Progressive prospects after the fiscal cliff?

The need for a new growth model may push Obama towards progressive policy by default

David Coates

Amid all the Christmas cards from the UK were many messages saying how pleased my UK friends were that Barack Obama had won a second term. It tells you about the very high quality of my UK friends!

For the record, I was very glad too. The prospect of a Romney presidency was truly appalling. The domestic policies the Republicans were proposing would have plunged the US economy back into recession and American society into even greater inequality than it currently endures. Romney’s foreign policies were simply terrifying.

So, yes, a great sense of relief. But now the question becomes – what will Obama do with his renewed mandate? Will his second term be more progressive (and so less disappointing) than his first? Or will the fact that he faces the same dire economic agenda and the same Republican intransigence in the House of Representatives mean that it will be, as Yogi Berra had it, déjà vu all over again?

Only time will tell, of course, but some things at least are clear. Firstly, from any Western European centre-left perspective at least, whatever happens in the United States during this second Obama term will be at best both parochial and modest. Any European centre-left party worth its salt knows it has two fundamental things to do. It has to move its whole economy away from Anglo-Saxon capitalism towards a more trust-based welfare-capitalist one – towards one, that is, in which the power of business is to some degree balanced by the power of organised labor. And it has to use its years in office to strengthen that latter power: by bedding in rights to collectively bargain, by building strong welfare nets, by insisting upon socially responsible business practices, and by using public policy to guarantee a minimum degree of social equality.

European centre-left parties don’t always do that, of course, but this President is not going even to try.  Barack Obama is not about to turn himself into a European social democrat of a genuine kind, or America into some form of advanced welfare capitalism. Oh that he was, but he is not!

Yet the rights of workers to join trade unions and negotiate their terms and conditions of employment are so limited here in the United States, and the rights of working women in particular (to paid maternity leave, flexible working hours and adequate child care) are so few in number, that catching up in just small ways on these key rights could itself help to set in motion a longer and much-needed process of progressive economic and social change.

And that could begin to happen. After all, the old Reaganite growth model (built on business deregulation, income inequality and consumer debt) came to bits in 2008, and cannot be rebuilt. In consequence, America (like the UK) visibly needs a new growth model, one in which the over-reaching power of Mighty Finance is curbed by the strengthening of American-based manufacturing on the one side and by the empowerment of American labour on the other.

That need is so overwhelming these days, and the old alternative so bankrupt, that this second Obama administration might yet inch us towards a better growth strategy simply by default: motivated to make the correct moves less by any progressive instincts which the Administration may or may not possess than by the growing realization in America’s governing circles that such a rebalancing is the economy’s best hope for sustained growth and prosperity again.

There are just a few signs out there that that sort of programme might be on the cards, and that policy might be slightly more progressive this time round. The new Administration is clearly determined to introduce comprehensive immigration reform and to tighten gun laws; and the President has recently spoken strongly in favor of trade union rights to organize and to collectively bargain.

We don’t know yet whether these much-needed initiatives are genuinely straws in a new wind, or merely ad hoc genuflections to passing popular pressure; and certainly the small detail of the fiscal cliff settlement gives genuine cause for concern.

As the Biden-McConnell settlement made very clear, this Administration is still capable of folding a winning hand; and may yet do so again. But there is a new toughness in the President’s opening negotiating stances these days that is both welcome and long overdue; and he is certainly on record as being unwilling to cave to Republican demands in the upcoming debt ceiling fight. Yet that fight is waiting in the wings – it is just two months away – and unless Barack Obama is prepared to break new constitutional ground by simply raising the debt ceiling by executive order, some new compromise will necessarily follow.

The Republicans are bound in March to go after Social Security, Medicare and Medicaid – urging deep cuts in each – and those cuts will come unless, before then, the President has persuaded a clear majority of the American people that a better way out of this impasse lies through progressive change – through such things as a new stimulus package paid for by deep cuts in military expenditure, the closing of corporate tax loopholes, and the belated creation of a strong public option to pull down excessive medical insurance costs.

Barack Obama has not even started to make that case. He needs to, and both his Inaugural Address and subsequent State of the Union report to Congress will offer him that chance. I highly recommend close attention to both those events. Much turns on what the President chooses to say on both occasions.