The Democrats' Choice: Manager or Visionary

This article appeared online on Feb. 5 2007.

"We have systematically diminished the role and the responsibility of our government, and we have watched our market become imbalanced," said either Sen. Hillary Clinton or Sen. Barack Obama. "I just believe strongly that we are in great need of a total overhaul."

"It's been government research and investment that made the railways possible and the Internet possible," said the other. "It's been the creation of a massive middle class, through decent wages and benefits and public schools that allowed us all to prosper."

Step back, just for an instant, and appreciate the moment. The two candidates left vying for the Democratic Party's nomination are not running from government or quietly weaving a pale thread of populism around rhetoric meant to reassure whinnying bond markets. They are saying, forthrightly, that government is not the problem, unchecked corporate capitalism is. They may even be saying that the era of big government isn't over, after all.

The first statement is Hillary Clinton's. The second came from Barack Obama. But either could be tucked away in the other's speech without anyone raising an eyebrow.

Not since 1992, when James Carville took his magic marker to the war room's whiteboard to immortalize, "It's the economy, stupid," have we seen an election conducted amid an economy in such screaming distress. Unemployment is rising, and the stock market is, well, falling is too kind a word; it's more drilling a hole to the center of the earth. New data out of the National Association of Realtors suggests that, over the course of 2007, a full $4 trillion in housing wealth was wiped out.

This is particularly grim news, as housing wealth has been the engine of our economy over the past couple of years. Americans have patriotically sustained our growth by overspending on houses, then riskily refinancing those houses in order to overspend on everything else. But with banks acting as their eager enablers, Americans took out too much credit, and many found themselves unable to pay it back. They lost their homes, and with them, their main source of wealth, and with that, their ability to consume, and thus their ability to pay back the banks that loaned to them in the first place. And so down go the banks, and with the banks, the credit market, and with the credit market, the stock market, and on and on, rippling—or, more accurately, ripping—straight through the vast and complicated market atop which American power rests. This is why the Federal Reserve has tossed aside its normal, deliberative processes and is cutting rates like some frenzied horror-film slasher.

The situation is dire enough that the Bush administration, apparently fearing a Marie Antoinette moment, has actually gotten behind a stimulus package, albeit one that shortchanges food stamps and unemployment benefits. But beyond the substantive shortcomings of the stimulus, the very fact of its existence unsettles. The sight of George W. Bush embracing John Maynard Keynes is enough to suggest that the economic end times may be at hand.

This is the context in which the campaign for the presidency is taking place. In South Carolina, a full 52 percent of Democratic primary voters said the economy was their most important issue. Health care, an intertwined concern, clicked in with 25 percent. Iraq commanded a mere 19 percent.

If the campaign is largely about the economy, it has not, however, featured much of an argument over the economy. Rather, we've seen a dramatic convergence in the domestic policies of the Democrats running for president.

It wasn't ever thus. In 1992, Bob Kerrey was touting a version of single-payer health care, Bill Clinton a hybrid of single-payer and managed care, and Paul Tsongas a type of managed care. The distance between the various candidates was immense. In 2004, none of the major campaigns had universal health-care plans, and except for Gephardt's, none even came close. This year, Clinton, Obama, and John Edwards—who should get special recognition here, as he was first out of the gate with a health-care plan—have all released functionally similar proposals. The major difference is that Barack Obama's doesn't have an individual mandate, or any mechanism at all, to ensure universal coverage, while John Edwards' and Hillary Clinton's do. That's a mark against Obama, as it will seriously degrade his ability to regulate the out-of-control insurance market, and it renders his plan considerably less ambitious than the other two. But he swears he'll institute a mandate if needed and has been talking up the possibility of creating penalties for those who don't sign up, which is basically how a mandate works, so it's not even clear how far that difference takes you. Aside from the mandate, the candidates' plans are nearly indistinguishable in structure—all are public-private hybrids that preserve the current system, create a new market of federally regulated insurers that have to compete with a public plan, and offer subsidies to help with affordability.

