The Washington Independent - U.S. news and politics - washingtonindependent.com: Stories by Robert L. Borosage

A President in Denial

Robert L. Borosage — Tue, 29 Jan 2008 03:37:20 GMT

The economy had to be a major theme of President George W. Bush’s State of the Union address. In the weeks leading up to the speech, the message he's been repeating, over and over, is while there are “storm clouds” over the economy, “the fundamentals are strong.”

Say what? Bush says the United States has “had strong growth” because “we’re competitive,” have got “flexible workplaces,” and have “kept taxes low.” Let's take a closer look at America:
World’s largest debtor. Hemorrhaging manufacturing jobs. Dollar sinking. Banks on auction block. Middle class struggling to stay above water. Basic family security – from health care to affordable education – eroding. Vital public infrastructure collapsing, from the bridge in Minneapolis to the levies in New Orleans. No wonder the elites that gathered at Davos last week were bemoaning America’s economic weakness, not celebrating its strength.

Globally, the United States is in a financial hole that is getting deeper. 2008 will be the ninth consecutive year that the U.S. economy has grown at a slower rate than the world. In the first seven years of this century, under the Bush administration, the United States has run up a staggering $4.3 trillion in trade losses -- more than $3 trillion in manufacturing alone.

We now run a trade deficit not simply in lead-painted children's toys but in advanced technology products. The United States has lost the lead it once enjoyed in the green technologies of the future. We’re increasingly dependent on foreign oil, feeding the coffers of the petro states.

America is now the world’s largest debtor. Washington is sending more interest payments to lenders abroad than it is getting from investments abroad. Vaults of foreign central banks are stuffed with dollars. Understandably, the dollar is losing value, and its role as the world’s common currency is eroding, as countries diversify their reserves into euros.

China alone holds $1.5 trillion in foreign currency reserves -- much of it in dollars. Foreign sovereign investment funds – led by China, the Asian tigers and the oil exporters – are buying up U.S. companies and banks at firesale prices. For European tourists, America is a cheap date.

The United States continues to boast of its “robust” financial markets. But the lack of sensible regulation, exposed at the beginning of Bush’s term with the Enron implosion and at the end with the subprime and related banking debacles, leaves investors wary. The Securities Exchange Commission seems toothless, and the conservative majority on the Supreme Court has now ruled that banks and accountants can create schemes to defraud investors without worrying about civil liability.

London has benefited from all this. It is taking over, once more, as the world’s leading financial center for stock listings.

Here at home, the populist rhetoric of the presidential campaigns is, if anything understated. Incomes for working families have stagnated while costs of basics – health care, gas, home heating, college tuition – have soared. To put it in economists’ terms, median household real incomes have fallen from 2000 to 2006 (the last year data is available).

Americans are working longer hours than workers of any other industrial country --including Japan -- only to run in place.

Instead of widely shared prosperity, America is experiencing the most extreme inequality since the Gilded Age. More than half of the rewards of economic growth over the past 30 years have gone to the top 10 percent of families. In 1980, CEOs earned, on average, 42 times what an average worker made; now that ratio is estimated at 364 times average pay. The concentration of wealth and income has reached levels not seen since the eve of the Great Depression.

The Bush tax cuts have contributed to this -- illustrated by the hedge fund billionaires who pay a lower tax rate than their secretaries. At the same time, the number of children in poverty and families without health care is rising. Half of the country’s workers have no retirement savings plan at work. Barely half have any paid sick days.

One result have been the racking up of staggering and, as we have seen with the burst of the housing bubble, unsustainable debt. In the past seven years, U.S. household debt has almost doubled. Struggling families have ran up credit card debt and borrowed against the equity in their homes to stay afloat. Now, with home prices declining, that option is over for most people. So last year's record rates of foreclosures and bankruptcies are certain to be surpassed.

