Building a Progressive Agenda

This essay is from Democratic Left and Tikun. It provides a context for future work in seeking to re-authorize the Elementary and Secondary Education Act, and to change NCLB.
Part II: Mobilizing from Below to Enact an Economic Justice Agenda


The impressive depth and breadth of Obama’s electoral victory, combined with Democratic gains in both the House and the Senate, provides the possibility of reversing three decades of growing inequality that is the primary cause of an impending global depression. But these electoral gains will prove temporary if the Obama administration does not improve the living standards of middle and working class voters. To do so, the new administration will have to govern “big” and “quick.” While there is short-term consensus in favor of a major stimulus package, some of his centrist Democratic advisers are already warning that long-term spending plans will have to be put on hold, particularly universal health care and the increased taxes on the wealthy originally set to fund the program. And the moderate punditry, led by global-capitalist enthusiast Thomas Friedman, reminds Obama that “excessive regulation” of the financial industry could “strangle” the “entrepreneurial risk-taking spirit of capitalism.” We are in the midst of a global “liquidity crisis” in which banks will not lend capital out of fear that borrowers will not be able to pay them back. The mainstream media – and the Obama campaign and transition team – does not yet comprehend that this crisis has everything to do with the massive growth in inequality of the past three decades. The policies of deregulation, privatization, and de-unionization, supported by both Democratic and Republican administrations, led working and middle class Americans to try to maintain their living standards by taking on massive consumer debt and borrowing against their home equity. Once the housing bubble collapsed, so did their purchasing power.
Only activist pressure from below can force an Obama administration to govern in a manner than could secure a Democratic realignment. With the constitutional system of checks and balances and separation of powers consciously aimed at forestalling rapid change, it is no surprise that almost all the reforms identified with the twentieth century Democratic Party – Social Security, the National Labor Relations Act, the Civil Rights Acts and Medicare – occurred in the period 1935-1938 and 1964-66, the only time when the Democrats controlled the presidency, had strong majorities in both chambers of Congress and insurgent social movements at their heels.
If upon taking office the Obama administration boldly leads, his administration could pass major legislation for universal health care, massive investment in green technology, and labor law reform that would transform United States social relations for generations to come. But already the corporate community is mobilizing heavily against the Employee Free Choice Act. As a former community organizer Obama understands that reforms do not come from the top down; in the past, they arose because moderate elites made concessions to the movements of the unemployed and the CIO in the 1930s and to the civil rights, anti-war, women’s and welfare rights movements of the 1960s. But while the December sit-down at Republic Windows indicates that a new wave of labor militancy could be in the offing, the strength of the labor movement and the Left is even weaker than they were in 1932, when an economic crisis still demobilized workers fearing losing their jobs if they rocked the boat. Nor does there exist the degree of social mobilization within excluded communities of color parallel to the vigor of the civil rights movement of 1960.

