Last night, Charlie Rose interviewed Charlie Rangel and Barney Frank. As chairmen of the Ways & Means and Financial Services committees, respectively, they have the most influence over tax policy and financial regulation in the House. I found the Barney Frank portion of the interview more interesting. Rose introduced Rep. Frank as the smartest and funniest member of the House. I wouldn’t disagree. It’s clear that Frank sees the political landscape from a bird’s eye view, while most people can’t see the forest for the trees.
Frank was unapologetic about defending capitalism as the best economic system, but he explained that it must be tinkered with in two main areas to make it successful. First, economic growth that creates wealth much be distributed equitably so that income disparities don’t get out of control. Second, there must be enough oversight and regulation that the people have faith in their institutions.
Frank said that the Bush administration’s policies had a very predictable side effect. While there has been decent economic growth over the last six years, almost all of the wealth has gone to those that are already wealthy. Most people have seen no benefit or, owing to inflation, are losing ground. When people are working hard and treading water they get angry and they look for someone or something to blame. For Frank, this explains the increasingly hostility to free trade and the saliency of anti-immigration rhetoric.
Frank isn’t hostile to free trade per se, but he sees it as politically insupportable in an environment where the middle and working classes see no offsetting benefits. [My personal observation on this is that people are facing too much inflation (on energy, education, and medical care) to see even a benefit in lower cost consumer goods.]
Essentially, Frank is saying that Bush’s policies lead inevitably to a populist backlash (including the more unsavory xenophobic type). As progressives we can’t respond very well to the anti-immigration portion of this populist backlash. The best way to respond is to package an economic program designed to offset losses coming from free trade. This includes funds for communities that lose manufacturing jobs (which already exist) and service jobs (which are opposed by the GOP). It includes large tax breaks for the lower, middle, and working classes…helping them afford day care, health care, save for college expenses, etc. And it includes higher taxation on the wealthy.
This must be combined with regulation that protects the little guy from predatory loans, protects their pensions, etc.
Frank actually recommends using such a package as THE response to anti-immigration politicking. But, more importantly, he sees it as the only way to diffuse the rise in xenophobia.
He’s a smart guy, and I’m glad he’s chairing the Financial Services committee. I’d like to see someone half as smart replace Max Baucus as chairman of the Senate Finance Committee.
