Model for Ideal Candidate: William D. Kelley

William D. Kelley is today largely forgotten. But this Pennsylvanian was a true political giant in his time. Kelley, who started out as a Jacksonian Democrat, became a Republican in the 1850's as he became convinced that slavery posed a direct threat to the type of democratic economic system he wanted to spread within the United States. Kelley was elected to Congress in 1860 representing the industrial district of Manayunk and Roxborough. He quickly became one of the leading spokesman for the key elements of Lincoln's economic plan: national banking, government support of the railroads and, finally, emancipation. In the post-War years, Kelley expanded his advocacy for emancipation to support for full citizenship and voting rights for freed slaves. There was no stronger defender of the rights guaranteed in the 14th Amendment than William D. Kelley.

Kelley also was a leader that Pennsylvania's manufacturers looked for ideas. While he was alive (he died in 1890 after 30 years of continuous service in Congress) he promoted the interests of productive enterprise, but justified his support, not with an ideology of private profit, but on the strength of his conviction that only by the development of a diverse industrial base would wealth be spread to all sectors of society. Kelley saw the spread of wealth in society as a key support for political democracy.

He was a vocal supporter of the rights of labor. He advocated in favor of a government-led credit system and denounced the gold standard and free trade as ideological shibboleths of entrenched power. At the same time, a large segment of business owners in Eastern PA looked to him as their advocate. The archives at the Library Company of Philadlephia contain ample testament to the support key business leaders gave to him and his seemingly "unorthodox" economic ideas over the years.

Now is the time to recast political alliances in our region the same way that Kelley did beginning in 1860. Kelley's ideas encouraged business owners to look beyond their parochial interests to the wonderful vistas that would open if their employees could enjoy the fruits of their own labor and the freed slaves were raised to the level (both in skill and income) of white workers. Before this realignment, the Philadlephia elite was largely pro-Southern and thought of their interests in terms of foreign trade and not home markets. In response, Kelley helped found the Union League as a center for pro-Lincoln businessmen and investors in our region, changing the region's political alignment until FDR rocked its foundations in 1932 and 1936.

Ideal candidate believes that a new alliance between the middle class, working class and skilled business managers and investors can be forged around a new program of investment in the US economy. This new program will not be led by Wall Street, which is too busy digging out of its current mortgage-backed mess. It could be led by a new alliance of manufacturers and investors not caught in the Wall Street vortex with citizens from all walks who realize that powerful ends can be achieved with the right kind of national government policy combined with the right type of private entrepreneurial energy.

Check out the talking points at the bottom of the posts on this site. Scroll down and post comments. Ideal candidate should be a collective effort of the best minds of our 6th district.

Poll Results: We Need A Stimulus Package

Ideal Candidate would have preferred higher participation. However, it's time to report the results of the poll. 60% of respondents chose either "imediate payroll tax rebate" or "rescind Bush tax cuts." 40% of the respondents also chose to increase federal aid to the states to make up for budget shortfalls. Both the tax rebate and aid to the states meet the criteria of "timely," "targeted" and "temporary" established by experts pushing a stimulus. Repealing Bush's tax cuts in 2010 (although perhaps worthy as a stand-alone policy) does nothing to stimulate the economy in the shortrun.

The key issue of the stimulus dbate for our 6th District race is as follows. Jim Gerlach would not know an effective stimulus package if he fell over it. Like many politicians, he sees every issue through the ideological lens of his peer group-- in his case, a supply-side orthodoxy that never saw an economic problem that could not be solved by lower marginal rates. But liberals and progressives will need lean to distinguish sensible policy from ideological preference. If liberal or progressive candidates are going to appeal to the educated opinion leaders in our district, they will have to know how to defend and how not to defend their political preferences. Resisting the Republican push to "make Bush's tax cuts permanent" must be defended on the right grounds (lower marginal rates do not, by themselves, make the economy grow faster and besides no one, even their proponents, believe they will stimulate growth in the near term) and not on the mistaken grounds that repealing them should be a feature of a short-term stimulus bill.

Ideal candidate should promote a stimulus plan having the broadest participation at the bottom rungs of the economic ladder (through payroll tax system) and not larded with largely ineffective tax incentives for private investment.

