Third Way Dispatch

On October 28, 1980, the race between President Jimmy Carter and challenger Ronald Reagan was deadlocked. Despite the hostage crisis in Iran and a poor economy, the electorate was not sold on Reagan, and his advisors thought he was more likely to lose than win. But on that night – the night of the only presidential debate – Reagan used his closing statement to frame the remaining week of the campaign. He did so in four words – “are you better off?” A dead heat turned into a blowout.

Wall Street is off to its worst January in history. The nation’s biggest mortgage lender is rumored to be nearing bankruptcy. Unemployment is on the rise. Every day seems to bring more bad news about the economy, and Americans’ view of the economy is at its worst since 1992.

Bad economic times are red meat to many progressives, who will be jumping on the chance to talk down the economy still further and trumpet a message of neopopulist pessimism.

Progressives should resist that temptation. We shouldn’t be trying to convince Americans that we’re on the brink of a new Depression, or that the middle-class is teetering on the precipice of poverty. Rather, we should be working to persuade Americans that we understand what it takes to get the economy moving forward in a way that benefits average families.

Our new memo offers our take on the elements of a middle-class economic package that will both provide the economy the short-term boost it needs and put the middle class on solid, long-term footing. We propose:

• Short-term middle class tax cuts to boost consumer spending and restart the housing market;

• Targeted help to families who’ve hit a rough patch through no fault of their own;

• Investment for new investment by businesses, including small businesses, to keep the economy growing;

• Permanent middle-class tax cuts and new policies to create middle-class wealth and help families navigate the new rules of economy; and

• Long-term infrastructure investments in schools, highways and broadband technology.

Our package is not about rescuing the middle class, progressives should be wary of portraying the middle class as victims. Rather, our message should be about re-orienting government policy toward ensuring future middle-class prosperity.

In today’s LA Times, I’m quoted – accurately and fairly – commenting on the Bush tax cuts and saying that the big challenge for Democrats in explaining why they don’t want to extend the cuts is to respond to the charge that they support the biggest tax increase in history.

I do believe that this is the challenge facing Democrats. Republicans only have one dusty old playbook, and on page one is their equivalent of the run off-tackle: charge the Democrats with engineering “the biggest tax increase in history.” It’s an easy play to run, and it often yields big results with little risk. With the Bush tax cuts set to expire in 2010, you don’t have to be Heath Shuler to know that play is coming.

But just to be clear: I view this as a challenge that Democrats must find a way to meet. The Bush tax cuts were ruinous and grossly irresponsible, and they must be repealed in significant part.

The way to meet the challenge is to put the question in values terms: “It’s quite simple – Republicans believe that the rich are the engines of the economy, and so they believe that making the rich a lot richer drives economic growth. Democrats believe that the middle class is the engine of the economy. If anyone should get tax relief, it’s the middle class.”

To torture the metaphor further, I am hoping that the Democrats will respond to the Republican play with a very large linebacker who will fill the gap.

I grew up in Philadelphia and also happen to be a lifelong Red Sox fan, so I know a little bit about losing. In Philadelphia, losing is handed down from generation to generation. I remember the day some 30 years ago when my father bestowed upon me four single World Series tickets from 1964 – games 1 and 2 and 6 and 7 (if necessary) for the Phillies. Tickets issued when they had a 6 ½ game lead with 12 to go. Tickets issued with Jim Bunning and Chris Short leading the rotation and Richie (“call me Dick”) Allen, Johnny Callison and Tony Taylor anchoring an offensive juggernaut. Tickets issued before a rookie second baseman named Joe Morgan blooped a game-winning single, before a steal of home stole another game, before they dropped 10 of 12. No, games 6 and 7 weren’t necessary and neither were games 1 and 2. The Cardinals won the pennant that year, defeating Jim Bouton’s New York Yankees.

But with losing comes optimism. I believed in the Phillies every year as well as my adopted Red Sox. I believed during the “you gotta believe” Tug McGraw years and the “Yes we can” Dave Cash years. I believed when Dave Henderson took Donnie Moore over the fence only to see Mookie Wilson ground one through the legs in 1986. And occasionally that belief is rewarded. The 1980 Phillies won the World Series in improbable fashion (I cried). The 2004 Red Sox came from 0-3 to sweep four from the Yanks and deliver a world championship (I matured to gloating). Good things do happen.

Two weeks after hitting theaters, Michael Moore’s new movie on the American health care system, Sicko, stands among the country’s top 10 box office releases (way behind the Transformers but ahead of Shrek III). Not bad for a summer flick with no explosions or Bruce Willis.

For advocates of major health care reform, this uptick in public interest is yet more evidence that times are ripe for a new discussion about the way we do health care in this country.

After Iraq, health care is once again the number one topic of concern for potential voters. Polls show growing public discontent with the current system and a seeming eagerness for change. A March 2007 CBS/New York Times poll, for example, found 59% of Americans to be “very dissatisfied” with health care costs in general, and 52% to be “very concerned” about future costs. Numerous other polls show strong majorities in favor of more government involvement in regulating health care costs.

Optimists for major reform may say the only big question left is this: Canada or Britain?

Earlier this year, we released a paper called The New Rules Economy, in which we argued that middle class anxiety is rooted in the uncertainty of change.

And by change, we really mean the broad structural changes that our occurring in our economy due to advances in technology and accelerating globalization. In our narrative, we see the middle class as being forced to figure out, cope, and prosper on their own amidst these vast changes. Conservatives tell the middle class not to worry and that they should put their faith in the markets to sort out winners and losers. Many progressives tell them the opposite – to worry. They warn them of the dire consequences of change and promise to turn back the clock or cushion the blow.

Today, we released a strategy memo, A New Middle Class Compact, that offers a series of ideas that address change and help average people succeed. This memo, based on our New Rules narrative, is about steering change and not being steered by it. It is about making globalization work for America and Americans.

The ideas in this compact are intentionally medium-sized, because we sought to create an agenda that progressives could unite behind in Congress and realistically have a chance to move forward in the near term. We also wanted the ideas to be illustrative of the narrative and framework that we propose. We hope you’ll take a look.