It's Health Care and Education, Stupid!

New York Times columnists Bob Herbert and Paul Krugman might as well have been conversing on paper today because while one (Krugman) poses the challenge of keeping good paying jobs for Americans, the other (Herbert) tells the Democrats to get off the dime and start proposing the necessary reforms.

Thanks, guys. But...if we all know this, how come the Democrats don't get it yet? Are they ever going to? And what's taking so damn long?


October 17, 2005
Op-Ed Columnist
The Big Squeeze
By PAUL KRUGMAN

In 1999 Delphi, the parts division of General Motors, was spun off as an independent company. Now Delphi has filed for bankruptcy. Its chief executive, Robert S. Miller, wants the company's workers to accept drastic wage cuts, from an average hourly wage rate of about $27 to as little as $10 an hour.

There are a lot of questions about how Delphi and the auto industry in general reached this point. Why were large severance packages given to Delphi executives even as the company demanded wage cuts? Why, when General Motors was profitable, did it pay big dividends but fail to put in enough money to secure its workers' pensions?

But Delphi's bankruptcy is a much bigger deal than your ordinary case of corporate failure and bad, self-dealing management. If Delphi slashes wages and defaults on its pension obligations, the rest of the auto industry may well be tempted - or forced - to do the same. And that will mark the end of the era in which ordinary working Americans could be part of the middle class.

There was a time when the American economy offered lots of good jobs - jobs that didn't make workers rich but did give them middle-class incomes. The best of these good jobs were at America's great manufacturing companies, especially in the auto industry.

But it has been a generation since most American workers could count on sharing in the nation's economic growth. America is a much richer country than it was 30 years ago, but since the early 1970's the hourly wage of the typical worker has barely kept up with inflation.

The contrast between rising national wealth and stagnant wages has become even more extreme lately. In 2004, which was touted both by the Bush administration and by Wall Street as a year in which the economy boomed, the median real income of full-time, year-round male workers fell more than 2 percent.

Now the last vestiges of the era of plentiful good jobs are rapidly disappearing. Almost everywhere you look, corporations are squeezing wages and benefits, saying that they have no choice in the face of global competition. And with the Delphi bankruptcy, the big squeeze has reached the auto industry itself.

So what are we going to do about it?

During the 1990's optimists argued that better education and worker training could restore the economy's ability to create good jobs. Mr. Miller of Delphi picked up that argument as part of his public relations campaign for wage cuts: "The world pays knowledge workers far more than it pays manual, industrial workers," he said. "And that's what's sweeping over here."

But that's a very 1999 sort of answer. During the technology bubble, it was easy to believe that "knowledge workers" were guaranteed good jobs. But when the bubble burst, they turned out to be as vulnerable to downsizing and layoffs as assembly-line workers. And many of the high-paid jobs that vanished when the technology bubble burst have never come back, partly because they have been outsourced to India and other rising economies.

Today, some of us like to stress the depressing effect of the dysfunctional American health care system on wages. A large part of the problem facing the auto industry and other employers that still provide good jobs is the cost of providing health insurance, both to their current employees and to retired workers.

If we had a Canadian-style system - which is enthusiastically supported by the Canadian subsidiaries of U.S. auto companies - the big squeeze might be averted, at least for a while. One more reason to be angry with auto executives is that they never threw their support behind national health care in this country, even though such a system is clearly in their companies' interest.

What if neither education nor health care reform is enough to end the wage squeeze? That's the possibility that makes free-trade liberals like me very nervous, because at that point protectionism enters the picture. When corporate executives say that they have to cut wages to meet foreign competition, workers have every right to ask why we don't cut the foreign competition instead.

I hope we don't have to go there. But denial is not an option. America's working middle class has been eroding for a generation, and it may be about to wash away completely. Something must be done.

The New York Times
October 17, 2005
Op-Ed Columnist
Get It Together, Democrats
By BOB HERBERT

A word of caution: Democrats should think twice before getting all giddy about the problems caving in on the Republicans and the prospects of regaining control of Congress in next year's elections.

For one thing, the Democrats' own house is hardly in order. While recent polls have shown growing disenchantment with President Bush and the G.O.P., there's no evidence that voters have suddenly become thrilled with the Democrats.

A survey taken by the Pew Research Center showed an abysmal 32 percent approval rating for Democratic leaders in Congress.

Another thing to keep in mind is that Congressional redistricting (anti-democratic in every sense of the word) has made it more difficult to oust incumbents. It would take a landslide of shocking proportions for the Democrats to win control of both houses of Congress next fall.

This is not to minimize the troubles facing the G.O.P. The party is in free fall. The war in Iraq has been a disaster and despite the vote on the constitution over the weekend there is no end in sight. The cronyism and incompetence of the Bush administration ("Brownie, you're doing a heck of a job") have become a national joke, a given.

Tom DeLay has been indicted. Bill Frist and his lawyers are answering subpoenas and preparing a defense for possible insider-trading charges. The White House is in a state of highest anxiety over the very real possibility that criminal charges will be brought against one or more of the most important people in the Bush administration. And conservatives have formed a circular firing squad over the Harriet Miers flap.

It's no wonder the Democrats are gleeful.

They should get over it, and get on with the very difficult business of convincing the public that Democrats would do a better job of governing a country that is already in deep trouble, and sinking deeper by the day.

It's not enough to tell voters how terrible the Republicans are. (Leave that to the left-leaning columnists.) What Democrats have to do is get over their timidity, look deep into their own souls, discover what they truly believe and then tell it like it is.

Give us something to latch onto. Where do we go from here?

A friend reminded me recently of the old political adage that all campaigns are a battle between hope and fear. Ever since Sept. 11 President Bush and the G.O.P. have been pushing the nation's fear buttons for all they're worth. The public is frightened, all right - about terror, about the consequences of the war in Iraq, about economic insecurity here at home, about the future of the United States. But there is no longer much confidence that President Bush and the Republicans are competent to deal with these tough issues.

What the Democrats have to do is get off their schadenfreude cloud and start the hard work of crafting a message of hope that they can deliver convincingly to the electorate - not just in the Congressional elections next year, but in local elections all over the country and the presidential election of 2008.

That is not happening at the moment. While Americans are turning increasingly against the war in Iraq, for example, the support for the war among major Democratic leaders seems nearly as staunch and as mindless as among Republicans. On that and other issues, Democrats are still agonizing over whether to say what they truly believe or try to present themselves as a somewhat lighter version of the G.O.P.

I wonder what Harry Truman would think about today's Democratic Party?

Democrats need to put together a serious proposal for withdrawal of American forces from Iraq over a reasonable (which means reasonably short) period of time, and couple that with a broader national security plan that focuses on Al Qaeda-type terrorism and domestic security.

Democrats need to tell the country the truth about taxes, about the benefits of investing in the nation's physical infrastructure, about the essential need to bolster public education from kindergarten through college, and about the shared sacrifices that will be necessary if anything approaching energy independence is to be achieved.

They need to be optimistic and hopeful as they deliver their message to the country, explaining that all of these things are doable, that they will strengthen the U.S. in the short term and create a better future for the next generation and the one after that.

Competence is essential, but it's not enough. The great voices of history have always been the voices of optimism and hope.