It is in the hands of the business community whether it is going to use this moment to break the impasse on immigration, but its backing can bring about this transformative change, which would build the momentum and core strength and character of the U.S. economy.
Ten-year infrastructure plan to rebuild America
There is deep understanding in the business community, among economists, and in the country at large that America has been underinvesting massively in its national infrastructure, according to a McKinsey Global Institute report on the “game changing” opportunities available to the United States. That backlog of maintenance and the gradual erosion of the transportation system create massive inefficiencies and backlogs, huge costs for business, and deprive the country of the chance to renew its economy as it did with the interstate highway system fifty years ago.51
The starting marker for this debate is the 2013 American Society of Civil Engineers Report Card for America’s Infrastructure, which gives America an overall grade of D+. That is up from D in its 2009 report. Our lowest grades are for roads, waterways, and levees, and for transit, aviation, and dams.52
The World Economic Forum rates America’s infrastructure behind that of all other advanced countries, with America ranked sixteenth on its roads, twelfth on its ports, and twenty-sixth on its power and telephone networks. It is sixteenth overall, which is just the middle of the pack among other OECD countries.53
While America lags, the Republicans in the U.S. Congress struggle to pass even a long-term transportation bill, and the gas tax, at 18.4 cents, has not been raised since 1993.54
It is hard to believe that the business community has allowed Washington’s aversion to any tax increase and Republicans’ unwillingness to commit to long-term highway and mass transit funding. It should have taken House Budget Committee chairman Paul Ryan to the woodshed for passing a budget that cuts infrastructure spending by 25 percent. Nor did it push the Obama administration for serious long-term infrastructure investment and creative financing, rather than the modest year-on-year throwaways for the budget.55
America needs to raise infrastructure spending by $150 billion to $180 billion a year for fifteen to twenty years, to increase infrastructure spending by 1 percentage point of GDP “on a sustained annual basis to compensate for past underinvestment and set the stage for future growth.” That would put America on par with the level of investment of Canada, Sweden, and Australia. That would add 1.4 to 1.7 percent to the annual GDP over the next five years and create up to 1.8 million jobs.56
There is no proposal that has won more support across both parties, from liberal and conservative economists and key stakeholders, than moving immediately to make long-term commitments in transport, bridges, highways, mass transit, air traffic control, rail, inland waterways and water systems, the electric grid, broadband, and telecommunications. And that investment should be financed by leveraging government funds with private capital—an infrastructure bank—as is already being done on a large scale in Europe and elsewhere.
Tom Donahue, head of the U.S. Chamber of Commerce, is right to observe that we have moved from “first in the world to middle of the pack” when it comes to infrastructure, and we require long-term investment and an infrastructure bank. So do Simpson-Bowles’s bipartisan deficit commission and the bipartisan coalition of officials led by former U.S. secretary of transportation Ray LaHood, former New York mayor Michael Bloomberg, former Pennsylvania governor Ed Rendell, and former California governor Arnold Schwarzenegger. So do Leo Gerard, president of the United Steelworkers, and his cochairman on the Task Force on Job Creation and former corporate CEO Leo Hindery. Their number one recommendation: Create a national infrastructure bank.57
Congresswoman Rosa DeLauro, my wife, introduced the infrastructure bank legislation fifteen years ago, and she was inspired by the work of legendary banker Felix Rohatyn, who championed the bank as a much-needed “domestic IMF.” The model to emulate, DeLauro points out, is the European Investment Bank, which is currently spending about $100 billion a year on almost five hundred large projects. Like the EIB, $25 billion of U.S. government investment can be leveraged with the sale of bonds to reach $455 billion, though it would have to operate on twice that scale.58
The idea has become a rallying point because it has real scale, leverages private funds, and opens the way for public-private partnerships, because it is long-term, and because the project selection is independent of Congress. Business’s requirements for taking the lead on this scale of infrastructure development are reforms that streamline and speed up the approval process, insistence on a ten-year plan that investors and stakeholders can work with, and openness to technology and big data that increase efficiencies.59
The gains for business and for the country will be immense—and business can lead.
Pre-K
In 2010, the U.S. Chamber of Commerce released a report in which it “calls on [the] business community to be deeply involved to make sure children have the skills to thrive in the global workplace, today and in the future.” They addressed all levels of education, but they focused on “the lack of preparation of early learners who enter school for the first time” and “the significant education gap among the groups of students.” Citing the studies by the Federal Reserve Bank of Minnesota, they accept that the “capacity for developmental skills begins in the first five years of life.” That sets their priorities. “There is a great need for children to enter kindergarten prepared to learn.”
