March 2011, Week 1


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Tue, 1 Mar 2011 20:54:34 -0500
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The Left Edge of the Possible

By Robert Kuttner
February 27, 2011


My friend, the late Mike Harrington, used to describe his
politics as "on the left wing of the possible." It's a fine
aspiration. But if anything, economic problems have become
more politically intractable since Mike died in 1989.

Scanning the various economic ills afflicting our Republic
and its citizens, it's evident that nearly all of the
solutions lie beyond what is currently deemed thinkable in
mainstream politics -- beyond the left edge of the possible.

It's not that my own views and values have become more
radical in two decades. What has changed is that the American
political center has shifted further to the right, while the
twin assault on the good society by the private financial
system and the organized right has become more intense.

There are only two possibilities: either we act to expand the
boundaries of the possible, or we suffer the consequences.

Consider these five prime economic challenges:

solons of both parties that the prime malady harming the
economy is the budget deficit. But nobody can explain how
fiscal austerity will promote economic recovery. On the
contrary, the more we cut, the more we retard economic
recovery and the more we remove the cushions that make the
recession slightly more bearable for regular people.

Out here in the real world, the problem isn't the deficit;
it's the recession, the high rate of joblessness and the
stagnant earnings.

The solution? Significantly more public investment to get the
economy on a faster road to recovery and to generate more and
better jobs. In the short run, the deficit increases. But
over time the economy grows faster and the debt burden

Unfortunately, both parties are mainly jousting over budget
cutting. We have the party of cuts versus the party of deeper
cuts. Neither is putting forth a serious recovery plan. The
win-win solution that benefits Main Street is beyond the left
edge of the possible.

THE HEALTH SYSTEM. Once recovery comes and tax receipts
return to something like normal (assuming that the right
doesn't further gut the tax code), America doesn't have a
deficit problem; we have a health system problem.

President Obama's Affordable Care Act insures more people,
but does so through the private insurance system, and doesn't
reduce overall health care costs. The Republicans would cut
costs by cutting care.

Every other wealthy nation insures everyone for about 10
percent of GDP. Our system leaves out some 50 million people,
and costs 17 percent of GDP. That's a difference of seven
percent of GDP, far more than the structural budget deficit.

The solution? National health insurance, of course; or if
you'd like to sound more like motherhood and apple pie,
Medicare for All. Polls show that large majorities of
Americans support it. But in mainstream politics, national
health insurance is considered beyond the left edge of the
possible (makes you wonder who controls mainstream politics.)

THE BANKING/HOUSING MESS. Seven million Americans are on a
path to foreclosure, one home in three has more mortgage debt
than the value of the home, and housing values declined last
year in 18 of the top 20 metro areas. Home ownership as a
ticket of lifetime asset accumulation is being denied to the
next generation.

The Administration's relief program, the Home Affordable
Modification Program or HAMP, is voluntary to the banks. It
is helping less than one out of ten homeowners in trouble.
Stronger medicine to keep people in their homes is rejected
because it would force banks to recognize losses. So
foreclosures continue and housing prices continue to sag.

The solution: give bankruptcy judges the power to order
reductions in mortgage principal owed. Use leverage on banks
rescued by government to insist on deep refinancings, so that
distressed homeowners are not forced onto the street. In the
long run, banks would incur less loss, neighborhoods would be
less blighted.

Are you kidding? The banks would never sit still for this,
and they own too many legislators of both parties. The
common-sense solution is in the usual place -- beyond the
left edge of the possible.

getting our clock cleaned by Chinese state capitalism. "We,"
in this case, is the American economy. American- owned
business is doing just fine.

The rules of the trading system, as indulged by U.S.
presidents of both parties, allow China and other
mercantilist nations to subsidize their industry, and to make
American business an offer it can't refuse -- locate in China
on our terms, and you get state subsidies and docile workers.
All you have to do is give sensitive trade secrets to your
new Chinese partners, who will soon displace you.

The U.S., uniquely among western nations with the exception
of Britain, doesn't mind if domestic industry gets hollowed
out. Industrial policy is considered a sin, but it's okay for
our fate to be an artifact of China's industrial policy.

The solution: one set of rules for all nations that benefit
from the trading system, and strategic investments to rebuild
U.S. industry.

Sorry, neither party will touch that one with a rake --
beyond the left edge of the possible. Business may complain a
bit about intellectual property theft, but basically the
business elite likes the present deal just fine.

reflecting revolutionary events in the Middle East, have
dealt another setback to the shaky U.S. economy. Imported oil
adds hundreds of billions of dollars to our trade deficit,
and contributes to escalating global climate change.

You would think that investment in clean, domestic, job-
creating, revolution-proof renewable energy, would be a no-

But that sensible policy is in the usual place, beyond the
left edge of the possible.

Every one of these areas has in common this reality: the
longer we delay the sensible solution, the more we suffer.
Only bankers, corporate elites and oil companies gain. Tea
parties benefit from the citizen confusion and frustration.

None of these alternative policies is extreme. They are
simply impossible given the present constellation of American
politics. Rather, it is the politics that pass for mainstream
conventional wisdom that are extreme -- in the sense of
extremely unhelpful.

I draw one simple conclusion. We need to take back our
politics, so that what is sensible is also possible. Maybe,
just maybe, events in Madison and elsewhere are the beginning
of that process.

[Robert Kuttner is co-editor of The American Prospect and a
senior fellow at Demos. His latest book is A Presidency in


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