Jesse Jackson Is No Bumper Sticker

I want to devote this column to comparing the economic positions of the Democratic candidates for President. I should confess up front that I am personally and politically drawn to Jesse Jackson’s candidacy on many grounds and that I have been contributing analysis and suggestions on economic issues to his campaign advisers.

Trying to stick as closely and “objectively” as possible to my professional role in this column as “economist,” I think Jackson’s proposals make Massachusetts Gov. Michael S. Dukakis and Tennessee Sen. Albert Gore Jr. look like minor leaguers.

(Gore suspended his campaign after last week’s New York primary, in which he finished third, but is trying to hold on to his more than 400 convention delegates. What he has said to date on the economy will therefore continue to have some influence leading up to the Democratic convention, and his proposals should be considered alongside those of Jackson and Dukakis.)

My judgment about the candidates’ economic proposals may seem startling to many readers, since Jackson has been widely portrayed, to quote the opening of a review of Jackson’s positions in this newspaper earlier this month, as someone who addresses “the issues of the day with all the subtlety of an automobile bumper sticker.”

But the Jackson campaign has been building toward a full presentation of his economic program and budget plan for some months and may be releasing a complete package fairly soon. Even based on what has already been released, the program looks good and it makes sense.

Before proceeding, what are the standards by which the Democratic candidates should be judged on economic policy?

Present Alternative

I think there are four: First, the Democrats should present a clear and forceful critique of the ineffectiveness, profligacy and regressiveness of economic policy under the Reagan Administration. Second, they should revive their party’s leadership as the party of economic justice, of intensive concern and vigorous support for the needs of the vast majority of Americans. Third, they should recapture the mantle as the party of economic growth. Fourth, they must make clear that they represent an alternative to “voodoo economics” by presenting precise program proposals in which the economic numbers add up.

Let’s apply these four standards in order.

All three candidates have stressed the fiscally libertine practices of Reaganomics, sharply criticizing rampant federal budget deficits in recent years. Jackson has most strongly criticized the unfairness of changes in tax policy since 1981; Gore and Dukakis lag substantially behind (in that order). And Jackson has most forcefully highlighted the feeble performance of the economy under the Republican regime. On balance, Jackson gets the edge on this first count, but his edge here is not yet enough to tip the scales decisively in his favor.

‘New Investments’ Proposed

On the second criterion, by contrast, Jackson leaves Gore and Dukakis in the dust. The three candidates share some important positions: They all favor significant increases in the minimum wage, for example, and legislation requiring advance notification of impending plant shutdowns. But Jackson has also advanced a much more impressive and far-reaching social agenda, with significant new programs, for example, in education, housing, child care, income security and environmental protection.

Whereas both Dukakis and Gore have tried to avoid committing themselves on spending levels for any such programs, Jackson has proposed “new investments” growing from $32 billion in the first year to $93 billion by the fifth year, for a total enhanced expenditure of $339 billion over the five years covered by his proposals.

Jackson has also advanced a more complete and coherent program for revitalizing the growth performance of the economy. Here, one needs to compare both structural and macroeconomic proposals.

All the candidates favor structural policies to help channel investments for improved productivity. Gore has somewhat vaguely endorsed investment tax credits as a mechanism, an approach that has not worked particularly well in the past. Dukakis places highest priority on public-private partnerships but has been willing to commit himself to proposing only $500 million in federal seed money to support those initiatives, a piddling amount compared to the magnitude of our needs.

Jackson, by contrast, has proposed an ambitious and promising two-part “Invest America” program, providing federal guarantees to help channel up to $60 billion in pension fund capital to finance small-business loans, low-income housing, neighborhood revitalization and infrastructure investment. The program would establish an American Investment Bank to fund major development projects through bonds leveraged by a combination of state and federal funds.

On the macro-policy front, all the candidates favor a change in the mix between fiscal and monetary policy--with less stimulative federal deficits and more stimulative monetary policy through lower interest rates--and a more vigorous effort to negotiate a coordinated global expansion with the major trade surplus economies such as Japan and West Germany. But when all is said and done, Jackson has presented a more credible basis for pursuing those objectives than either Gore or Dukakis.

Both the U.S. Federal Reserve Board and central bankers in trade-surplus countries are most likely to reduce interest rates if they perceive a detailed and internally consistent plan to begin reducing the U.S. government deficit.

Detail Refused

Jackson has released such a plan, demonstrating with particulars that it is possible both to expand investments in important new and neglected areas and to reduce the federal deficit substantially--provided that one has the courage to propose an end to the rampant military spending increases and unfair tax breaks for corporations and the wealthy that have dominated U.S. fiscal policy over the past decade.

Both Gore and Dukakis refuse to provide such detail, claiming that it is unreasonable to issue numbers now when they don’t know what conditions will be like in 1989 and beyond. That’s not an unreasonable argument. But how are we, judging the candidates now, to feel confident that they will provide the clarity and vigor necessary to pursue those fiscal objectives in the future if they won’t tell us what they want? And without such a basis, how can we be sure that their programs will promote economic growth?

Which brings us to the last standard for evaluation. Jackson has provided some clear and precise numbers to back up his proposals. By contrast, Dukakis and Gore have been evasive and sloppy. They have been evasive because they refuse to put their numbers where their mouths are. And they have been occasionally misleading with their numbers as well.

Dukakis suggests, for example, that we could almost immediately generate an additional $35 billion a year in tax revenues through more aggressive efforts at tax compliance, helping significantly to reduce the deficit (and allowing him to sidestep the question of restoring some fairness to the tax structure). But conversations with staff of the House Budget Committee suggest that these estimates are wildly unrealistic. They come from a congressional report that mentioned the $35-billion figure as a possible target only by the mid-1990s, after five years of an intensive campaign, not as an immediately realizable prospect.

The report itself provides no basis, moreover, for assessing the likelihood that such fruits could eventually be harvested. Congressional staff members suggest that it would be misleading to expect a net increase in tax revenues from compliance efforts of more than $2 billion to $3 billion a year after two years of start-up, less than 1/10th what the Dukakis campaign is projecting.

Gore has committed similar imprecision. He left the impression in a recent New York Times interview, for example, that we could substantially reduce the federal deficit by moving “to eliminate the $40 billion of unnecessary medical diagnostics (paid out in Medicaid and Medicare) each year.”

When challenged on the figure, Gore insisted that “I’ll be glad to document it for you. . . . “ But it turns out, according to Gore’s own Senate office staff, that they intended merely to highlight a large area of waste in medical practice and reimbursement, not to suggest a particular figure by which federal expenditures could be reduced through efforts to curb that waste. They do not know or intend to project what the expenditure savings might be over a reasonable time horizon, but they admit that it could not plausibly reach anything like a full $40 billion in reduced health-care costs.

Judged by the four standards combined, Jackson’s economic program and budget seem to dominate dramatically what we’ve seen (or not seen) from the other candidates. The inversion is complete. Gore and Dukakis, who have been portrayed as sensible and experienced, have offered us little more than rhetoric and vague promises. And Jackson, tarred as the oratorical author of bumper stickers, has generated a set of proposals for economic justice and economic growth that have both substance and precision. The choice seems clear.