As Hillary Clinton campaigns for the nomination for president, what should be on her economic agenda? Setting aside the political reality that Republicans will attempt to block most anything she tries to do, here is a list of objectives:
Monetary Policy: The composition of the Federal Reserve Board is an extremely important factor in the determination of monetary policy. President Obama did an excellent job of picking the Chair of the Federal Reserve, first by maintaining Ben Bernanke as Chair and then picking Janet Yellen to replace him. But Obama allowed vacancies on the Board of Governors to persist for far too long – he did not seem to understand the need to fill these positions as soon as possible, and with people who supported his policy agenda.
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If Clinton gets the nomination and wins the election, it is imperative that she fill open positions as soon as possible and pick people who will put concerns about unemployment ahead of concerns about inflation. The Fed has a dual mandate to attain full employment and stable prices, but often these goals are in conflict -- the pursuit of one goal means moving further away from another. In the past, when the two goals were in in conflict, concerns about inflation generally dominated concerns about unemployment. That needs to change, and it starts with the choice of who will fill vacancies on the Board of Governors.
Fiscal Policy: There are three main agenda items for fiscal policy. First, maintaining and improving economic security through the preservation and enhancement of social insurance programs such as Social Security, Medicare, Obamacare, food stamps, and unemployment insurance. Second, rebuilding our crumbling infrastructure to improve living conditions and maximize our potential economic growth. Third, getting the budget back in shape. If another economic crisis hits, budget pressures will inevitably mount as tax revenues fall and spending on social insurance rises. When that happens, cries that “the deficit is going to cause a disaster if we don’t implement austerity” must not get in the way of implementing the fiscal policy measures that are needed to alleviate the effects of the recession.
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How can we increase spending on infrastructure, provide generous social insurance, and close the budget gap at the same time? We can start by dispelling false narratives promoted by those with an ideological agenda for smaller government about how much trouble programs like Social Security are actually in. We can also change our priorities and shift money from programs such as national defense to spending on the needs of working class households. But in the end there is no way to avoid higher taxes, starting with increasing the taxes of those at the top of the income and wealth distribution. Satisfying all of these needs is no easy task, and we can’t do it all, but we can certainly do better than we have in recent years.
Education Policy: Education is not the full answer to the struggles of working class households and increasing inequality, but it is part of the answer. Presently, students are mired in a stifling level of student loan debt when they graduate from college. We must do something to change this. The federal government alone can’t fully solve the problem, states must step up their support for higher education so that tuition levels are not so burdensome. But the federal government can improve the student loan program, and it can stop the cuts to Pell grants and other programs that help those who couldn’t attend college without this assistance.
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Financial Regulation: Changes in financial regulation implemented after the financial crisis do not go far enough. For example, we need higher capital requirements, better disclosure and transparency, better protection for consumers of financial products, better regulation of the shadow banking sector, the repo market in particular. That’s unlikely to happen, but if nothing else the next president must fight to preserve the regulation that is presently in place. There is a concerted effort to roll back the changes in financial regulation that is proceeding slowly, methodically, and largely under the radar. These efforts must be stopped.
Climate Change: We cannot wait any longer to begin implementing policies that address greenhouse gas emissions. If elected, Clinton must find a way to break through climate change denialism and begin taking action. That is no easy task, and in the end Congress will likely stand in the way of any major initiatives much to the detriment of our future. But nothing will happen if it’s not on the agenda, and it will be important to show leadership on this issue.
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International Trade: I believe that free trade with other nations makes us all better off in the long-run. But too many trade agreements put the interests of corporations first leading to trade deals that are unfair to American workers. Free trade must also be fair trade. In addition, while there are long-run benefits for all, in the short-run some workers lose their jobs and become unemployed when production shifts to other nations, and we don’t do nearly enough to help when this happens. Those workers do not need to be sacrificed in the interests of the greater good; the benefits from trade can be shared in a way that protects displaced workers from the cost of reducing barriers to trade.
Inequality: Inequality has been rising for over three decades, and it ought to be apparent by now that this problem won’t fix itself – there is no inherent mechanism within capitalism to offset the trend toward ever increasing inequality. Thus, if Clinton is elected she must push for policies that will help to correct this problem such as creating incentives for businesses to locate in the US, paying a decent minimum wage, using taxes and transfers to ensure that the income of workers begins rising with their productivity once again, imposing large inheritance taxes to move away from patrimonial capitalism and closer the meritocracy we hold so dear, enhancing educational opportunity, and reversing legislation that puts the bargaining power of firms over the bargaining power of workers.
None of this is likely to happen unless Democrats miraculously win the presidency, the House, and the Senate, but I can dream, can’t I?
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