1 AMERICA AT A TIPPING POINT
America is poised to lead the twenty-first century, as it led the twentieth. That will happen because America is at a tipping point in its own renewal, a renewal that will allow it to be the exceptional nation again.
America led the Industrial Revolution that changed human history, produced once-in-a-century disruptive changes in where and how families lived and worked, and created a rising prosperity unheard of before the late nineteenth century. It was made possible by the steam engine, the railways built coast to coast, the massive immigration, the concentration of populations in burgeoning cities, and the governments that supported the new industrial monopolies. America became a magnet to the world and was poised to be the leading economic, cultural, and military power of the twentieth century.
But those revolutionary changes left a lot of blood, and they came with a high social cost. The desperate working conditions and teeming tenements, exploitation of women, government corruption, and the inequality of the Gilded Age put it all at risk. It was the two-decade struggle for progressive reforms and government activism to mitigate those costs and renew America that allowed the twentieth century to become America’s century.
America emerged ascendant by the turn of the twentieth century, when it became the largest industrial power. By the end of World War II, America would account for almost a half of the global economy. It became the country that produced the highest per capita income and eventually the country with the largest middle class. It remained the country where people all across the globe sought to emigrate, and the country that produced the highest per capita income and largest middle class by 1980. Starting with Presidents Teddy Roosevelt, Woodrow Wilson, Franklin Roosevelt, and Harry Truman, America invested in U.S. military defenses and technology and projected a global presence in support of American interests and values. And America emerged exceptional because of what Joseph Nye called its growing “soft power”—its openness to technology and innovation and to a robust popular culture and civil society.1
Well, America is being transformed today by revolutionary changes that are fueling the country’s growing economic and cultural dynamism. These revolutions are producing seismic changes to our economy, culture, and politics as well as disruptive, once-in-a-century changes in where we live, our way of life, the structure of families, and what are considered the ascendant values. But those revolutionary changes come with powerful contradictions: they come with a high human cost, stark inequalities, and political dysfunction. People live the contradictions, and increasingly they insist on a bold politics that can mitigate the social costs and create human possibility. That is why reformers have the opportunity to renew America and make it possible for America to be exceptional again.
This is a very different picture than the one offered by those who are averse to government or those who think America is in decline or those who believe we are so deeply gridlocked that it cannot begin to tackle its great problems.
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America’s economy is on the move. It is being fueled by revolutions in energy, immigration, innovation, big data, and advanced manufacturing, by revolutions in the metropolitan areas. Each is disruptive and they feed on each other to produce accelerating changes across the economy and society. America is increasingly energy independent, sending shock waves across the energy market, lowering energy costs, and making progress on climate change at the same time. America’s support of basic research, great research universities, and openness to innovation have allowed it to take advantage of the digital revolution, big data, and advanced manufacturing to attract investment from around the world and foster whole new industries.
Just as important to America’s emerging standing are the social transformations that are making the country ever more racially and culturally diverse, younger, a home to immigrants, and located in the big metropolitan centers that are host to the rising economic and cultural dynamism. While most other countries struggle profoundly and sometimes violently with their immigrant populations and religious and racial differences, America’s path to a unified, multicultural identity makes it truly exceptional.
America’s revolutions have produced a country where 38 percent are racial minorities and 15 percent of new marriages are interracial. Adding to the racial and cultural diversity is the influx of immigrants. The globe has witnessed a massive, growing migration, and fully one in five migrants has ended up in the United States. The foreign-born now comprise about 40 percent of the residents of New York City and Los Angeles and half of Silicon Valley’s engineers. America’s revolutions have produced a country where a growing number of people are secular, though America remains uniquely a country where 40 percent still attend religious services each week.2
Just think of the scale of social change over the past two decades. America has grown more diverse and racially tolerant at an impressive and accelerating rate, particularly among the Millennials. The proportion of African Americans, Hispanics, and Asians in the presidential electorate has doubled to 30 percent. Millennials will be more than a quarter of the 2016 presidential electorate and 40 percent of the eligible voting population in the election after that.3
America is emerging as a racially blended, multinational, multilingual, religiously pluralistic society. And while these revolutions are tilting America’s trajectory upward, they are also producing sudden, sweeping, and accelerating social changes, evident in the decline of the traditional family and the struggles of working-class women and men. For all the problems, that multiculturalism grows more central to our national identity. And today’s major national leaders in politics, civil society, and big companies have accepted the call to find unity in diversity.
