For the Democrats in Congress, winning in November isn’t rocket science; it’s about having the will to pursue survival ruthlessly. The key to winning is giving the American people what they’ll like, and not allowing any of the normal Washington obstacles to stand in the way. But, for Dems to act that way depends on them changing both their beliefs and their behavior. Let’s start with the beliefs.
The first belief that has to change is the idea that deficits are a problem for the Federal Government, that Democrats have to minimize to show that they are responsible. This is a myth, a lie, a scare, or a fraud. Deficits are only a problem when inflation begins to appear. If there is no inflation, Democrats should not even give lip service to the idea that deficits are important.
The reasons why deficits are not a problem are the following. First, the Government of the United States can never go broke, because it has unlimited authority to create money to use for whatever purposes it cares to. It cannot run out of money. It can never become insolvent, or fail to pay its debts, so long as it chooses to create more money. Second, the Government doesn’t have to borrow money to repay its debts, or to spend more than it does now. If it does borrow money that is its choice dictated by false ideas, not dictated by real need. Nor does the Government have to increase taxes to collect money to pay for its spending. It doesn’t need accumulated tax revenues to pay for what it spends unless it it needs to withdraw money from the economy to reduce inflation. As long as there’s no inflation, without needing to resort to either taxation or increased taxation to reduce it, there is no Governmental need for the tax money.
The belief that the Federal Government can’t, or should not run, a deficit, is just a mistaken belief, a hangover from the days of the gold standard, that prevents Democrats from acting in ways that people will like and that will get them votes. It prevents them from advocating for enhanced Medicare for All and making it effective within a year. It prevents them legislating an effective jobs program that will work quickly and end the recession before the elections in the Fall. It prevents them from moving quickly to fund a rapid transformation to an economy based on alternative energy sources. It prevents them from rapidly improving our educational system or rapidly repairing our deteriorating infrastructure. It prevents them from spending the money needed in order to reconstruct our mass transportation system. In short, the belief that deficits are important and that we really have to worry about them, and take care not to spend too much money, is a major obstacle in the way of creating an effective Government and implementing real change. It is a needless obstacle, and its acceptance and advocacy amounts to progressives tying their hands behind their backs during the heavy lifting required for real change. This mistaken belief is at the heart of both progressive and Democratic failures over the past 35 years or so, because it has limited their willingness to advocate for Government-facilitated social change over this long period of time.
The second belief that Democratic Senators have to change is the idea that the filibuster is good for them, and that they need to retain it against the Day when the Republicans will regain power. The filibuster is not good for them, however, because in making it difficult for Democrats to pass legislation that will actually solve problems, it destroys their legislative performance and they become targets for the broader failure of their Party. A case in point is Senator Barbara Boxer (D-CA). Senator Boxer entered the Senate with a pronounced anti-filibuster attitude, but over the years, she became convinced of its usefulness in preventing Republicans from working their will when the Democrats were in the minority. However, perceived Democratic failures on the stimulus package and health care are now imperiling Senator Boxer’s re-election in 2010. A national wave for the Republicans could well sweep her aside. And what is creating that national wave? It is the failure of Democrats to effectively fulfill their promises and deliver change people can believe in. And that failure is due, in part, to the presence and influence of the filibuster in the Senate. Democrats need to recognize that the filibuster as an institution discriminates against Democrats, because they are the activist Party. So, the vast majority of the time, they, and not the Republicans are having their objectives, and also the needs of the majority of people thwarted by it.
Democratic Senators continued belief in the usefulness of the filibuster is about these Senators retaining individual prerogatives and power. It’s not about increasing the effectiveness of the Senate, or increasing both the power and the accountability of the Party in the Senate. But what we need now is both increased power for the political party that wins an election, and also increased accountability for that political party which comes with unambiguous authority to pass legislation. It is only with increased power and accountability that even a significant part of the enormous legislative agenda facing the Democrats can be passed by election time this Fall.
There are other ways of attempting to legislate the Democratic agenda. Some suggest that Senators be required, once again, to implement physical filibusters, thinking it likely that those filibustering will get tired and key bills will be brought to a vote. Others, advocate reconciliation, or reconciliation sidecars, to short-circuit the filibuster. I think it’s plausible that using these methods may succeed in passing a bill or two, but I also think that it’s too late in the game for Democrats to rely on them. The truth is that the first year of the Obama Administration has produced very little popular legislation for the Party to run on in the Fall. The year has been wasted from that point of view. Now the Democrats need a second round of legislation that is likely to be both effective and popular. And they have very little time to produce that legislation. There’s no time to fool around with filibusters, reconciliation, and a fruitless quest for bi-partisanship. There is only time for crafting bills that people will like and passing them.
