42 Democrats in search of a policy

I don’t know if the recent vote in the Senate by 42 Democratic senators that temporarily derailed President Obama’s Pacific trade package was purely for show, but I suspect that much of it was. Politics is a two-way street, after all, and a smart politician always works both sides when he can.

But there’s no doubt that the Democrats are truly pissed. It’s “interesting” that the acknowledged leader of Democratic “populism” is Elizabeth Warren, whose state, Massachusetts, is a leader in the “knowledge economy” and would probably benefit more from the trade package going through than any state not on the West Coast, with the exception of “evil” New York.

As far as the actual trade package goes, the Democrats are pursuing a myth, the myth of the millions of “good jobs”—$40 and $50 an hour manufacturing jobs—that are out there (somewhere) for the taking, if we would just stretch out our hands. The intensity with which they pursue this myth is not at all attractive. Yet the Democrats have some real grievances. It’s just that the solutions are covered with sleeping dogs.

It’s a fact that most Americans live better than they have ever lived before, but it’s also a fact that income growth for most Americans has been flat for more than a decade.¹ A good chunk of the income growth that has occurred has been swallowed up by the ever-increasing cost of health insurance. Unfortunately, neither the populists nor anyone else knows how to suddenly make incomes grow the way they did back in the Clinton Administration. Any attempt to address the constant increases in health costs runs into the deep attachment among the American middle class to a health care system that is 1) not constrained by spending limits and 2) heavily subsidized (because employer-provided health insurance is not considered income, even though, in fact, it is income).

Populist Democrats are justifiably resentful of President Obama’s eagerness to do Wall Street’s biding and cut entitlements. But if we don’t cut them, where is the money going to come from? The populists have no answer. Hundreds of billions are tied up in useless and unnecessary spending for defense, “intelligence,” and “homeland security”, but Democrats won’t touch a penny of that. They won’t even cut corporate welfare (vide Warren’s defense of the Export-Import Bank, which largely subsidizes Boeing the way France and Germany subsidize Air Bus), because all welfare is good! Besides, if you start cutting someone else’s “bad” program, they might turn around and start cutting your “good” program, and the whole DC house of cards would come crashing to the ground!

There’s plenty not to like about the Clintons’ and Obama’s smarmy embrace of Wall Street and Silicon Valley billionaires. But ethico-aesthetic repulsion, however justified, is no guarantee of a valid economic policy.

But does Warren have a point?
One of Mass. Senator Elizabeth Warren’s objections to President Obama’s trade package is not so easy to caricature. As Mike Dorning of Bloomberg View explains, if the trade package is passed, it could allow amendment of existing U.S. law, including every populist’s favorite, Dodd-Frank, which regulates Wall Street, on a “fast-track” basis, exempt from the Senate’s 60 votes to break a filibuster rule. Would such an end run be possible? Plausible? Well, who can predict the future?