]Specifics of a progressive agenda [
Thus, a “realigned” new Democratic majority can only be built if the Obama administration enacts a legislative agenda that reconstructs a new “productive” egalitarian economy. I emphasize “productive” because as this economic crisis should teach us, an economy whose major “wealth” is created by the shuffling of paper assets by ‘mega-banks,’ hedgefunds, and corporate law firms will inevitably be divided between a privileged top 10 or 20 percent of credentialed “symbolic manipulators” and a precarious middle and working class who “serve” them.. Only an economic system that invests in production for human needs – such as renewable energy, mass transit, and urban infrastructure, school and housing construction – can generate a sufficient number of “good jobs at good wages.” The infotainment, finance, and service model of “post-industrial” capitalism is vulnerable to continuous speculative bubbles because it does not produce sufficient real value to sustain mass middle-class living standards.
And if the production of “useful goods” is increasingly off-shored, then United States living standards can only be sustained if the rest of the world will lend it the money to run massive trade deficits. If and when East Asian central banks decide that investment in Euros rather than U.S. Treasury bonds is a more secure way to preserve value, the entire United States model of indebted growth could collapse.. The dirty little secret is that aside from the auto industry, it is mostly military-related aerospace and military hardware production that sustains a high-wage manufacturing base in the United States. That base still produces 25 per cent of our GDP, while only employing 12 per cent of our workforce, whereas the financial industry has those figures reversed.. Such an imbalance between those who produce real value and those who shuffle paper value cannot sustain an egalitarian economic system. Republican intransigence and virulent anti-union sentiment is close to destroying our domestic auto industry.. Our domestic parts manufacturers alone employ 650,000 workers – or nearly triple the 230,000 remaining employees of the (once) Big Three— and sizeably in states outside of the Midwest. Should domestic parts suppliers go under with the Big Three, we could well lose several million industrial jobs forever. Even foreign transplants will switch to importing parts and supplies from foreign suppliers. Add in the Big Three auto dealers, who employ several hundred thousand workers, and the magnitude of the problem is clear.
Our other major remaining industrial centers – aerospace and machine tools -- are heavily tied to military production. While this is a form of high-wage industrial production, it is heavily capital intensive and produces goods that have little “multiplier” effect Tanks and planes are not capital goods – they don’t produce more material goods; rather they either depreciate or are blown up!. Thus, the truth that no “strong on defense” Democrat speaks is that unless we transition our military production to industrial production for civilian use, we cannot create a new “productive” economy that creates a larger number of high-value-added productive jobs. Obviously, not all jobs can be outsourced. There are , and will remain, large numbers of people employed in the “infotainment” industry, health care, retail, construction, and the food and hospitality industry., and further unionization could raise the living standards of those employed in these largerly service sectors. But if the purchasers of care and leisure goods are going to be able to pay human wages to their service providers, then there must be enough industrial high-wage jobs to sustain those not working in the service sector.
Only insurgent social movement activity will push the pragmatic Obama and his centrist, technocratic cabinet to govern “big.” While Obama’s web-based network of predominantly white and youthful middle-strata progressives could be activated in favor of “global warming” policies and major investment in green technology, they are unlikely to agitate for the industrial and social policies outlined above, which only mobilization by organized labor, new immigrant communities and excluded inner-city residents could engender. Obama’s victory raised hopes among these communities; but is there the organizational base within the labor movement, immigrant rights movement and inner city communities to mobilize quickly around an economic justice agenda? A sense of hope may lead the excluded to engage in more spontaneous acts of disruption that can scare elites into offering legislative change. (FDR’s pre-1935 reforms responded more to the homeless and unemployed movements of 1932-33 and the labor unrest in Toledo, Minneapolis, San Francisco and Seattle of 1934 than to the later emergence of the CIO.) Perhaps we will see urban militancy akin to that of the mid-1960s -- though the protests against police brutality that led to mass riots were led by working and middle class community activists who no longer reside in the largely impoverished urban ghettos. And whether mobilization of communities of color would provoke a similar politics of white racial backlash to those of 1966 onwards remains an open question.