Yet, this unsustainable level of borrowing has failed to generate rapid growth. Consider the “recovery” from the 2000 recession, in the wake of the bursting of the dot.com bubble. The Federal Reserve pushed interest rates to the lowest levels in memory and held them there. Bush’s tax cuts and military buildup generated record deficits. Chinese and Japanese lenders helped keep inflation down and the dollar up -- lending us the money we needed to buy the goods they were producing with the jobs our global corporations took to them.

Yet with all this fuel, the United States witnessed the weakest seven year job growth and one of the weakest periods of real gross domestic product growth since the Great Depression. Less than 6 million new jobs were created -- which the economist Charles McMillion estimates cost about $1.8 million of debt per job. During this time, manufacturing lost 3.2 million jobs, or nearly 20 percent. These were replaced by new jobs in private education and health-care bureaucracies (3.3 million) and new service industry jobs in restaurants and bars (1.5 million). The United States is going from the industrial and technological capital of the world to a tourist theme park.

Worse, Washington spent the money the government borrowed largely in tax cuts for the wealthy, military buildup and of course, the Iraq quagmire (nearing $1 trillion and counting). The result is a dated and crumbling public infrastructure that makes America less and less competitive. The United States is lagging in everything from high-speed trains to broadband to failing public schools. The post 9-11 backlash has even eroded America's longtime edge in advanced education, with foreign students increasingly looking to Europe for their education.

The broken health-care system leaves the United States behind in virtually all measures of public health. Shelve the Horatio Alger myth, our divided education system provides this country with less mobility than enjoyed in Europe.

So what fundamentals, Mr President? The world’s largest debt. A hollowed out manufacturing center. A declining middle class. Glaring inequality. A banking system on the auction block.
With a $13 trillion economy, the United States is still a wealthy country. Its military, roughly half the world’s military budget, is without rival -- the strains of the Iraq occupation notwithstanding.

There is, as Adam Smith wrote, a lot of ruin in an economy. With the dollar decline, U.S. exports should rise. But it’s hard to figure what the president means when he says “the fundamentals are strong?” No wonder he has little patience for those mired in “reality based” thinking.

Robert L. Borosage is the president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. He has contributed to The Washington Post, The Los Angeles Times and The American Prospect magazine. He is a regular commentator on TV and radio, including Fox Morning News and National Public Radio.

McCain Policy Defies Math

Robert L. Borosage — Tue, 29 Apr 2008 21:33:54 GMT

Sen. John McCain (R-Ariz.) says that his age provides him with the “experience that is the basis for sound judgment.” That raises a simple question. How could an experienced senator run for president in the midst of a recession and put forth an economic plan which is, frankly, incredible?

McCain has just finished his “time for action tour” of “forgotten” America. Clearly designed to reassure affluent independent voters that McCain is a “compassionate conservative,” it offered relatively little to the working and poor people who turned out to hear him. After echoing the president for months that the economy’s “fundamentals are strong,” McCain has been loath to admit how serious this recession, indeed, the entire economic situation, is.

He has been slow in addressing those losing their homes, provides no relief from trade policies shipping jobs abroad, offers no major initiatives for the rising numbers of poor and has no plan to cover the 43 million Americans without health insurance. McCain's big answer to the recession seems to be a “gas tax holiday” for the summer -- a tax break more likely to end in the pockets of the oil companies than consumers.

The core of the McCain economic plan consists of heroic promises to cut taxes on the wealthy and the corporations. Cobbled together to appeal to conservatives in the earlier Republican primaries, when the economy was growing, these aren’t designed to counter the recession and won’t kick in completely until 2012. McCain starts by pledging to extend all the Bush tax cuts -- which he opposed in 2001 because he could not "in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us.” That will cost an estimated $2 trillion over the next 10 years, according to the Tax Policy Center, a nonpartison group.

Then McCain proposes new tax cuts – even more skewed to the wealthy than the Bush cuts. The soon-to-be Republican nominee would eliminate the Alternative Minimum Tax. He calls this a “middle-class tax cut,” but most of the benefit of eliminating the provision – as opposed to limiting its reach to middle income taxpayers – goes to those making more than $500,000 a year.