Religious observance has plummeted across the spectrum of religious denominations, except for white Evangelicals. Over one in five Americans is secular with no religion, and they now outnumber the mainline Protestants. And with the exception of the Evangelicals, people of all faiths now accept premarital sex and gay marriage.4
The traditional family has given way to a country relaxed about the pluralism of family types and a revolution in the role of women. Women are pouring into the universities, where they are now a growing majority of the graduates. Three-quarters of women are now in the labor force, and two-thirds are the principal or cobreadwinner. Fully half of Americans are now not married, and 40 percent of the households include only a single person.5
The metropolitan areas have been turned on their heads. The exurbs, Levittowns, strip malls, and automobiles are being forsaken as people move to the cities, attracted by the urbanism, the major businesses, universities and research institutions, culture, and the influx of immigrants and racial diversity. Two-thirds of the college-educated Millennials now live in the fifty-one largest cities and are moving into the close-in neighborhoods. They identify with the new way of life in these cities and are contributing to the new kind of localism.6
So America’s revolutions have America on the move in impressive ways and they are setting off waves of change that are the main story for a generation.
But these economic and social transformations are also creating stark problems for people and the country that leave the public seething, frustrated, and pessimistic about the future of the country. That sentiment is also fostering a growing reform movement that wants to expose the dark side of America’s progress and demands political leaders take up the country’s deepest problems in order to be taken seriously.
To begin with, this new, wondrous economy produces no wage gains for anyone except for those at the top. People distill that into a first economic principle: jobs in the new economy don’t pay enough to live on. People are on the edge financially as they cope with stagnant wages and pay cuts. This leads people to put together multiple jobs to get by. Since they are on the edge, they think they face an endemic cost-of-living crisis. They feel powerless in the face of the inexplicably high costs of child care and student debt, which can send them into ruin.
Aspirations have been recalibrated to the times that are dramatically different. The younger generations think hardworking people can set their sights on a “more comfortable life,” but that middle-class dreams are only for the older ones.
To add income or ease the constraints of the new economy, a growing number of people are working independently as service providers, consultants, freelancers, or in their own small businesses, though most never succeed in escaping the low-pay economy.
And while ordinary people are scrambling, the CEOs of big businesses make 295.9 times the pay of the average worker and have emerged as the face of America’s inequality. They broke the social compact with their employees and their country. These big businesses executives use Super PACs and lobbyists to make sure government works for them. Their companies got bailed out, while ordinary people struggled and lost their homes or businesses.7
At the same time, all these revolutions in the American economy and around the globe are producing the most vexing contradiction of all—climate change and its resulting, and now foreseeable, economic and human costs. The poor will certainly pay the highest price.
And the social transformations that make America exceptional also come with a high price and create a lot of uncertainty about how to proceed. Social conservatives are still contesting the sexual revolution and the changes to gender roles and the traditional family. In that context, how do you begin the discussion about the surge in the number of unmarried households and children raised by a single parent? How do you deal with the social consequences of the very real demise of the traditional family and the male breadwinner role?
The debate in the 1960s over the “crisis in the Negro family” and the mounting number of children raised by single parents was smothered by the unsettled debates over civil rights and affirmative action. At that time, the proportion of children born to single parents among blacks was 23 percent, but now the rate is higher for all races and has risen to 44 percent across the white working class.8
The consequences of that change could not be more important. Children raised by a single parent learn fewer skills and important values at an early age and are much more likely to end up in poverty and face huge blockages to upward mobility. While middle-class men and women have been adapting by marrying later and settling into more egalitarian parenting roles, many more children are being raised by working-class single parents—mostly women.
At the same time, working-class men have been left marginalized. In the boom decades after World War II, many of these men would have had the primary responsibility for supporting the family and its 3.8 children, the peak average in 1956. Now, with most looking at earning dramatically less than prior generations, working-class men are not rushing to get more education and many are pulling back from the labor force and marriage.9
Working women, on the other hand, have been left on their own. America has witnessed a revolution in women’s roles in the economy and the family. Yet working mothers are managing work and family without the barest help on child care, paid sick days, and family leave. Women have obtained more education and moved into more skilled jobs. But they still dominate the lowest-paid occupations, face a wage gap relative to men, and receive lower benefits in retirement. And all of these problems are just multiplied for the majority now unmarried.
Working women are on the edge of revolt and poised to demand reform, though it is not clear yet whether the single working-class mothers raising children on their own or the men who are being marginalized will rise up and demand help.