]Stimulus plan needed now[
Even before taking office the Obama administraiton confronts the most serious breakdown in the global economy since the Great Depression. Obama’s Treasury department and the Congressional Democratic leadership are likely to agree on a massive two-year stimulus package of at least $850 billion, but Republicans – perhaps joined by fiscally moderate Southern and Western Democrats – are likely to filibuster against such “massive deficit spending,” particularly if major public investment in alternative energy technologies is part of the package.. The Obama administration will have to remind the American public that Ronald Reagan ran deficits equal to 7 per cent of the GDP in each of 1981 and 82 (or the equivalent of $680 billion per year (!) in today’s dollars), in the face of a much less severe recession. In addition, the Obama administration must press Congress to implement a major anti-foreclosure program (similar to FDR’s Home Loan Corporation), as the income stream from homeowner payments on refinanced, affordable mortgages should significantly increase the value of the toxic assets of “securitized mortgages.” The Bush administration’s failure to protect the foreclosed (particularly those who could pay a reasonable renegotiated mortgage rate on a readjusted home value) explains in large measure its utter inability to improve the balance sheets of major financial institutions.
The stimulus package should include major government funding of job-training in the inner cities (in green technologies, for example) and of opportunities for both GIs and displaced workers to return to university as full-time students (and for women on TANF to fulfill their ‘workfare’ requirements through secondary and higher education pursuits). While affluent suburbs provide their residents superb public education and public services, federal cutbacks in aid to states and municipalities has worsened the life opportunities of inner city residents. With all but seven states’ budgets in the red, cuts in social services and public-sector layoffs will devastate already hard-hit communities. .
The inefficient and inequitable United States health care system cries out for replacement by a universal and cost-efficient alternative. If private insurance administrative and advertising costs of 25 per cent on the health care dollar could be reduced to Medicaid and Medicare’s three per cent administrative overhead, both universal and affordable coverage would be achieved.. Even securing “opt-out” provisions from the Obama’s ‘pay or play’ system of private insurance would be an improvement. Such ‘opt-outs’ would allow states to create their own single-payer systems, and enable Medicare or the federal employees health plan to market to employers as a lower-cost alternative to private group plans.
]Looking at the revenue side[
But how to pay for all this? The Obama administration should reverse not only the Bush tax cuts, but also the Reagan cuts in marginal rates on high-income earners, which would each return some $300 billion in revenues to the national treasury. In addition, abolishing the preferential 15 per cent tax rate on hedge fund and private equity managers’ earnings could garner another $100 billion in annual revenues. Truly ending the war in Iraq should save $100 billion per annum; a 1/3 cutback in United States military bases abroad and an end to Cold War era plans to build a next generation of fighters and an anti-ballistic missile defense could save $216 billion in federal revenue per year.
The military budget is hideously oversized for a nation that claims armaments are necessary for defense, and not defense of empire. One fights terrorism by intelligence and espionage cooperation among states and via a multilateral diplomatic strategy that provides hope for the billions who still live under authoritarian governments and in extreme poverty. Obama’s call to send more United States troops to Afghanistan ignores the lessons of the Soviet experience: that foreign military presence only elevates the forces of Islamic fundamentalism into national resistance fighters.
When the ponzi scheme of “securitized mortgages” collapsed with the end of the irrational run-up in housing prices, the federal government had to bail out Bear Stearns, then Fannie Mae and Freddie Mac, and then AIG. American capitalism has “privatized” gain, but “socialized” risk. Yet if risk is to be “socialized” then so should investments. The Obama administration should not only demand equity shares in the banks and corporations that are bailed out by the public treasury, but should also require that consumer, worker, and government representatives be added to the board of directors of corporations receiving government aid. And the administration must stick to the goal of re-regulating the finance industry so that it serves the interest of the productive economy and not those of run-amok speculators.
A “new New Deal” would have to restructure international economic institutions so that they raise-up international labor, living, human rights, and environmental standards. In large part Obama owes his victory in the key battleground states of Ohio, Michigan, Indiana and Pennsylvania to the efforts of one of the few integrated institutions in the United States – the American labor movement. Restoring the right to organize unions (a right that no longer exists in practice in the United States) is a key policy component in the battle against economic inequality. Given the massive corporate and media offensive already launched against the Employee Free Choice Act, Obama will have to place the entire prestige of his presidency behind the legislation. He must use the bully pulpit to explain to the American public that NLRB elections are not “free” – not when the time lag between petitioning and the election works in managements’ favor, allowing management to intimidate workers, require them to attend anti-union meetings and leaves management free to fire pro-union workers with impunity.
]What’s next for the democratic Left?[
An Obama presidential victory by no means guarantees the bold policy initiatives necessary to restore equity with growth to the United States economy. His campaign did not advocate major defense cuts, progressive tax reform, and significant expansion of public provision. But FDR did not campaign on bold solutions in 1932. It was pressure from below that forced FDR’s hand. Similarly, Obama’s victory may provide space for social movements to agitate in favor of economic justice and a democratic foreign policy. Let us hope that as a president who understands the process of social change, Obama will realize that those demanding the most from his administration are those who can best help him succeed in office.
Obama, a supreme pragmatist , will respond to the balance of social forces that press upon his administration, or ignore them in the absense of pressure. Thus, the work of DSA, YDS and the rest of the democratic Left has just begun. We must join with our allies in the labor movement, communities of color, the feminist, and gay and lesbian and immigrants rights groups to advance the transformative social and economic policies outlined above and in DSA’s Economic Justice Agenda (see www.dsausa.org) . And we should begin to gear up to defend progressive House and Senate gains made in the 2006 and 2008 elections and replace Republicans and conservative Democratic officials at every level of government. To do this, DSA and YDS must not only build more capacity on the ground, but also build working relations with such groups as Progressive Democrats of America as well as trade unions and communityorganizations active in progressive electoral politics.
What will be the unique “value-added” of DSA and YDS in these broad coalition efforts to press the Obama administration from the left? As all crucial economic justice reforms – universal national health care, EFCA,public investment in green technology and inner city infrastructure – involve state action to limit the prerogatives of corporate capital, the right will charge these reforms as being “socialist.” DSA’s role is to educate the American public as to the historic role of socialist-inspired reforms in rendering capitalist societies less capitalist and more democratic. Until more average Americans say “what’s wrong with socialism” even a less exceptional and more humane American mixed economy will remain a utopian dream.

Joseph M. Schwartz , a national vice chair of Democratic Socialists of America, teaches politics at Temple University. His most recent book is The Future of Democratic Equality: Rebuilding Social Solidarity in a Fragmented America (Routledge, 2008). Parts of this article is revised from “Memo to Obama,” which will appear in the January-February issue of Tikkun magazine.