Barney Frank and the "Grand Bargain"

I'd be very curious to know what people think about this:

Representative Barney Frank has proposed in a series of meetings with business groups a "grand bargain" with corporate America: Democrats would agree to reduce regulations and support free-trade deals in exchange for businesses agreeing to greater wage increases and job benefits for workers.

In broad strokes, I generally agree with this maneuver, but of course the devil's in the details. Clearly Democrats are going to have to work with the business community and earn their acceptance of progressive policies, and making quid pro quo exchanges like this is one way to do that. But it's important to watch it closely so that there's balance in the deal.

The details, at least what we know of them, here:

"What I want to do is break that deadlock," Frank said in an interview. "A lot of policies that the business community wants us to adopt for growth are now blocked. On the other hand, the business community is successfully blocking the minimum wage [increase] and created a very anti union attitude in the Congress."

Frank proposes that if businesses support a minimum wage increase and provide protection for workers adversely affected by trade treaties, Democrats would be more willing to ease regulations and approve free-trade deals. Frank also would support changes to immigration rules favored by businesses, and noted that allowing more immigrants would put needed funds into the Social Security system.

Frank casts his proposal as a way for capitalists to quell some of the populist fervor that was expressed in last week's election, when many Democrats vowed to crack down on companies moving jobs overseas.
"I'm a capitalist, and that means I'm for inequality," Frank told Boston business leaders on the morning after Election Day, in a speech about his grand bargain. "But you reach a point where you get more inequality than is healthy, and I believe we're at that point.

"What we want to do is to look at public policies that'll get some bigger share of the increased wealth into wages, and in return you'll see Democrats as internationalists. . .. I really urge the business community to join us."

Gridlock on these policies will not be good for public image, but if you give away the farm in trade agreements and regulations, I think we'll have disarmed at our peril. It's clear to me that what has been mandated by voters and desired by the public at large is regulated capitalism. That means ending corporate welfare as we know it, and at least improving equality of opportunity. In the end, I believe such policies would increase competitiveness and open markets to US goods rather than close them. Worker protections in global free trade treaties need to be GLOBAL or they will not work. We have a race to the bottom where companies go on a hunt around the world for the lowest-wage workers to exploit with impunity. As long as that system remains in place, you can put all the worker protections together you want and it won't help anyone keep their job.

The current wage inequality, in the words of Alan Greenspan (of all people), is unsustainable and "threatens global capitalism." At some level, I believe corporate America knows this. But they've been having their way in Congress for so long, writing the laws themselves, receiving fat coporate welfare checks, that to think they're just going to buy into such a bargain (even when it may be tilted toward them) is not realistic.

But while Frank has won support in Massachusetts among financial-services executives, some national business leaders are skeptical. Bruce Josten , chief lobbyist for the US Chamber of Commerce said he is worried that Frank's grand bargain would mandate costly benefits to employees, including health care , in exchange for support of free trade.

"His grand bargain . . . certainly is not going to sail with the American business community," Josten said in an interview. Josten noted that Frank historically has been at odds with the US Chamber due in part to opposition to trade deals. In 2005, for example, Frank supported the chamber's issues only 33 percent of the time.

They are going to remain resistant to change and try to threaten and wheedle and maintain the status quo. Indeed they've given half a million dollars to Frank's campaign PAC in the last election cycle. And they've still got the pen of the President with which to veto. So essentially, neither side is in perfect shape on this one, which makes compromise more possible. And of course, the path to that compromise goes through health care:

A starting point could be health care. Many businesses are trying to shed high health care premiums. Frank hopes that workers and businesses can agree on a government-administered plan paid for by workers that would reduce burdens on businesses, which would pass on savings to employees through higher wages.

"I think employer-paid health care is a mistake," he said. "I think it depresses wages."

Stephen J. Collins , president of the Automotive Trade Policy Council, which represents Detroit's Big Three automakers, said business leaders would welcome such a discussion with Frank. "Our companies are very open about the fact that they are facing massive competitive challenges of a global nature that need big answers," Collins said. "There has to be a partnership between government and industry to solve some of these problems, and health is one of them."

It's fantastic that Frank understands that a single-payer system is the only one that makes sense. I think he may find a great deal of support for the business community with that proposal. When car companies are paying more for health care than steel, they intuitively understand how relieving them of that burden will increase their competitiveness and their ability to take risks (drdave noted this as well in his diary last week).

I don't think you can sign free trade agreements without global labor and environmental standards, and if health care is the carrot to that stick, so be it. As for regulations, there's a lot of bureaucracy that maybe could be trimmed, and certainly it appears that Sarbanes-Oxley will be curtailed (though I see that as a lot of corporate whining). But the real reform there is no longer having lobbyists and industry executives in charge of regulating their own industries. I've seen enough in my lifetime to believe that greed is endemic to the current capitalistic system, and while that doesn't disqualify it, it demands real regulatory agencies to conduct oversight and ensure consumer, shareholder and worker protections.

Frank is proposing a year-long series of hearings to look at this issue and build a framework for compromise. While I have faith that he will not sell out core principles, we should watch this closely to make sure that there are no efforts to do so. Where this leads will eventually define how Democrats can be seen on issues of trade and economic fairness. While striking deals with corporate America doesn't make one an automatic DLC Democrat, we should be mindful that whatever bargains are made must embody a progressive capitalism that benefits everybody rather than just the privileged few.