Indiana Democratic Senatorial candidate Joe Donnelly’s jobs program is Tea Party Light

This commentary on new Indiana Senator Joe Donnelly's political platform is slightly edited from its original publication on Examiner.com.   This author found Donnelly's platform and program to be Tea Party Light despite his running  as a Democrat; and this judgment has been confirmed by what he has done in office since his election in 2012.  An avowed Blue Dog Democrat, Donnelly follows that pattern of somewhat economically liberal but socially conservative Democratic politicians that are the norm generally in Indiana.  A socially conservative, even hidebound, state that traditionally swings Republican, Donnelly won election narrowly because his Republican challenger, Richard Mourdock, made a major faux pas in the 2012 election by saying that if  woman became pregnant through incest or rape she still shouldn't have access to abortion, because "that's what God intended."  Yet, despite this, Mourdock still got 47% of the vote--GF

Indiana’s Democratic Party Establishment is at it again:  against a strongly right-wing Republican challenger in Indiana, a state so traditionally extremely conservative it can be called hidebound and politically, economically ignorant, the Democrats have once again turned to a self-professed Blue Dog Democrat, Joe Donnelly, as challenger to Tea Party-endorsed Republican candidate Richard Mourdock, who handily defeated veteran “moderate” incumbent Richard Lugar 61-39% in the Republican primary.  Once again, as with the successful running of Blue Dog Democrat Evan Bayh for Indiana Governor and Senator and the hapless campaign in 2010 of Blue Dog Democrat Brad Ellsworth against Republican Dan Coats, Indiana’s Democrats are taking “progressive” and labor voters for granted, assuming they will automatically support Democratic candidates who are more akin to Republicans than they are to traditionally-labeled “liberal” Democrats. 

But while this paid off electorally in the case of Bayh, the result was not good for either Indiana or the nation.  Bayh, who as Governor labeled the state’s labor movement, which had supported him, a “special interest group” and introduced a punitive “welfare reform” measure while saying that single mothers needed to be “slinging burgers” rather than receiving welfare assistance, further demonstrated his self-identified “fiscal conservative” leanings as Senator by being not only the Democrat in office who had voted the most times with the Republicans, but was also a “bipartisan” co-author of the Congressional authorization for George W. Bush’s ill-fated war in Iraq as well as a co-author of the “bankruptcy reform” law that penalized the “middle class” that Blue Dogs claim to support against those “undeserving poor” allegedly leeching from the teat of federal largess.  Bayh, who resigned from the Senate, went on to work for the Chamber of Commerce as an advocate against business regulation, when deregulation itself was a major contributor to the economic recession that has plagued the U.S. since 2007 (which is more than simply a “liberal” view, unless one considers the views of Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman to be based on “liberal” ideology rather than professional understanding).

Currently the Donnelly-Mourdock race is a dead heat, with each candidate having 40% support each among potential voters, with 20% undecided.  Of course, the Donnelly campaign is having a field day decrying Mourdock as a Tea Party extremist who appeals to the far right while alienating independents and moderates, including many supporters of former Senator Richard Lugar.  (The Donnelly campaign has actually launched a “Republicans for Donnelly” committee to pick up support form disaffected Lugar voters, which is already reaping some success).   Further, for the Donnelly campaign to label both the Republican Party and Mourdock himself as dominated by the far right is a pretty easy task, as shown by the items posted on the official Donnelly website, linked at http://www.joeforindiana.com/news, which contains not only Donnelly-camp press releases and citations of Mourdock’s official stances on issues, but news stories taken from the Indianapolis Star and the New York Times.

It doesn’t take much to demonstrate that Richard Mourdock is heavily indebted to the Tea Party not only ideologically but financially, having received important campaign contributions from groups linked to the Tea Party and the far right, and that Mourdock himself expresses positions that many self-identified “moderates” and even “conservatives” would find extreme.  Donnelly’s website shows that very well.  But does Donnelly himself, as a self-identified Blue Dog, i.e., very conservative, Democrat, offer a positive alternative?  A look at his Jobs Program, linked at http://files.www.joeforindiana.com/DonnellyJobsPlan.pdf, shows Joe Donnelly’s proposals themselves to be Tea Party Light, as opposed to Mourdock’s Tea Party Heavy.