People are living these changes and adapting to the new economy and society, but they are also judging leaders and parties on whether they “get it” and whether they will address these accumulating problems. Is their agenda relevant and bold enough for these times? And that is why it seems like the country is at a tipping point very much like the one it came to in 1900 that led America’s leaders to move over two decades toward progressively bolder reforms in our economy, society, and politics and that allowed the twentieth century to become America’s century.
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America led the global economy in the last two decades of the nineteenth century because it was better able to translate technological discoveries into economic practice than England, Germany, or France. The steam engine and portable power fueled the Industrial Revolution like computers and the Internet fuel the digital revolution today, Walter Isaacson writes. Economic output tripled, and America would soon lead the world in the “age of oil, automobiles, and aircraft.”10
To fuel the steam-powered economy, America sucked in immigrants from all across Europe to work in the mines and factories and build the railroads from coast to coast. A country where two in every three people were employed in agriculture fell to four in ten as people rushed to America’s cities. New York City’s population grew to 2.5 million in 1890, and Chicago grew from a “prairie town” to the home of 1.7 million by the turn of the century, more than three-quarters of them first-generation immigrants. With poverty and starvation the backdrop, the Irish led the rush of one in five in Great Britain who immigrated to America, followed by the Germans and Scandinavians, Italians and eastern Europeans.11
But the surging populations were jammed into tenements that were often swept by contagious diseases. Factories and housing were built shoddily as building codes were often ignored and local party bosses were bought off to cater to businesses’ needs.
The new working-class people that crowded into the cities were recruited as families, and the roles of men and women in the family were changed abruptly and radically in the process. The husband was the breadwinner and the unions and reformers worked for a family wage that could support the new family. Single women worked in the lowest-paid jobs, where the hours were long. Married women were expected to wash clothes, raise children, sell rags, do piecework from home, and handle boarders to help the family get to bare subsistence.12
Beyond the teeming slums and inhumane working conditions, America’s Industrial Revolution also produced political corruption on a massive scale, market monopolies, squeezed incomes for laborers and farmers, and a level of inequality not seen before in America.
Atop this new economic order stood the industrialists, such as Andrew Carnegie, John D. Rockefeller, and John Pierpont Morgan. These entrepreneurs created huge trusts to eliminate competitors and used their monopoly power to set prices. The trusts were products of corrupt deals between business and government at the highest and lowest levels. The federal government used tariffs to protect these industries from foreign competition, and their market power meant rigged prices for farmers and consumers. Before the turn of the century, “muckraking” investigative journalists would expose special deals between businessmen and local party bosses that corrupted both parties.
During America’s first century, the top 1 percent owned between 25 and 32 percent of the country’s wealth, but that doubled to 45 percent between 1870 and 1910. That earned this era the name “Gilded Age.”13
With rising opposition to the new industrial order, industrialists mobilized to defend tariffs, trusts, and the big banks in the 1896 presidential election. The Republicans raised more money as a percent of GDP than has ever been raised on a U.S. campaign to maintain control of the federal government. That might even embarrass the billionaire donors in the post–Citizens United era, now that the U.S. Supreme Court has given billionaires legal permission to make unlimited contributions to the new Super PACs.14
America first began to confront the dark side of its growth from the bottom up. Factory workers organized, and local charities, settlement houses, and parishes began to grapple with the overwhelming social cost of growth; investigative journalists—“muckrakers”—forced leaders to address the worst abuses, and ultimately the reform-minded leaders in cities and states came to power and created models of reform. They consciously expanded the role of government, and made gradual steps to reform democratic participation so it could not be captured by powerful business interests. It would take not one but four elections and three presidents to achieve the bold reforms necessary for America’s renewal at the turn of the twentieth century. And ultimately, it would take President Franklin Roosevelt and the New Deal to establish legal protections for labor unions and to create a system of social insurance.
Teddy Roosevelt achieved some reforms during his time as president, and by 1912, when he ran as an independent, he was insisting we “must drive the special interests out of politics”—an evil he put on the same level as slavery. He embraced the whole emerging progressive agenda of minimum wages, maximum workweeks, workplace safety regulations, graduated income, workmen’s compensation, child labor laws, tariff reform, direct Senate elections, voter referendums and recalls, inheritance taxes, public disclosure of campaign donations, and even environmental conservation.15
When Woodrow Wilson and the Democrats swept out the conservatives in the 1912 elections, they confronted the problems of the time head-on. The Republican Party remained the party of the industrialists and continued to protect the trusts and fight limits on working hours and child labor. The conservative Republicans had to be decisively defeated before the progressives could limit the workweek, pass real antitrust laws, regulate railway rates, slash high trade tariffs to favor farmers and consumers, introduce direct primaries to defeat the party machines, require the direct election of U.S. senators, bar corporate contributions to campaigns, introduce an income tax, and give women the right to vote.
