This Report Has the Most Clues to Hillary Clinton's Economic Plan
As Hillary Clinton hits the presidential campaign trail this week, will she sound more like friend of Wall Street Chuck Schumer, the Democratic senator from New York, or populist Elizabeth Warren, the Democratic senator from Massachusetts?
Clinton has her own strong ties to Wall Street, but she adopted some of Warren’s language in her announcement video, saying, “Americans have fought their way back from tough economic times, but the deck is still stacked in favor of those at the top.”
Other important hints on the kind of economic policies she’s likely to pursue come from a January “Report of the Commission on Inclusive Prosperity” by the Center for American Progress, a liberal research group founded by Clinton campaign chairman John Podesta and currently run by Neera Tanden, who was her top policy adviser in 2008.
The report, which was co-authored by former U.S. Treasury Secretary Lawrence Summers and Ed Balls, a British Labour Party leader and economic spokesman, puts the focus on raising wages, expanding job creation and ensuring broadly shared economic growth.
“It is difficult to believe it won’t be a major source of ideas” for Hillary Clinton’s ’16 campaign, said William Galston, a top domestic-policy aide in President Bill Clinton’s White House who is now a senior fellow at the Brookings Institution. “There are some obvious places to begin to look for the kinds of advice that will likely be on her desk, and that report would be first and foremost among them.”
Among its proposals: higher taxes on the wealthy through the elimination of exemptions and deductions that disproportionately benefit the rich, and curbs on CEO compensation by limiting the tax deduction a company could take for stock options for its top executive unless they are expanded to include most employees.
The commission also called for significantly increasing the time between when options are granted and when they can be exercised and for limiting the amount that can be exercised at any given time.
Unions would gain power through changes in collective bargaining, including faster elections to determine union representation and increased protection from employer retaliation against workers trying to organize. The commission opposes state-level obstacles to unions, including recent legislation in Republican-led Wisconsin, Michigan and Indiana to restrict collective bargaining by public employees.
The commission backs a big tax cut for the middle class, with households earning up to $95,000 a year benefiting. The tax reduction would remain in place until income stagnation is overcome. Another potentially expensive proposal is the expansion of national service programs to help the young get work experience during times of high unemployment.
It also supports a number of proposals that President Barack Obama championed but failed to get through Congress. They include a higher minimum wage, increased spending on roads, bridges and other infrastructure -- $100 billion per year over 10 years is the report’s recommendation -- and guaranteed financial support for an education at a public four-year college or community college.
Missing from the report: a detailed explanation of how, or whether, its proposals would be paid for.
In an interview, CAP’s Tanden said, “We are particularly concerned with the challenge of wage stagnation, because we think that’s essential to problems of stagnant mobility, rising inequality and the anxieties middle-class folks are facing.” In her video, Clinton refers to the need to help “everyday Americans.”
“The bottom 90 percent of Americans are not really seeing gains from economic growth” in their paychecks, Tanden said. “We’ve had productivity gains over the last 15 years,” but even amid record profits, “we’ve seen very little wage gains from that.”
Since the end of the recession, while the unemployment rate has fallen from 10 percent to 5.5 percent and more than ten million jobs have been created, wages have risen by two percent per year, barely faster than inflation.
The report also recommends some financial sector reforms -- stronger regulation of shadow banking, for instance, and tougher sanctions for financial misconduct. But it doesn’t come down hard on Wall Street.
“We definitely have proposals in the financial sector,” Tanden said, “but we think it’s a broader problem than that.”
The report supports free trade. “We’re very mindful of the differentiation between globalization and trade deals. Globalization has had negative consequences, particularly for particular sectors of the U.S. Trade deals are a different thing,” Tanden said. “The question is, can we turn trade deals into something that’s ameliorating some of the consequences of globalization rather than making it worse.”
She declined to say whether she’d discussed the report with Clinton. But “from my past experience working for Hillary,” she said, “the issues of how the middle class is squeezed in the U.S., and how wages are challenged are issues she’s worked on for a long time.”