Hope vs Austerity-- Which Road Will Biden Take?

Anselm Weber ran for a state House seat in a very red part of Southwest Florida. He didn't win; he probably didn't expect to. But he did get a chance to talk with people about Democratic values and his district saw a significant increase in blue votes. Yesterday he told me that he spent most of his campaign "talking to nonaffiliated voters, engaging them on obvious and real material policies for the working class. Not one person was upset with the idea of a Climate Jobs Program, a $15 minimum wage or even a potential state based universal healthcare program. It shouldn't be shocking that Republicans tar Democrats as socialist because they literally do it every election cycle. The fact that Democrats got blown out while a $15 minimum wage Initiative passed in a right to work state should tell you running to the center doesn't work, especially when millions of Floridians are sinking into further scarcity. Why would any person living near poverty get excited about incremental solutions to a systemically unequal system? It's time to adjust to the Republican propaganda and fight for popular policies like a Green New Deal, Medicare for All and an end to poverty wages."

If only! Instead we got a warning from Robert Kuttner that President-elect Biden is probably still the Austerity freak he's always been. "Virtually all of the Biden campaign’s senior staff has been named to White House jobs, save one. That would be Bruce Reed, the longtime head of the center-right Democratic Leadership Council, a former chief of staff to the vice president from 2011 to 2013, and a notable budget hawk. Maybe Team Biden is having second thoughts about Reed? Let’s hope so."

Why hope so? Kuttner made that as clear as clear can be: "In 2010, Reed served as executive director of the Bowles-Simpson Commission, one of Barack Obama’s worst blunders. The commission was created in order to put the federal budget on an automatic pilot to deficit reduction, long before the economy was in post-collapse recovery."

Is that so terrible. Yes-- and in many ways. Aside from being deadly for the working class, Austerity is deadly for the Democratic Party. "The premature pivot to austerity was a major factor in the Democrats’ record-breaking loss of 63 House seats in the November 2010 midterm election. As executive director of the Bowles-Simpson Commission, Reed was not only an austerity advocate himself. He brought on unpaid staffers from leading austerity organizations funded by Pete Peterson. When Reed was named to a senior job in the Biden campaign last January, the Peterson-funded Committee for a Responsible Federal Budget, a group bent on cutting Social Security, cheered. 'We can’t think of a better person for the job,' CRFB said in a statement."

Is this something Biden is really thinking about. Kuttner sure thinks so. "One of Biden’s first and most important decisions," he continued, "will be whether to give recovery priority over deficit reduction. If ever there was a time for large-scale, deficit-financed public investments, it is now. But the undertow of conventional wisdom, bad fiscal advice, and old Washington cronies remains potent. We dodged a bullet when Reed was passed over for Biden chief of staff in favor of Ron Klain. How about a nice ambassadorship for Reed, maybe to a threadbare country that drank the austerity Kool-Aid? If Biden has his head screwed on, he’ll keep this guy far away from White House policymaking."

Biden shouldn't be appointing people-- like Reed-- who will sabotage working class aspirations from within. The fact that Trump and his team of miscreants are doing all they can to sabotage the incoming administration is all the sabotage he can handle. Last night, CNN reported how this is manifesting on the foreign policy front: "Trump's order of a further withdrawal of US troops from Afghanistan and Iraq is the latest foreign policy move on a growing list in his final weeks in office that are meant to limit President-elect Joe Biden's options before he takes office in January. The White House has directed newly installed acting Defense Secretary Christopher Miller to focus his attention in the remaining weeks on cyber and irregular warfare, with a focus on China in particular, an administration official tells CNN. It is contemplating new terrorist designations in Yemen that could complicate efforts to broker peace. And it has rushed through authorization of a massive arms sale that could alter the balance of power in the Middle East. The Trump team has prepared legally required transition memos describing policy challenges, but there are no discussions about actions they could take or pause. Instead, the White House is barreling ahead. A second official tells CNN their goal is to set so many fires that it will be hard for the Biden administration to put them all out. It's a strategy that radically breaks with past practice, could raise national security risks and will surely compound challenges for the Biden team..."

And the Trumpist Regime-- likely with the connivance of McConnell, who speaks for the GOP toadies in the Senate-- is doing this in every facet of government. There's a way around it-- at least according to a memo that started circulating yesterday from New Consensus, a progressive think tank led by AOC’s former chief of staff Saikat Chakrabarti. The group urges Biden to team up with the Federal Reserve and Treasury Department to provide trillions of dollars of low-interest loans to build "industries of tomorrow" and help small businesses suffering because of the Covid-19 pandemic. Their bold proposal is the opposite of Austerity adits hard to imagine the geriatric, calcified Democratic leadership-- not just Biden, but Pelosi, Hoyer, Clyburn... the whole sclerotic lot of them-- stepping out on this ledge:

1.1. Industries: We must foster, nurture, and scale-up to self-sufficiency today the industries of tomorrow-- from solar panels through wind-turbine generators and 6G networks, to life-extension, space exploration and far beyond. These industries, again, should be spread across the entire nation, in a manner encouraging even development continent-wide. This is what we did in the 1930s and 1940s, and is what we must do again.