The conservative Supreme Court overturned legislation passed in 1916 barring the use of child labor in manufactured products intended for interstate commerce. This and other progressive reforms would have to wait until a more thoroughgoing defeat of the conservatives and the next wave of reform under the New Deal and the post–World War II national investments that produced the American middle class. Nonetheless, the two-decade era of progressive reform that began with Teddy Roosevelt and ended with Woodrow Wilson fundamentally changed the path of American capitalism and democracy and allowed America to dominate the century.
Today, America is at another tipping point, and Democrats are leading the battle for reform because, quite simply, they are aligned with the ascendant trends and because the Republicans are fighting those trends with growing ferocity. Surging racial and immigrant diversity, the sexual revolution, gay marriage accepted constitutionally, growing secularism, and radically changing family structures have moved conservatives to join a counterrevolution to reverse these trends before it is too late for the country. The modern Republican Party’s raison d’être is to keep the new American majority from governing successfully.
But this battle against America’s ascendant trends and values has put the Republican Party into a death spiral that it can only hope to slow. Despite its constitutional advantages in the Congress and its success mobilizing voters in off-year elections, the Republican Party is deeply unpopular nationally, and fewer and fewer voters identify themselves as Republican. It is the party of the oldest, most rural, most religiously observant, and mostly married white voters. It is barely up for consideration with the Millennials, the secular, the foreign-born, and anyone with a trace of color or an accent, and it does not compete in the country’s most dynamic metropolitan areas.
Voters have given Democrats the political stage because they embrace America’s multiculturalism as a unifying concept and welcome the seismic changes that have upended the traditional family, accelerated racial and immigrant diversity, and reshaped the metropolitan areas. With Republicans digging in and contesting these changes, Democrats more explicitly defend the values of equality, equal rights, and fairness; they place more emphasis on empathy and protecting people from harm; they place a high premium on openness to diversity and acceptance of differences; they celebrate an individualism rooted in individual autonomy; and they uphold education and science rather than religion as paths to discoverable truths.
Having the political stage, however, is not the same as stepping up to push for the reforms that can renew America. That requires putting America’s economic and social contradictions at the top of the public agenda, even as powerful conservative forces mobilize to defeat them. And progressive reformers will have to make the case for government activism, even as it joins the even more difficult battle to reform a deeply corrupted government dominated by special interests. It is not certain that Democrats will be willing to confront those contradictions without growing pressure in civil society, growing protest movements, and electoral battles within the Democratic Party.
Importantly, the Republicans’ intensifying mobilization against the ascendant trends over the past decade has allowed them to win control of the U.S. Congress and historic numbers of state legislatures. They now govern almost unopposed in nearly half of the states. That will delay America addressing its greatest challenges.
Republicans sustained high off-year turnouts in 2010 and 2014 by constantly raising the specter of President Barack Obama and the grave risks to the country’s traditional values if Democrats hold office. By stoking fears about Obamacare, illegal immigrants, and gay marriage, they have raised the stakes for conservatives and built their turnout. Every election is national when you are battling to block the new American majority.
And with the electoral and constitutional bias in favor of rural areas, Republicans have joined the battle for traditional values with great success. Those battles, however, only further alienate the Republicans from the burgeoning new electorate.
Even more consequential and polarizing is the Republican strategy to hold off the deluge by building a conservative base in the race-conscious and religiously observant South, the Appalachian Valley, across the rural Plains states, and in the Mountain West. It has won nearly total control in twenty states by fighting Obamacare, eliminating aid for the poor and the unemployed, making a last-ditch effort to end abortion, and defending traditional marriage. By winning big in this GOP conservative heartland, the Republicans can govern as conservatives in twenty states and take for granted nearly forty Senate seats, even though the party’s regional base counts for only a quarter of the national presidential electorate.16
The problem for the Republicans is that the more they succeed in animating and solidifying their support in the GOP conservative heartland, the more the rest of the country views them as out of date and out of touch.
It also creates forbidding odds against the Republicans in national elections and in the Electoral College. Democrats are aligned with the current trends, only expanding their Electoral College map while Republicans fight these battles.
