Win or lose, Bernie Sanders has made this Democratic primary the most substantive in my lifetime. Not that Hillary Clinton’s campaign is devoid of ideas. She has some thoughtful ones. But the boldness of Sanders’ proposals is what has driven this historic and instructive debate.
The dynamic so far consists of Sanders setting a marker (e.g. free tuition, universal free health care, breaking up the banks, a $15 federal minimum wage, a $1 trillion public works investment); Clinton responds, and their two camps engage in a spirited, intelligent, and surprisingly concrete debate.
This back and forth has forced both candidates to raise their game. When Sanders proposed free college tuition, Clinton responded by unveiling her detailed New College Compact Plan. When Clinton attacked Sanders for failing to identify revenue sources to finance his free tuition and health care proposals, he promptly posted chapter and verse on his web site.
When economics Professor Gerald Friedman concluded that if all Sanders policies were implemented the combined effect would be to stimulate dramatically strong economic growth, four former heads of the Council of Economic Advisers (CEA) wrote an open letter not only dismissing his conclusions as not credible but admonishing, “Making such promises runs against our party’s best traditions of evidence-based policy making…”
The three-paragraph letter generated a collegial scolding from James Galbraith, former Executive Director of the Joint Economic Committee, the Congressional counterpart of the CEA. He pointed out the signatories’ own lack of evidence for their conclusion. “I looked to the bottom of the page to find a reference or link to your rigorous review of Professor Friedman’s study. I found nothing there.” That led one of the signers to undertake a far more detailed response, which in turn generated an instructive and much too rare discussion regarding the validity of assumptions inside the black box of conventional economic models.
The back and forth has also revealed strategic differences born of a distinct political philosophies. Bernie would deal with concentrated economic power through structural change; Hillary would rely on regulatory oversight. Bernie would work to break up giant banks directly. Clinton prefers to strengthen the Dodd-Frank law. Clinton sees Sanders’ proposal as politically untenable. Sanders sees Clinton’s proposal as unworkable.
Sanders’ prescription for structural change often includes using government as a competitive service provider. That is the case with his proposal to revive Postal Banking. From 1910 to 1967 the U.S. Post Office, the most ubiquitous of all public institutions, provided financial services. At its peak 1947 the U.S. Postal Bank had over 4 million accounts and deposits exceeding $3.3 billion. Almost 90 million people in the United States have no bank account and pay about l0 percent of their income in fees and interest to gain access to credit or other financial services. Continue reading