Gerlach Wrong on Stimulus Policy

An Ideal Candidate for the "Gerlach" seat would immediately begin putting heat on the "orange sweater guy" for statements like this:

Gerlach Statement on President Bush’s Economic Stimulus
Proposal
Washington
Congressman Jim Gerlach (PA-06) made the following statement today following President Bush’s proposal on how to stimulate the economy and Speaker of the House Nancy Pelosi’s comments to work in a bipartisan manner:
"I commend the President and Speaker of the House for recognizing that our leaders need to work together to continue the growth of our economy, and reinvigorate the American workforce. Federal and state treasuries may rise and fall, but history has consistently shown that a low tax rate for individuals and businesses provides a necessary stimulus to spur growth and revenue. Good ideas on how to generate more prosperity are found on both sides of the political aisle. It is my hope that Speaker Pelosi will keep her word and reach out to Republicans, keeping politics on the side, to help all Americans. Working together, Republicans and Democrats can continue to ensure that there is a brighter, more prosperous Pennsylvania for everyone as we move forward."

This is classic Gerlach. Phony tone of bi-partisanship, coupled with a veiled hint of classic conservative movement policy commitments. He sneaks in his observation that "history has shown that a low tax rate for individuals and businesses provides a necessary stimulus to spur growth and revenue." In context, this is a stupid statement, even if you believe the most credible version of the supply-side credo Gerlach is mouthing. It's stupid because a stimulus plan is a counter-cyclical temporary policy, not a policy of incenting entrepreneurship or business investment, or any of the other classic supply-side assertions about the effect of low tax rates. He is signalling to his base that he is still a true believer in making Bush's tax cuts permanent and in larding the stimulus with largely wasteful "incentives" for business investment, whose time lag and uncertainty fail the "targeted" and "temporary" tests of effective stimulus policy that are the basis for the current bi-partisan consensus. Remember, the Left is being asked not to push for classic public government-centered public works plans off the agenda. Republicans like Gerlach should be called out and told to keep their policy preferences in the closet in the name of getting something done to lessen the severity of the economic downturn.

Hey publicly mentioned candidates (Bob, Bob, Richard or Michael) any comment?

Pelosi's Offer of Compromise on Investment Credit is Probably OK

Evidently, Speaker Pelosi is willing to include investment tax incentives in her stimulus bill in exchange for the Republicans backing off the (ridiculous) demand that a permanent extention of Bush's tax cuts be included in a stimulus package. No economist believes that permanent extention is a stimulus measure. The extention of the cuts wouldn't take effect until 2010. Nevertheless, the supply side crowd was gunning for it.

Pelosi needs to do something. Although Bush will not be explicit about what he is talking about, on paper an investment credit is less damaging than across-the-board cuts (it will be temporary) and is worth buying off conservative opposition. A credit for private investment, however, is less targeted than a direct increase in federal expenditures, because it assumes that private investors have a list of projects that are ready for approval and the only thing holding them back is the after-tax impact of that decision (not necessarily true as financial accounting rules could require accruing taxes not paid next year due to the credit). Nevertheless, Ideal Candidate approves the concept of a deal.

Pelosi and Reid's "Pay-Go" is a "No-Go"

Ideal Candidate believes that it is important to tell Democratic voters when our Congressional leadership have been wrong. The so-called "Pay-go" rules that the Pelosi-Reid leadership imposed on itself at the beginning of the 110th Congress is a good place to start.

The idea was that the Democrats could win over so-called "fiscal conservatives" by criticizing Bush and the Republican leadership as "spend and spend" if not "tax and spend." The awkwardness was always that Democrats historically have been committed to the activist use of government for progressive ends. So the "fiscal conservative" t-shirt did not quite fit.

Once control of Congress returned to the Democrats, the problems increased. Every spending increase had to be paired with some sort of revenue increase, to "pay for it." The trouble is that no large institution other than the federal government accounts for its finances this way. When private or public entities want to build an asset, they borrow money (the bigger the institution the more likely they issue bonds rather than borrow from a bank) and count the spending as capital expenditure. Capital expenditures are depreciated over time, with only a small amount of the spending included as expenditure in any given year. Business corporations do it. Public entities, such as transit authorities and school boards do it. The federal government doesn't. Since the Reconstruction Finance Corporation was wound up in the 1950's the federal government has saddled itself with a budgeting system that accounts the money spent to build a road the same way as it does money spent in reimbursing hospital bills through Medicare. Both types of spending get counted towards the annual "budget deficit" that newspapers like the Washington Post teach us is "out of control."