This recent history has left America profoundly polarized into red and blue America—and it only grows worse as the economic and cultural revolutions seem ever more certain. The deep red-blue polarization is not a sign that Republicans will prevail. Indeed, it portends the opposite.
Republicans increasingly say it is important for them to live with people who share their religious faith and political views, while Democrats say they want to live in neighborhoods with people of different racial and ethnic backgrounds. Each holds increasingly negative views of the other party, though Republicans’ contempt for Democrats is in a league of its own: 72 percent of consistent conservatives hold a very unfavorable opinion of Democrats, while just 53 percent of consistent liberals hold a similarly intense negative view of Republicans. Increasingly, they each think that if the other party wins and gets to promote its values, the country is at risk. This intensifying polarization is hardly symmetric, as Republicans grow more alienated from the ascendant values.17
As the national odds grow longer for conservatives, that only increases the urgency to defend their values and translate them into politics.
The Republican battle for American values is also a battle for policies that they advance in the GOP-controlled states, the U.S. Congress, and the U.S. Supreme Court when they can. They think the social safety net itself, including food stamps and unemployment benefits, is the primary cause of idleness and poverty. They oppose immigration and making gay marriage legal. They oppose further equal-employment protections for women and gays. They are determined to ban abortions. They are an antitax party that cuts corporate and top tax rates as a matter of principle. They cut public spending for education and science. With large financial contributions from the energy companies and banking sector, they promote fossil fuels and battle to protect the coal industry while opposing action to limit greenhouse gas emissions. They want to lift regulations of business and Wall Street banks. They believe campaign spending by the very rich and by corporations counts as constitutionally protected free speech.
These are the policies Republicans enact, and thus, defeating and marginalizing Republicans and conservatives is the only way to fully proceed with a reform agenda for these times.
It is already happening. Many of the reforms to address the dark side of our economic growth and social transformations are starting to gain momentum in civil society. Initial reformist steps are being taken at the local and state levels that may show the path for enacting much bolder ones nationally.
If you think this is fanciful, consider what happened in California.
In 2008, the California budget was in crisis and faced shattering deficits and drastic cuts in public programs. “Political paralysis gripped the Capitol and left the state starved for cash,” The Los Angeles Times observed. The population was leaving and many stories talked about California as no longer the pioneer of change for the country. The citizens of the state despaired of its future, and more than half said the state faced structural problems that would not ease when the national economy recovered. Four of every five voters said the state was on the wrong track going into the 2010 elections. With the deficit projected to reach $60 billion in 2010 and a $27 billion shortfall expected the next year, Jay Leno joked, “California is so broke that I saw a going-out-of-business sign at a meth lab.”18
The gridlock was painfully familiar. The voters via state initiative had limited state property tax increases and blocked the legislature from raising taxes without the support of two-thirds of the legislature. In any event, the Republican caucus in the Assembly and Senate voted to kill any revenue increase to address the crisis. Between 2008 and 2013, the state’s prestigious universities were cut by $900 million and per-pupil school spending was slashed by 29.3 percent. The voters ignominiously recalled the Democratic governor, Gray Davis, after just ten months in office and rated Republican Arnold Schwarzenegger so poorly he dared not run for reelection in 2010.19
But California embodies many of the trends in this book, and voters turned against the gridlock and against candidates who were increasingly hostile to spending and taxes, immigration, abortion, and action on climate change. In 2010 voters elected Democrats to every statewide office, and in 2012 they passed a referendum that raised the income tax on the wealthy to fund education. In the general election they gave the Democrats super majorities that ended the Republicans’ ability to veto tax increases. Progress was premised on taking power away from Republicans, not a return to bipartisanship. Reporting on our bipartisan poll for The Los Angeles Times, I observed, “Only in the context of California can you imagine coming out of that scenario and describe it as going more smoothly.”20
The California budget came into surplus in 2013 and is projected to reach $4.2 billion in fiscal year 2015–2016. The surpluses have been devoted to spending for schools and universities, to a rainy-day fund, and to paying down liabilities. Rather than California going bankrupt and shutting off the lights, Standard & Poor’s upgraded California’s’ bond rating to A+, the state led the country in jobs created, and its economy grew 4 percent in 2014, stronger than the national economy. In its own show of confidence, Boeing announced it was returning some engineering jobs to California.21
While putting its budget in order, growing the economy, and creating jobs, California also made the state a better place for working families by increasing the minimum wage in 2013, and employers will be required to pay their employees at least $10 an hour by 2016. At the same time, many California cities are proposing and passing even higher minimum wages. California became one of three states to require certain employers to offer paid sick days and has expanded its paid family leave insurance program to include caring for an ill family member. The governor has reached levels of popularity not seen for decades and was reelected in a landslide in 2014.22
And what is the “best state for business? Yes, California,” according to data compiled by Bloomberg and reported in Bloomberg View. California-based companies over the past four years outperformed the S&P 500 by 23 percent. They delivered returns of 134 percent—2.5 times the returns for companies based in Texas.23
The United States, too, will soon have a political moment that allows it to transcend the dysfunction and move on to tackle its huge challenges. A lot of people will sigh, finally. A lot of people around the world who need America to be exceptional will be reassured it can renew itself and represent progress again. The plate-shifting changes taking place in the economic realm along with the social and cultural transformations are setting the stage for new leaders—leaders who identify with the new realities, understand its contradictions, and are prepared to fight so all Americans can share in the rewards of America’s ascendant trends.
