Kerry's 'Benedict Arnold Democrats'

By Roger Bybee

"You can't prosper if you're the Democratic Party with what could be called Goldman-Sachs economics. You've got to have 'average-person economics.'" -- former Republican strategist and author Kevin Phillips.

John Kerry has been loudly denouncing "Benedict Arnold CEOs" for their policy of outsourcing US jobs overseas.

But when it comes to finding solutions for this massive relocation of US jobs, Kerry has out-sourced his economic policy-making to what might be called the "Benedict Arnold wing" of the Democratic Party.

Kerry has assembled a pro-globalization crew of Clinton-Gore retreads to set his economic policies, mostly drawn from the big Wall Street investment banks. Among the leading lights are former economic advisor and Democratic Leadership Council acolyte Gene Sperling, ex-Treasury heavyweight Roger Altman, ex-Treasury secretary Robert Rubin, former World Bank president Lawrence Summers and banker Felix Rohatyn. This bunch clearly has a primary loyalty to the Fortune 500 rather than the Unfortunate 500,000-plus whose jobs have been lost to NAFTA alone.

This brain trust is much the same crew that assisted Clinton and Gore in 1993 in ramming through NAFTA against the opposition of the majority of his own party in Congress and 64% of the American people.

That demoralizing betrayal of the Democrats' most core constituencies enfeebled Clinton's ensuing push for a health-care plan and allowed the Republicans to block a critical new benefit that would have enlarged the Democratic base. The NAFTA "victory" and health-care defeat surely played a key role in driving down Democrats' turnout in 1994 and enabling the stunning GOP takeover of Congress.

But let's be clear: Critically looking at Kerry's inner circle and their direction is not an exercise in settling old scores. Rather, it focuses the party on the all-important question of how to generate enough votes to dethrone the venal and vicious Bush-Cheney junta. Thus far, the current Kerry crew appears downright allergic to the kind of populist pitches and programs essential to mobilizing low and moderate-income voters.

In 2000, the bottom 80% of Americans on the socio-economic ladder were so uninspired by Al Gore's vanilla-pudding campaign that they cast a mere 47% of the vote. Yet Kerry's chefs are proudly lifting the lid off much the same confection for 2004.

While unquestionably more humane than the Bush-Cheney cabal, the Kerry economic team wears Wall Street blinders that limits their vision to a more inclusive form of trickle-down economics. "The Clinton-era god of deficit reduction and private-sector supremacy is also worshiped in the Kerry camp," reports Louis Uchitelle of the New York Times (3/28/04 and 4/11/04). Kerry is steering far clear of government-driven programs to stimulate high-wage, high-skill economic growth. "For now, Kerry is in the Clinton, not the Roosevelt mode. He counts on the private sector to generate full employment, with government playing a peripheral role, mainly in tax incentives that encourage companies to create more jobs."

On the plus side, Kerry -- who voted for NAFTA -- now opposes the Free Trade Area of the Americas and the Central American Free Trade Agreement. Over the past couple years, respectable opposition to "free trade" has emerged because of the over-reaching of the globalizers. As Julia Sweig of the Council on Foreign Relations explains, "Part of the reason this year has not been kind to these trade pacts is the advocates of free trade are too fundamentalist in their approach. They don't give the same level of priority to human capital -- immigration and labor rights -- as they do to inanimate issues like property rights and goods and services." (N.Y. Times 12/18/03)


Ferocious Talk, Feeble Solution

However, on the high-profile issue of outsourcing that has emerged as a remarkable lightning-rod among Republican as well as Democratic voters, Kerry's feeble "solution" is inconsistent with the ferocity of his attacks on "Benedict Arnold CEOs." His program for combating job relocation is tepid and timid, fully fitting the profile of relying on tax breaks while leaving basic corporate power untouched.

The cautious, investment-bankers' mentality is apparent throughout John Kerry's three-part program to retain jobs in the US: revoking tax breaks for the export of jobs; holding down health costs; and a 120-day review of all trade agreements once he takes office.

• Tax holiday: Kerry would offer a one-year tax holiday to encourage corporations to invest profits earned overseas in job creation within the US, by taxing those profits at a reduced 10% rate. Currently those profits are untaxed until they are repatriated to the US. Proceeds from the tax holiday would be used to lower overall corporate tax rates, from 34% to 32.5%. The incentives for relocating production overseas are linked to US support for regimes that repress worker rights and thus hold down wages. Moreover, the firms receive a wide array of federal financial backing and protection for their overseas plants: While a vast architecture of institutions and policies promote the relocation of US jobs to high-repression, low-wage sites, Kerry has merely challenged one small plank of this vast structure.

• Health plan: Clinton Lite? Reducing the costs associated with the world's most expensive health care system in the US would certainly assist in retaining jobs. Unfortunately, Kerry's plan is unlikely to get at the heart of the problem: the central role of insurance corporations, HMOs and other profit-based entities. "As much as half the health-care dollar never reaches doctors and hospitals -- who themselves face high overhead costs in dealing with multiple insurers," estimated Marcia Angell, former editor-in-chief of the New England Journal of Medicine.

Only a Canadian-style single-payer system can root out the waste and enormous cost of the insurance corporations now at the core of the US health system. For example, US auto firms operating in both the states and Canada find that the Canadian system saves them about $4 per hour per worker in health care costs alone. In contrast, Kerry's plan wins the praise of the Centrist Policy Network for retaining a significant role for private-sector insurance firms. Kerry's plan at this point reads like a replay of the cumbersome, confusing Clinton plan that proved such an easy target for hard-line conservatives.

• Review of the disasters: Kerry's call for a 120-day review of trade agreements like NAFTA and the World Trade Organization can only be interpreted as the most token nod toward re-thinking the dominant robber-baron model of globalization. The most notable experiment in "free trade," the North American Free Trade Agreement, has been a colossal disaster. (While Kerry voted for it, he must be credited with forcefully denouncing NAFTA's Chapter 11 [N.Y. Times 4/19/04], which allows tribunals to override democratically-developed environmental and consumer-safety rules.) The deal has compiled a clear 10-year record of declining manufacturing wages in both the US and Mexico, neglect of Mexico's educational, health and transportation infrastructure, continued environmental devastation in polluted communities and rivers along the border, US-subsidized farm imports displacing vast number of Mexican farmers who migrate to the US, and ongoing repression of worker rights.

The Benedict Arnold Democrats shaping Kerry's economic policy appear intent on sticking closely to the Clinton-Gore script. After enduring the debacle of Bush's current job-loss recovery, it is very understandable and very tempting for Democrats to reach for this familiar tonic. However, while Clintonomics helped to produce massive job growth and modest gains in income, it also fueled the growing polarization of wealth, declining turnout among low-income voters and the stunning, ongoing loss of the Democratic majority in Congress to hard-liners.

In the contest of 2004, another dose of Clinton economics and politics may be fatal to Kerry and provide the Bush-Cheney-Rumsfeld junta with another four years with even more contempt for the public interest and world opinion. Simply put, John Kerry cannot win the confidence of a majority of voters nor motivate low-income citizens to vote unless he persuades them that he is deadly serious about confronting the relocation of US jobs and other abuses of corporate power.

For every progressive committed to a Kerry presidency, now is the time to call on the Kerry campaign to deep-six conventional (and counter-productive) wisdom on "free trade" and "private-sector supremacy," which offers only a road map to defeat. Kerry must dramatically demonstrate that he is driven by a genuine concern for jobs and justice, rather than the protection of "inanimate issues like property rights."

Roger Bybee is a Milwaukee-based writer and activist. Email

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