The time urgency has become even more serious since the recent Supreme Court decision removing funding limits on what corporations and other aggregate social constructs can spend directly on campaigns in support of one or another candidate. If the Democrats don’t pass legislation neutralizing the effects of this Supreme Court decision in the next couple of months, they will face a flood of corporate spending designed to block their legislative agenda that may well sweep them out of office in the 2010 elections.
Once the Democrats change these critical beliefs, here’s what they need to do avoid a blood bath in 2010, and perhaps even win the election.
— Don’t do anything to cut back on projected deficits, and block all initiatives to do so. If you don’t, any reductions in deficits that result will only introduce further drag on the economy. The News is breaking this evening that the President is planning to call for a spending freeze in “discretionary spending” beginning in fiscal 2010 in order to save $250 Billion. In light of what I said at the beginning of this Diary, it should be clear that this is a monumentally stupid move. It is the kind of mistake that FDR made in 1937 which halted the recovery and intensified the Great Depression. Obama has been warned against it time and again. Unemployment is still 10%. It is likely that it will still be 10% in the Fall. Freezing spending, means withdrawing money from the economy, which is bound to cost jobs. If the Democrats in Congress allow the President to to push through this freeze and other moves toward budget balancing, it is they who will pay the price in both 2010, and also, along with Obama, in 2012, because the effects of this freeze will echo through both elections in higher unemployment rates than would otherwise be the case.
Congressional Democrats: don’t listen to balancing budget and deficit fairy tales and fables any longer! With no inflation deficits aren’t important. What is important is slack demand and a deteriorating economy that is losing real wealth and ruining American lives every day. The deficit in economic activity is the real issue. Not the paper deficit, nor the usual tall tales about how going further into debt to the Chinese, or incurring debts that our grandchildren will to have pay, will ruin America, unless we tighten our belts, starve our economy, and further increase the gap between the rich and everyone else.
— For God’s sake, exercise the nuclear option, and get rid of the filibuster, once and for all. Make the Democratic Party as a whole stronger in the Congress, so that it has both the unambiguous power to pass its agenda, and also the responsibility if it fails to do so, or if it passes bad legislation.
— Next, enforce Party discipline in both Houses of Congress. Make it clear that all Democrats will either vote with the leadership of the House and Senate on key bills, or will lose all Seniority and Committee Chairmanships. No exceptions. No Joe Liebermans, no Mary Landrieus, no Blanche Lincoln, playing their little games without consequences. The Leadership has to make it clear that if they break Party discipline, they go to the bottom of the heap. Who knows? If Harry Reid showed guts like that maybe he’d have a chance at re-election.
— Develop and pass bills in both Houses to counteract the Supreme Court’s recent decision. The best approach to this may be a variation of a proposal by prometheus6 to pass a Federal Law that changes the definition of a legal person to specify that it is an economic unit constituted by contract with the right to itself enter into legal contracts, and other rights necessary to secure the right to enter into contracts. Also, other rights may be granted to legal persons or classes of legal persons, but in no case will rights granted to legal persons be:
interpreted such that they supersede, impede or obstruct the constitutional rights of citizens and legal residents of the United States of America, its territories, and possessions.
— develop and pass a new jobs bill with 51 votes that makes the Federal Government the employer of last resort. Use New Deal programs as models. It doesn’t matter how much it costs. Get it done so that people can go back to work in the next 9 months. Sure people will be worried about the deficit. But educate them about that. Don’t keep reinforcing the old false memes about balanced budgets, and the national debt, and ruinous deficits, and debts to the Chinese, and our Grandchildren, as the President just did this evening with his announcement of a “spending freeze.”. Stop talking and practicing Hooverism. Stop pandering to Judd Gregg and Evan Bayh, and teach people that in the present fiat money system, the United States cannot go broke because it lacks money. It can always create that. Instead, it can only go broke if it curtails economic activity, because it’s afraid to use its ability to make money, lest someone charge it with “big spending.”
— Next, pass a new health care reform bill. And if you really want to win the election in 2010, don’t even worry about what the Insurance companies and Pharma want. Also, don’t pass any bills that will create new and complex Government-run entities, or private sector organizations whose ability to compete with insurance companies is dubious, at best. Rather, just expand Medicare and Medicaid as much as you can, consistent with the ability to get a majority in both Houses. At a minimum, expand Medicare to those over 45, and under 18, and Medicaid to people whose income is up to 200% of the poverty level. Also, make people automatically eligible for Medicaid as soon as their share of medical costs incurred while ensured privately, exceeds 10% of their income. In addition, allow Medicare and Medicaid to negotiate drug prices with Pharma, and close the Medicare donut hole.