There is no evidence in the California story that the specter of extinction brings out Republican leaders ready to join the battle for reform. If anything, the party became more conservative. The conservative columnist David Brooks beseeches his party “to declare a truce on the social safety net” and insists, “They need to assure the country that the net will always be there for the truly needy.” But how do conservatives get there when they believe the safety net is the cause of poverty and idleness?24
Perhaps a shattering national defeat like the Democrats faced in 1984 or progressives gaining control of the judiciary and Supreme Court will allow the modernizers to gain the upper hand in the Republican Party.
Until then, Democrats will have the role of addressing the contradictions and dark side of our progress.
Just as there was building reaction to the trends of the Gilded Age, there is momentum for reform brewing in America today. People are at work in their communities and with their churches to help struggling families; journalists are finding new forms of media and using technology to speak truth to power and to challenge people to act; companies are forming coalitions with nonprofits to pass important legislation that invests in people; and leaders seeking to make bold policy reforms are being promoted in their cities and states. It is becoming clear that America has the capacity to bring the big changes that are necessary for its ascent. America is not paralyzed.
Just look at what is happening in the cities and states. The political liberation of California, for example, is made possible by the dynamic, diverse, and growing cities and metropolitan areas that refuse to wait for the smoke of national gridlock to clear. California cities as well as metropolitan areas all over the country, even in the conservative heartland, are urgently proceeding with progressive reforms, much as leading cities and states did after the turn of the twentieth century. Cities are beginning to address the issue of low wages, the need for more union organizing, the challenges of balancing work and family, and the need for universal pre-K education to raise social mobility and push back against the rising tide of inequality.
Cities are taking action because they cannot wait to tackle even the most difficult challenges. Just as an illustration, mayors are taking on the responsibility of addressing climate change. Impatient with “the continuing absence of tangible outcomes from inter-governmental efforts to reduce greenhouse gases,” New York City’s former mayor Michael Bloomberg organized the mayors of the world’s greatest cities in the C40 Cities Climate Leadership Group to take “concrete actions that demonstrate that preventing catastrophic climate change is possible.” Under that banner, San Francisco is taking steps to reduce emissions to 25 percent below 1990 levels by 2017, with the ultimate goal of an 80 percent reduction by 2050.25
As the United Nations was convening for the first time to consider the issue, New York City mayor Bill de Blasio pledged that New York would become the largest city to meet the U.N. target of reducing greenhouse gas emissions by 80 percent from 2005 levels. That is comparable to taking 700,000 vehicles off the road. “Climate change is an existential threat to New Yorkers and our planet,” de Blasio declared, and “New York City must continue to set the pace and provide the bold leadership that’s needed.” His proposal accepts and builds on the $20 billion plan of his immediate predecessor, Bloomberg, to mitigate the effects of a thirty-one-inch rise in sea levels with vast storm protection, floodwalls, bulkheads, and new building codes. Bloomberg asserted, “If anyone is up to the task of defending and adapting the city they love, it’s New Yorkers.”26
States are also acting. Oregon and Washington have taken dramatic steps to block America’s potential coal-export boom by denying permits that would allow the shipment of coal mined in Wyoming and Montana from their Pacific Coast ports to Asia. Export plans have been blocked by what Ronald Brownstein calls “America’s coal-fired divide.” These states champion the EPA’s efforts to limit new coal-fired plants nationally while shutting down their own. With California implementing its own cap-and-trade law and requiring zero-emission vehicles, the West Coast is rapidly turning to alternative energy and a greenhouse-gas-free future.27
America’s progressive cities and states will serve as models for future national action to address climate change, the struggles of working women and families, and jobs that don’t pay enough. The actions being taken by city and state leaders will teach the country that it can address the deepest problems holding America back.
