Friday, December 15, 2006

THOMAS B. EDSALL: Democrats Arrive at the Heart of the Matter

The Democrats are positioned to make a down payment to the voters who gave them majority control of the House and the Senate. Their ability to pay in full is another question.

House Democrats, more than their Senate colleagues, can set certain partisan markers: a minimum-wage hike, ethics reform, reduced student loan interest rates and changes in labor law, which will make union organizing less difficult.

As the majority, Democratic leaders and committee chairs can focus public attention on job, pension and health care security issues; publicize evidence of decreased mobility on the economic ladder; and spotlight the growing vulnerability of middle-income families to sharp and sudden downward financial swings.

The threat to the middle class is real. “I won by almost 13 points, with almost no newspaper endorsements, against an incumbent who had given out $1 billion in projects,” says Sherrod Brown, a new senator for Ohio. “It was because of the strength of our message about the middle class.”

So much for the down payment. After that, the going for the Democrats gets tougher. They will encounter two roadblocks: Republican chokeholds on federal spending, meant to “starve the beast” by radically depleting coffers, and intense internal Democratic policy conflicts.

Democrats on the House Budget and Appropriations Committees released a report early this month, titled The Republican Legacy, which describes the spending restrictions confronting them. The 110th Congress “will face a fiscal challenge of historic proportions. The cost of the Iraq war, coupled with the growing price tag of tax cuts passed over the previous six years, have left the nation deeper in debt than ever.” (Since 2002, Congress has appropriated $379 billion for the Iraq war.)

One solution, raising taxes, is widely seen as a third rail for Democrats. “We are not talking about that now,” said a spokesman for the incoming speaker, Nancy Pelosi.

The intraparty conflict pits its business and labor wings against each other on policies dealing with the international marketplace. Should lawmakers encourage the flow of cheap goods from China to stock the shelves of Wal-Mart, benefiting American shoppers, many of whom are low income? Or should policy be designed to protect American jobs and wages by raising trade barriers?

This split is profound. Barney Frank — echoing a large swath of his party — contends that this nation’s “enormous economic power” could be used to stem the hemorrhage of services and production overseas. Trade agreements could be made contingent upon rules requiring that China and other countries abide by environmental and labor standards. “People greatly exaggerate the value of a cheap T-shirt,” Frank says, upholding the position of organized labor and dismissing the argument that such goals are unattainable and unenforceable.

A leading Democratic proponent of free trade, who does not want to publicly engage the topic yet, has a counterargument, that China is moving full speed ahead, that “you cannot put labor provisions into a trade agreement with China. They’ll walk away.” That globalization is inexorable. That “we are either going to be inside the net or outside the net.” That America needs to deal with dislocation effects and negative distribution consequences. He points out that Midwestern law firms are outsourcing research to India, that the U.S. needs a better education system, that Korea has a national broadband infrastructure, that Shanghai and Beijing airports are more modern than J.F.K., that key military agencies no longer support basic research.

He argues that chemical plants need security and that America needs universal health coverage. “There’s a lot we can do to make it better,” he says, like locating businesses in the U.S. in clusters around universities, and locating production closer to centers of “intellectual ferment.” He is firm on one point: “We need to get back on track fiscally. We have to have higher revenue. Business is not supporting taxes. They rail against government spending. We don’t have the means to pay for what we need.”

This conflict goes to the heart of Democratic struggles to develop a credible economic policy. The Democrats have a two-year window in which to confront their internal schisms and to present a stronger face to the electorate in 2008.

In a recent column, the name of the governor of Iowa was misspelled; it is Tom Vilsack.

Thomas B. Edsall, a correspondent for The New Republic and National Journal, has been a guest columnist for the last month. He holds the Pulitzer-Moore Chair at the Columbia Graduate School of Journalism.

No comments: