A political system dominated by Big Oil, the NRA and other destructive special interests. A popular president fresh off re-election with a progressive agenda blocked by a Tea Party-controlled House of Representatives hellbent on extreme austerity. An Occupy movement exposing the unsustainable income inequality tearing apart the social contract that has defined the United States of America for much of its history.
The headlines are ripe with the problems facing American society in the year 2013. But where are the solutions? What can be done to fix our broken political and economic systems so the 21st Century becomes an era of shared prosperity, rising wages, and plentiful job prospects instead of massive poverty, stagnant wages, and high unemployment?
One recent book describes the decades-long decline of the American middle class and rise of the ultra wealthy: Who Stole the American Dream?, by Hedrick Smith.
The book does a good job of diagnosing the problem of plutocrats and their political enablers, and Smith devotes a section to concrete solutions to restoring the American dream for the 99 percent. He offers a 10-step “domestic Marshall Plan” that evokes the “generous American aid that put Western Europe back on its feet after World War II by financing reconstruction of its infrastructure and its war-ravaged industry. In other words, a massive collective effort— a public-private partnership sparked at the outset by government initiatives and investments.”
Here is a summary of the 10 steps:
1. Infrastructure jobs to compete better: Smith elaborates on many of the bipartisan ideas to fix America’s crumbling infrastructure that President Obama has championed — including in his American Jobs Act and his recent State of the Union Address. One bipartisan idea that has gained traction is a National Infrastructure Reinvestment Bank “to spark the financing of a 10-year plan to improve our ports, airports, and commercial and commuter rail systems, as well as our bridges and highways” by taking advantage of historically low interest rates and high unemployment. Another idea is a youth jobs program to put five million young people to work on infrastructure projects.
2. Push innovation, science, and high-tech research: Smith documents America’s slide in research and innovation and advocates for new investments in scientific and technological research and development. President Obama started this path by including the Advanced Research Projects Agency at the Department of Energy (ARPA-E) as part of the Recovery Act and last week the president proposed an “Energy Security Trust” to fund research into alternatives to gasoline. But there needs to be much more government funding of innovation and R&D.
3. Generate a manufacturing renaissance: Creating new government initiatives and public-private partnerships to rebuild America’s lost industrial base. “Technology-based manufacturing must be central to reviving the U.S. economy.” Ideas include federal loan guarantees, tax credits and other incentives to encourage clean energy manufacturing; and state and federal governments tightening “Buy American” requirements for government contracts.
4. Make the U.S. tax code fairer: “Rebalance the U.S. income tax code to reduce its heavy tilt in favor of the super-rich.” Smith says the most important step in simplifying the tax code and leveling the economic playing field is to raise the 15 percent capital gains tax rate to 35 percent — the same rate as wages and salaries. Other important tax reform actions include closing the payroll tax exemption, creating a special tax on executive stock options, and closing corporate loopholes, something President Obama has repeatedly pushed for.
5. Fix the corporate tax code to promote job creation at home: “Fix the corporate tax code by lowering the rate and closing loopholes, because that would make the United States more globally competitive by enacting reforms that would discourage U.S. firms from offshoring jobs and reward those that hire at home.”
6. Push China to live up to fair trade to generate four million jobs in the United States: Do more to combat China’s unfair trade practices and rebalance global trade. Take multinational action to confront China’s currency manipulation and restrictive trade policies. Also, “it is essential for Congress to fund the retraining of Americans thrown out of work when trade with China and other low-cost countries wipes out their jobs.”
7. Save on war and weapons: “Cut spending on wars overseas and reduce the Pentagon budget by $1 trillion over the next decade— savings that would generate funds for a domestic Marshall Plan and underwrite a middle class-agenda.”
8. Fix housing and protect the safety net: “Fix the housing market by arranging massive refinancing of millions of homes now ‘under water’ to help get the economy moving and to strengthen the nation’s safety net programs, especially Social Security and Medicare.” The most important thing that can be done to strengthen Social Security and Medicare is to remove the income cap on the payroll tax. Also, Smith advocates strengthening programs that create an economic ladder for the working poor to enter the middle class, including college student loans, Medicaid, food stamps, childcare support, housing assistance, and the earned income tax credit.
9. Rebuild the political center: “Regenerate the centrist core of American politics both by rejecting extremist candidates in both parties and by opening up our political process in every state to give more influence to moderate and independent voters.” Ideas include “breaking the iron grip of parties by opening primaries to all voters and turning over the once-a-decade redrawing of congressional district lines to nonpartisan commissions”; increasing voter participation by adopting automated online voter registration, computerized voting, making voting more accessible to people whose jobs are distant from their homes and voting sites, and making voting mandatory and penalizing people for not voting as they do in Australia; reducing unregulated funding and big money influence on campaigns and legislative policy making.
10. Mobilize the middle class: “The fundamental need of American democracy is the practical exercise of democracy— a rebirth of citizen activism. That requires not only a populist rebellion against the political and economic inequalities of our divided nation, but a hopeful rebirth of American idealism, a revival of the belief that ordinary people can, in fact, make a difference and turn the tide.”
Is there any hope these critical actions will be taken given the gridlock in Washington and economic and political polarization across the nation? Perhaps the original Marshall Plan (officially the European Recovery Program, ERP) could give guidance. The plan had bipartisan support from a Republican-controlled Congress and Democratic White House and is widely considered successful in assisting the economic recovery of the 16 European nations that participated in the program.
In a speech at Harvard in 1947, Marshall said “It is logical that the United States should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace.”
Image: U.S. government via Wikimedia Commons