Of course many of the changes in the country are just becoming the new orthodoxy and part of our shared national character—they go unchallenged, or if questioned, there is pushback.
Millions were moved by Coca-Cola’s Super Bowl commercial featuring seven young women singing “America, the Beautiful” in different languages, because this diversity is something we have integrated into our national identity. When an outspoken few took to Twitter and conservative talk radio to express their discomfort with the ascendant populations, Coca-Cola doubled down and extended their ad buy to the Sochi Winter Olympics, signaling to the world that these angry voices do not speak for America or corporate America.
In spite of the polarized country and U.S. Congress, we have seen impressive coalitions forming to advance the needed reforms at the national level. The U.S. Chamber of Commerce, industry trade associations, and leading high-technology companies joined together with advocacy groups, churches, and unions in support of comprehensive immigration reform, large-scale and long-term investment to renew America’s infrastructure, and the adoption of universal pre-K education.
The Catholic Church, too, is challenging the priorities of those who resist reform, denying them any religious standing for their economic values. Pope Francis shook up the agenda when his apostolic exhortation found the “free market” sinful: “Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills.” That is a powerful call to action in all areas, but also to politicians.28
Democrats will have to make the case for government activism at the national level.
The reader will soon appreciate that America’s economic and cultural ascent was made possible by government, though it is hard to unpack that amid the dysfunction and gridlock, brinksmanship, stop-and-go politics, contradictory policies, and lack of long-term thinking. But our shambolic politics has managed to further America’s promising economic transformations. It ranged from the Defense Department’s financing of new technology to direct government support for universities, science programs, and research and development to pluralistic policy approaches to energy and immigration that basically said “all of the above.” Mayors and governors stepped in where the federal government was stymied.
Pluralistic political control set the stage for the revolution taking place in energy. It could not have happened without Congress passing tax credits for investment and exploration for unconventional sources of natural gas, together with the light hand of regulation in pro-oil states. But the energy industry was revolutionized when the federal government negotiated and legislated successive and dramatic increases in the required fuel-efficiency standards for American cars and trucks. The federal government created tax credits and investment funds for alternative energy, and half the states now require a growing proportion of state power generation to come from these new energy sources. It is this uniquely American and seemingly contradictory combination of government actions that proved transformative.
The same is true of immigration. A Great Society–era law reopened America’s gates to immigrants, and nearly all of them came from Spanish-speaking and Asian countries. Legal immigration was more than matched by the growing generations of the undocumented, including foreign students and visitors that stayed. Republican president Ronald Reagan signed the law granting amnesty to millions, though a reluctant Congress demanded tougher enforcement at the Mexican border. The increased risk of being sent home led growing millions of undocumented immigrants, ironically, to remain in the United States and to move out of the border areas of the Southwest and settle permanently in cities all across the country. That roughly 40 percent of the megacities and almost 30 percent of California residents are foreign-born are very much products of these contradictory government policies.29
America’s leadership in new industries and innovative technologies is rooted in a half century of steady investment in R & D, Defense Department spending on basic research and weapons technology, and federal support for great research institutes and universities. The recent gridlock has slowed spending on research and education, but Congress continues to prioritize Defense Department funding, and each year at the midnight deadline, it inevitably extends the R & D tax credits for companies that conduct research in the United States.
So America has managed to advance these transformations through the political pluralism and chaos. But that is surely at its limit.
For the country to take full advantage of these revolutions and the ascendant economic trends, government must do a lot better. It must educate dramatically better and use resources more equitably. It must educate kids at the earliest ages and support parenting. It must help black and white working-class men get off the margins and give support and greater equality for working women and working mothers. It must support unions as they find new ways to speak out on behalf of working people. And for America to address the big contradictions at the heart of its economic progress, including the growing inequality and failure to produce economic gains for most people in the country, government itself needs to become transformative.