And it’s more than a question of “liberal” versus “conservative” ideology; it’s a question of what’s really going to work to create jobs and a vibrant economy both in Indiana and nationally, and what is just a repackaging of the neoliberal economic nostrums that have been around ever since the Reagan days from 1980 until now,  a time already marred by three major recessions, stagnant wages for working people while the already-rich have become even richer, economic inequality that’s at its greatest since 1929 (itself a major contributor to the severity of the Great Depression of the 1930s), significantly increased poverty and intractable unemployment even in good times, and the undermining of the “middle class” that has been going on since the 1970s and which is continuing with a vengeance.  These are all demonstrable facts, and it doesn’t take a “liberal” to see that none of these are desirable; nor does it take much to see that the much-decried New Deal reforms that raised taxes on the rich, provided for Social Security, unemployment compensation, collective bargaining rights for unionized workers, and put into place a minimal social safety net, were positive contributors, not drags on, the prosperity that characterized the U.S. economy from the late 1940s into the mid-1970s.  Anyone saying that they didn’t goes against the palpable realities of economic history and statistical measurement, even though denouncing the New Deal is currently politically fashionable; which by no means would be the first time that ignorance and dismissal of fact became politically fashionable!  Even the most cursory look at U.S. and world history would demonstrate that.

When Richard Nixon and Milton Friedman said in the mid-1970s that “We are all Keynesians now” they were stating economic reality, not political ideology.  Regardless of political opinion, John Maynard Keynes made major contributions to economic science as such, and he and his successors among economists and economic policy makers did something far more that simply spout some new “liberal” orthodoxy.  So did another derided economic thinker, Karl Marx, who is returning to deserved recognition now, thanks to the Great Recession of 2007.  “By their fruits ye shall know them”:  and the fruits of neoliberalism, extreme political conservatism, and centrist political adaptation are much in abundance, have been since the 1980s, and certainly since 2007—and they are unpalatable indeed.  This author submits that not only as a self-identified person of the political left, but also as the holder of an actual university degree in economics itself.

So let’s look at Joe Donnelly’s Blue Dog program for job creation, as stated in the PDF linked above.  The first thing to note is that his proposals are not all bad, as even hard-line economic conservatives would have to admit; but those that are manifest reliance on ‘big government” and applying Keynesian measures in economic policy!  Those that express the current nostrums of political conservatism and economic neoliberalism would actually work against job creation, as I shall demonstrate below.

First, on the positive side, Donnelly demands, “Oppose unfair trade deals that ship Hoosier jobs overseas” and “Close tax loopholes that encourage some Wall Street corporations to send American jobs to other countries.”  Good ideas advocated by many, but also good ideas that run counter not only to neoliberal orthodoxy, but which were also placed into practice by conservative and centrist political practice under Ronald Reagan, both Bushes, Bill Clinton, and are maintained today by Obama.  Renegotiating “free trade” pacts such as NAFTA and CAFTA would be a very good idea, and would benefit not only workers in the U.S. but also workers in countries such as Mexico, where workers emigrate, often illegally, to places such as the U.S because of the poverty engendered by destruction of their own domestic economies by multinational corporations enhancing profitability through unregulated markets that undercut domestic jobs throughout, trample on environmental protections and workplace safety regulations, slash wages, and engender race-to-the-bottom “free market” trade policies.  Same goes for “tax loopholes,” again another manifestation of “unregulated free market” economic policies that supposedly bring benefits to all by enabling the free movement of capital to the most productive workforces, but only mean job cuts for “overpaid” workers and starvation wages for those workers elsewhere who have “more competitive” wage rates.  As Joseph Stiglitz has written so accurately on markets:

 

This we should know by now: markets on their own are not stable. Not only do they repeatedly 

generate destabilizing asset bubbles, but, when demand weakens, forces that exacerbate the downturn come into play.  Unemployment, and fear that it will spread, drives down wages, incomes, and consumption—and thus total demand.  Decreased rates of household formation—young Americans, for example, are increasingly moving back in with their parents - depress housing prices, leading to still more foreclosures. States with balanced-budget frameworks are forced to cut spending as tax revenues fall—an automatic destabilizer that Europe seems mindlessly bent on adopting. (“After Austerity,” Nation of Change, May 7, 2012, http://www.nationofchange.org/after-austerity-1336401779.)

The dismal jobs report released by the Bureau of Labor Statistics on Friday, June 1, which reported a dismal creation of only 69,000 jobs in May and the first rise in the unemployment rate in nearly a year, only underscores the need for a proactive program of direct job creation.  Donnelly indirectly understands this by calling for an increased share to Indiana of federal revenues for road and bridge upgrades, which would directly employ more workers to work on such projects; but then he undermines this understanding by emphasizing “trickle-down” indirect job creation by calling for more tax cuts and economic incentives for small businesses—which may, or may not, result in increased hiring by such businesses.  And though historically small businesses (officially defined as those businesses with 100 employees or fewer) are the biggest job-creators, they are also the biggest creators of jobs with lower wages and fewer benefits, if indeed, any benefits.  What would be far more effective would be a policy of direct job creation such as a new Works Progress Administration (WPA) modeled on the WPA created under the New Deal that provided direct employment to some 8.5 million workers in the late 1930s.  (On such a program and its historical effectiveness see the following articles on the New Politics website: George Fish, “Open Programmatic Proposal to the Broad U.S. Left for Directly Dealing with the Present Unemployment Crisis,” http://newpol.org/node/425; Brian King, “Jobs for All,”  http://newpol.org/node/445; and Jesse Lemisch, “Occupy the American Historical Association: Demand a WPA Federal Writers' Project,” http://newpol.org/node/555; as well as UCubed, “WPA 2.0 is Solution to Unemployment Crisis,” http://www.unionofunemployed.com/blog/recent-news/ucubed-wpa-2-0-is-solution-to-unemployment-crisis/.)