Now that Pelosi and Reid are working with the White House to pass a "fiscal stimulus"bill, our leaders are in the embarrassing position of having to explain why this stimulus should not be "paid for" under "pay-go" rules. The truth is that the "pay-go" promise made no sense to begin with.

Ideal Candidate believes that receipts should balance expenditures for things that are in the nature of consumption-- here today gone tomorrow. But the fiscal balance should not include spending on infrastructure assets, which by their nature will make the economy perform better in future years. This spending needs to be accounted for differently. Also when the private credit markets are not working properly and bankers are not responding to lower interest rates by increasing lending, Congress needs to spend money and not concern itself with "paying for it." This is Econ 101.

Ideal Candidate is intrigued by ideas for going back to the model pioneered by FDR in the 1930's to build infrastructure and repair credit markets: the RFC. For a discussion of the RFC model please see this article in the Philadelphia Jewish Voice.

Hopefully any "real" candidates that emerge will want to join this discussion.

EPI Plan Adds Public Investment to Stimulus

The labor-affiliated Economic Policy Institute adds one more weapon to the stimulus arsenal that the Brookings approach ignored: increased public spending on investment. See article here.

When I attended the Hamilton Project program, Rubin wanted to keep public investment off the table because it risks sparking an ideological fight over private vs. public investment. Rubin wants to focus on boosting consumption and leaving investment until later. Overall, Ideal Candidate favors including public investment as a way of baiting Gerlach to oppose building roads, bridges and schools, but can see why Rubin wants to build the biggest tent in favor of a stimulus package based on the three "ts": timely, targeted and temporary.

Economic Stimulus: A primer

Ideal Candidate is glad that some visitors to the site are participating in the poll question about economic stimulus. Some of you may still be confused about what a "stimulus package" entails and why it is an important issue now, as opposed to when the 111th Congress convenes in 2009.

The type of economic stimulus package being debated right now (of the type endorsed by Fed Chairman Ben Bernacke) is not designed to right all the economic wrongs that have accumulated over the past 30 years. Rather, it is a narrowly tailored policy that is required today to slow or stop the economy's decent into a recession (defined as two or more quarters of negative growth). This should be distinguished from a policy of fixing long-term structural problems that may be needed to (1) reverse the growing gap between rich and poor (2) rebuild the nation's infrastructure or (3) save the US manufacturing sector.

A rough consensus among experts is emerging around the halmarks of an effective stimulus package. It needs to be "timely, targeted and temporary." These requirements were spelled out clearly at a recent forum sponsored by former Treasury Secretary Robert Rubin's group at the Brookings Institution-- The Hamilton Project.

Although Rubin's approach is to build consensus among technocrats without regard to party or ideology, the ideological opponents are already lining up in the usual places, i.e. the editorial page of the Wall Street Journal.

Ideal Candidate believes election campaigns are a great time to educate the voting public about economic issues and advocacy and debate around the design of an effective stimulus package is a good "teachable moment" about the uses and misuses of economic policy. In the 19th century election-year speeches and editorials rang with rhetorical appeals for and against protective tariffs, national banks and federal support for "internal improvements." As a consequence the average well-informed citizen felt a high degree of involvement in economic issues.

Maybe we've been spoiled by the 20th century. The US was the center of the economic universe and even since living standards stopped growing as fast since 1973, most Americans had faith enough in their pensions, in Wall Street, in the values of their homes or Alan Greenspan that they didn't need to worry. Those days may be gone.

That's while Ideal Candidate will be stressing economics in this election campaign.

Once Again: It's the Economy!

As the daily drumbeat on the business pages makes clear, the economy is again likely to become the key issue in the 2008 elections. Voters in the Republican primary in Michigan told exit pollsters that the economy was their lead issue. According to this morning's summary in the New York Times:

"Surveys of voters leaving the polls showed that 55 percent cited the economy as their biggest concern, and 42 percent of them cast their ballots for Mr. Romney compared with 29 percent for Mr. McCain. In Iowa, by contrast, only 26 percent of Republican caucusgoers cited the economy as the most important issue, behind immigration. In New Hampshire, the economy was cited as the top concern by 31 percent of Republican primary voters, followed closely by Iraq, at 24 percent and immigration, at 23 percent."