1.2. Infrastructures: We must provide state-of-the-art renditions of all essential shared infrastructures on which business firms, industries, and our citizens rely-- from transport networks through communications networks and power grids to above-ground private transit, high tech schools and beyond. Here too it is not just a matter of restoring what we have, but also of building what in future we’ll need.

1.3. Investments: Because 1.1 and 1.2 have many attributes of what the economists call ‘ public goods,’ in which private sector actors have neither the jurisdictional authority nor the coordinative or financial capacity to invest in socially optimal amounts, we must collectively make strategic self-liquidating public investments in fulfillment of objectives 1.1 and 1.2, precisely in order to make private investments in future more viable and more profitable. We should ensure that this public investment is both (a) adequate to the vast scale of the task, and (b) sufficiently growth-generating as to afford the means of publicly extinguishing loans or remunerating equity investments with the proceeds of successful projects or project portfolios. That is how any investor ensures that expenditures are bona fide investments rather than mere expenditures alone. Note that this means, when the investments are public, that they will not be inflationary; for they yield the very products, services, and infrastructures that will absorb the moneys spent to finance them.

...The Plan just elaborated offers a plethora of benefits that should recommend it to Democrats, Republicans, and Independents alike. Among these are:

3.1. Growth & Employment: The boost in productive investment that the Plan affords will generate both enormous growth and enormous employment gains in high-quality, high-paying industrial and infrastructure jobs across our full continent-spanning republic. That will in turn also generate increased federal, state, and local revenues.

3.2. Innovation & Small Business Ownership : The restoration of the Fed’s small business fostering mandate under the Plan will aid cutting-edge new businesses, as well as sole proprietorships, family firms, family farms, and worker-owned firms in gaining a toehold in the fast-paced American economy. And again, this will occur across our continental republic’s full geographic expanse.

3.3. Greentech Growth: The Plan’s focus on tomorrow’s industries will perforce be investment in green technologies with vast carbon-eliminating and planet-preserving significance. State-of-the-art industries and infrastructures are now green industries and infrastructures, such that to modernize is to harmonize with a livable planet.

3.4. Export Growth: The Plan’s focus on cutting-edge industries with great export potential will help restore America’s lost role as a world leader both in developing new industries and in prospering through worldwide demand for its unrivalled products.

3.5. Debt & Deficit Reduction: The Plan’s focus on projects that are in aggregate self-liquidating-- that is, remunerably productive-- will both reduce public debt and avoid inflationary pressure, precisely because its expenditures are used to finance the production of the very goods and services that will absorb newly generated credit and money, rather than simply to speculate on secondary financial and derivatives markets on already-existing paper assets.

3.6. Financial Stability: By rerouting investment capital to productive investments rather than speculative secondary and derivative financial markets, the Plan will eliminate the principal source of the financial volatility that has plagued the nation’s financial markets over the past several decades-- namely, the flow of credit to financial rather than real assets over three decades of degraded and ‘outsourced’ production.

3.7. Wealth & Income Inequality: Finally, by both growing jobs in remunerative manufacturing and infrastructure on the one hand, and ending financial bubbles whose aftermaths always worsen inequality on the other hand, the Plan will assist with the urgent multi-sectoral task of restoring an equitable sharing of the nation’s resumed growth. Few developments could do more to restore cultural health and social stability to our ailing nation. The Plan we’ve just outlined, again, can be pursued with or without formal legislation. Of course the latter might be desirable and even forthcoming in light of its obviously nonpartisan, pro-growth appeal, and we’ve no doubt you will be seeking it. But should that not happen, as you know, the nation does not have the luxury of waiting for such perks before tackling its most urgent and indeed ‘existentially’ compelling needs. What ​can​ legally be done ​must​ quickly be done. This is especially the case when lack of bipartisan support has become often less a matter of good faith disagreement over policy merits and more a matter of self-interested tactical jockeying for partisan power at or during the next electoral cycle.

The keys to the Plan’s success are several. First is its focus on both ​cutting-edge ​industryand ​state-of-the-art ​infrastructure. Second is its careful coordination of efforts coherently across ​all sectors​ of the economy and ​all Congressional Districts​ of the nation, not to mention ​all levels of government​ and both our ​public and private sectors​. And finally third is its ​making optimal use of instrumentalities that we already have​, simply reconfiguring them so as to enable them to address new challenges and new circumstances.

In this sense, the Plan is as ‘conservative’ as it is ​transformative​-- it merely ‘tweaks,’ but it does so in ‘levered,’ ‘high impact’ fashion. We can thus think of it much as we might think of the gear shift on the bicycle that President-Elect Biden rides to keep fit (a version of ‘​Ridin’ with Biden’​): a quick flick of the thumb or forefinger enables immediate acceleration to one’s desired speed, no matter the slope – uphill or down – of the terrain we are riding. ​Let us, then, start the ride​. And please know we are eager to assist you in any way that we can.