Indeed, insofar as there's a detectable difference in economic approach, it's less about what to do than how to do it. Much has been said about Obama's recent comments on Ronald Reagan, of which I'll say more later. But Obama's been speaking admiringly about Reagan since long before the campaign. In his book The Audacity of Hope, he admits to appreciating the Gipper's understanding of government's failings. "Reagan's central insight," he wrote, "that the liberal welfare state had grown complacent and overly bureaucratic … contained a good deal of truth." This insight was hardly peculiar to Reagan; it was shared by a generation of community organizers, Obama among them, who fought with public bureaucracies every day. This insight has led Obama to the belief that individuals should experience a government as gentle and unfussy as possible. In my talks with his advisers, the term "iPod government" repeatedly came up, a reference to Obama's desire for a sleeker, easier-to-use state. This guiding principle helps explain how he came up with a health-care plan without an individual mandate. Obama's fears that care would prove unaffordable and individuals would be left begging for exemptions from some unconcerned bureaucrat outweighed concerns that the healthy would opt-out of the system and that the insurers wouldn't cover everyone at a fair price if "everyone" meant only the sick. It's that thread that reconciles his philosophical preference for single-payer with his programmatic eschewing of universal care. Single-payer is simple. Mandates are more complicated, and Obama fears that a mismatch between affordability measures and care costs will leave individuals fighting with the state for coverage. Better the policy be meeker and the experience smoother than risk a strong policy's potential to force the unsuspecting into unwanted dealings with an unfamiliar bureaucracy.

Similarly, Obama's stimulus plan is essentially a quick, across-the-board tax cut. Clinton's is a series of tax credits and targeted subsidies. The difference between the plans, again, is between the ease-of-implementation of Obama's and the specificity of Clinton's. Her targeted credits help worthwhile programs and do more to target the worst-off, but in so doing, they create an essentially means-tested stimulus package that would require beneficiaries to prove their distress. Obama, by contrast, offers a large payroll tax rebate that would require little in the way of administration.

In this, as in much else, Obama betrays a universalist streak. Government is simplest when it is unspecific—it's when it starts trying to subdivide the population and impact only targeted groups that it becomes hard to administer (think of how little trouble seniors have accessing a universal program like Social Security versus how much trouble the poor have trying to determine eligibility for a means-tested program like Medicaid). If Kennedy wanted a rising tide to lift all boats, Obama wants us all in one boat to better navigate the waves. But before he can rehabilitate the universalist approach to government, the experience of interacting with government must be bettered. In a world where a trip to the DMV is such a Kafkaesque odyssey that you can actually hire individuals to undergo the torment for you, unifying the public square first means beautifying it. So Obama's detailed plans for more government accountability and transparency precede and even take priority over his plans for what the newly accountable and transparent government should do. Till that day when government is reformed and citizens' trust is ensured, that new government must be used with care, and its capabilities should not be overestimated.

***

Many of Clinton's economic plans are universal as well. Indeed, her health-care plan, with its mandate, is a truer expression of the principle than Obama's competing proposal. But in general, Clinton's approach doesn't display much of a unifying theme. Her health plan is universal because that makes it a better policy, not because she conceives of social policy within a universalistic framework as such. Which gets to the real difference between the two candidates, which is not in what they want to do with the economy, or even what they believe about it, but how they conceive of the president's role in affecting it.

Where Obama speaks of trends and values, situating his policies within the broader forces shaping our culture as well as our society, Clinton speaks of individual problems and solitary obstacles, offering her proposals as discrete solutions to identifiable challenges. Her approach was well expressed in a speech she gave in Knoxville, Iowa. "The next president," she said, "will be a steward of our economy at a time when the bills from eight years of neglect and mismanagement will be coming due."

That is why, when you ask Clinton's advisers about their economic plans, they're likely to point you toward various policies she's proposed and pieces of legislation she's sponsored, most of which are admirable, forward-thinking, and thoughtfully designed. That is what a responsible economic steward does: competently manage the economy; identify and propose policies to solve problems when appropriate; leave things alone if they're humming along satisfactorily.

Obama's advisers, by contrast, are likely to point you toward his speech at the NASDAQ, which highlighted his desire to transform our economy through the application of moral leadership. There, Obama went before an audience of bankers and stockbrokers and spoke, not of our growth numbers or our credit problems but of our economic values:

Seventy-five years ago this week, Governor Franklin Delano Roosevelt took his campaign for the presidency to the Commonwealth Club in San Francisco.

It was a time when faith in the American economy was shaken—a time when too many of our leaders clung to the conventional thinking that said all we could do is sit idly by and wish that our problems would go away on their own. But Franklin Roosevelt challenged that cynicism. Amid a crisis of confidence Roosevelt called for a "reappraisal of values." He made clear that in this country, our right to live must also include the right to live comfortably; that government must favor no small group at the expense of all its citizens; and that in order for us to prosper as one nation "the responsible heads of finance and industry, instead of acting each for himself, must work together to achieve the common end."

