It's the Policy, Stupid

Like Mark Schmitt, I've been reading the Third Way's strategy paper on the economy, especially it's attack on the "myths of neopopulism," and like him I'm not totally thrilled with it. I continue, however, to have the same basic puzzlement as to why the "optimism versus pessimism" argument is thought to be so central to disputes and why the Third Way thinks it should be able to sell its policy agenda with so little discussion of, um, the policies.

As a purely political matter, optimism versus pessimism strikes me as a fairly easy question to answer. You need to look at the specific geographic area where the candidate is running, and then tailor a message to extremely short-term economic trends in that geographic area. Whether or not people aged 25-59 in 2006 are or are not better off than people aged 25-59 in 1976 has precisely nothing to do with effective political messaging (I aim this critique at both Third Way-style optimists and EPI-style pessimists) since, after all, virtually nobody aged 25-59 in 2006 was in that age bracket thirty years ago.

As a policy matter, you actually need to look at the policies. The Third Way has done enormous work convincing Democrats that they should promise to make college tuition tax deductible. This is, simply put, a bad policy idea for reasons I can discuss elsewhere. Conversely, the "baby bonds" idea is a good one. But the merits (or lack thereof) have nothing to do with the "how well off are the middle class?" question.

Should we adopt universal health care? Should we significantly reform the tax code? These are big issues. And the answers to those issues stem from analysis of the policy issues like, what would the impact of a universal health care program be? Or, would equalizing the tax code's treatment of wage and investment income really reduce savings and could any reduction be offset in a more progressive manner than the status quo? These are the questions that need answering. To just propose a random hodge-podge of tax deductions, some of which are seriously ill-considered, isn't really grappling with the issues facing the country.