He would also lower the rate and coverage of the estate tax. He’d cut the top corporate tax rate across the board from 35 percent to 25 percent; allow corporations to write off all investments in their first year, and make the corporate research and development tax break permanent. He would double the child tax deduction -- providing the greatest benefit to families paying the top tax rates, and offering nothing to those making less than $28,000 a year.

The Tax Policy Center did the math. When all the McCain tax cut promises kicked in by year 2012, they would cost more than $550 billion a year -- with an estimated total of nearly $6 trillion over 10 years.

He would lower tax receipts from 20.3 percent of gross domestic product to 16.7 percent. The decrease is about 17 percent of the federal budget – as much as the size of the military budget and more than the entire sum spent on domestic discretionary programs like, education, energy, environment, homeland security, public health, everything the government does outside of the military and entitlement programs like Social Security and Medicare.

McCain claims that he would still seek to balance the budget in his first term. So how does he pay for the cuts?

McCain’s first response to this – and virtually any question about the budget – is to say that he will eliminate earmarks. But earmarks – many of which involve programs like increases in veteran’s housing that McCain himself supports – total about $18 billion a year. McCain says he can find $100 billion in savings for “earmarks, program review and other budget reforms.”

He says he’d save another $30 billion from corporate tax loopholes. He’ll save $2 billion by requiring that retirees with incomes above $87,000 pay for their prescription drugs.

That still leaves staggering deficits as far as the eye can see.

When asked, McCain argues furiously that he will freeze domestic spending for a year and “scrub” every program, arguing that every American knows there are “hundreds of billions of waste that can be eliminated.” That may be true, but when politicians call for balancing the budget by eliminating unspecified waste, fraud and abuse, Americans should hold on to their wallets. Eliminating waste is an ancient refuge for politicians unwilling to pay for their promises.

Meanwhile, McCain’s new promises will cost more than any waste he’d eliminate. McCain is famously committed to sustaining the war in Iraq, at $12 billion a month not projected in current budget estimates. He argues that we need to increase the military by 150,000 soldiers, develop a new civilian corps to manage foreign occupations, create a new secret intelligence agency beyond the Central Intelligence Agency for covert operations and revive a separate information agency to sell America’s story abroad. He admits “this will cost real money,” so McCain sees the military budget going up, not down, saying “we can afford to spend more on our defense.”

In addition, in recent weeks, McCain has promised he’ll create a new program to bring the Internet to poor areas that don’t have it, expand a wage insurance program for older workers that lose their jobs when companies move abroad, expand education and training to help younger workers retrain, have the federal government backstop companies offering student loans and more. He pledges a new “Medicaid Trust Fund” that will help those with pre-existing conditions who can’t get health care under his plan – “we’re not going to leave anyone behind” -- a commitment that will cost hundreds of billions, if he is serous.

So McCain’s program violates basic addition. He admits this by saying that he’d go with his tax cut plans even if the spending restraints weren’t in place. In presidential politics, arithmetic is for sissies.

Americans are sensibly cynical about such promises -- even from someone who advertises his “straight talk.” The real rub is that there is no reason to think that McCain’s plan will help either the economy or working people.

Essentially, McCain is offering a sequel to the Bush years – top-end and corporate tax cuts, costly war abroad, corporate trade policies and constraint on domestic spending. George W. Bush tried this mixture, presumably with fewer spending cuts than McCain.

We have seen the result. Gilded age inequality exacerbated by the tax cuts. Key domestic agencies --from FEMA to the Consumer Product Safety agency – starved for resources and staff, leaving Americans at risk. Bridges, levees and sewers collapsing as vital public investment is postponed. Large budget deficits and dramatically increased national debt, even as the United States racks up unsustainable foreign debts. And for most Americans, stagnant incomes that don’t keep up with rising costs in health care, education, gas and food. Despite low interest rates, top-end tax cuts and the military buildup after 9/11, Bush’s plan gave us a “recovery” of relatively slow growth, weak job growth and declining incomes – the median income never recovered the level it had reached in 2000.