Our sense of the possible should be shaped by remembering the economic policies enacted and pursued by President Bill Clinton, when government policy raised wages, moderated inequality, and gave relief to the poor. At the outset of his first term, President Clinton passed an economic plan that reduced America’s deficits mainly by cutting defense spending and raising taxes in nearly equal measure. His plan raised the top tax rate from 31 to 36 percent for individuals with income above $150,000 and established a new tax rate of 39.6 percent for incomes over $250,000, and critically, it taxed income from capital gains and work equally. It subjected all income above $135,000 to the Medicare tax of 3.8 percent. It raised the tax rate for corporations from 34 to 35 percent. At the same time, Clinton’s plan expanded the earned income tax credit for low-wage workers and indexed it for inflation, and later he expanded health care coverage for poor children. He would embrace the child tax credit that was part of the conservative policy wheelhouse. That combined with full-employment policies and welfare reform in his second term.
President Ronald Reagan and President George W. Bush had a different mix of policies, and their failure is obvious. The rate of income growth in the Clinton economic period was 16.8 percent, double the average for the Republican presidents (8.3 percent). And that is using the calculations of conservative academics that take into account reduced family size, income transfers, food stamps, tax credits, and subsidies for health insurance!30
The top 5 percent in the country saw a 15.1 percent gain in income in the Clinton period—and importantly, they gained just a touch less than the middle class, who had gained 16.8 percent. But the Clinton policy mix brought gains for the poor and those on the bottom fifth of the income ladder as well. The income of this bottom quintile went up 23.2 percent during the Clinton economic period, but only 0.4 percent under Reagan and 2.2 percent under George W. Bush. The great expansion of the earned income tax credit along with increasing wages allowed the bottom 20 percent to make real gains. In fact, only in the Clinton period did one see an improvement in the Gini coefficient, the standard measure of inequality.31
Clearly government policy matters and can make a difference on the issues America must address. We can have fewer people in poverty, can push wages up for the middle class, and can have a more broadly shared prosperity. The challenges in 2016 and beyond are much greater than in 1992, but government policy can still push against the arc of inequality.
Consider the Affordable Care Act, which came into full effect at the outset of 2014. America stood out in the Western world with its 15 percent of the population without health insurance seemingly in perpetuity, a moral outrage that came with such a high human cost in illness and lost peace of mind as well as a high economic price as cost shifting made the whole system unaccountable. But look at the graph below and what happened to the line tracking the percent uninsured in the months since the new health care law came into effect. Look at the bars and the dramatic drop in the numbers of people who face financial stress from dealing with health care costs.32
The new health care law is surely imperfect, and it almost fell victim to the ferocious Republican opposition determined to repeal it and limit where it can be fully implemented. The dramatic drop in that graph line and bars tells you why. It says government has the power to effect transformative social and economic changes.
To tackle the huge issues America will require a new politics, and that, too, is possible, as we hope to prove in this book.
The stage is set for contemporary Democratic leaders to play such a role in the face of today’s greatest problems, if they take up the challenge.
In 2008, the citizenry elected Barack Obama, who attacked “hyperpartisanship” and promised to “change the culture of Washington.” But the country knows this is a different moment. The president’s determination to reach a compromise exposed the recalcitrance of the conservatives and why Democrats have no other option than to win the argument and champion bold reforms to mitigate the inequality and social costs that hold America back. While America has a long way to go and conservative resistance is strong, President Obama will have achieved near-universal health care coverage, substantially lowered carbon emissions, and legalized the “DREAMers,” those who came to the United States as minors under age sixteen, so America will be enriched even more by its immigrant diversity.
President Obama himself made a personal turn in his 2015 State of the Union address as the country began to see robust macroeconomic growth. He continued to describe the “state of the union” as very strong and overstate how many lives have been touched by the recovery. Nonetheless, he stopped to signify this time of building imbalances and injustices. At “every moment of economic change throughout our history, this country has taken bold action to adapt to new circumstances,” enacting bold reforms. At this moment, he called for the country to turn to “middle-class economics”—the abiding idea “that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.”33
He set the stage for the next Democratic president. We do not know whether he or she will act gradually and pragmatically, like the early Teddy Roosevelt, or will take up the full banner of reform, like Teddy Roosevelt under the New Nationalist banner, or will govern as a partisan to vanquish the conservatives and finally enact what the country has longed to see, like Woodrow Wilson did upon taking office.
The public is very conscious of the economic and social transformations that are changing the country. While they identify with the revolutions that are changing America in exceptional ways, they are acutely aware of the contradictions that make life a daily struggle for so many. They are ready to join the struggle to tackle the downside of our progress and join the battle for bold reforms. It is just such an American renewal that will allow America to lead in this twenty-first century.
Copyright © 2015 by Stanley B. Greenberg