They called for much better coordination and effective programs and made clear that “through these efforts, states and localities should strive to provide access to high-quality programs for all children.”60
In 2011, Barack Obama released his plan to increase funding for pre-K education for poor children and requested $8.2 billion in his budget for Head Start. Republicans were instinctively critical, even though many Republican governors had advanced pre-K programs in their states and business had been supportive. The national Republicans said the program “continues to significantly underperform in certain aspects,” but instead of working to improve implementation, they cut Head Start by $400 million and eliminated slots for 51,000 poor preschoolers in 2013.61
A number of business groups were supportive of pre-K nonetheless, including a new group, Ready Nation, with backing from John E. Pepper Jr., former chairman and CEO of Procter & Gamble.62
The business community pulled back in the context of the political polarization and Republican resistance to government education initiatives, but the U.S. Chamber of Commerce has continued to send signals that the country should act. On its Web site it has a section on pre-K where it offers the following guidance: “13 Things That Business Can Do to Support Early Childhood Education.” The list urges all kinds of activity, including learning about the issues, talking to your employees, and getting involved locally. Buried in the middle of the list is Point #6: “Convey to policy makers your support for public investment in early education. As someone who does not have a vested interest in the early childhood education field, business leaders make powerful messengers in support of public investment for effective programs.”63
It is asking the leaders to use their standing as businesspeople to call for “public investment” in expanding pre-K for children. And many state chambers have taken up that guidance, including seven local chambers in Texas.64
In the U.S. Chamber’s own terms, it is time for the business community to become articulate again on this fundamental need—because they are “powerful messengers” and must lead so children do come to school prepared and American companies are able to build the kind of workforce they need.
There is a lot of room to make pre-K universal and to make it effective at raising student performance and social skills. A recent estimate by the Social Mobility Project at Brookings shows that 60 percent of parents with some college education or more have their four-year-olds in pre-K centers or classes, while only 50 percent of those with high
school diplomas or less do. That percent has not moved up in the past ten years, so this is a moment to press for a change.65
The good news is that many red and blue states have been trying to make progress with pre-K, so national businesses have the space to act. Reformers and the business community have a shared stake in a great expansion of the most effective pre-K programs, regardless of whether these are public, nonprofits, for-profit companies, religiously based, or even in family homes. Tolerance for that local pluralism may make it possible to make great advances locally despite the gridlock nationally.
DEMOCRACY IN THE TWENTY-FIRST CENTURY
A lesson from the progressive era is that if you dig deeply enough the sources of the worst wrongs are private interests and politicians working out special deals at the expense of the ordinary people and the public interest. Well, the conservative majority on the Supreme Court has made clear that this is the one area where it intends to throw off all spending limits and regulations, empowering Super PACs and giving corporations and billionaires constitutional rights on a par with the First Amendment right to free speech. That leads Darrell West to observe that the federal judiciary has made “freedom to spend” equivalent to “freedom of speech.” The reason why this is happening is transparent and does not pass the smell test with citizens. This corruption is at the heart of the current Gilded Age. Thus you cannot cleanse politics of this money until conservatives lose their majority on the U.S. Supreme Court. This will be their last stand.66
In the 2012 presidential contest, the two parties and their allies spent about $2 billion, a breathtaking number. Obama, despite raising $218 million from small contributions, worked many campaign fund-raisers, getting contributions of $1,000 or more; Romney, for his part, raised two-thirds of his funds in contributions of $1,000 or more at fund-raisers where he opined about “the 47 percent” who are “the takers.” Their Super PACs and the independent groups on both sides spent almost all their funds on TV ads.67
Well, the Republicans in 2016 are bringing an innovative American spirit to financing the next election. They have essentially thrown the entire legal system for financing presidential campaigns over the side and turned their campaigns over to Super PACs that can spend without limits and billionaire donors who can give without limits, starting with the Koch brothers, who pledged almost $1 billion through their Super PACs and allied groups. Jeb Bush created a Super PAC, Right to Rise, that will be run by his closest personal adviser and take over the advertising, direct mail, and data-gathering functions normally performed by a candidate-directed campaign. It can raise money from the super-rich without limit and had raised tens of millions of dollars before Bush had even declared his candidacy. Senator Ted Cruz launched a clutch of four tightly held Super PACs with “strong personal and family ties to Senator Cruz.” They started with over $30 million from donors who were promised “influence and control over expenditures.” Governor Scott Walker directed his long-time adviser to run his Super PAC, named the Unintimidated PAC. Walker also created a tax-exempt 527 committee to raise and spend unlimited amounts of money on campaign issues. A Marco Rubio Super PAC began with a $10 million contribution from a billionaire auto dealer in Miami.68
The billionaire megadonor takeover of the Republican Party has the full imprimatur of the U.S. Supreme Court, though the citizenry knows this is a corrupt deal to maintain and magnify the power of the 1 percent over government.
