Prosperity, Not Austerity

After playing a key role in President Obama’s re-election, the labor movement must pivot immediately to a new task: moving the president away from a potentially disastrous policy of ​“austerity economics” and toward a second-term adoption of more worker-friendly ​“prosperity economics.” In the weeks after the election, Obama will negotiate with the hard-right House Republicans about the looming threat of automatic across-the-board cuts.

Labor leaders see Obama’s strategy on these negotiations as a key test of his second-term priorities. They fear that if he accepts cuts to important programs such as Social Security, Medicare and Medicaid, his presidency will turn into a political and economic catastrophe for working people. ​“Even people who voted for Mitt Romney” don’t want cuts to those key social insurance programs, says AFL-CIO President Richard Trumka. Instead, labor wants Obama to adopt a plan for ​“prosperity economics” along the lines proposed by Yale political scientists Jacob Hacker and Nate Loewentheil earlier this year. Beyond debunking austerity as a deeply flawed strategy, Hacker and Loewentheil argue for a government investment in such areas as research, infrastructure, education, improved economic and environmental security for working families, constraints on corporate political power, and more widespread unionization. Together these measures will provide stronger, more equitably shared economic growth that ultimately resolves budget deficits.

If Obama adopts a deficit-obsessed austerity approach to the long-range budget, there will be little money available for creating jobs — what workers most need from the next Congress. And if Obama breaks his promise to protect social insurance programs and accepts a ​“grand bargain” with Republicans that prolongs the past ​“lost decade” for workers, the political and economic repercussions could be far-reaching. ​“Our members would simply walk away from the Democratic Party, and Paul Ryan would be president in 2016,” one labor official says.

Vigorous job creation will not only meet the needs of the jobless but also give workers more confidence and power to raise stagnant wages.

Many union strategists will continue to push for a revised, updated version of the Employee Free Choice Act, but such reform is a longer-term struggle. Obama sidelined labor law reform in his first term, and his recent campaign program to strengthen the middle class did not even mention unions, let alone legislation to facilitate organizing.

Communications Workers of America President Larry Cohen envisions creating a mass coalition movement for both economic justice and stronger democracy that would take up issues from labor rights to climate change and corporate personhood. Increasingly, union leaders believe reform will only come after social disruption or political cost forces the issue. ​“Unrest first,” says one high-ranking strategist, invoking the precedents of both the civil rights movement and labor organizing in the 1930s. ​“Labor law next.”