In the campaign debates leading up to November’s congressional midterms and 2016’s presidential election, candidates will have to address the health of the American middle class — and the broader U.S. economy. While the economic recovery is progressing, there are constant reminders that the recession, which ran from late 2007 to the middle of 2009, initiated a phase of much slower growth. Slow growth is now the new normal. In the five years that followed the end of that period of economic contraction, gross domestic product has averaged growth of only about 2 percent per year, well below the historical average, while wage growth continue to stagnate and millions of Americans remain without jobs. Some experts even believe the economy will never fully recover, and the Department of Labor noted in a 2013 report that the recession and subsequent slow recovery has “left lasting scars on the economy.” The slow recovery has profoundly hurt the American middle class — which drove the country’s phenomenal postwar economic growth.
With the American middle class lagging behind peers in other wealthy countries and the scars of the recession still prominent, politicians are under pressure to — at the very least — make issues like minimum wage and legislation to spur greater job creation part of the national political debate.
Massachusetts Senator Elizabeth Warren devoted her appearance on MSNBC’s Hardball with Chris Matthews to explaining how the United States economy can create real jobs. His aim was to push Warren to give specifics on how the Democrat party plans to help unemployed Americans. As a prelude to his big question, Matthews retold a story Warren included in her newly released memoir A Fighting Chance. He recounted how a jobless woman walked two miles to hear Warren speak at a 2012 campaign stop. She told the senator: “I’m here because I’m running out of hope.” Matthews challenged the Massachusetts senator, who he called a “progressive hero,” to explain how Democrats could “restore hope” for a future with “meaningful family building employment that seems to be gone in so much of the country.” He asked: “How do you bring it back?”
That the labor market is making measurable progress toward recovery cannot be denied. Federal Reserve Chair Janet Yellen noted in a press conference following a meeting of the central bank’s policy making arm earlier this month that there is “sufficient underlying strength in the economy” to support continued improvement in the jobs market. But the falling unemployment rate hides a number of ills. The Labor Department’s May Employment Situation Report told the story of an economy, and a labor market, that is healing. Yet there was also evidence of deep scars.
May’s employment gains mean all the jobs lost during the recession have been recaptured, leaving employment at an all time high of 138.4 million people. But over the course of the five-year long recovery, the U.S. population has grown, and so the percentage of Americans that are employed remains smaller than before the recession began. According to an analysis conducted by the liberal Economic Policy Institute, more than 7.1 million jobs need to be created to fill that gap. That reality indicates the United States is far from healthy labor market conditions. Plus, the labor force participation rate remains very low by historical standards, long-term unemployment is still elevated, and many workers are underemployed.
Polling data suggest that jobs and the economy will be among the most important issues for voters in November’s congressional midterm elections. Even though Gallup’s measure of economic confidence has improved slightly over the past several months, the American public continues to express high levels of concern about the health of the U.S. economy. Economic concerns is notably higher in 2014 than in prior midterm election years, and economic conditions are an important part of why the American public is dissatisfied with its leadership. A survey conducted by Gallup earlier this year showed that American voters rate the economy as the most important issue guiding their vote for Congress this year. In third position — following the federal budget deficit — is the way income and wealth are distributed in the United States.
Warren’s appearance on Matthew’s Hardball comes as primary elections for November’s midterms progress. She is not facing a reelection race this year, meaning she is under far less pressure than her congressional colleagues to tout efforts made by her party to speed up the economic recovery and create a more favorable environment for job creation. However, her name has been included in a number of polls as the possible Democrat nominee for 2016. For now, it is unlikely Warren would run; she told reporters at a December press conference in Boston that she would not enter the race, and the Massachusetts senator has consistently polled lower than Hillary Clinton as a possible 2016 presidential election contender.
But Warren’s comments regarding job creation in the United States are not important because she could be a dark horse candidate in 2016. Rather, they are significant because she has the potential to transform the policy debate this presidential election cycle, just as John Edwards did in 2008. In terms of likability, Warren may not rank high among possible Democratic contenders, but her dedicated and populist approach to the promotion of liberal causes, like education and minimum wage legislation, could force other candidates to bring more to the political conversation.
Edwards effectively made his rivals to mirror his rhetoric on economic stimulus and the minimum wage, bringing the field to farther to the left. OnTheIssues.org, which ranks politicians’ ideology based on their statements, found that both Clinton and Barack Obama became gradually more liberal as the 2008 campaign progressed, and by its ended, both their absolute scores matched that of Edwards.
While Warren was promoting her new memoir, A Fighting Chance, the interview read less like a book plug and more like a debate on the Democratic party’s domestic policy goals. Of course, Matthews insistence that she answer, in quantifiable terms, what steps the party has taken create a better economic climate for job creation helped shaped the interview. The memoir — published just ahead of Clinton’s Hard Choices — may not have been the focus of the Matthews interview, but the themes running throughout the book and the points she made in rapid fashion in the short segment that aired last week are the same. Warren’s memoir was originally titled “Rigged,” a nod to her belief that the American political system concentrates power in the hands of Wall Street bankers and plutocrats at the expense of the American public. “Big corporations hire armies of lobbyists to get billion-dollar loopholes into the tax system and persuade their friends in Congress to support laws that keep the playing field tilted in their favor,” Warren wrote. “Meanwhile, hardworking families are told that they’ll just have to live with smaller dreams for their children.”
