assumes that public investment in education and infrastructure
makes no contribution to economic growth. Thus, literally, a dollar
invested in a tavern is productive, a dollar invested in a school
is not. The effect of this assumption is to make a balanced budget,
which shifts investment from the public to the private sector,
appear more effective in stimulating growth than it is. Even so,
the CBO's scenarios dramatically undermine the conventional wisdom.
One scenario is the familiar disaster story: Current policies
are frozen, the deficit rises exponentially after 2030, and the
sky falls on the economy.
Under a second "sustainable" scenario, the budget is
balanced by the year 2002 and each year thereafter. Per capita
GDP rises to $38,200 in 2030 and to $50,400 in 2050. But a third
scenario, also sustainable, which has received almost no attention,
stabilizes the ratio of the deficit to GDP at 1.7 percent from
now until 2050. Remarkably, the economic result is almost identical
to the balanced budget forecast: a per capita GDP of $37,500 in
2030, and $49,200 by 2050. So even with an economic model that
credits no benefits to public investment, the difference to the
economy between a steady modest budget deficit and zero deficit
is minuscule. On the other hand, the latter path of moderate deficits
would free up a net (taking into account greater interest costs
of maintaining a deficit) of $600 billion over the next five years
and more than a trillion dollars over the next ten for desperately
needed public investments in human and physical capital. In any
realistic model of the economy, this investment would add enough
to the long-term growth rate to surpass the per capita income
performance of the balanced budget scenario. Yet Democratic politicians
are so frightened of being labeled fiscally irresponsible that
there is no effort to try to build on this opportunity to tell
an economic story with an investment theme.
It gets worse. Consider how Democrats treat the ingredients of
the deficit. The prime remaining source of the disaster budget
scenario is the country's inefficient, chaotic, and expensive
health care system. It combines the worst features of capitalism
and socialism in which huge public subsidies enrich private insurers
and providers. Bill Clinton had it right in 1993 when he told
the country that the system had to be changed. But when his health
care plan failed, instead of taking the issue to the country,
he abandoned his story. This allowed the Republicans to redefine
the villain from one of the health care system to one of Medicare
and Medicaid costs, for which there is only one answerspend less.
Within the context of the balanced budget, Democrats have also
largely bought into Reagan's spending priorities. Eight years
after the fall of the Berlin Wall and the end of the Cold War,
the United States is still spending more on defense in real terms
than we were in the mid-1970s when the Soviet Union was armed
to the teeth. Clinton's proposal to expand NATO will add an estimated
$40 billion in additional military spending to bring the new eastern
European nations' military up to required NATO standards (the
new countries don't have the money and our European allies have
said they will not support the upgrading), and for more aid to
Russia to overcome its anxieties. Slowly the Pentagon is regaining
its old confidence; it has permitted the sale of F-16 fighters
to Third World countries while telling Congress it needs money
for more F-22s to counter the proliferation of F-16s.
But the global economy will not permit us to have a big government.
Like the budget deficit, the global economy is both reality and
myth. Over the last quarter century, the international sector
of the U.S. economy has doubled and global international financial
markets have indeed gained power over national economies. The
United States, like other countries, does not control as much
of its domestic destiny as it did 30 years ago. But we remain
by far the most important economy in the world, and we still make
between 85 and 90 percent of what we buy. Selling to the U.S.
market is a central economic goal of a large number of nations
around the world.
So the United States retains enormous leverage. The American government
has forced Third World countries to meet the demands of our multinationals
to protect overseas investments and obey our patent and copyright
laws. We have made the Russians accept a humiliating expansion
of NATO. And alone against almost the entire world, the Clinton
administration prevented the previous secretary-general of the
United Nations from being reappointedthis, despite the fact that
the United States is the United Nations' chief deadbeat, owing
that world body more than a billion dollars in back dues.
Thus the United States could lead the world in creating the rules
that would make a global marketplace work for everyonenot just
those at the top of the wealth and power pyramid. The creation
of international health, labor, and environmental standards, the
regulation of dangerously volatile international financial markets,
and the lifting of the debt burden to the weakest Third World
nations is a task fit for the world's remaining superpowerand
an inspiring theme for a twenty-first-century Democratic Party.
But Democrats who have attempted to make this an issue are denounced
by a Democratic White House that prefers to spend its international
political capital forcing the rest of the world to swallow Reagan-Thatcher
five-year cyclical expansion has lowered the U.S. unemployment
rate and sent the stock market soaring. But the real wage of the
typical American is 10 percent below where it was at the previous
peak of 1979. Despite deregulation, privatization, and a halving
of the corporate tax rate, private investment in this expansion
has been no greater than in previous ones. In the 1990s, productivity
growth in the United States is slightly below its anemic performance
in the 1970s and 1980sand considerably below the rate of productivity
growth in western Europe, which for a decade has been saddled
with Maastricht-induced austerity. As for our well-hyped national
concern for the next generation, try this: In France the poverty
rate for children under six years old is 6 percent; in the United
States it's 22 percent. Which economy is working better for kids?
The consequences of Democrats remaining as supporting players
in the Reagan movie will be profound, both to the nation and to
themselves. The absence of a progressive story about what is happening
to America deprives the citizenry of the analysis it needs to
consider an alternative path. When the next recession hits, we
know what the Republican explanation will be: Taxes were too high,
government was too big, business was overregulated. What will
the Democrats say?
A NEW STORY LINE: YOU ARE NOT ALONE
Reviving a liberal story in the late 1990s does not mean going
back to the characters and images of the 1930s or the 1960s. But
the basic theme of politicswho gets whathas not changed. It
is no surprise that as the conservative story has come to dominate
our political culture, the distribution of wealth in America has
become the most lopsided in modern times.
A liberal story worth telling would assert that the distribution
of wealth is not the result of natural economic laws, but of the
capture of government by those who now enjoy its favors. It would
reverse the conservative tales, in which the striking worker who
withdraws his or her labor is a villain, but the striking investor
who withdraws his or her capital is a hero. Or in which the public
school teachers, who are not given enough books and pencils to
teach inner-city children, are treated with contempt, and urban
real estate speculators, who are subsidized to destroy neighborhoods,
are revered as creators of wealth.
A liberal story would raise citizens' expectations of politics,
teaching that you are not alone in your struggle to survive in
the new brutally competitive world. As an American, whatever your
race, your gender, or the condition of your pocketbook, you are
in fact "entitled" to certain opportunitiesto work,
to education, and to have your vote count for as much as anyone
A strong story requires strong language. Once again, we might
hear respectable politicians and journalists using bold termssuch
as "full employment," "national health insurance,"
and perhaps even "working class." We need straight language
not primarily as sound bites or bumper stickers, but rather as
a means of making clear how we really think the world should work.
Get that story right, and the bumper stickers will follow.
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