The broader conservative assault on democracy also includes, amazingly, limiting the right to vote. It took its most brazen forms in George W. Bush v. Albert Gore Jr., the Supreme Court case that put Bush into the White House, and the gutting of the Voting Rights Act, freeing most southern states from having to seek preclearance on changes in registration laws. In between and in nearly every election Republican secretaries of state are trying to limit access to the polls and the ballot. They have put the right to vote on a par with the right of states to ensure the integrity of elections and to prevent fraud. The result of new voter ID laws is to make it harder for the poor and minorities to vote. This thuggish and undemocratic work still left Democrats with the lead in the popular vote in four of the past five national elections, but that only raises the stakes if Democrats win again. Republican secretaries of state are moving to limit voting hours and early voting, and Ohio will continue its role at the front line of this battle.69
The conservative jurists do not waver on this assault on democracy. Some have wavered on the constitutionality of the Affordable Care Act, the constitutionality of state efforts to bar gays and lesbians to marry, and the constitutionality of the death penalty. They do not waver on the question of democracy.
As we know from the progressive era, you can only bring this scale of reform if the public feels revulsion with the corrupt deals at the heart of the system and if you open up the process to reclaim democracy. That came with exposure by reforming investigative journalists, changes to the Constitution, and presidents who changed the Supreme Court.
The reforming journalist’s role has been taken by The Washington Post, The New York Times, Salon, Vox, Open Secrets, and the academics who dig into campaign finance records and tax returns. Under the spotlight of today’s investigative journalism, the corrupt connections become more visible and the pressure for change has been building.
In his in-depth Opinionator piece for The New York Times, Thomas B. Edsall documents the flood of conservative money going to the secretive Super PACs and independent committees. He also documents the Republicans’ Putin-like effort to erase any sign that they were once enthusiastic supporters of disclosure and transparency in campaign finance. That is gone. The current Republican Party platform, Edsall points out, supports “the free speech right to devote one’s resources to whatever cause one supports.” Today’s Republicans have elevated the First Amendment and, as a result, conservatives have found religion when opposing campaign finance regulations. This is why they have brought the gears of the Federal Election Commission to a halt.70
The top 1 percent for their part wants to stay out of public view because their policy preferences are so out of step with the average citizen, we now know from Darrell West’s book Billionaires. The differences are stunning, and the implications for democracy beyond challenging. Just 27 percent of the public would cut Medicare and funding for education and highways to reduce the budget, though 58 percent of the 1 percent would. A nearly universal 87 percent of the public would spend whatever is necessary to ensure that all children have good public schools. Just 35 percent of the 1 percent aligns with that public consensus. About half the country (53 percent) would provide jobs for all who want to work, but only 8 percent of the 1 percent would.71
The 1 percent and big donors dominate the financing of both parties, and they use their money, Joseph Stiglitz points out, to impact the government’s policy priorities and rig the rules to their advantage. Many of the billionaires have mastered politics more than entrepreneurship. Stiglitz is eloquent on this point: “we have a political system that gives inordinate power to those at the top, and they have used that power not only to limit the extent of redistribution but also to shape the rules of the game in their favor, and to extract from the public what can only be called large ‘gifts.’” Stiglitz stands in awe of their inventiveness: “Those at the top have learned how to suck out money from the rest in ways that the rest are hardly aware of—that is their true innovation.”72
Stiglitz is wrong about the public, however. It knows the system is rigged and would overturn the whole corrupt system. As we saw in the previous chapter, the public detests the Super PACs and wants to regulate what the 1 percent and business can give as contributions. They scorn the idea that campaign contributions have anything to do with free speech. And three-quarters would support a constitutional amendment to overturn the main decision of the Supreme Court on campaign funding.
There is no argument to win, as the public is aligned with a constitutional revolt against the corruption at the cor
e.
This is a moment not unlike the progressive era, when the Supreme Court threw out all efforts to regulate hours of work. The progressives limited their eight-hour day and restrictions on child labor to the railroads when regulating interstate commerce. But it took the Labor Standards Act in 1938 and new justices to bring the change. Hopefully, it will not take two decades to reduce the influence of big donors, though it might.
Any Democratic president in this period has to make constitutional change his or her starting point. They should use the prospect of constitutional change to educate the country on the state of American democracy and the corruption that undergirds our inequality and struggling middle class.
Many were surprised when Hillary Clinton’s presidential campaign announced that campaign finance reform would be one of the four pillars of her policy agenda. “We need to fix our dysfunctional political system and get unaccountable money out of it once and for all—even if that takes a constitutional amendment,” Clinton said. Her campaign chairman was heard to say that “the country needs justices who believe as much in the right to vote as in the rights of corporations.”73
The Democrats should also battle for transparency in hopes that the crudeness of unlimited, secret donations becomes an embarrassment in an age where transparency is assumed in every aspect of life. Do Republicans begin to lose their allies in the private sector and civil society because of the obscene level of campaign donations and obscene level of campaign advertising? Is their opposition to transparency so illegitimate in this Internet age that Republican conservatives are delegitimized?
Everyone knows that Republicans will maintain control in at least twenty states in the GOP conservative heartland and will keep any constitutional amendment from being ratified. Advancing reform is meant to build public consciousness of the role of money and put Republicans on the defensive. There are some real changes that can happen at the national, state, and local levels though. You can have immediate disclosure on the Internet of every contribution in real time, and with outside groups, you can require disclosure of every large contribution used to fund the advertisements they are airing.
America Ascendant Page 41
