The Democratic Party is flying blind on economics
Ten years after the Great Recession, there is no sign the party is even trying to think about preventing the next one
One consistent theme of American politics over the last generation has been the increasingly strong ideological discipline of the Republican Party. What that has meant in policy terms is fairly clear: tax cuts for the rich, cuts to social insurance programs, deregulation, free trade, union-busting, and a belligerent foreign policy.
The rise of President Trump, of course, seemed like it might upset things. He ran as an erstwhile economic populist, promising to protect Medicaid, Medicare, and Social Security; enact soak-the-rich tax increases; and tear up free-trade deals that had harmed the (white, he none too subtly implied) working class. But his actual administration, stacked as it is with right-wing hardliners, has simply underlined the dominance of conservative ideology. The only significant policy passed during his administration has been a traditional tax cut for the rich, plus a lot of deregulation carried out at the executive level.
So what about the Democrats?
Certainly before 2008, one couldn't say they had a starkly different set of policy ideas. Up through about the early 1970s, it had been a fairly straightforward working-class party, but after a generation of reform, under Bill Clinton it stood for a muddle of capitalism worship leavened with means-tested welfare programs. At bottom, it was a left-inflected version of the same neoliberalism that comprises Republican Party doctrine.
But the 2008 financial crisis called that ideology into question. It turns out that Clinton's welfare reform grossly harmed the poorest Americans, his neoliberal trade agreements dealt a sharp blow to the national manufacturing base, and his financial deregulation set the stage for global economic catastrophe. Though Barack Obama basically held the line on Clintonian orthodoxy, when he was gone from political competition in 2016, previously marginal left-wingers like Bernie Sanders and Keith Ellison, who had been carrying the old New Deal torch for decades, suddenly rocketed to the front rank of politics.
Has the party as a whole changed its thinking on these questions, though? To get one initial look, I interviewed multiple Democratic congressional candidates. I reached out to dozens, attempting to get a decently wide range of perspectives and regions. Ultimately, eight candidates agreed to be interviewed, and while the sampling method is clearly less than scientific, it provides an interesting sort of ersatz focus group containing a decent mix of left-wingers and centrists. Not being quite sure what I was going to find, I asked fairly basic questions about economic, social, and foreign policy, focusing on broad disputes between the economic populist-dovish wing of the party and the neoliberal-war hawk wing.
My major conclusion is this: The Democratic Party has developed a strong consensus on social justice issues like gay marriage, transgender rights, and police brutality. On foreign policy, it seems somewhere in the middle — not exactly favoring imperialist wars of aggression, but not terribly interested in a new paradigm either. But the party as such makes virtually no attempt to put forward a consistent party line on economic issues. On political economy, what up-and-coming Democrats believe and say depends largely on forces outside the party, and the candidates who are the clearest thinkers are the ones who have done their own reading and research.
This lack of ideological spade work is setting the party up for disaster down the road.
I interviewed Jess King (candidate for Pennsylvania's 11th District), Richard Ojeda (West Virginia's 3rd), Gil Cisneros (California's 39th), Shireen Ghorbani (Utah's 2nd), Mike Levin (California's 49th), Diane Mitsch Bush (Colorado's 3rd), Dan Canon (Indiana's 9th, who lost his primary after the interview), and Randy Bryce (Wisconsin's 1st, where he is gunning to fill Paul Ryan's seat after Ryan retires). I attempted to contact several senatorial candidates, as well as the DCCC itself, but none agreed to talk.
First, a bit of necessary background. The greatest political-economic risk for Democrats is the possibility that the next Democratic president will have to clean up after another financial crisis. During the Great Recession, the Obama administration moved heaven and Earth to save the financial system (including looking the other way while Wall Street committed a world-historical crime spree), but the party only managed milquetoast half-measures to save the rest of the economy. The economic stimulus of 2009 — passed in a panic after Obama was inaugurated — prevented a full-blown depression, but did not restore full employment.
As 2010 progressed, it became increasingly obvious that the stimulus had been a severe undershoot. But Democrats did not pass another. The reason was ideological. The Keynesian idea that the government should spend until full employment was reached — as it did during the New Deal and the Second World War, thus fixing the Great Depression — took tentative hold in 2009, but soon afterwards the forces of neoliberalism regrouped and began loudly flipping out about deficits. Most Democrats had a vague at best understanding of the logic of stimulus, and quickly gave in.
