The "L" Word

It was a lively week for wrestling and politics. Last Friday, visiting KSG Fellow Jesse “The Body” Ventura publicly mulled a 2008 presidential bid. The day before that, a spokesman for the Kerry campaign declared that “George Bush’s failed economic policies have put the middle-class in a world of hurt.” Booyah!

Kerry has been – ahem – grappling with some important economic issues lately, but the poor guy has been squirming around in a tight political headlock. In recent years, the Right has wrestled the policy debate over to its side of the ring, and many perfectly sensible policies are now strictly off limits for any Democrat who hopes to get elected—which is most of them. Desperate to dodge the “liberal” label, Kerry has been boxed into a corner (if you’ll pardon the mixed metaphor). And unless the Republican-imposed taboos can be broken, the country may soon be on the ropes.

Hillary Clinton’s Medicare/Medicaid debacle taught the Right that stigmatizing pays political dividends. Try looking for any mention of single-payer health insurance in Kerry’s platform—it’s like hunting for WMD in Baghdad. Gore didn’t dare touch it in 2000. President Clinton himself dropped the subject after 1994, when his wife’s plan went down in flames. Ever since, the Right has cowed Democrats on the issue by labeling any single-payer proposal as “Hillarycare” or “socialized medicine”. And the public pays the price—literally, in the form of escalating health insurance costs. Every year, health insurance costs ratchet up about 15 percent, and over 41 million Americans currently have no coverage at all. Nobel prize-winning economist Joseph Stiglitz has shown how imperfect information in private health insurance markets forces up premiums, and how mandatory public health insurance programs can overcome this market failure. But any Democrat who dares to propose such a plan would be heckled off the national stage as an “old school liberal.”

Encouraged by the triumph of dogma over economic reason on the health care front, the Republicans are taking the battle to taxation. These days, anything goes when you’re cutting taxes, but tax increases are virtually taboo. Even reversing recent cuts is portrayed as supporting high taxes. As Bush told Congress in his State of the Union speech, “The tax reductions you passed are set to expire...Unless you act, Americans face a tax increase.” In the face of the $4 trillion of deficits the Congressional Budget Office projects for the decade, Kerry’s promise to repeal Bush’s tax cuts for the top two percent of households is a step in the direction of fiscal sanity. But he knows the Republicans would label him a tax-hiking liberal if he touched the rest of the tax cuts. In fact, in order to avoid being written off as the Second Coming of Dukakis, the Kerry campaign has proposed $225 billion in new middle-income tax cuts.

Sure, it’s better to give tax cuts to people who can use them than to the ultra-rich. But our bipartisan mania for tax-slashing has real costs. In order to rein in the deficit and cut taxes simultaneously, Kerry is proposing a total spending cap on discretionary spending outside of defense and education (about 20 percent of the federal budget), instead of allowing government expenditure to remain at a stable proportion of GDP, growing at the same rate as the economy. But rising production and consumption place rising demands on our national infrastructure, which needs to keep pace with the economy’s growth. Moreover, as per capita income grows, we can afford more of all types of goods, including government services. Freezing our provision of everything from scientific research to transportation to environmental management at their 2004 level is completely arbitrary.

In fact, in this era of globalization, extreme fiscal austerity is particularly harmful. Harvard economist Dani Rodrik has shown that the most open economies tend to have sizable public sectors, because government consumption can be used to offset the income volatility that free trade typically generates. The Big Government Bogie, in other words, may actually make free trade politically and economically sustainable. “Scaling governments down without paying attention to the economic insecurities generated by globalization,” Rodrik cautions, “may actually harm the prospects of maintaining global free trade.”

Of course, Kerry has to choose between capping spending and letting the Bush deficits swell. But let’s be clear: We are in this bind because voters have bought into the credo that, when it comes to taxes, What Goes Down Must Not Come Up. Perpetual and irreversible tax cutting is a recipe for a fiscal crunch, and we’re hurtling toward one now, as the GOP pursues ever more tax cuts and Democrats feel compelled to follow.

It’s tempting to just say Democrats should grow some cajones and confront the right-wing taboos head on. But until Americans look beyond the “liberal” label, there’s not a lot Democratic politicians can do about the Right’s knuckle-headed policies. And if voters don’t get informed, our rude awakening is going to arrive, sooner or later, in the form of a national economic smackdown.

Eoghan W. Stafford ’06 is a social studies concentrator in Leverett House. His column appears on alternate Wednesdays.