A Policy Agenda for Stronger, Fairer, and More Sustainable Growth
July 13, 2015
The Roosevelt Institute today released the following statement in response to Hillary Clinton’s economic speech at the New School:
Today, Hillary Clinton began outlining a comprehensive framework for tackling America’s problems of slow economic growth, low investment, and stagnant wages. Secretary Clinton’s speech reinforced an argument made by the Roosevelt Institute and supported by the economic evidence: inequality is a choice determined by the rules that structure how our economy works—the laws, regulations, and institutions that shape market behaviors and outcomes. Changes we have made to the economic rules over the past 35 years have left the U.S. with a weaker economy, higher inequality, and greater concentration of economic power. This cannot stand if the U.S. economy is to be put on track for long-term prosperity.
It is encouraging to hear Secretary Clinton focus so clearly on this central cause of America’s economic problems as she articulates a three-pronged approach to putting the U.S. economy back on track: making economic growth stronger, fairer, and oriented toward the long term. Delivering on the sweeping vision offered today will require a detailed policy agenda that addresses a number of issues ranging from family-friendly work policies to financial reform. Below, we’ve offered an outline of specific policies that we urge all presidential candidates to consider as they build their platforms.
But beyond any specific policies, an effective agenda must take a comprehensive approach to reforming the economy—an approach built on the evidence that our economy works best when it is working for everyone, not on the faith that prosperity will trickle down from a wealthy few at the very top. We cannot achieve strong, sustainable growth so long as the majority of economic gains remain concentrated in so few hands. To put it simply, stronger growth, fairer growth, and more sustainable growth are interconnected. We can’t have one without the others.
As we discussed in detail in our Rewriting the Rules of the American Economy report, there is a long list of policies that America can choose to implement in order to promote stronger, fairer, and more sustainable growth. We have summarized those policies below.
Making growth stronger
This means breaking down barriers to work: creating good jobs, sustaining good jobs, and ensuring that more Americans can obtain good jobs.
1) Expand access to labor markets and opportunities for advancement
- Enact paid sick and family leave so that more people can have the security to work while still caring for their children and family members.
- Subsidize child care to benefit children and improve women’s workforce participation and economic mobility.
- Open Medicare to all to make health care more affordable for families and employers.
- Expand public transportation to promote equal access to jobs and opportunities.
- Reform the criminal justice system to reduce incarceration rates and penalize employers for discriminating against people with an incarceration history.
- Enact comprehensive Immigration reform, recognizing immigrant families for their contributions to America’s economic success.
- Protect women’s access to reproductive health services so all individuals can access comprehensive, affordable, and quality care.
2) Make public investments needed for private sector growth
- Invest in large-scale infrastructure renovation with a 10-year campaign to make the U.S. a world leader in infrastructure manufacturing, jobs, and innovation that raises efficiency and cuts the cost of doing business in the U.S.
- Enact universal early childhood education and a universal child benefit, ensuring that every child in America has access to pre-school starting at age 3 and that parents have the resources to invest in their children’s futures.
- Make higher education accessible and affordable by reforming tuition financing, restoring consumer protections to student loans, and adopting universal income-based repayment.
3) Make full employment the goal
- Appoint members to the Federal Reserve who prioritize the Fed’s full employment mandate.
- Restore balance to trade agreements to ensure that U.S. businesses and workers can compete with the world on a level playing field.
Making growth fairer
This means rewarding work fairly and crafting a tax code and compensation system that incentivizes investment and innovation in the real economy.
1) Empower workers
- Close the pay equity gap to ensure equal pay for equal work.
- Raise the national minimum wage and expand enforcement to ensure that work pays a living wage.
- Strengthen the right to collective bargaining by easing legal barriers to unionization, requiring mandatory arbitration for first contracts, imposing stricter penalties on illegal anti-union activities, and amending laws to reflect the changing workplace in America.
- Leverage government to set workplace standards by attaching strong pro-worker stipulations for private government contractors.
2) Make taxes more progressive
- Ensure top earners pay their fair share by raising top marginal income tax rates, replacing tax expenditures with capped credits, and taxing capital gains at least as much as labor income, with a much higher tax rate on short-term capital gains.
- Enact revenue-positive corporate tax reform that ends the indefinite overseas deferral of corporate profits in foreign tax havens, eliminates the incentive for offshoring by taxing corporations as unified entities on the basis of their global income, establishes a global minimum tax, and reduces corporate welfare within the tax code.
Focusing growth on the long term
This means ensuring that our financial system focuses on creating long-term value and minimizes the risks of a major financial crash.
1) Fix the financial sector
- Eliminate hidden subsidies to big banks that create too much risk and then hold taxpayers hostage to the need for bailouts.
- Appoint officials to key federal agencies with a track record of enforcing regulations rather than lobbying for the industry.
- Level the playing field between large financial institutions and community banks with increased leverage requirements and leverage surcharge.
- Address the “shadow banking system” that eludes existing rules and regulations designed to make our economic system safe, stable, and accountable.
- Eliminate the loopholes promoting offshore banking centers and tax havens.
- Increase transparency throughout the financial sector so we can finally understand the risks and conflicts of interest that tip the scale of fairness and threaten to destabilize the economy.
2) Focus corporate executives on long-term investment
- Eliminate the CEO performance pay loophole, i.e. Section 162(m), that ties incentives to short-term stock prices rather than long-term performance; increase disclosure requirements on executive compensation and stock options; and implement the Dodd-Frank rule requiring disclosure of the CEO–median worker pay ratio.
- Enact tax reform to combat short-termism for shareholders, first by raising tax rates on capital gains to the same level as the rates on labor income and then by raising the rate on short-term capital gains and non-productive long-term capital gains (land speculation) even higher.
3) Rewrite the rules of trade to put all U.S. workers and businesses on a level playing field
- Restrain the scope of the investor–state dispute settlement procedures for future agreements (and revise the myriad prior agreements) and build in safeguards so that public interest regulations cannot be undermined by private international courts.
- Rebalance intellectual property protections to encourage innovation and lower consumer prices.
- Make U.S. market access benefits contingent on firm audits of compliance with labor and environmental standards—a social standards export license—to give real meaning to a high-standard global economy.