Here Comes the Recession

After Hillary Clinton's crucial comeback in New Hampshire, it was her passion that got all the attention.

The New York senator sharply defended herself during the final debate, and two days later told voters in a quavering voice, "This is very personal for me, not just political."

But another event in New Hampshire, perhaps overlooked, also helped turn around Clinton's fortunes.

In long question-and-answer sessions with voters, she focused like a laser on the economic fears of middle- and low-income Democrats.

She talked in great detail about a moratorium on foreclosures, help for seniors to pay utility bills, mandatory preschool, greater investment in alternative energy and job retraining.

When she got to California - a linchpin of her strategy to win most of the Feb. 5 primary states - she promoted her economic stimulus package while munching at King Taco in East Los Angeles and speaking to students in Santa Barbara.

At a black church in Compton, she even found a biblical verse to frame her message that inspiration can go only so far: "We cannot be just hearers of the word, we must be doers."

Clinton's detailed stimulus plan "was dexterous, and allows her to maintain the upper hand on this defining issue," said Democratic strategist Simon Rosenberg, who is neutral in the race. And it helps her with Latino and women voters, whom she depends on in California.

Clinton lacks Barack Obama's soaring oratory skills or John Edwards' rallying cry against corporate greed.

Her command of economic issues may not inspire, but her ability to connect with voters' concerns is a big asset.

For all the debate about Clinton fatigue vs. Clinton nostalgia, there's no doubt many voters have fond memories of the booming economy of the 1990s.

Maybe Bill Clinton's unofficial motto from 1992, "It's the economy, stupid," is recyclable.

Clinton Wants More Active Role for Government in the Economy

Hillary Clinton said that if she became president, the federal government would take a more active role in the economy to address what she called the excesses of the market and of the Bush administration.

In one of her most extensive interviews about how she would approach the economy, Mrs. Clinton laid out a view of economic policy that differed in some ways from that of her husband, Bill Clinton.

Mr. Clinton campaigned on his centrist views, and as president, he championed deficit reduction and trade agreements.

Reflecting what her aides said were very different conditions today, Mrs. Clinton put her emphasis on issues like inequality and the role of institutions like government, rather than market forces, in addressing them.

She said that economic excesses — including executive-pay packages she characterized as often “offensive” and “wrong” and a tax code that had become “so far out of whack” in favoring the wealthy — were holding down middle-class living standards.

Interviewed between campaign appearances in Los Angeles on Thursday, she said those problems were also keeping the United States economy from growing as quickly as it could.

“If you go back and look at our history, we were most successful when we had that balance between an effective, vigorous government and a dynamic, appropriately regulated market,” Mrs. Clinton said.

“And we have systematically diminished the role and the responsibility of our government, and we have watched our market become imbalanced.”

She added: “I want to get back to the appropriate balance of power between government and the market.”

In the last two weeks, Mrs. Clinton has devoted most of her public remarks to the economy, and she won the New Hampshire primary and the Nevada caucus largely because of support from households making less than $50,000 a year, according to polls conducted by Edison/Mitofsky.

Mrs. Clinton’s approach to the economy would have three main components. She would roll back the Bush tax cuts for households with incomes over $250,000 while creating more tax breaks below that threshold.

Impose closer scrutiny on financial markets, including the investments being made by foreign governments in the United States.

And raise spending on job-creating projects like the development of alternative energy.

“We’ve done it in previous generations,” she said, alluding to large-scale public projects like the interstate highway system and the space program. “But we’ve got to have a plan.”

Clinton can speak in both fine detail and sweeping historical terms about the economy — almost as would a policy adviser, which she essentially was for a long time.

When talking about the middle class, she divides the decades since World War II into two periods, using the same cutoff point that many economists do.

In the first period, from 1946 to 1973, the pay of most workers rose steadily.

The income of the median family — the one earning less than half of all other families and more than half of all others — more than doubled during those years, to almost $50,000, in inflation-adjusted terms, according to Census Bureau data analyzed by the Economic Policy Institute, a liberal group in Washington.

Since 1973, the income of the median family has grown only about 25 percent.

During the earlier period, Mrs. Clinton said, the share of workers in labor unions grew, allowing workers to win raises and benefits that they can rarely win on their own.

Marginal tax rates on the affluent were “confiscatory” by today’s standards, she said. (In the early 1970s, the top rate, which applied to income above $1 million in today’s terms, was 70 percent; the top rate now is 35 percent.)

Jobs once paid enough that only one parent in many families needed to work, saving them from expenses like day care.

And not only did the federal government invest in public goods like the highway system, but companies also invested more in communities than they do today. In Rochester, for example, Kodak helped build hospitals and schools.

“You had a corporate ethos, that, because of the more self-contained American economy, was really focused on community,” Clinton said.

“There was a sense of multiple obligations. It wasn’t just to one’s shareholders. It was also to one’s employees, to one’s community.”

Clinton mentioned technological change, which has eliminated the need for many blue-collar jobs, as well as global trade, which studies suggest may be holding down the wages of some Americans.

But when discussing the causes of the middle-class wage slowdown, she tends to focus not on market-based changes, like technology and trade, but on institutions, like unions and the government.

Her first priority, she said, would be changing the tax code. She has proposed tax credits for college tuition, retirement savings, health care and alternative energy use, most of which would go to lower- and middle-income families.

She would also raise the top marginal rate to 39.6 percent, its level for much of her husband’s administration. Increasing high-end tax rates would bring in $52 billion a year, her campaign says, and help pay for some of her other proposals.

“It’s shocking that there is such a continuing political pressure to lower tax rates on the wealthy, when so much of what we look back on now with nostalgia and pride.”

She was referring to the decades immediately after World War II, “was at a time when those who were well off were paying a significantly higher percentage of their income.”

She said she would also use the White House bully pulpit to inveigh against the current level of executive pay.

Though it is difficult to reduce such pay with new laws, she said, she wants to consider proposals that law school and business school professors have made along these lines.

“We have this class now of professional corporate managers who are not the creators of the corporation — they very rarely had anything to do with starting the business or building it up,” she said.

“And then they come in and they believe their No. 1 obligation is to secure the biggest possible pay package at the expense at everybody else.”

She concluded by saying it was time for an economic "sea change" in the way that the economy was run.

“You try to find common ground, insofar as possible. But if you really believe you have to manage the economy, you have to stake a lot of your presidency on it. Because at the beginning is when you’re strongest.”

tags: hillary clinton  economy  president  2008  

links: digg this    del.icio.us    technorati    reddit