Early in the interview, Matthews explained that the central argument of A Fighting Chance is that the American political system is rigged against working families. “Over the past generation, America’s determination to give every kid access to affordable college or technical training has faded,” he quoted the memoir. “The basic infrastructure that helps us build thriving businesses and jobs, the roads, bridges, and power grids has crumbled … the optimism that defines us as a people has been beaten and bruised. It doesn’t have to be this way.”
Following that introduction, Matthews pushed Warren to explain what the Democratic party can do and will do to create real jobs.
“Well, you know, this isn’t magic,” she responded. “We actually know how to do this. We did this for nearly half a century, coming out of the great depression until about 1980. We made the investments together that helped build opportunity for all of us.” She discussed why education was such an important investment, and why college should not be such a large financial burden for students. Warren’s example was her own college education, from a commuter college that charged $50 per semester. “How could I go to a school that cost fifty dollars a semester? Because I grew up in a America that said, we collectively, all of us, are going to make those investments in education so that any kid, who works hard, who plays the rules, who tries to get out there and make something of herself, is going to have a fighting chance to make that happen.”
The America of Warren’s past also “made the investments together that helped build a robust economy,” investments in infrastructure like bridges and roads. Such spending is key to economic growth, she argued:
It’s really about setting the table so that small businesses can start, so that businesses can grow, so they can flourish, so they can create jobs here at home. There is reason we make those investments. It makes easier, it makes it more profitable to invest in having those jobs here in America. And, one more part. We for more than half a century had an idea, this is what separated us as a people, that we would invest in research, in medical research and scientific research. Why did we invest in those things. We invested in them because we believed that if we built a big pipeline of ideas that our children would be able to create things and build things that we could only dream of. And together that built a robust economy for America, an economy that expanded, that created more jobs, that meant that as a country we got richer and family by family we got richer. Those things work together. We know how to do this.
Then her comments became political. That attitude toward economic growth was phased out in the 1980s “when the Republicans came up with a different vision,” she explained. “They said … the way you build an economy is you let those at the very top, the richest and the most powerful, keep more of their money and more of their power, and somehow it’s going to trickle down for everybody else.’ Well we tried that, for more than thirty years and it really hasn’t worked. It has cut the legs out from under America’s middle class.”
Matthews pushed Warren to give a “date” when the Democrat party — which controls the Senate and the White House — would take action rather than making only ideological stands. According to Warren, the party is working on legislation to help the American middle class, but the Republicans have stood in the way of recent efforts. Just last week, Democratic lawmakers attempted to pass a bill that would mitigate the “crippling” burden of student loans, the Massachusetts senator told Matthews. Now, outstanding student loan debt totals $1.2 trillion, which is spread among 40 million people, a frightening statistic to Warren. Students should be allowed to receive an education without being crushed by debt, she argued. Currently, the government earns “tens of billions of dollars” in profit off student loan interest, and those profits that are “already baked into the budget,” meaning student loan interest rates cannot be lowered without finding a new source of funds. The legislation proposed by Democrats would close tax loopholes favoring millionaires and billionaires, and that revenue would replace the lost profits from interest.
With political polarization taking much of the blame for Washington’s dysfunction, it is no surprise the problem of partisanship made an appearance in Warren’s interview. In answer to Matthews accusations that the Democrats should be able to accomplish significant policy goals given the party holds a Senate majority and controls the White House, she explained that Senate Republicans had filibustered the student loan bill, which won votes from all Democrats, both Independents, and three Republicans. “We are 58 votes in the choice between billionaires on the one hand and students on the other. That’s about as direct as you can make the choices, and that’s what we are going to do. We’re going to keep making it clear what the choices are,” she stated forcefully. Now, Democratic lawmakers need to get voters to “push back on the Republicans who say it is more important to protect billionaires, people that have already made it, than it is people who are just trying to get a start. That’s what this all about.”
But Matthews, who was more focused on job creation than student loan debt, stated that there are no job creating business left in the United States, and “I still don’t hear [any solutions] from you and the Democrats.” In his opinion, the United States government needs to enact policies that will create “real construction jobs” in America once again. He argued that politicians are hesitant to pursue such an agenda because we as a country “are afraid to borrow the money or tax the money” necessary.
Still, Warren maintained that the pundits like Matthews must consider “why” the United States will not launch construction projects at high rates like China — a country where 9 percent of gross domestic product is spent on infrastructure, compared to the United States’ 2.4 percent of GDP. “And Republicans want to cut it even further,” said Warren of infrastructure spending. Plus, Republicans — when faced with a new investment proposal — “say exactly the same thing, there’s just not enough money,” she continued. Yet they keep fighting to protect loopholes for millionaires and billionaires and subsidies for “big oil” and “big agriculture.” To Warren, that is what the fight in Washington is about.
But Republicans also say that it is Democrat opposition that prevents the passage of any substantial job legislation. Noting that the Labor Department’s May Employment Situation Report was “so-so at best,” Speaker of the House John Boehner, an Ohio Republican, announced in a press release that the GOP-controlled House of Representatives will pass three pieces of legislation meant to help small businesses invest, grow, and create jobs. “They’ll go right on top of that stack of dozens of job bills that are sitting over in the Democrat-controlled Senate. While our focus is on jobs, we see Senate Democrats sitting on their hands,” he claimed. “And we see the president proposing what is essentially a national energy tax that would destroy even more jobs. This is, of course, on top of a healthcare law that’s raising costs and making it harder for businesses to hire new workers.”
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