Forget Clintonomics--This Is Mondalenomics

If you've a hankering for higher government spending and higher taxes—and I know plenty of people who do—you most likely got a bellyful at last night's Democratic debate in Hanover, N.H. Here are a few takeaways:

1) Democrats do realize that America exists in a hypercompetitive global economy, right? Mentions of "compete" or "competitiveness," zero; "China," one; "India," zero; "Asia," zero; "innovation," zero; "productivity," zero; "technology," two.

2) Thank goodness for global warming. Without it, Dems would seem to be hard pressed to come up with a strategy to grow the economy faster. This from Dennis Kucinich: "I'm talking about a new WPA, a Works Green Administration, creating technologies for a green America—we have to believe in economic growth. We should raise the ceiling." (Here's why climate change and massive government spending may not be an economic plus.) A skeptic might say that global warming provides a handy excuse for more government spending.

3) As far as dealing with Social Security goes, raising taxes—by lifting the cap on taxable wages—seems a popular way of returning solvency to the system. (Such a move, by the way, would be the largest tax increase in American history.) Here's Barack Obama: "I think that lifting the cap is probably going to be the best option." Forget about cutting projected increases to benefits. (As Americans get richer, benefits get fatter since they are linked to wages rather than inflation.)

And forget about raising the retirement age even though Americans are living and working longer. In fact, Kucinich wants to do just the opposite: lower the retirement age: "We should be thinking about lowering—lowering—the retirement age to 65. People's bodies break down. There are people who are retiring early; they don't have the kind of economic help they should get." I am pretty sure that would make the problem worse and require even bigger tax increases.

4) Bill Richardson rightly made the point that the Social Security Administration assumes America is on the verge of nearly a century of lousy economic growth, which makes the solvency issue worse: "You've got to also grow the economy. You have to have universal pensions: Here's—you know, this estimate, and you've just talked about, it's based on the growth of the economy, 1.3 percent. If it grows to 1.8, we don't have this. And if we—if we balance the budget, restore our fiscal house, there will be economic growth. If we invest in education and have a stronger workforce, if we incentivize and have a pro-growth economy, where we say we're going to make America green, renewable energy, we're going to bring new jobs."

My take: I've recently started a running series in this blog looking at how the weakening economy might create a situation for Republicans in 2008 that's reminiscent of the 1992 election. But there is another economic factor at play here, too. Can Republicans use the tax issue as an effective political weapon against Democrats? Up until now, I've doubted it. (My friend Larry Kudlow of CNBC, though, thinks taxes will be a big loser for Democrats just as they were for Walter Mondale back in 1984.)

While Republicans keep talking about Democrats rolling back the Bush tax cuts, most Democrats have only committed to repealing provisions affecting wealthier Americans. Plus, the last big tax increase Americans remember was Bill Clinton's in the 1990s, yet voters also probably associate the '90s with an economic boom.

But the Social Security tax hike would affect people making just under $100,000 and make the social insurance program an even worse deal for younger workers. This might be a huge opening for Republicans. I think Hillary Clinton also realizes this since she has been noticeably vague on how she would deal with Social Security. Here is how she answered moderator Tim Russert's question on raising the income cap: "Well, I take everything off the table until we move toward fiscal responsibility and before we have a bipartisan process. I don't think I should be negotiating about what I would do as president. You know, I want to see what other people come to the table with..." Ah, that explains things.