President Barack Obama said that the most “salient message” from the election was the voters’ demand that all levels of government and the private sector work together to “help the middle class move forward”. He’s right.
Real unemployment, in all categories, remains above 16 per cent; wages for 90 per cent of workers remain stagnant; there is little business confidence despite cash-rich treasuries; and the trade deficit in manufactured goods is a persistent $300bn each year.
Voters, particularly those in the industrial heartland, and only slightly less so on each coast, have demanded a more balanced economy. They want an economy that restores the vitality of the manufacturing sector. These workers supported the bailout of the auto industry because they believed there was no reasonable alternative. And they feel that the private sector, acting alone, cannot sufficiently advance the economy or protect their interests.
It is no surprise then that during the campaign Mr Obama called frequently for combining the executive branch’s nine distinct department and agency commerce-related efforts into a reconfigured “department of business”. It is not a new department but, rather, under a reconstituted and renamed commerce department, a consolidation of responsibilities and activities.
Given the complexity of the steps that need to be taken to speed up economic recovery, Mr Obama’s proposal is not just practical and expedient, it is also imperative.
The steps to be taken are obvious. First, adopt a manufacturing and industrial policy that integrates the government’s policies related to financing, research and development, and investment tax credits, taxation, trade, subsidies and domestic procurement.
Second, overhaul the corporate tax code to change the provisions that discourage some US companies from expanding domestically. Eliminate the incentives that encourage other companies to ship jobs overseas and lower tax rates in exchange for eliminating certain special tax breaks.
Third, invest significantly in the rebuilding and upgrading of the nation’s infrastructure, ideally through a new, independent national infrastructure bank, with a capitalisation of at least $1tn.
Finally, create a justice department bureau to enforce trade agreements and protect the nation’s intellectual property. The current system places trade agreement negotiation side-by-side with enforcement, often in the same hands, and without prescribed IP protection protocols.
With Mr Obama’s proposed “one-stop-shop” reform of the commerce-side of the executive branch, whose stated goal is to “help American businesses succeed”, there would just be a single, encompassing department of business with focused front-end guidance, resource allocation and follow-up. It would replace the nine disconnected agencies whose efforts are further complicated by the multiplicity of Congressional oversight committees.
Putting it less politely, keeping Congress as far as possible from folks who do the real work of running government is always positive. At least and until the voters of this land decide to combine their voting rights and sufficient brains to kick out the 19th Century ideologues who stand for election with the singular goal of blocking government.
Leo Hindery is chair of the US Economy/Smart Globalization Initiative at the New America Foundation, a bright and experienced economist and investor – and a helluva racing driver.