This vision of America would require change that went beyond replacing a failed president. It would require a renewed trust in the market and a renewed spirit of obligation and cooperation between business and workers; between a people and their government. As FDR put it, "Faith in America, faith in our tradition of personal responsibility, faith in our institutions, and faith in ourselves demands that we all recognize the new terms of the old social contract."

Seventy-five years later, this faith is calling us to act once more.

But when Obama says act, he really means talk. Speak. Inspire. The invocation of Franklin Roosevelt is very telling: Obama does not mention a single program from the New Deal. Rather, he remembers how Roosevelt used the office of the presidency to transform our economic culture, to create a political atmosphere in which progressive economic values would thrive and thus complementary policies would follow. Clinton, as steward, promises to better manage our economic policies. Obama, as moral leader, promises to better our economic politics.

This is also what drove their argument over Ronald Reagan. Speaking to the editorial board of the Reno Gazette-Journal, Obama said, "I think Ronald Reagan changed the trajectory of America in a way that Richard Nixon did not and in a way that Bill Clinton did not." Bill Clinton, perhaps predictably, hotly disputed Obama's claim, but he shouldn't have. His presidency is perhaps the best illustration of Obama's argument.

Clinton, in a sense, was the progressive steward of the Reagan Revolution. Reagan's great accomplishment was to inject a certain set of economic principles and beliefs into the body politic. Reagan believed, and convinced millions of Americans to believe, in smaller government, lower taxes, balanced budgets, and the injustice of welfare. But though he enjoyed great success in elevating those ideas, he was far less successful in implementing them. Early on, he cut taxes, but then he had to spend years raising them in order to fund the government. Deficits exploded under his watch, the welfare rolls grew (though not as a percentage of the population), and the government expanded.

Clinton's great successes, the ones he and his wife tout on the campaign trail, were really the fulfillment of Reagan's principles. It was Clinton, after all, who declared, "The era of big government is over," and was able to back that up with actual decreases in the size of government. It was Clinton who actually balanced the budget, who reformed welfare. Reagan set the politics; Clinton played the steward. This is not, it should be said, an attack against Clinton. He governed in a difficult ideological atmosphere—in Reagan's America, not his own. And in Reagan's America, Newt Gingrich and his followers were intent on enacting a far crueler version of Reaganism. Clinton, sensing their threat, smartly co-opted their principles and refashioned them as part of a relatively progressive and unquestionably compassionate agenda. In doing so, he succeeded in making some admirable policy advances (the State Children's Health Insurance Program, a rise in the minimum wage, the expansion of the Earned Income Tax Credit) and staving off their most dangerous initiatives.

Hillary Clinton, similarly, means to govern within the ideological confines of the moment and to tirelessly work to implement better policy. Happily, compared to 1992, it is a moment more amenable to the progressive agenda, largely thanks to George W. Bush's eight-year project to discredit conservatism. (As John Kenneth Galbraith once said, "liberalism is, I think, resurgent. One reason is that more and more people are painfully aware of the alternative.") A talented bureaucratic leader may prove best able to press the advantage and transform sentiment into substance. And Clinton is, by all accounts, exactly that. Her understanding of the bureaucracy is deep, and her command of the relevant policy is masterful. Given the circumstances, she will push, with savvy and determination, for the best policies possible.

But she largely accepts the circumstances, or at least her inability to change them through the application of her own charisma. Obama, by contrast, focuses more on changing the circumstances in which the legislation is made. The promise of his presidency is less its capacity to change our policies than its capacity to change our politics. He is the more likely to address, forcefully and eloquently, a culture that accepts grotesque CEO pay and rampant inequality. She is more likely to push workable solutions aimed at curbing those blights. She promises to ride the bureaucracy; he promises to drive the mood. He promises to replace Reagan's vision of an individualistic economy with the progressive dream of an interconnected economy; she promises to work tirelessly to redress the inequities of our current economy. She promises to care for our economy; he promises to change its values. She wants to be the more liberal Clinton; he wants to be remembered as the progressive Reagan. To choose between them requires not so much an analysis of their policies as a judgment call on our politics. It requires deciding whether our country needs a talented steward or a visionary.

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