Economic Populism Still the Right—and the Winning—Choice

In yesterday’s Wall Street Journal, the centrist think tank Third Way’s Jon Cowan and Jim Kessler call economic populism a “dead end for Democrats,” pointing to one lonely data point—Coloradans’ vote against raising taxes to increase education funding—to call into question the entirety of progressives’ economic policy agenda.

Call me crazy, but I’m not prepared to cede the direction of American politics to the 1.3 million people who turned out to vote on a school-tax measure—just 36 percent of registered Colorado voters. For one thing, a similar school-tax measure was defeated by an almost identical margin in the state just two years ago, and yet this result didn’t portend doom to Democrats running state-wide in 2012. And for another, aside from living in a swing state, I’m not sure why these voters are more representative of America than the New Yorkers who on the same day as the Colorado vote elected Bill de Blasio mayor in a landslide, or the Californians who in 2012 voted to increase their income taxes to fund public education.

In any event, Colorado’s vote against a tax increase has very little to do with Americans’ attitudes toward Social Security and Medicare, as Cowan and Kessler presume, and even less in common with the reality of these programs’ fiscal future.

In poll after poll after poll, huge majorities of Americans want no part of cuts to either Social Security or Medicare—and by percentages much larger than those who voted against Colorado’s tax hike. (These results were concurrent with polls that show majorities of Americans support raising taxes on high earners.) If we’re truly listening to the American public, and not simply cherry-picking from off-year election results, the question becomes how to strengthen the social safety net and not, as Cowan and Kessler advise, how to deal with the programs’ “undebatable solvency crisis.”

With regard to Social Security, locking in future benefit cuts now to avoid potential benefit cuts later—those that will materialize only if current long-term projections remain accurate—makes no sense. Moreover, instead of arbitrarily determining that raising additional federal revenue would be futile, there are plenty of progressive policy proposals—chief among them, eliminating the cap on taxable earnings—that would shore up Social Security’s finances well into the future by raising revenue, and without cutting benefits.

And while Cowan and Kessler decry the increasing costs of federal healthcare programs, they do nothing to acknowledge that projections of Medicare spending have drastically improved recently; that countries around the world tend to devote more resources to healthcare and social insurance as their economies get richer; or that cutting federal health benefits (especially in the drastic way proposed by House Republicans) would just shift costs onto vulnerable populations, perhaps improving the government’s balance sheet, but only at the expense of the economy and of the disadvantaged.

Perhaps Cowan and Kessler’s most egregious claim is that it is simply impossible to raise revenue sufficient to “have it all,” meaning refraining from cutting the social safety net and investing “more deeply in K-12 education, infrastructure, health research, clean energy and more.” Well, to quote one politician that has twice won in Colorado, that firewall of progressivism, “yes, we can.” The idea that we have to stick to a historical average of government revenue (which Cowan and Kessler imply) is arbitrary and economically nonsensical, as well as an international anomaly. With domestic spending at historic lows (relative to GDP), negative environmental externalities still largely unpaid for, a relatively low tax burden, and Americans against cutting the social safety net and for higher taxes on the well off, we can and should be making these necessary investments.

Coloradans’ vote against hiking their taxes is not “the true 2013 Election Day harbinger of American liberalism.” It was the opinion of a small number of voters in a traditionally anti-tax state. If given a zero-sum choice between new taxes on the wealthy and cuts to the safety net, Americans would choose the new taxes. And our fiscal future would be better for it.