There is no reason to expect that voters in the 6th PA would rate the issues any differently than voters in the recent Michigan primary. Although conditions locally are not yet recessionary (as they are in Michigan, California and other parts of the country), the drumbeat of bad news and the presence of real economic anxiety in a Congressional district with a sprawling suburbs and old manufacturing towns will mean that voters in November will want to select a candidate prepared to address the economy.

Ideal Candidate has laid out talking points (see below) that focus on economic anxiety and provide concrete policy options for addressing short-term cyclical weakness and the roots of our long-term structural economic underperformance. Where do would-be candidates Mike Leibowitz or Bob Rovner stand? Which of these gentlemen (or someone else) will have the vision to become worthy of the title "Ideal candidate?"

Bob Rovner Is a Charming Guy but Not Yet Ideal Candidate

Ideal Candidate is not ready to pass the "ideal" baton just because Bob Rovner, former State Senator and host of a valuable local radio program, is a charming guy. Mr. Rovner (who has run for office in the past as a Republican and as a Democrat) needs to convince voters that he will be an advocate for game-changing politics if he is elected. Let's have his program, so it can be evaluated against the "ideal" standard.

How You Can Help Ideal Candidate

Ideal Candidate can only succeed in sharpening the Democratic challenge to Gerlach if he/she has help. You can help by:

- Commenting on posts
- Participating in the Poll
- Sharing the blog with friends, family and collegues.

In your comments, it would be helpful to Ideal Candidate for you to give candid reactions to the Ideal Candidate Talking Points. Ideal Candidate does not stay still. He/she listens to 6th District voters and is always open to constructive advice and/or criticism. Ideal Candidate's talking points are a work in progress and will be updated, supplemented and/or modified continually.

Ideal Candidate looks forward to your participation.

Leibowitz is Not Yet Ideal

This just in: Mike Leibowitz says he's running

KP Exclusive: A Challenger for Gerlach | Keystone Politics

Ideal Candidate plans to stay in the race. IC will wait to see how Leibowitz's campaign develops to see whether he can assume the title of "Ideal Candidate." Unknown insurgent candidates cannot run a "safe" campaign and beat a well-known and well-financed incumbent. Insurgents must look for "break-out" issues that can appeal broadly and make Gerlach have to fight to hold his own base. See Ideal Candidate's talking points below.

Ideal Candidate Speaks: Let's Not Forget Congress

In this Presidential election year, it is easy to forget that we will also be electing 1/3 of the Senate and all 435 members of the House of Representatives. Yes, in Pennsylvania there is no Senator up for election. And yes, we can expect a coat-tail effect: if we nominate a strong Presidential candidate that candidate will influence voting down the column to the so-called "minor" races.

But we need a candidate. We need a candidate for House of Representatives. Until someone else emerges, I am that Ideal Candidate.

The problem is that I am now but a cyberspace entity. Until someone circulates a petition and files for the office, my campaign as "Ideal Candidate" is not for the office, but to influence the formation of the policy ideas and broad themes that could define a successful campaign.

Let's be honest. Conventional wisdom says that this seat is a long-shot. Gerlach has survived two tough challenges since being elected in 2002. He has earned his incumbency by being a fighter, and by being smart enough to chart a course just independent enough to avoid being seen as a "nothing but(t)" --an echo of the Bush White House. But a "just independent enough" is not enough to represent our district in a new change-oriented Congress in January 2009.

Now that Connie Williams has announced her retirement and Daylin Leach has announced his intention to run for Connie's seat, two possible candidates for the "Ideal Candidate" with proven vote-getting ability in the eastern portion of the district are out of the picture. Ideal Candidate has heard rumours of folks interested, but, as of now, is not aware of anyone who is serious.

Ideal Candidate is not out to "draft" any particular individual. Ideal Candidate will continue to serve as the only "declared" candidate for the office until a flesh-and-blood person with the qualifications to serve emerges. At that point, Ideal Candidate plans to continue to offer critiques and advice: holding up the ideal against which these campaigns should be judged.

Let the campaign begin!