And McCain would inherit a very different world than Bush did. Both would inherit a recession in the wake of a bursting speculative bubble --but Bush inherited a surplus; McCain a deficit and a country far deeper in debt. Bush inherited a strong dollar; McCain a currency already debased and likely to fall further. Now disparities of wealth and income have reached levels not seen since 1929, just before the Great Depression.

McCain, of course, is not selling Bush redux to America; he’s selling “change” and “character.” “They know that I’ll take action,” he says. But his policies offer only to keep digging the hole we are in.

And what does it say about character that, as a senator, McCain opposed the Bush tax cuts because they were too favorable to the wealthy, were not tied to spending constraints and were passed during a war; but now, as a candidate, he not only embraces extending the Bush tax cuts, but calls for more? What does it say about the character of a presidential candidate that, in the middle of the worst financial crisis since the Great Depression. he offers an economic plan that he must know is simply fantastical?

Robert L. Borosage is the president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. He has contributed to The Washington Post, The Los Angeles Times and The American Prospect magazine.

McCain's Trade Deficit

Robert L. Borosage — Thu, 22 May 2008 13:31:28 GMT

“Free trade,” said Sen. John McCain, the GOP presidential nominee in all but name, “ is the best thing that can happen to our nation. If I were president, I would negotiate a free trade agreement with almost any country willing to negotiate fairly with us.” He excoriates Sens. Hillary Rodham Clinton and Barack Obama for preaching what he calls “the false virtues of economic isolationism.” Trade looks likely to be a central issue in the general election campaign.

That’s all to the good, because America desperately needs an adult debate about U.S. strategy in the global economy. But for that to happen, both McCain and his Democratic opponent will have to go beyond what is now merely an exchange of rhetorical spitballs.

McCain has been a consistent advocate of Washington's current trade policies. He has voted for every treaty presented to him – the North American Free Trade Agreement, the Central American Free Trade Agreement, the World Trade Organization, Permanent Relations with China. He opposes adding protections for labor rights and the environment to those securing investment rights in trade accords. He opposes efforts to revoke the tax breaks that businesses get for investing abroad. He doesn’t believe in industrial policy to create jobs here at home. He opposes steps to penalize moving jobs off-shore.

But McCain has contributed more heat than light to the trade debate. His often repeated position is: “I'm a student of history. Every time the United States has become protectionist and listened to the siren song [of protectionism], we've paid a very heavy price… It sounds like a lot of fun to bash China and others, but free trade has been the engine of our economy. Free trade should be the continuing principle that guides this nation's economy."

But McCain has contributed more heat than light to the trade debate. But surely, any “student of history,” or member of the Republican Party, should know that the U.S. economy developed and prospered behind protectionist tariff barriers throughout its history. Republican presidents were leading advocates of high tariffs to bolster American industry. It was only after World War II, when U.S. industry dominated a world exhausted by war, that Washington became an advocate for more open trade. Protectionism is as American as apple pie. Trade policy in its modern form is a corporate strategy, not a “continuing principle.”

McCain’s mantra in defense of free trade echoes what most defenders say, from mainstream economists to The Washington Post editorial page. Assertion – “free trade benefits America” – replaces analysis. Boosterism – “we can compete with anyone” – supplants the cold calculation that used to be the hallmark of America’s business community. Authority – and the money and power of the Wall Street lobby – displaces argument.

But, not this time. This simply won’t work anymore. It is not 1980, when feckless Reagan policies started racking up ever larger trade deficits. It’s not 1992, when the economic adviser Robert E. Rubin convinced President Bill Clinton to embrace free trade fundamentalism.

In 2008, working Americans are making less than their fathers would have made 30 years ago. Inequality has reached heights not seen since 1929. The United States has lost one in five manufacturing jobs since 2000. Establishment economists like Alan Blinder warn that as many as 30 million service jobs are “contestable” in the global economy.

