Part One:
THE GREAT DIVIDE WITHIN THE DEMOCRATIC PARTY.
We speak with Harold Meyerson, editor of The American Prospect, about Sunday’s debate between Joe Biden and Bernie Sanders. One of the problems is that the two candidates have constituencies which are distinct in more than just ideology or belief. Bernie’s supporters are disproportionately young, Biden’s are older. The political divide reflects the way those different genations experience the American economy. For the young, it’s been bad for most of their lives. For older people, the economy was once better for them.
The Biden camp understands that this gap exists. That’s why, shortly before the debate, Biden changed his position on bankruptcy law: In 2005 he had pushed a bankruptcy act which progressives like Warren had opposed. Also Biden very recently (the afternoon of the debate) stated his support for free college tuition for a full four years, a change from his previous position of only 2 years of support. Similarly, on health care universal coverage, Biden didn’t push for a public option in 2009, but now he’s responding to pressure from the left. So Biden has been moving toward the progressive position.
As Meyerson wrote in his article: “As a leader, Biden is a proven follower. When the conventional wisdom shifts in the Democratic Party, he shifts with it. Biden has never been a free agent. He bows to wherever he thinks the majority sentiment is. So it’s up to the left to demonstrate to him (through public pressure) that progressive ideas have already won a majority sentiment on a number of issues.
Meyerson thinks that’s already clear. But many progressives would like to feel more confident. They need to trust that, once elected president, Joe wont cave in to pressure from the powers-that-be (at least that have been thus far) within the Democratic Party, i.e., the corporatists, centrists, and “New Democrats”/aka Republican-light.
Therefore, progressive activists should continue to put pressure on Biden – before the nominating convention and after he becomes president – on people-focused issues, as opposed to Wall Street and 1% issues.
Part Two:
WILL THIS VIRUS KILL OUR ECONOMY?
We speak with William Ferguson, professor at Grinnell College, about the expected economic impact of the new coronavirus pandemic. The two tools that a national government has at its disposal in order to fight ab economic downturn are monetary policy and fiscal policy. The former essentially means the Federal Reserve lowering interest rates (and/or adding to the money supply) to stimulate the economy. These actions affect the demand side of the economic equation (the level of spending that supports production). Now that the Fed has lowered rates to near 0 (0.25%), it has pretty much used up all of its tools. So the Fed’s toolbox is empty now, even before Covid-19 has reached its worst level.
Fiscal policy, on the other hand, refers to Congress lowering taxes – or spending govt money – in order to stimulate demand (people/companies *buying* goods and services) and also production.
Borrowing to invest (“govt investment”) is very different from borrowing to consume: The former will generate long-run benefits for the population as a whole – such as infrastructure. The country ends up with something to show for it after the investment (which would not be the case if we borrowed money to go to Las Vegas and gamble).
In a crisis like this, the govt really needs to inject a lot of spending, and there aren’t many agencies that can do that. So it would be problematic if Biden were to appoint economic leaders (Treasury, OMB, etc) who came from a more free- market type of school (leave the market actors to transact business without regulation until they end the economic downturn). Equally problematic would be a Treasury secretary or OMB Director who demands that the budget be balanced before the govt spends any money (i.e., unwilling to increase the govt deficit).
