A Platform For Prosperity
Once or twice a century, a Presidential election teaches America something new about itself. This is one of those times. Beneath the patina of two-party politics as usual, a fast-paced New Economy is churning up society, generating new kinds of voters, different issues, and surprising conflicts. The longest economic expansion, the greatest creation of wealth, and the biggest budget surplus in U.S. history are changing the rules of the political game. Presidential candidates George W. Bush and Al Gore are trying their best to reshape their parties' platforms for the digital age. So far, their efforts are lame. Sure, there is talk of paying down some debt, but the Democrats still want to spend the surplus in a thousand different ways. And the GOP wants to use it for enormous tax cuts. It's not just predictably boring but a threat to continued prosperity. The campaign ought to be a clash between competing visions of how best to encourage a high-growth, entrepreneurial, information-based New Economy that generates income and wealth for everyone. With the conventions approaching, it's clear that we don't have them yet.
THE NEW ECONOMY VOTER
What is new in this first Presidential election of the 21st century? The electorate, for starters. An investor class is elbowing itself into the political game. Half of U.S. families now own stock, and almost any trip to the gym or the corner bistro reveals a TV that is playing CNBC rather than a sports channel. Thanks largely to the stock market, there are now 5 million millionaire households, up 60% in the past decade. The "rich," once a tiny and sometimes reviled elite, have plenty of company these days, which explains the widespread popularity of the GOP plan to end estate taxes.
But they are not the only new winners in the New Economy. Thanks to fast growth, unemployment is at a near-record low, and minorities who had difficulty entering the labor market for decades are now part of the economy. Welfare as we knew it has mostly ended, integrating many more into the economy. Immigrants, too, find themselves in huge demand. These groups also have a stake in the politics of prosperity but their interests are often very different from the investor class. Greater government funding for education and training, the paths to upward mobility, are probably more important to these potential voters than cutting estate taxes.
A new band of prosperity protesters are on the political scene as well. The anti-globalization troops that stormed the World Trade Organization conference in Seattle and the anti-Nike demonstrators on campus are, for the most part, children of the investor class. Despite their small numbers, they are players in this election. Their anti-Big Business ideology is reflected by Ralph Nader, and their votes for him could tip the election away from Gore. The prosperity protesters' anti-corporate rhetoric resonates--some 77% of Americans feel that too much power is concentrated in the hands of a few large companies, according to a 1999 Pew poll.
GenY grew up in the great prosperity of the `90s and could begin to exercise power in this election. These twentysomethings obsess about their stock portfolios, envy friends who become Internet IPO millionaires, job-hop as a matter of course, and dislike Social Security because they feel it will not be there for them. GenYers worship digital entrepreneurs such as Bill Gates, not corporate chieftains such as Jack Welch.
TRIM THE DEBT FIRST
America is in transition to an information-based society. The danger is that this transition will stall and serious conflict will arise unless the polity focuses on nurturing technology-driven growth rather than fighting old partisan wars about the size of government. Class and generation battles, now mute, could easily erupt in the near future.
A Business Week campaign platform for the New Economy would begin by using the surplus to pay down the nation's debt. Big tax cuts or spending programs in the near future would only increase consumer demand at a time when the Federal Reserve is trying mightily to curb it. Better to reduce the debt, as Fed Chairman Alan Greenspan has repeatedly suggested, lowering interest rates across the economy, promoting investment and growth.
If taxes are to be changed, it is better to simplify and lower marginal rates across the board than dole out a multitude of breaks to political constituencies. Economic growth, not social engineering, should be the goal of a New Economy tax policy.
The New Economy also demands a more active government in some specific areas. Federal funding of pure research and development, which has been declining, should be expanded. (Lest we forget, the Internet began as a Defense Dept. project to link universities.) College scholarships should be increased for engineering, computer science, and other high-tech fields that aren't attracting U.S. students. Money should also go to charter schools and vouchers for public schools. If the surplus is to be spent, it should not all go for the elderly or aging boomers. And entitlements, including Medicare drug benefits, should be means-tested, with the well-off paying their own way. As it stands now, an overwhelming percentage of the federal budget will go to the elderly by 2010 through entitlements like Medicare and Social Security. What about the young?
Democrats and Republicans in this political year are playing a game of spend the national bounty. Instead, they should be seeking new ways to expand it.