By February 2010, Obama was "pivoting" to deficit reduction and austerity — and most of the party went along with him. It was a monumental political mistake: It meant unemployment was still nearly at 10 percent on election day in 2010, and hence absolutely crushing defeat — the loss of 63 House seats and control of the chamber, six Senate seats, and 680 state legislative seats. That in turn meant Republicans largely controlled the congressional redistricting process during a census year, which they used to gerrymander themselves a multi-point handicap in the House.
Fast forward to today: The economy isn't exactly roaring, but it is much, much healthier than in 2010. Unemployment is low, and job creation keeps trundling along. However, corporate profits and the stock market have been suspiciously high. The basic economic structure — severe inequality, a bloated, crime-ridden, and fragile financial system, and many markets controlled by lumbering monopolist behemoths — appears similar in important ways to that of 2007 and 1929. The risk of another financial crisis at some point soon was increased still more by the recent passage of another financial deregulation package (incidentally with the key assistance of the several centrist Democrats in the Senate).
No one can say for sure when the next crash might come (although some economists and analysts are predicting a recession in 2019 or 2020, perhaps sparked by high oil prices). If disaster does strike in the next couple years, and Democrats win control of the government in 2020, the objective political self-interest of the party will require them to first vote for a deficit-busting stimulus package, and then if they've got any sense at all, a financial regulation package that will actually significantly reduce the financial sector's hammerlock of power over the political system. The neoliberal instinct that the financial sector must be preserved at all costs is a tremendous political liability and creates devastating side effects for the economy as a whole.
I found no evidence that anyone in the Democratic Party, in the leadership or out, had been promulgating a strategic party doctrine on this question, or even discussing it much. On the contrary, if anything there were strong indications that the old background radiation of austerity and deficit phobia has continued to beam through their collective political unconscious.
The non-establishment candidates generally understood this problem the best. On the question of deficits and Democrats shooting themselves in the foot in 2009-10, "anybody who's paid attention to my campaign, we're hammering left-wing economic populism," said Indiana's Dan Canon. "The glaring reality around economics is that people in our community are hurting — economic stagnation, income and asset stagnation is incredible," said Pennsylvania's Jess King. "Some Democrats are tone deaf, frankly, to a classic Democratic policy position and value position," said Diane Mitsch Bush of Colorado. "We have to enable the middle class to climb up the opportunity ladder. The rungs of that ladder were pulled up in the Reagan era, and they were pulled up further during that recession."
Both Canon (who is no longer in the running) and King are full-fledged outsiders, while Bush is somewhat in the middle, having been a Colorado state representative, but has not been endorsed by the DCCC. (She also happens to be unusually well-versed in the issues.)
On the extreme other side, Ben McAdams, a candidate for Utah's 4th District who has been placed on the DCCC's Red-to-Blue list, has actually endorsed a balanced-budget amendment — the sort of neutron-bomb austerity policy that would permanently devastate the national economy, and stand a good chance of triggering a global financial crisis. (McAdams did not respond to an interview request.)
But it's not just just the centrist types who were skeptical of stimulus. Wisconsin's Randy Bryce, who is on the Red-to-Blue list but has a populist reputation due to his working-class steelworker credentials, was seemingly somewhat baffled by the stimulus question. He did note that Obama's stimulus didn't go "far enough," but then added a non sequitur about bipartisanship: "We need to find ways to work together [with Republicans] so government isn't at a standstill."
Utah's Shireen Ghorbani, an outsider candidate and former Peace Corps volunteer who emphasizes her commitment to public lands and job creation, argued that balancing the budget in general was a moral priority: "I do believe our government spending has gotten out of control … I do think it's a set of values that you bring."
Perhaps the most interesting comment of all came from Richard Ojeda, the most charismatic and certainly the most committed fire-breathing populist of all the candidates, with little connection to the national party establishment. The West Virginia Democrat offered up a deficit-reduction agenda of his own volition, arguing rather tepidly that "on the budget and deficit issues we have in America, we need to target fraud, waste, and abuse," citing wasteful healthful spending in the Department of Veterans Affairs and the military. "When I was in Iraq in 2004-2005, the contracting companies, Brown & Root and Halliburton, they were getting paid $200 per troop per day … if you think we were eating $200 worth of food every day, you would be mistaken."
It is always important to keep down waste and fraud, to be sure. But when I presented him with the argument for potential stimulus to prioritize employment over deficits, he seemed genuinely nonplussed. "I would like to do a little more research," he said. "But I will tell you that I think people need jobs. I think that jobs are what really help our economy."
