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Yesterday was a bad day for the big Pacific trade deal as “Senate Democrats blocked consideration of giving President Obama power to accelerate a broad trade accord with Asia, a rebuke that the president helped bring on himself,” the New York Times writes. No, the deal is not dead, but the timing is getting funky with summer almost here — not to mention the political difficulties of the approaching election year. Beyond that, there is a fascinating Democrat vs. Democrat dynamic developing, which the trade troubles reflect. This Politico piece on the party’s internal struggles is amazing:
In the fourth quarter of his presidency, without another race to run, Barack Obama has gone to war with what he sees as an out-of-touch, stuck-in-old-thinking Washington liberal elite — Elizabeth Warren’s the most famous member, but AFL-CIO president Richard Trumka and a coterie of Hill Democrats are up there with her. Obama advisers say the president sees Democratic opponents of his trade agenda as just as detached from reality as Republicans in Congress who held four dozen Obamacare repeal votes or turned raising debt ceilings and fiscal cliffs into government crisis carnivals. … For Obama, there’s a direct connection between bringing the Democratic Party into the 21st century on trade and his sense of himself as ushering in a generationally transformative foreign policy. Aides say Obama views both ideas as pragmatic, dealing with the reality in front of him. Both are about engagement. Both are about what he says is an orientation toward the future instead of sticking with the ways of the past. You can’t be a progressive on trade, he believes, unless you’re willing to talk about a new way to make trade actually work.
Well, there goes the GOP theory that the trade push is just some elaborate charade since someone as far left as Obama couldn’t possible want a free trade deal. This piece makes Obama out to be more technocratic, third-way guy than hard lefty ideologue. More Tony Blair than Ed Miliband, you might say. At least on this issue. And certainly not Bill de Blasio.
In the WSJ, William Galston has a must-read take on the Dems’ economic split.Here’s a bit:
Democrats on the left focus on the conservative political mobilization of recent decades; policies that undermine labor unions; failed financial regulations; corporate self-dealing; and one-sided trade treaties that disregard the interests of ordinary Americans. Center-left Democrats emphasize technological change and globalization (as distinct from treaties); a mediocre educational system; a slowdown in innovation; and the failure of the public and private sectors to invest adequately in the future.
The Inequality Democrats vs. the Innovation Democrats. Or given the recent UK elections, maybe the Miliband Democrats vs. the Blair Democrats. Maybe the former would raise the top income tax rates, eliminate the capital gains tax preference, break up the banks, reign in executive pay, increase Social Security spending and taxes, support public unions, especially teachers. Protectionism on trade. On the redistribution vs. growth debate, a heavy thumb on the redistribution side. The latter would maybe support trade, eliminate high-end tax breaks rather than raising tax rates, support charter schools, lowering corporate tax rates, emphasize boosting public and private innovation investment. On the redistribution vs. growth debate,a heavy thumb on the growth side.
The Inequality Democrat agenda might be best represented by the recent Center for American Progress report on “inclusive prosperity.” The Innovation Democrats might look to this new report from the Information Technology and Innovation Foundation, written by Robert Atkinson, formerly of the Progressive Policy Institute, a Bill Clintonite, New Democrat think tank It has the rather pointed title, “Inclusive Prosperity Without the Prosperity: the Limits of the ‘Middle-Out’ Strategy.” And it has this handy chart summing up the two views:
Right now, likely party presidential nominee Hillary Clinton — looking to stave off a primary challenge — seems to be going the Full Middle Out. But if elected, hopefully she would be more innovationist, though one could see how this could also descend into cronyism. Pro-business vs. pro-market and all that. But I really like innovation as the lens through which we judge public policy.