Better Off Than 4 Years Ago?


Mitt Romney's selection of Paul Ryan has accomplished something quite important. At both conventions, in the corner rooms of Charlotte and Tampa organized by media groups and political activist outfits, serious discussions unfolded about the real state of the economy and the different policy approaches Americans needed to consider.

Paul Ryan is the most ideologically severe vice-presidential candidate in a century, a commentator said at a National Journal/Atlantic economic-policy dinner done on a not-for-attribution basis. But nearly everyone credits his selection with igniting a debate about tough choices on the economy that politicians and presidents have been ducking for decades. The clear consensus emerging out of Tampa's GOP convention and the DNC's in Charlotte is that there is a real choice being offered to Americans. The first option is "rigorous austerity" that could even further gut America's middle class and take the fallen standard of living to new lows. The second is a limited Keynesian approach that tries to reform while slashing spending.

There are also a couple of themes that aren't getting much air time but which deserve to be kicked around.

One of these, a charge leveled by Democrats about themselves, is that the Democrats have really screwed up -- twice. The argument goes like this: Back in the '90s, while the economy was expanding, the IT bubble was bubbling, and capital gains churning was filling federal and state coffers, Clinton -- guided primarily by his economic mentor and Treasury Secretary Robert Rubin -- helped ignite a financial-sector privileged wealth production machine that didn't take into account the long-term consequences of American manufacturing decamping to foreign shores.

In other words, Clinton pushed the Uruguay Round of GATT, set up China's membership in the WTO, and removed the important barriers that divided retail banking from securities trading. Clinton was highly influenced by the economic-policy practitioners on his team who carried with them all of the biases of neoliberal economics. Those who focused on the importance of manufacturing, of the role of government in seeing to the parts of the economic environment markets would not sustain, the importance of high-wage job creation, were pushed aside.

This is also exactly what happened during the first two years of the Obama administration, where those of a neoliberal persuasion prevailed over those who wanted to concentrate first on a serious jobs and infrastructure program.

That discussion came up frequently in the meetings in Charlotte. Arianna Huffington even held a "shadow convention" (as she also did in Tampa) on the subject of what is really working and what not in job creation in the United States. She believes that the Democrats on the whole are not having a serious debate about the jobs crisis today and have not taken responsibility for their own mistakes in favoring banks' survival over that of families losing their homes and jobs on a massive scale. 

To be fair to President Obama, he inherited skyrocketing unemployment, collapsing global economy when he moved into the White House, and did take steps that stopped further, probably catastrophic implosion. He called on people like Lawrence Summers and Timothy Geithner in part because the world respected them and Obama needed to stop a global confidence crisis that was aggravating underlying economic instability. 

But Obama allowed voices like Austan Goolsbee, Jared Bernstein, and Paul Volcker to be sidelined, while really technical financial and economic geniuses like George Soros never got in the door. Obama allowed the neoliberal, macroeconomic financial-sector-über-alles types to prevail over the micro-economic jobs, housing, and manufacturing voices. 

Obama has shifted now and is pushing a jobs and infrastructure program that many Dems I spoke to in Charlotte say he should have led with in his administration. Ironically, the financial sector crowd that Obama bailed out are giving donations in droves to Mitt Romney, while many in the small donor base that previously supported Obama have lost their jobs and their homes and their willingness to send in $3.00 for a chance to play basketball or have dinner with the president.

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Steve Clemons is Washington editor at large for The Atlantic and editor of Atlantic Live. He writes frequently about politics and foreign affairs. More

Clemons is a senior fellow and the founder of the American Strategy Program at the New America Foundation, a centrist think tank in Washington, D.C., where he previously served as executive vice president. He writes and speaks frequently about the D.C. political scene, foreign policy, and national security issues, as well as domestic and global economic-policy challenges.

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