Did the Dems Blow it with ACA?

Thomas Edsall has a thoughtful piece in today’s New York Times, essentially defending Chuck Schumer’s claim that the pivot to health care after the 2008 election has been a millstone around the Democratic Party ever since.  Polling evidence indicates most of the public, and supermajorities of Whites, see Obamacare as good for the poor and bad for just about everyone else.  Edsall reproduces a provocative chart from a Brookings study:

I can’t vouch for the methodology, but if this is true, Schumer is right.

Of course, programs that address the urgent needs of the poorest people should be a top priority, but context matters.  Incomes for all but the top quintile have stagnated or declined in recent decades, and the ravages of the financial crisis have still not been repaired.  It makes no sense, either as policy or politics, to focus almost entirely on a health care program (inefficient and kludgy by design) that imposes still more burdens on middle income groups and put off indefinitely actions that can make the country as a whole more egalitarian and prosperous.

So, wise guy, what would you have done?  I would have led with policies that could positively frame the overall agenda and build a majoritarian base for the midterms.  Then, with more political clout, I would put forward the harder proposals: health care and especially climate change.

As I see it, there were three big economic tasks facing Obama in 2009.  The first was the aftermath of the crisis itself.  This called for a much, much larger and better targeted fiscal response.  One piece of this would have been a structural commitment over a long time frame to provide transfers to the states if their revenue base remained below the pre-crisis trend.

The second was trade deficit, which, as Dean Baker likes to point out, is an ongoing drag on employment and incomes and saps the benefit of whatever fiscal stimulus the government provides.  The standard economic recipe is a lower dollar, and this is, in the end, a diplomatic issue, since it’s not possible for the US to devalue unilaterally.  But the US is, in the sense of international political economy (and in my macro textbook), a structural deficit country, along with most of the rest of the English-speaking world.  That calls for structural solutions, but these take time and a lot of trial-and-error.  That’s not something you can do between January 2009 and November 2010.

The third is the onrush of inequality, especially as it grinds away at the working class—by which I mean people who work for a paycheck or salary and do not have scarce skills.  There are dozens of specific reforms that could turn the tide, but the common denominator is power.  Private sectors unions are virtually past tense in America, and employment has become virtually informalized everywhere: no rights and no expectations.  This means labor law reform should have been a top priority.  There are two components to this.  One is making it easier for workers to form unions or to promote other kinds of collective organizations, like works councils.  There has been a lot of academic work on what the labor institutions of the future might look like, but no meaningful political commitment.  The other is to introduce a standard labor contract for all workers which would spell out the protections employees can rely on when they agree to work for someone else.  This would do away with employment-at-will and uphold essential human rights, like freedom of speech and association.  We have standard contracts for renting an apartment, but not for renting a human being.

This may sound absurdly optimistic.  Maybe so, but 2009 was a moment when a progressive Shock Doctrine might have been feasible.  The question on the table is, what would a new New Deal have looked like if we had had, like picture suggested, a new FDR?