Politics Mondays: BEC Strategy Memo # 1 - How The GOP Could Win With The Minimum Wage

As a few of you know, I was the chief political strategist in 2004 for Cynthia McKinney's successful campaign to return to Congress in 2004. I have never written much about my role, which Congresswoman McKinney described as 'leading her air campaign' and 'providing the vision and big picture.' My responsibilities involved message formulation, speech writing, debate preparation and fundraising. It was an honor to serve Cynthia and in some ways very easy, because of her intellect and heart, years of political experience and genuine love for people. I have never seen anybody better campaigning on the street or in the 'hood. She is tireless, caring, witty and has a wonderful sense of humor. Just a few of the reasons why she has withstood the non-stop media barrage against her in Atlanta and nationally. Her enemies don't seem to realize that because of her campaign and leadership style, the people already know her, have direct access to her and can tell that her worst enemies don't live where they do. This does not mean that there does not exist a form of fatigue with her, felt by the electorate - as there would be with anyone who has served six terms - but it does mean that people know when someone has come out of town to to get rid of a local (even if they are trying to use another local to do so).

I would have loved to have helped her again this campaign season, and of course, I, at times, see where ideas, tactics, and strategies I have, might have been helpful, but times and circumstances change. We have both moved on from 2004 to work on some new and very exciting things. I wish my friend the best in her political career. What she has accomplished, and the way her political opponents have reacted to her should be carefully studied by the Black electorate.

I mention that relationship as a preface because I have not gone much into the vast amount of strategic advice I have provided to politicians, business leaders, artists, and entrepreneurs, and yes, close personal friends and numerous associates.

That is about to change. I will shortly be announcing the launch of an exciting new business I have founded which will make available to many in the general public what I have previously only done on behalf of the well-known.

As I mentioned in my panel discussion this past Saturday at the beautiful Reginald F. Lewis Museum, there has been a dearth of strategic sophistication where the Black political economy is concerned. There are many reasons for this. First, in a professional sense the world of strategy is dominated by older White men. So we have very few role models (which is one of the reasons I am praying that Donna Brazile asserts her self as a strategist rather than a 'commentator' or 'consultant.') Another fact is that Black subscription to White political ideologies and prescribed alliances amount to Black dependence on White dollars and ideas. This applies to both sides. And if any Black person on the right – conservative or Libertarian - wants to play games with me on this point in the public, I will name names and show beyond a shadow of a doubt that the same plantation that Republicans and conservatives say exists between Black Democrats and the White Left, is also in session among leading Black opinion leaders within or closer to the GOP. Obviously, I will do the same if some silly Black Leftist wants to argue this ridiculous point in reverse. The plantation is not a partisan affair. It is ever present.

Part of the real crisis of the Black intellectual, which I hope to elaborate on soon, is the amount of Black thinkers – of any ideology, religion or ism – who are bought and paid for by some university, think tank, foundation or political party. It is a tragedy. And again, I have seen this from the inside out (live from D.C.) and the outside in and am not interested in taking sides with any political party or Left, Right or Center-thinking person. Those Blacks who want to try as hard as they can to make us believe that progressive or socialist ideology is 'Black' are just as much a part of the problem as those that worship conservaism. I can't take that side, no matter how sympathetic I may be to some of what Karl Marx promoted. They have one hell of a plantation going in those circles of the White Left. Don't be fooled by the revolutionary rhetoric. It is White money and White ideas backing many Blacks and Latinos in the name of liberation.

No, I am taking the side of the Truth and suffering Black people who don’t have a learned head that is thinking on behalf of the masses, because they are too compromised and intellectually deferential to White men and women who throw slick talking points in front of them and fill up their e-mail 'in-boxes' with ways to think about reality. Too many Black intellectuals, opinion leaders, economists, political consultants, researchers, professors and authors are barely more than mental slaves.

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For years I have wrestled with how to best address for some and introduce for many the discipline of strategy, in the public. The root word in Greek for strategy means ‘the office of a general.’ There are military implications all up in and around the word and concept. It represents a different form of thinking, motivation and objective, in many cases, than that which is involved in public discourse, education and dialogue. I really would love to go into communications theory, and from a military and political standpoint, but I am hesitant for a variety of reasons.