It was obvious that this was new territory for him. It's remarkable that despite having a populist instinct going straight to the bone, he had apparently not run across a clear articulation of perhaps the key economic policy issue for any national legislator until I happened to bring it up — but when I did, he quickly intuited where he probably should land. And that doesn't say as much about me or Ojeda — who is the kind of naturally gifted politician any movement would be lucky to cultivate — as it does reflect the lack of an ideological economic firmament in Democratic Party politics.
One important lesson here is that the sort of conversations and arguments to which elected officials happen to be exposed is more important than one might think. Conventional wisdom around money in politics presents a picture in which the politician is presented with campaign cash or the promise of a lucrative future job, and cynically votes the lobbyist line. That's probably a good description of how bank deregulation gets through. But on the stimulus versus austerity question, genuine ideological conviction is equally if not more important. In the pit of the Great Recession from 2009-10, the Democrats most in favor of deficit cuts were centrist Blue Dogs in vulnerable seats — and they got wiped out almost to a man in the ensuing election. And from 1929-1933, the ideological precursors of today's neoliberals were so convinced of the moral righteousness of austerity and the gold standard that they clung to them as their economies (and in some cases entire constitutional orders) collapsed around them.
Of course, money talks here too — it's just more in how donations buy access to politicians, the huge subsidies for pro-austerity think tanks, and the corresponding lack of funding, platforms, or worshipful deference from "nonpartisan" media on the Keynesian side. Cultural hegemony can be enforced through repetition that simply drowns out all contrary arguments. At the extreme, a candidate like Ojeda can simply never run across anyone giving him what would be a perfect ideological weapon.
All this bears an interesting comparison to social justice issues — gay marriage, transgender rights, feminism, anti-racism, and so forth. On this question, I found all but unanimous agreement from every single candidate. "I am proud to be someone who stands up for social justice," said California's Mike Levin. "I don't know if I could consider myself a Democrat if we weren't invested in essential ideas of inclusion and equality," said Ghorbani. "I don't have any problems with these issues," said Ojeda, pointing to an anti-hate crime bill he had sponsored.
The only thing that might be characterized as a quibble on this set of issues is one of presentation. King, for instance, figures that leading with populist economic policy is a better way to approach working-class Pennsylvania voters who are skeptical of Democrats. While Trump stands for a "white nationalist populism," she said, "we have a real responsibility as a party to stand for an inclusive populism." That means "leading with economics … it goes back to health care, it goes back to a good job." The point isn't to give any actual ground on social justice issues, but simply to lead with the most appealing sales pitch depending on the audience — and particularly avoiding the implication, as Hillary Clinton famously did not, that anyone who might be skeptical of social justice policy is irredeemably loathsome. Politics is played on the margins, and one always wants to pitch to the widest possible electorate.
Forces in and around the Democratic Party have generated effective discipline on formal social justice questions. How it happened provides an interesting example of how an elite political formation can change its thinking on key questions.
For one thing, activists on the ground have made great strides in pushing issues like police brutality to the forefront of the national conversation. For another, pro-Democratic liberal media outlets like Vox have made reporting on such social justice outrages a major source of traffic and attention. Hillary Clinton's primary campaign — whose staffers are loyal liberal media consumers — discovered somewhat by accident that scurrilous sotto voce accusations that their opponent Bernie Sanders was behind the times on social justice questions, if not actively racist, was a handy (if dishonest and cheap) way to polish him off.
Taken together, all this had the head-spinning effect of rebranding a centrist Democratic Party establishment which had been openly skeptical of social justice issues until quite recently — Clinton herself only came out for gay marriage in 2013 — as academic jargon-wielding crusaders for the downtrodden.
For leftist academics and activists who had spent decades crying in the wilderness about, say, transgender rights, it was a maddening act of political appropriation. Still, it has had the salutary side effect of making social justice politics a matter of party dogma. Even people who are just cynically mouthing the slogans will feel hemmed in by the need to not break promises or appear hypocritical.
But there has been no such thorough process on political economy. Party elites like House Minority Leader Nancy Pelosi are still raising blockbuster sums from wealthy donors, while Senate Minority Leader Chuck Schumer quietly connives to get bank deregulation through Congress. Discussions of the logic of Keynesianism — which, if anything, is basically an entry-level economic topic — are still mostly confined to the fringes of national discussion, despite being the number one economic policy issue for a decade straight.
If the recession, Democrats' political obliteration in 2010, and the ensuing pathetically weak recovery didn't knock some sense into the party establishment on political economy, it's hard to imagine anything else doing the trick. Perhaps the up-and-coming left-wingers will seize the party leadership, or Schumer and company will be shoved out when the crisis hits, or even simply change gears for real in the moment.
But on its current course, the party is setting itself up to make the same drastic mistake it made one decade ago.