THE PRO-GROWTH PROGRESSIVE
An Economic Strategy
for Shared Prosperity
By Gene Sperling
Simon & Schuster; 354pp; $26.95
The Good Makes a solid case that pro-growth policies needn't violate progressive politics.
The Bad Some clunky language--and not all arguments are persuasive.
The Bottom Line Has the potential to shift the terms of U.S. political debate.
Sometimes it seems as if the Democratic Party has developed an allergy to the word "growth." John Kerry never once used the term in his three debates with President George W. Bush during the 2004 campaign. Even more surprising, Al Gore didn't mention growth in the 2000 Presidential debates, either, despite serving as Vice-President during an economic boom. Meanwhile, Republicans, and Bush in particular, have consistently cited economic growth as the main justification for big tax cuts. Democrats seem to prefer to talk about economic security and redistribution.
That's what makes Gene Sperling's new book, The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity, especially important. As a member of the Democratic government-in-exile, Sperling is a heavyweight in Washington. He served as President Bill Clinton's National Economic Advisor and then played a similar role in Kerry's ill-fated Presidential campaign.
The task Sperling has set for himself is easy to state but hard to execute: He wants to find a politically viable middle ground between Americans who feel left behind by the global economy and those who see the future as relatively bright. "Democrats cannot just be the party for you when something bad happens," writes Sperling. "They also need to be the party of your optimistic aspirations."
Although his arguments are not fully compelling, Sperling makes substantial headway toward his goal. For the general business reader, the virtue of this book is that it offers an early look at the potential economic and business themes of the next election, at least from the Democratic point of view. In one chapter he proposes that Democrats run on a platform "to spread wealth creation, and encourage entrepreneurship, risk-taking, and small business creation."
Sperling builds a case that pro-growth policies can be put in place without violating progressive values. For example, he strongly favors globalization as a positive economic force but wants to put in place a new "cost-sharing compact" to cushion any potential negative impact on workers. At the same time he wants to cool down the rhetoric about globalization by both supporters and critics. "The first step in moving beyond our polarized national debate on trade," he writes, "is to reduce the exaggeration on both sides about the costs and benefits of open markets."
While agreeing that minimizing income inequality is important, Sperling wants the Democratic Party to put more emphasis on fostering growth. "Our primary goal should be raising all middle-class and poor boats substantially," he writes, "even if the well-off boats rise at a similar or faster pace." And, compared with most liberal policymakers, he gives more explicit emphasis to fostering technological change, the main driving force for long-run growth. In particular, he calls for a sustained increase in expenditures for education and research, or what he calls an "Apollo equivalent."
Sperling believes in the importance of boosting national savings and reducing the federal budget deficit. However, he doesn't simply rely on the typical argument made by most economists, that such measures automatically lead to more growth. Rather, Sperling makes the more persuasive case that encouraging personal savings "is a vital ingredient in ensuring economic dignity and upward mobility." Moreover, he argues that fiscal discipline is required to "build public trust in government -- a prerequisite for attracting support for expansive government initiatives."
The Pro-Growth Progressive lays out some innovative policy proposals. For example, to boost savings, Sperling suggests what he calls the Flat Tax Incentive, which is a flat 30 cents refundable tax credit for every dollar of savings by a worker. In contrast, current methods of encouraging savings, such as making 401(k) contributions exempt from taxation, tend to give heftier subsidies to higher-income workers (who get a bigger benefit from tax exemptions because they pay a higher marginal tax rate).
The book has several big problems, too. For one, Sperling sometimes can't stop himself from refighting old political battles from the Clinton years. And some of his language goes way beyond clunky, into almost a parody of economic blather. At one point he observes that "to achieve shared growth in the dynamism economy we must move toward a four-part strategy for cost sharing and adjustment assistance." That isn't likely to raise anyone's enthusiasm for growth.
Nevertheless, The Pro-Growth Progressive has the potential to shift the terms of America's political and economic debate. In today's world that's no small achievement.
By Michael J. Mandel