Even after the dollar has lost more than 30 percent of its value to the euro, the United States is running a current account deficit that requires borrowing or selling off assets at the rate of $2 billion a day. We’ve suffered $4.3 trillion in global losses since 2001. Foreign countries – from China to the oil-producing nations – sated with dollars, are ever more reluctant to take on more U.S. treasury bills. They’ve started diversifying their reserves into euros and yen, and are setting up giant sovereign investment funds to purchase real assets instead. Soaring oil prices – responding in part to the fall of the dollar – are effecting one of the largest transfers of wealth in the world’s history.

Surely it is incumbent on McCain – and on the defenders of the current course – to explain how they plan to get the country out of this hole. Or why they think that it doesn’t matter that we are the world’s largest debtor, and that the dollar is slowly being debased.

The International Monetary Fund warns that the U.S. trade imbalance is destabilizing. If nothing changes, the market will solve the problem. The dollar will continue to decline; the U.S. economy will go into recession. Imports will grow more expensive; exports more competitive. Eventually, the U.S. accounts might come into better balance.

That’s what we’re headed for now. The dollar has lost 32 percent of its value to a basket of major currencies, including the euro. Exports are growing faster than imports. Last year, the current account deficit declined from a staggering 6.2 percent of GDP in 2006 to 5.3% in 2007. If the economy tanks this year and the dollar continues its fall, our trade imbalance should decline further. But no politician would admit that recession and decline of the U.S. internationally is the strategy we should follow.

Moreover, the market, despite all the fatuous nonsense about the earth being flat, doesn’t exactly rule here. China, Japan and the Asian tigers all peg their currencies to the dollar. (They’ve limited the dollars decline in relation to their currencies to about 13 percent). The U.S deficit with China continues to rise. They’ve been buying bonds – and now investments – to prop up the dollar so they can continue to capture manufacturing jobs and markets. This mercantilist policy – a direct violation of the spirit of the WTO – is the one model of development that seems to work.

Arguably, as Kevin Phillips notes, Washington has been pursuing its own mercantilist strategy. We’ve put our manufacturing sector at risk, but subsidized and protected agribusiness, the military-industrial complex and, most particularly, Wall Street. U.S. policy has been designed to make America the world’s banker, the key handler of investment transactions. It remains to be seen whether the staggering losses suffered from the follies of the shadow banking system has undermined that strategy.

McCain keeps saying that U.S. workers can compete with anyone on a level playing field, and he is suggesting that is what the current trade accords create. But this rhetorical fantasy is divorced from the reality of today’s global marketplace.

Thirty years ago, perhaps, unions raising objections to job losses could be dismissed as protectionists, pessimists preaching “economic isolation.” Now we’ve seen the reality caused by our trade strategy. And those defending it can’t simply repeat the same old mantras without addressing the new and forbidding realities that we face.

McCain, aware of how the public has turned against trade, now admits, “open markets don't automatically translate into a higher quality of life for every single American. Change is hard, and while most of us gain, some industries, companies and workers are left to struggle with very difficult choices.” So he now suggests a wage insurance program that will ease the transition of skilled workers to less skilled, lower paying jobs. When they lose a good job and are forced to take lower paying work, McCain’s program will cover about half their loss for a couple of years.

But this loser’s subsidy won’t help workers with the health care and retirement benefits that are often lost in the transition. It won’t help those, even more in duress, forced into part-time work. Part of it will be pocketed by Wall-Mart and other low-wage employers reducing wages for new hires enjoying the subsidy. It is hard to see how easing the way to low-paid work helps sustain a vibrant middle class in the global economy.

Americans have learned not to expect much from candidates or campaigns. Slogans and slurs drown out real policy debates. But this year, Americans are paying attention and looking for answers. We deserve a serious debate about what surely is the fundamental challenge facing this country: How, in a global economy, can the United States dig itself out of the hole it is in, and sustain the strong middle class that is the triumph and cornerstone of American democracy?

If McCain really thinks extending our current trade policies is the ticket, then he owes us a bit more than rhetoric and cheerleading. He owes us an explanation of what his strategy is and why it will work better than the last 30 years.

Or if he really is happy with how things are going – having announced that the economy made “great progress” under President George W. Bush -- he should admit that he thinks this thing is working just the way he wants.

