Will Hillary Clinton really support the middle class?

Employment & Income17 Jun 2015Evert-jan Quak

On 13 June, for the first time since announcing her presidential candidacy in April this year, Hillary Clinton took to the big stage at an open air rally in New York. In her speech, she gave her audience a good idea of the presidential campaign she will roll out with her team in the coming months. Her core message is to reduce the economic power of the wealthiest and give it back to the struggling American middle class in particular.

To be successful in this campaign, however, she has to show that she is honest in her ambitions, really understands the struggles of the middle class, and is willing to embrace a significant economic reform programme against all the odds.

The tone of her speech was populist and critical of American corporations. ‘The financial industry and many multinational corporations have created huge wealth for a few by focusing too much on short-term profit and too little on long-term value… too much on complex trading schemes and stock buybacks, too little on investments in new businesses, jobs and fair compensation’, she told the cheering crowd of 5,500 supporters.

‘Prosperity can’t be just for CEOs and hedge fund managers. Democracy can’t be just for billionaires and corporations,’ she continued. ‘Prosperity and democracy are part of your basic bargain, too. You brought our country back. Now it’s time, your time, to secure the gains and move ahead.’

Clinton’s promise is to ‘build an economy where hard work is rewarded’ so that the ‘middle class mean something again, with rising incomes and broader horizons’. There was a lot of rhetoric, but the aspiring president gave no details on the specific policies she will opt for to change the economic trends of increasing income and wealth inequality. She pledged to unveil her economic programme in greater detail in the weeks to come, clearly to keep the media spotlights on her, but she already gave her audience a glimpse of what they could expect.

As president, Clinton will reward businesses that invest in long-term value and will rewrite the tax code to increase employment and productive investments within the United States, rather than promoting quick trades and allowing corporations shelter their profits overseas. She will give new incentives to companies that give their employees a fair share of their profits, and aims to focus on entrepreneurship and small businesses. She is willing to impose additional fees and royalties on fossil fuel extraction to protect the environment and stimulate the use of renewable energy. Another important pledge is to make preschool and quality childcare available for all and to include paid family breaks.

There is nothing really new about these promises, as they have been part of the Democrats’ political agenda for many years. They represent a continuation of President Obama’s regime, in particular his promises. For all the Democratic candidates, it is important to counteract the confidence backlash of Obama’s ‘change’ campaign, which in real politics did not change a lot in the lives of many Americans. Power relations in Washington have been too complicated for the incumbent president to push for reforms that will trigger systemic change.

Hillary Clinton is well aware of that, and that is why she emphasizes the importance of her experience in politics. She may not be the youngest candidate, she told the crowd in New York, but tried to turn that in her favour by joking that ‘you won’t see my hair turn white in the White House. I’ve been coloring it for years’.

However, the question remains how convincing Hillary Clinton can be in pursuing a renewed change campaign. The presidency of her husband, Bill Clinton, saw huge steps in the direction of free trade with the signing of the NAFTA and GATT agreements. In the 1990s, he also was responsible for financial deregulation and relaxing housing rules. Hillary Clinton cannot be held responsible for that, especially with today’s insights into the drivers of inequality. However, her speech presented no vision on an alternative trade regime or financial markets policy. And as can be seen from The Broker dossier on the Middle Class, alternative structures have to be sought for the financial and economic markets.

The struggle of the middle class and rising inequality in American society will be important ingredients in the political campaigns in the run-up to the presidential elections. It will not be purely the Democrats that will use the ‘middle class’ card, however. The Republicans are doing the same, but with a completely different message: ‘more Washington-led policy is not what mainstream Americans want’. They will emphasize that growth is needed to increase employment and that more taxes and legislation, especially from the federal government, will do the economy more harm than good.

Clinton cannot respond to her critics by simply adopting a populist tone, saying what is wrong and coming up with some simple answers. She has to build her campaign around a comprehensive vision for economic reform and by coming up with specific policies. She will need to counter the arguments of the Republicans using the same tactics she employs to win over sceptics within her own party who think she is not honest and lacks a broader vision on inequality.