21.3.2 Greater governmental intervention in the national economy

Position: Democratic Beliefs on Economic Intervention

Modern Liberalism

• Belief: Modern liberalism within the Democratic Party holds that the government should play a significant role in the economy to ensure fairness, stability, and equality of opportunity.

Positive Freedom and the Enabling State

• Belief: Democrats believe in "positive freedom," where the government acts as an enabling force to empower citizens to achieve their potential. This involves the state taking proactive steps to ensure that citizens have access to the resources and opportunities they need to succeed.

Keynesian Economics

• Belief: The Democratic Party strongly aligns with Keynesian economic principles, which advocate for government intervention to manage economic cycles. This involves using fiscal policy (government spending and taxation) to influence the economy, particularly to achieve full employment and stimulate economic growth during downturns.

Policy/Approach	Explanation and Examples
Support for Progressive Taxation	Democrats generally advocate for a progressive tax system where higher-income individuals and corporations pay a larger percentage of their income in taxes. This is designed to reduce income inequality and fund government programs. For example, President Biden proposed increasing the corporate tax rate from 21% to 28% to fund infrastructure projects and social programs.
Government-Led Infrastructure Investment	Democrats support large-scale federal investments in infrastructure to stimulate economic growth and create jobs. Biden's $1.2 trillion Infrastructure Investment and Jobs Act (2021) is a recent example, focusing on rebuilding roads, bridges, and broadband expansion. This policy is seen as both an economic stimulus and a way to modernize the U.S. economy.
Minimum Wage Increases	Democrats often push for increasing the federal minimum wage to ensure that workers earn a livable income. President Biden and many Democrats support raising the federal minimum wage to $15 an hour. This reflects their belief that government intervention is necessary to ensure fair wages in a market economy.
Expansion of Social Safety Nets	The Democratic Party promotes expanding social programs such as healthcare, unemployment benefits, and food assistance. For example, the Affordable Care Act (2010) (also known as Obamacare) was a landmark effort to increase government involvement in healthcare to provide more Americans with access to affordable health insurance. Democrats also pushed for the expansion of unemployment benefits during the COVID-19 pandemic to support those impacted by economic downturns.
Regulation of Corporations	Democrats advocate for increased regulation of businesses, especially in industries such as finance, healthcare, and the environment. The Dodd-Frank Act (2010) was introduced after the 2008 financial crisis to increase oversight and prevent risky financial practices. Additionally, Democrats support strong environmental regulations, as seen in Biden's push to rejoin the Paris Climate Agreement and introduce stricter emissions standards for industries.
Government Role in Healthcare	Democrats argue for greater government involvement in healthcare, aiming to expand access and reduce costs. The Affordable Care Act (ACA) is a key example of this, where the government played a more active role in regulating the insurance market and expanding Medicaid. Some Democrats, such as Bernie Sanders and Elizabeth Warren, advocate for a Medicare for All system that would expand government control over healthcare even further.
Investment in Renewable Energy	Democrats often support government intervention to combat climate change and promote renewable energy industries. Biden's Build Back Better plan proposed large investments in clean energy, electric vehicles, and efforts to reduce carbon emissions. These policies are framed as both economic stimulus measures and a necessary response to environmental challenges.
Childcare and Family Support Programs	Democrats advocate for expanding government-funded programs that provide support to families, such as childcare subsidies and paid family leave. The American Rescue Plan (2021) included provisions for expanding the Child Tax Credit, which aimed to reduce child poverty by providing direct payments to families. These interventions are seen as necessary to ensure that economic growth benefits all citizens, not just the wealthy.
Economic Stimulus and Relief Measures	During economic crises, Democrats typically favor government intervention through stimulus packages and relief programs to support individuals and businesses. For instance, the American Rescue Plan (2021) provided $1.9 trillion in economic relief during the COVID-19 pandemic, including direct payments to individuals, expanded unemployment benefits, and aid to state and local governments. This reflects the belief that government action is necessary to stabilize the economy during downturns.
Universal Pre-K and Education Investment	Democrats have pushed for expanding government-funded education programs to increase access to early childhood education. For example, Biden's Build Back Better plan proposed universal Pre-K for all American children. Democrats argue that investing in education through government intervention is essential for creating equal opportunities and boosting long-term economic growth.

These policies reflect the Democratic Party's broader belief that greater government intervention is necessary to reduce inequality, promote economic stability, and provide essential services to all citizens.

Summary:

The Democratic Party's economic philosophy is grounded in modern liberalism, which supports significant governmental intervention in the economy to ensure fairness, economic stability, and the welfare of all citizens. Through regulatory reforms, progressive taxation, and Keynesian economic policies, the Democrats aim to create an economy that works for everyone, particularly in times of economic hardship. Their support for policies like the Dodd-Frank Act and the Buffett Rule exemplifies their commitment to these principles.