[Next week: How Democrats need to step up and what a real strategy would include]

Robert L. Borosage is the president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. He has contributed to The Washington Post, The Los Angeles Times and The American Prospect magazine.

An Alternative Trade Policy

Robert L. Borosage — Thu, 26 Jun 2008 10:00:00 GMT

Related: McCain's Trade Deficit

Where is Sen. Barack Obama on trade and globalization? Few issues appear to so treacherously divide elite from majority opinion. Many middle-class and working-class Americans view globalization as destructive to the U.S. economy -- forcing down wages, shipping good jobs abroad and increasing inequality. Most elites, however, believe globalization’s benefits are apparent; they dismiss opponents as ignorant or sore losers or Neanderthals.

Sen. John McCain (R-Ariz.), the presumed GOP nominee, stands with the elites -- treating embrace of our current trade policies as a matter of honor. Last week, he even traveled to Canada to celebrate the North American Free Trade Agreement before a Canadian business club. There, he scorned Obama’s call for renegotiating it as “nothing more than retreating behind protectionist walls.”

Obama, on the other hand, often goes wobbly on the trade issue. In the primaries, he vied with Sen. Hillary Rodham Clinton in denouncing NAFTA, vowing to renegotiate it. Yet, one of his leading economic advisers, Austan Goolsbee, apparently told the Canadian consul general in Chicago that Obama’s rhetoric was “more reflective of political maneuvering than policy.” Obama himself reassured Fortune Magazine’s Nina Easton that “sometimes during campaigns the rhetoric gets overheated and amplified.”

The finagling hasn’t gone unnoticed in the industrial heartland, where Obama has had a hard time convincing workers that he stands with them. They have every reason to be skeptical. Bill Clinton, after all, campaigned in 1992 as an opponent of NAFTA and scourge of China. Then, under the tutelage of Robert Rubin, now Citibank chairman, Clinton earned the elite's praise by championing the Wall Street trade agenda –- supporting NAFTA, the World Trade Organization and trade with China.

Not surprisingly, labor leaders reacted negatively when Obama named Jason Furman as his economic coordinator. Furman had been director of the Rubin's Hamilton Project, which focused in part on what reforms were needed to mitigate opposition to the globalized trade agenda. Now that Clinton seems to have squandered his cachet as the first black president, many voters would find it sadly ironic if the first black president were another Bill Clinton.

But Obama’s gyrations may simply reflect the distortions of the infantilized political debate. The question isn’t, as McCain suggests, one between embracing the current trade regime and “retreating behind protectionist walls.” It’s not even really about NAFTA, much less the treaties with Colombia, Panama and South Korea now blocked in Congress.

The challenge is defining a sensible strategy to sustain a prosperous middle-class America in a global economy. Clearly, the current strategy isn’t working for a great many Americans. Many good jobs are getting shipped overseas. Many employers are using globalization as a club to bludgeon workers for wage and benefit cuts. Workers are increasingly insecure, and the low-priced goods available at Wal-Mart aren’t worth the squeeze produced by stagnant wages and soaring costs of basic essentials -– gas, food, health care. The country is running unsustainable trade deficits, borrowing or selling off assets at the rate of $2 billion a day.

Obama, for all of his mixed signals, seems to get this. He argues broadly that U.S. trade strategy has to be “good not just for Wall Street, but also for Main Street.” He criticizes trade accords for serving special -- read multinational corporations and banks -- interests and not working families.

In fact, Obama, in a piecemeal fashion, has laid out elements of a major alternative strategy.

It starts with a commitment to reviving U.S. manufacturing jobs -- with an strategy focused on capturing the green markets of the future. He supports launching a concerted drive on energy independence and global warming, investing in conservation and renewable energy, providing subsidies for research and development in the next generation of batteries and green machinery, promising to see the green cars of the future are built in America. This would not only generate millions of new jobs here in America, it would dramatically reduce the half of U.S. trade deficits that goes to paying for imported oil and gas.