One of these reasons is that I know that many people will not accept that a Black man can play chess. And what I mean by that, is that I have been struck by how many Black men have motivations ascribed to them by other Blacks in relation to the moves and decisions that they make – in a cultural, political and economic context. It is very difficult for a Black man (or Black woman) to execute any form of sophisticated strategy in front of the Black masses. We are so damn suspicious of any person, it seems, who is creative enough, disciplined enough and courageous enough to do a couple of things that are subtle, nuanced and require some critical thinking to understand. Rather than ask questions in the right spirit or practice patience, we immediately think the worse of this person. I have seen this so many times in my public and private life that I feel that I almost have a degree in the field. It goes back to self-hate, self-doubt, and the lack of self-knowledge. But in truth, it also is due to a litany of leaders who have sold our people out.

But it is a tragedy when people that agree with you on 99% of all issues will become suspicious of you for the 1% that they don't understand or don't agree with you on. The 1 percenters are a dangerous crowd - more emotionally upset over a small area of confusion than they are overjoyed over an ocean of agreement. A form of self-hatred, again.

But still, any person looking at our condition in Black America should be forced to realize that we don't necessarily need any new programs or a new agenda. What we need are new tactics and strategies in executing and obtaining them.

And to that end, I have decided that I will begin to share more openly, from time to time, strategy, of a political nature that I think more honestly reflects the dire need for more careful maneuvering on the part of Black leaders and Black voters. My hope is that the viewers of BlackElectorate.com will be able to roll with me on this and understand that strategy is passionate and it is offered dispassionately. I and others, even all of us, can and have given dispassionate advice to individuals we did not know or care for. In some cases we did this because it was good business, on other occasions we did it because it reflected our desire to teach and help anyone who asked. But hopefully we all do such a thing because it serves an enlightened self-interest.

I have given passionate, dispassionate and sincere political advice to Democrats, Republicans and Independents. I have done the same for activists, consultants, and people in street organizations. I do so out of an enlightened self-interest, I believe. I love the art and science of politics, business and warfare, for their own sakes; I enjoy the activity of advising other people; and I always see where what I am doing can help all of us - whether one day it inspires a young Brother or Sister to realize or see that Blacks really do this kind of thing, or whether it lines up the Black electorate immediately or down the road for something that could be beneficial to our people. I also do so out of a study of political history that has allowed me to see that the Black electorate has been putting off, denying, and delaying, the need to become more competitive, sophisticated and enlightened in how it negotiates with The State - in America and all over the world. And how it navigates a global economy. We are at a critical time in this nation and world's history and that of our people, and serious decisions that we could have made that might be uncomfortable but which would help the majority of us, are going to be unavailable shortly or made for us by others. Part of what is delaying this process are Black leaders who accept crumbs from White political power centers (again, this is taking place everywhere) and Black intellectuals who are not speaking and writing truthfully and with courage about where we really are in history.

These individuals would rather dumb down the Black electorate and tickle its ears (as well as their White benefactors) with a phony analysis of what is really going on and what needs to be done. They are too comfortable, don't want to risk anything of their personal comfort and status and really don't love their people as much as they claim. This is real and a very serious game they are playing.

Soon, folks like this will have no capital whatsoever with people on the street. I would rather die before joining that hall of shame, which is being built right now for this crowd of non-threatening Negroes. And, sadly, what these true accomodationists don't realize is that they will immediately be dumped by their White paymasters who already have very little respect for them, once our people turn them down completely.

I have long said that being Black and free in America means three things: freedom of association, freedom of speech, and freedom of thought. I can barely count the number of Blacks that I really believe have this kind of freedom. I believe I am one of the minority blessed to truly enjoy this. I wish every Black person could feel what I do in not being afraid to associate with, think about, and assemble with who I do.

But it takes courage because I and others who are like that are greatly misunderstood by many, including the sincere, and always run the risk of offending and alienating the very people they are seeking to help by the risks that they are taking.

I am taking a risk in publishing strategic memos like what follows at BlackElectorate.com. These memos are going to come from a wide variety of angles, and they are going to make many of you uncomfortable wherever they might find you. Well, I and you, need to be made uncomfortable. Because comfort, and the lack of struggle, and shying away from difficulty is what has eroded our willpower to do for self and make the type of sacrifices and investments that are demanded by the time and circumstances. May what I am doing at BlackElectorate.com be helpful in shifting the paradigm, supporting freedom, justice and equality, and evolve us deeper into a self-enlightened interest that places the needs of Black people all over the world as a primary concern, rather than any partisan affiliation or political ideology that is alien.

It is one thing to talk revolutionary, in rhetoric, it is another to make the kind of moves that are necessary to liberating minds and bodies from forms of enslavement that we do not even fully realize or perceive. Much of these moves are going to be more like chess than the checkers we have been accustomed to playing.

