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Dems see room for big government

Expect only subtle differences between three lead candidates

WASHINGTON – Hillary Clinton has taken the world of politics by surprise the past couple of weeks, giving her support to the most liberal members of her party on trade, climate change and Wall Street. She has now joined her foremost competitors for the Democratic presidential nomination – Sen. Bernie Sanders, I-Vt., and Martin O’Malley, the former governor of Maryland – in signing on to the same ambitiously progressive program.

That united front contrasts with the discord in the Republican Party, where internal divisions have been on display this week as GOP factions in the House dispute who will replace Rep. John Boehner, R-Ohio, as speaker.

This newly solidified Democratic agenda also contrasts with the situation in the party not all that long ago. After a catastrophic financial crisis and 15 years of declining incomes for typical American households, Democrats seem to have diminishing confidence in the potential of the free market to provide an improving standard of living.

“Bill Clinton said, ‘The era of big government is over,’” recalled Ross Eisenbrey, vice president of the liberal Economic Policy Institute, citing the former president’s State of the Union address in 1996. “Democrats for a long time have run from the notion that government can be – often is – the only solution to certain problems.”

Today, the Democratic candidates – the people who will present the party’s ideas on national television in Tuesday’s primary debate – are in agreement on the need for strict regulation of the financial sector and an increase in the federal minimum wage. They’re also wary of the invisible hand of international commerce. They oppose a trade agreement in the Pacific negotiated by President Obama along with the construction of the proposed Keystone XL pipeline, which would carry Canadian oil to refineries on the Gulf Coast.

That Democrats are in agreement on these points can obscure the fact that they haven’t yet come to a consensus on several important points. Viewers might hear more about these unanswered questions in the first Democratic debate on CNN Tuesday evening at 6:30 p.m. MDT.

The minimum wage

Clinton, O’Malley and Sanders all agree that the federal minimum wage should be raised. The sticking point is by how much.

O’Malley and Sanders support a national floor on wages of $15 an hour. That’s a crucial number for many workers, yet some prominent economists warn that doubling the current minimum wage of $7.25 an hour, and then some, could be counterproductive. If the minimum wage is so high that employers don’t make money by bringing more hands on deck, then they’ll hire fewer people, and it will be harder for low-wage workers to get a job.

Clinton has not said exactly how much she thinks workers should be paid at a minimum. Earlier this year, Clinton called into a conference of workers agitating for a $15 minimum wage to offer her general support, but she did not commit to that figure.

Social Security

Another unanswered question is what Clinton thinks should be done about Social Security. Sanders and O’Malley have both called for more generous benefits for retirees. They believe that too few workers have enough money to save for retirement, leaving them in a difficult financial position when they retire.

Younger people who hope to retire comfortably one day confront another kind of risk, too. The program’s trust fund will be exhausted in about two decades, if current trends hold, and beneficiaries will no longer be paid in full.

To pay for expanded benefits, O’Malley and Sanders have suggested increasing taxes on workers with incomes above $250,000. Sanders has additionally proposed a tax on capital gains in excess of that figure, so his plan would likely do more to improve Social Security’s finances over the long term. The program’s trustees have forecast that Sanders’s proposal would allow beneficiaries to be paid in full for the next five decades or so.

Clinton, though, has not yet said what she thinks she should be done about Social Security’s solvency or about the incomes of current and future retirees.

The big banks

These three candidates also agree on the need for stricter regulation on Wall Street. Clinton’s campaign released a detailed proposal on financial reform last week, calling for corporate leaders whose companies violate the law to face harsh penalties. They could be barred from working in any finance position and in some cases, serve terms in prison under Clinton’s plan. The document also calls for limits computerized trading on the stock exchanges that critics say shortchanges investors and destabilizes markets.

In one respect, though, Clinton’s proposal did not go as far as O’Malley and Sanders on the question of bank regulation. She did not advocate for the restoration of a law dating to the Great Depression that prohibited firms from combining risky investment banking (the business that makes the big bucks on Wall Street) with ordinary retail banking (the business you do when you stop by the bank down the street).

Clinton’s husband repealed that law, known as the Glass-Steagall Act, during his presidency. It’s one decision he made that his wife does not intend to reverse. Clinton’s liberal critics say the end of Glass-Steagall was partly to blame for the recent financial crisis, a position that many Democratic economists reject. O’Malley and Sanders would ask Congress to reenact it, forcing major financial institutions to sell off desks doing business in the wrong category.



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