Obama would complement this with a commitment to modernizing U.S. infrastructure in everything from high-speed broadband to mass transit to airports, bridges and sewer systems. He pledges to double federal spending on civilian research and development.

The question, of course, is whether the ideas generated will be developed and produced in the United States. The lower dollar and higher transport costs already help to make American costs more competitive. Obama would reinforce these by ending the tax breaks that subsidize multinationals to send jobs abroad.

Recognizing that the benefits of globalization have not been widely shared, Obama uses the state to adjust the scales. He’d increase taxes on the wealthy to pay for affordable health care for all.

He would end the war on unions to help insure the benefits of globalization and increased productivity are shared. His plans include putting government on the side of workers, passing the Employee Free Choice Act, reviving the National Labor Relations Board and raising the minimum wage.

In addition, Obama pledges increased investment in education, in everything from pre-school to affordable college and advanced training. He argues that America can only prosper in a global economy if its citizens are the best educated and its workers the highest skilled in the world.

This domestic agenda would be reinforced, according to Obama, by changing the U.S. posture on global standards and negotiations. The Illinois senator pledges to seek global rules that protect the concerns of workers and consumers and small investors – labor rights, environmental and consumer protections, greater financial transparency and limits on excessive speculation. He is talking about lifting standards up, not allowing multinationals to drive national standards down.

On China and the mercantilist countries that play by a different set of rules, Obama has been circumspect. But he joined Hillary Clinton in supporting legislation to sanction China if it continued to undervalue its currency. He argued that “Allowing subsidized and unfairly traded products to flood our markets is not free trade… We cannot stand by while countries manipulate currencies to promote exports, creating huge imbalances in the global economy. We cannot let foreign regulatory policies exclude American products….”

All the basic elements of a serious strategy are here. For progressives, the haunting question, derived from the Clinton years, concerns both scope and priority. Clinton advocated many of these same elements, but shortchanged or abandoned most of them, choosing instead to pay down the deficit and pursue Wall Street’s priorities on protecting investments abroad and creating surpluses at home. Inheriting a recession and rising deficits, Obama will face the same pressures from Wall Street, surrounded by many of the same advisers.

This is where the growing revolt against the current trade policies might be key. Blocking President George W. Bush’s bilateral trade strategy, torpedoing fast-track procedures for trade treaties, frustrating progress in the global negotiations isn’t a trade policy; it is a necessary spoke in the wheel. It forces Wall Street and global corporations to the table. Their influential lobbies can either support the new strategy, or face a growing revolt against globalization. That is why voters are sensible in wanting Obama to be clear about his opposition to continuing the current course.

The working-class opposition to current U.S. trade policies drove both Hillary Clinton and Obama to join the revolt against NAFTA and Wall Street’s trade policies. McCain’s purblind embrace of Washington's current course has not only put trade at the center of the presidential debate, it offers Obama an opportunity to be the voice of working people in championing a new national global strategy.

By laying out a sensible national strategy designed to sustain a prosperous middle class in a global economy, Obama may be able to use the trade debate as an example of the “change we can believe in.” He can attract workers, manufacturers and exporters to the new strategy, and reassure Wall Street that he understands the global economy is already here, while defining the new deal required to make it work for most Americans.

He might just begin to “turn the page” from the tired spats of “free trade” versus “protectionism,” to the much needed discussion of how this country sustains high wages in the global economy.

Bill Clinton understood that the central post-Cold War security challenge was economic, not military. But he got the mission wrong. He thought his job was to champion the global market, when multinational corporations and banks were already forging it. The challenge instead was to create rules around it and national policies that would insure globalization worked for working people.

This challenge now faces the next administration. McCain appears satisfied with repeating the homilies about free trade. Obama has laid out elements of an ambitious new course. The coming debate may enable him to address the concerns of the vast majority of Americans, while leading the country toward a strategic discussion it can no longer afford to ignore.

Robert L. Borosage is the president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. He has contributed to The Washington Post, The Los Angeles Times and The American Prospect magazine.