Democrats’ new deal could be better

Recently Chuck Schumer, the Democrats’ leader in the Senate, promised readers of the New York Times “a better deal.” He said the party was listening to a country that’s “clamoring for bold changes to our politics and our economy.” He’s right that voters are unhappy, but I wonder if the Democrats are really getting the message.

Schumer’s opinion piece displayed the standard Democratic dissonance between a radical-sounding critique of American capitalism and timid little steps to put things right. Both sides of this traditional formula are wrong. The system isn’t fundamentally broken; American voters don’t want their government to demolish capitalism and start again. At the same time, bold innovations in policy—much bolder than Democrats appear to be contemplating—are needed to make the economy work better for the wide middle of the American electorate.

Schumer talks about “vulture capitalists” gouging consumers and “huge corporations … padding the pockets of investors but sending costs skyrocketing for everything from cable bills and airline tickets to food and health care.” This weary anti-capitalist imagery evokes an economic system that’s fundamentally exploitative, one that would descend into outright criminality unless minutely policed by Democrats, Washington’s self-denying, ever-vigilant guardians.

The point isn’t just that this is preposterous (though it is), but also that too few Americans will buy it as a political program. Most voters aren’t instinctively anti-business, and they understand that Democrats in Washington are as much in hock to special-interest money as their opponents. To pretend the opposite invites derision. A bit less moral indignation and a lot more policy ambition would go a long way.

Schumer’s remedies for the depredations of the capitalist system aren’t necessarily wrong. They’re just small: Require drug companies to justify price increases to the public and let Medicare push for lower prices, allow regulators to break up big companies “if they’re hurting consumers,” and give firms a tax credit to train workers for unfilled jobs. Does stuff like this really measure up to the menace of vulture capitalism? Don’t imply the system needs dismantling unless you’re Bernie Sanders and are actually willing to do it.

Shorn of its anti-capitalist rhetoric, the Democratic program could nonetheless afford to be bolder. Three areas in particular call for genuine, not feigned, radicalism.

1. TAX REFORM.

The Democrats’ goal should be to lift the lowest-paid workers out of tax altogether. That would mean reforming the payroll tax, which falls on even the lowest-wage labor. Much of the necessary revenue could be raised by reducing or eliminating the deductions that mostly benefit the better-off. In the aggregate such a change would shift more of the burden of the tax system onto the higher-paid.

There’s a good case for higher tax rates at the very top of the income scale and for a fairer treatment of inherited wealth (it isn’t right that capital gains can be passed along to heirs entirely untaxed). Middle-income households needn’t then face higher taxes. But the goal shouldn’t be to punish the rich for their supposedly ill-gotten gains. Most Americans aspire to do well and would like to be rich. They have no moral objection to money. The goal that deserves emphasis is not raising taxes, but cutting them, especially the taxes that fall on the low-paid.

2. HEALTH-CARE REFORM.

Here the aim should be bigger than defending Obamacare from Republican assault, worthy as that may be. The organizing principle should be universal coverage as a fact, rather than an aspiration (as it is under the Affordable Care Act). But genuinely universal coverage does not and should not mean “single-payer”—a term that suggests health care delivered through a government monopoly. There’s no reason why assurance of coverage cannot be combined with competitive delivery of medical services and/or health insurance. (Ezekiel Emanuel, an adviser on Obamacare, wrote a book about it.) This approach to the problem better conforms to the American insistence on consumer choice and control.

3. EDUCATION.

America’s best universities still lead the world, but many of its high schools, by international standards, are failing pitifully. This, not capitalist padding of investors’ pockets, is the wedge that will widen and deepen the gap between prosperous Americans and the rest.

Democrats should be ashamed that they are resisting rather than championing the campaign for education reform. Teachers’ unions are a core constituency, no doubt, and it’s apparently too much to ask of the party’s leaders that they should turn on publicsector unions the way Britain’s Labour Party did in the mid-1990s. But America has far more parents of school-age children than teachers. Political selfinterest, quite apart from the interests of those parents and their kids, would seem to argue for a judicious distance between the party and the principal opponents of innovation and competition in schools.

Americans do deserve a better deal. It’s a shame the Democrats still aren’t seizing their opportunity.