Congressman Barney Frank, incoming chairman of the House Committee on Financial Services, has proposed something big and bold -- a grand bargain with labor and business to create a society more equal, more dynamic, and less bureaucratic.
Democrats control Congress by narrow margins, which limits their power to two areas. They can block things Republicans and business elites want -- and hold those goals hostage for things Democrats and liberals want. And they can use the hearing process to shed light on the real America.
Frank plans to do both. His committee has broad economic jurisdiction.
Business, Frank explains, wants more trade and foreign investment deals. Business also wants relief from excessively bureaucratic audit and reporting requirements imposed by the Sarbanes-Oxley Act of 2002 .
But at least half the Democrats in the House -- including Frank -- have been skeptical of who benefited from recent trade deals. Democrats also voted with near unanimity for Sarbanes-Oxley, and some felt it did not go far enough.
So what would business have to give in return to get Democrats to support trade agreements and regulatory relief?
First, Frank wants to renegotiate the grand bargain first brokered by FDR -- business has to learn to live with trade unions again, for there is no more effective force for greater equality of earnings. Specifically, Frank wants business to support a reform to allow a union to win recognition once a majority of workers signed union cards.
Present law requires unions to present a majority of signed cards, then wait for a secret election. In the interim, management can harangue and harass pro-union workers, fire organizers, and the penalties are so puny that union-busting campaigns are seen as a minor cost of doing business.
Second, Frank wants to tie trade deals to enforceable labor and environmental standards. And third he wants big business to support universal health insurance. "It's in their interest anyway," he says.
And finally, "They need to stop demonizing the public sector," Frank says.
How on earth does Frank propose to bring this about? He plans two years of hearings, on two tracks. One set will be an ongoing seminar on the widening inequality in America -- and the need for a new generation of strategies to broaden American prosperity -- including the role of unions, guaranteed health coverage, and other forms of social investment to protect living standards.
The other hearings will address financial regulation -- where it is excessive, like some provisions of Sarbanes-Oxley that are costly to small business; and where it is not sufficient, as in the case of predatory lending, credit card overcharges, home mortgage discrimination, and hedge fund abuses.
At various moments in the history of the Republic, hearings have been Congress's most potent weapons to reframe public debate. Sometimes these are investigative hearings that reveal wrongdoing, but other times they simply explore and explain how things work.
The Pecora hearings of the early 1930s uncovered abuses on Wall Street and laid the groundwork for the entire New Deal system of financial regulation. The Truman Committee of the World War II era investigated war profiteering, saved taxpayers hundreds of billions of dollars, and propelled Truman to the vice-presidency. The Fulbright hearings of the 1960s laid bare the failures of the Vietnam War.
Future historians may add the Frank hearings of 2007-08 to this influential list.
Skeptics might say that this proposed grand bargain is a bridge too far. Labor, especially the industrial unions, see trade deals as job-killers. It would be revolutionary for business to support universal, government-financed health insurance, much less to embrace unions.
But there was a time when unions backed trade, because policies were in place to prevent trade from destroying workers' livelihoods (as they are today in Europe.) There was a time when business decided that it could live with unions (as it does in other countries.) And health costs are reaching a level where business may decide, if only for competitive reasons, that tax-supported universal insurance is the lesser evil.
"I want to make opposition to the current regime [of economic policies] respectable," Frank says. "I don't want The New York Times and the Washington Post lecturing Democrats that they care about poor people while we oppose trade."
If Frank's bargain seems improbable, it's also because too many Democrats have been content to advance token proposals that neither fire the public imagination nor transform economic possibility. This kind of leadership has been so rare lately that we've almost forgotten what it looks like.
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His column appears regularly in the Globe.
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