Donnelly also endorses the shibboleth of retraining unemployed workers, which is at best only a partial solution.  First, because skills demanded by employers at any one time are regularly changing, and retraining programs through technical colleges and other places traditionally teach the skills that used to be in high demand, but are not necessarily so at present; second, many laid-off workers are older, and/or have family obligations that interfere with going back to school; and third, the need for employment for the unemployed is now, at whatever skill level the unemployed have now—which can often be quite high, as many potential workers who are classified as “unskilled” or “lacking in experience” are in fact well-educated college graduates!  (See Bonnie Kavoussi, “Unemployed College Graduates As Vulnerable As High School Dropouts to Long-Term Unemployment: Report,” Huffington Post, February 2, 2012, http://www.huffingtonpost.com/2012/02/02/long-term-unemployment-college-graduates_n_1250418.html;  Catherine Rampell, “Many with New College Degree Find the Job Market Humbling, New York Times, May 18, 2011; and Hope Yen, “1 in 2 new graduates are jobless or underemployed,” Associated Press, April 22, 2012.)  This is especially true in Indiana, which has long suffered a “brain drain” due to the lack of high-skill jobs, and where many Indiana college graduates are unemployed, underemployed, or have only temporary jobs.  (See in particular on how college graduates in Indiana can be derisively dismissed as “unskilled” George Fish, “Add another Frustration to Being Unemployed: A Case in Point from Indiana’s WorkOne State Employment Agency,” New Politics, http://newpol.org/node/564, and George Fish, “Indiana’s Brain Drain: the problem that won’t go away,” Examiner.com, reposted on "politically Incorrect Leftist.")

Last, Joe Donnelly advocates measures that would actually be counterproductive to job creation, such as calling for a Balanced Budget Amendment to the Constitution and being fixated on the so-called “deficit problem,” which, as economists Paul Krugman, Joseph Stiglitz (as mentioned above, both Nobel Prize-winners in economics) and University of California economist and former Clinton Administration Secretary of Labor Robert Reich have all emphasized numerous times, is a pseudo-problem manufactured by conservatives.  Krugman, Stiglitz and Reich have all demonstrated that truth of “Keynesian orthodoxy,” also confirmed by economic history, that the use of temporary deficit spending by government to create employment (coupled with progressive income taxation on higher income brackets) not only directly produces revenue for paying off the deficit by making unemployed workers employed taxpayers, those same workers’ wages also directly fuel consumption which further creates jobs.  A full-employment economy is a win-win situation, whereas an economy with significant unemployment is a downward-spiral lose-lose situation.  (In fact, the budget surplus that was created under the Clinton Administration was turned into a deficit under George W. Bush by tax cuts for the very rich coupled with high defense spending, notably for the futile wars in Iraq and Afghanistan.) 

Donnelly also indulges in the all-too-common “bash China” syndrome, by which the U.S.’s economic ills would be solved if China would only revalue the yuan and “play fair” in trade.  But that argument is only partially true, and contains fundamental fallacies.  As the report by the Economic Policy Institute (EPI) cited by Donnelly himself in support of his hard line on Chinese trade, that of Robert E. Scott, “Growing U.S. Trade Deficit with China Cost 2.8 Million Jobs Between 2001 and 2010,” EPI Briefing Paper, September 20, 2011, http://www.epi.org/publication/growing-trade-deficit-china-cost-2-8-million, states (p. 18):

 

Is America’s loss China’s gain? The answer is not clearly affirmative. China has become dependent on the U.S. consumer market for employment generation, suppressed the purchasing power of its own middle class with a weak currency, and, most important, now holds over $3 trillion in hard currency reserves instead of investing them in public goods that could benefit Chinese households. Its vast purchases of foreign exchange reserves have stimulated the overheating of its domestic economy, and inflation in China has accelerated rapidly in the past year. Its repression of labor rights has suppressed wages, thereby artificially subsidizing exports.

 

So, while Joe Donnelly stands as fundamentally different from open Tea Partier Richard Murdock, by staying within the Blue Dog Democrat framework he himself does not propose an adequate solution to either Indiana’s or the U.S’s fundamental unemployment problem.  He may be the “lesser of two evils,” but the lesser of two evils is not in itself a positive good.