— Once that health care reform bill is passed, pass another health insurance industry regulatory bill, constraining annual price increases to the general rate of inflation in the United States, prohibiting denial of coverage due to preconditions, prohibiting rescissions, outlawing discriminatory pricing based on age, gender, preconditions, or past illnesses, and waiving ERISA restrictions enabling States to implement single-payer health insurance programs, if they are so inclined. And when you pass this bill make it clear to people that the War between the American people and the insurance industry is nearly over, and that the people are winning. Either the insurance companies can sue for peace, or the next step, next year, will be enhanced Medicare for All.
— Next, pass true financial reform. Make the banks recognize their toxic assets, by requiring mark-to-market evaluations again. Take banks that are insolvent into resolution, and after cleaning up their balance sheets, lending money to businesses needing credit, and breaking them up, then spinning them off to private ownership Prevent banks other than investment banks from gambling in using the newer financial instruments that proved so devastating in the recent crisis. Also, establish regulations requiring new inventions in financial instruments to go through an exacting risk assessment by regulatory agencies before permission is granted to investment banks to trade in them. Finally, break up the big banks and regulate them so that they can never get too big to fail again.
— Go back to credit reform reform. Limit interest rates on consumer credit cards to 5 percent above the prime rate, beginning two months after enactment.
Other bills, such as Educational Reform, A Carbon Tax, and Energy legislation come next, if there’s time before the Congressional election. But even if there’s not, passage of the bills I listed will prove to the country that the old Democratic Party legislating on behalf of the people is back. The people will like the various measures I listed above, because they provide benefits for people and not for corporations. They are examples of legislation that people will like. Sure, the bills will cost the Government a lot of money and the Republican and blue dogs will scream about the deficit. But, remember, that it’s only money which the Government can create at any time. Remember also, that the Republicans won’t be attacking the Democrats as the Wall Street Party anymore. They won’t be claiming that they, themselves, are the Main Street Party anymore. And the people are not about to vote against Democrats in 2010, because, at long last, they would have passed legislation that benefits people and the economy so substantially.
By 2012, the additional stimulus provided by the jobs bill, health care reforms, the lowering of credit card interest rates, and the freeing up of lending to business, will create a renewed economy, which will begin to reduce the deficit naturally as growth, and an approach to full employment increase tax revenues. As inflation begins to become a danger, the Government can short-circuit it by raising taxes on the wealthy, which will begin to restore the progressive tax structure that will increase social and economic equality over time, once again. As time goes by, the pressure from the deficit hawks will ease. And, if the Democrats take care to drive home the lesson that deficits are not important during slack demand and are only something to be concerned about when inflation becomes a factor, then perhaps the ubiquity of Pete Peterson can finally be laid to rest, along with the deficit hawkism that never fails to threaten the hopes and dreams of regular people whenever anyone even senses there is a possibility of emerging from a recession.
Finally, after writing this, I can just hear the critics now, telling me how unrealistic this all is. How the Democrats will never do anything like this because they’re bought and paid for. How there’s not even a majority in the House to do what I’m suggesting, and their certainly aren’t 51 votes in the Senate to pass a substantial expansion of Medicare. In addition, there’s no way the Democrats will have the guts to regulate corporate personhood, or to pass real financial reform that takes the big banks off their pedestals, and makes them act like real banks rather than gamblers playing in that great international casino in the sky. All this may be true, I may be totally unrealistic in providing this unsolicited advice to Democrats, especially in the face of Obama’s announced move right this evening into blatant Hooverism. So, perhaps there’s no way they can move to implement what I’ve suggested before this coming Fall.
However, I believe strongly that if the Democrats fail to do something like this, to pass a raft of legislation that really benefits people, and does not benefit big corporations, then there is no way that they can avoid a major Republican sweep this Fall. That sweep will occur not because people turn to the Republicans out of hope, or because they really think that the Republicans can help them solve their problems. But, instead, they will turn to the Republicans and/or to third Parties out of anger and hate, and out of a desire to punish, because they will have decided that the Democratic Party is a Party of liars, cheats, and frauds who say that they represent the people, but who never do anything except to tighten the bonds of Wall Street over Main Street, the chains of corporatism binding individual liberty. It is time for the Democrats, and for the President, to stop talking out of both sides of their mouths. It is time for them to decide. Is it to be Wall Street or Main Street? Is it to be Corporatism or Freedom? Is it to be the People, or the Plutocrats? There really is no choice for them, because if they don’t choose Main Street, Freedom, and the People, then come Fall and 2012 thereafter, no one will care if they continue to exist or not. They will be a dying or dead political Party. Ready to go the way of the Whigs and the Federalists into oblivion.