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Left-Right Populism, Part 1

I’m not sure there truly is the possibility of forging a left-right populist coalition, and I’m particularly wary about it ever happening in the South. Nor am I sure that forging such a coalition, if possible, would benefit President Barack Obama or Democrats in Congress.

For the sake of argument, however, let’s assume that a coalition can be formed and it would help the White House and many Democrats both politically and electorally. What combination of policies would be necessary to do this?

In this, the first of two posts, I consider what might be the policy cornerstones of left-right populist coalition. The criteria for inclusion are policies that (a) offer widespread potential appeal to working-age, working-class voters–particularly whites, of course, since it is their votes that are most in play; and (b) can be translated or communicated easily and thus capitalized on politically/electorally.

1. Push payroll tax cuts. When factoring in the employer’s half of the contributions to FICA and Medicare, a solid majority of Americans pay more in payroll taxes each year than they do income taxes. Liberals view this as a travesty, conservatives a testament to the fact that millions of Americans pay little to nothing in income taxes. On the other hand, giving small businesses a payroll tax break for hiring new workers—which accounts for $13 billion of the $15 billion in incentives in the new jobs bill passed this week by the Senate—is hard for anti-business tax conservatives to complain about. (Note that while only four Republicans, including Scott Brown, helped end yet another attempted Republican filibuster, when it came time for final vote 13 Republicans voted “aye.”) Relatedly, though I could not find more recent polling on the question of payroll taxes v. income taxes, a Mark Penn poll from 2001 suggests that the public prefers the former to the latter. Give Harry Reid credit for pushing this jobs bill through and, even though it’s far smaller than what the House is proposing, Nancy Pelosi would be wise to carve out something similar to the Senate version and pass that now and take up other matters in separate legislation. (If we’ve learned nothing from the Clinton years or Obama’s first year, it’s that a small bill can get passed through Congress with far less fuss and attention than a big one. Piecemeal legislative strategies work.)

2. Reverse the Citizens United ruling. Americans across the board are upset with the recent Supreme Court ruling. Reversing it through constitutional amendment, as Sen. Chris Dodd is proposing, will be tough; reversing it in the near term by Supreme Court appointment even tougher, because the next two justices likely to retiree in time to give Obama a chance to fill their seats, John Paul Stevens and Ruth Ginsberg, were of course in the four-member minority that dissented from the five-member majority’s ruling. So for now, agitation and rhetoric will have to suffice, but Democrats and similarly outraged Republicans should their amplifiers up to 11 because, as I discussed earlier this month, the Citizens ruling is the rare example of something in which Americans hold nearly unanimous opinions.

3. Push through that new regulatory agency. This is the third policy subject on which there was movement this past week. (The Reid jobs bill passed, the Dodd constitutional amendment was proposed.) But the news here, which also involves Chris Dodd, was more discouraging: The retiring Connecticut senator’s attempts to create a new regulatory agency to oversee the banking industry are bogging down. Of course, part of the problem here is that Dodd is retiring and, even if he weren’t, he’s not exactly the ideal person politically to be pushing such an agenda. That said, I’m going to make what many will surely call a crazy suggestion: The Obama Administration ought to consider reviving Eliot Spitzer’s career by bringing him back from political exile to spearhead the formation of (and to potentially lead) such a regulatory agency. I know, I know: Spitzer’s personal resume is icky. But he’s done some great writing on these topics for Slate and is clearly a person seeking redemption. Yes, Spitzer has criticized Administration figures like Tim Geithner in his public writings and comments, but he’s also given some good advice to Obama. And who better than a guy who excels at taking on big institutions and is desperately seeking a path to political redemption? Besides, Spitzer’s sexcapades are unrelated to policy, unlike Dodd’s AIG and financial industry connections. Oh, and precisely because Spitzer is a controversial jerk people love to hate, there’s zero chance the media would ignore him or his activities.

4. Create financial services industry tax preferences for domestic investiture. Before the recent financial crash, Wall Street was accounting for 40 percent of corporate profits. The problem isn’t that this is “obscene” per se, it’s that it testifies to the fact that we make profits by moving money around instead of investing it. About a month ago, Obama called for taking $30 billion of the TARP bank bailout monies and using it to invest in small businesses. This is the kind of move that liberals and conservatives applaud because it entails the use of taxpayer monies to help small businesses hire new workers, rather than prop up banks who made poor decisions in the first place. So if this is a good idea in the short term, why not make it a policy or tax preference in the long term? That is, why not alter the tax code to encourage financial institutions to make investments in domestic as opposed to foreign entities, and for productive and job-making ventures rather than mere wealth creation for their investors? Making profits by moving money around tends not to trickle down, exaggerating existing wealth and income disparities. So let’s figure out a way–and I’m neither a tax code expert or financial services industry expert, so I’m not sure how this would be enacted–to tax profits at a lower rate when those profits are derived from domestic investitures that create new infrastructure and jobs in the good old USofA instead of just creating larger paper assets for investors at the top of the food chain?

As I see it, three threads are common to these four ideas. First, although there of course are costs to creating and running a new regulatory agency or lost federal treasury revenues to absorb on account of new tax preferences, none of these are “big government” programs in terms of what they would contribute to deficits and national debt. Second, they have a certain little-guy-ahead-of-the-big-guys tilt to them that should make it hard for sensible people in either party to oppose. And third, with a little but not too much effort the benefits of each can be easily explained and justified to the public. In a later post, I’ll get to policies that are likely to thwart liberal-conservative populist coalition-building.

Oh, and a final comment I simply cannot resist: Go USA hockey!