Today, we publish BEC Memo Strategy # 1, “How The Republicans Could Win With The Minimum Wage.” This memo was written two months ago. In light of the recent negotiations regarding this issue, this memo, I hope, helps us to see that there is some serious chess that can be played on this issue, by the Black electorate (in some ways that I imply but don’t elaborate on in what follows). I hope that many of you will be intrigued by my view - shared only by a tiny few - that John Kerry lost the 2004 election because of his lack of support for the minimum wage issue. Next week, that issue will be followed by BEC Strategy Memo # 2, “How The Democrats Could Win With The Capital Gains Tax.” Both of these memos were originally written at the request of Polyconomics, Inc. What follows is the original memo submitted for their publication and editing.

In the future, expect BEC strategic memos on the subject of reparations, the United States of Africa, inner city and distressed rural economic development, education policy, third political parties, interpreting and influencing the Supreme Court, direct and indirect taxation, and political developments and elections in the Western Hemisphere, Caribbean, Africa and the Islamic World.

I hope you all will understand.

But if not, so be it.

I have got to do what I have been called to do.

We can holler all day long about let's get political. I'm saying, good.

But let's get strategic, as well.


Sincerely,

Cedric Muhammad
Publisher
BlackElectorate.com
http://www.blackelectorate.com,

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BEC Strategy Memo - How The GOP Could Win With The Minimum Wage (June 18, 2006)


The American electorate is on the precipice of a titanic political struggle over the greatest of unresolved issues: redistribution of wealth versus economic growth. With the two major parties painting two extremely different pictures of the American economy, this year’s mid-term elections provide the best forum for a major battle in this larger war, which we expect will be intensely waged for the rest of this decade.

The Republicans, thanks to a recent White House face-lift, tell us that we are in the midst of an economic boom rivaled by few others. The Democrats insist we are headed for economic contraction. The rank-and-file constituencies in both camps measure the economic terrain in terms of the capital to labor ratio in their own lives.

The Party of Lincoln and Reagan advocate lower taxes on small business, corporations, dividends and capital gains while showing a split personality on whether or not more or less workers from Mexico are needed. To them, ‘low tax rates’ are the barometer and the most important variable in the economic growth equation, regardless to salary levels and hourly wage rates.

The Party Of Roosevelt and Clinton explain that capital does not matter as much as having everyone at work. To them, a ‘good paying job’ is the ideal barometer and the most important variable in the redistribution of wealth, regardless to the profits of employers.

The political right – perfectly or imperfectly - draws its economic wisdom from Adam Smith’s Wealth Of Nations while the left veils, ever so slightly, its attachments to a godfather named Marx and his magnum opus Das Kapital.

A primary experiment in the American political economy that reveals these lines of demarcation is the minimum wage.

Established via amendments to the Fair Labor Standards Act (FLSA) the minimum wage has been with us for not even a century. But its establishment manifests more of the fundamental economic tensions that shaped the early debates that surrounded the U.S. Constitution, three centuries ago, than possibly any other ‘innovation,’ in American politics. It, perhaps more than any other economic law, represents the capital and labor pendulum that swings within the dialectic of output and its redistribution in a society.

The justification for it today, its supporters tell us, is the same as that provided by President Franklin D. Roosevelt on June 16, 1933, “ No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By business I mean the whole of commerce as well as the whole of industry; by workers I mean all workers – the white-collar class as well as the man in overalls; and by living wages I mean more than a bare subsistence level – I mean the wages of decent living.”

Its opponents find such authoritative announcements to be antithetical.

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As we head into the 2006 mid term elections a pro-minimum wage movement is sweeping the country. This year five states have raised their minimum wage. Eight others have done so since 2004. Ballot initiative efforts to do the same are currently white-hot in five more states. Still, four more of the nation’s legislatures are considering laws to increase the minimum wage in their states.

The confluence of these efforts is not an accident but rather partly the natural result of the nation nearing its longest period without an increase in the federal wage. The last hike was delivered on September 1, 1997 when the rate went from $4.75 to $5.15.

The other factor most responsible for the issue’s reemergence is that a strategically challenged Democratic Party has suddenly discovered it as a wedge issue capable of attracting significant levels of support from Reagan Democrats and Republicans more concerned about labor than capital.

Hence, the Left’s new focus on getting the issue onto the ballot anywhere they can, in order to create a national message this election season. While such an approach produces mixed results during a presidential election cycle it can create one-issue voters and boost turnout by as much as eight percentage points. Nothing to sneeze at with battleground races all over the country, and only fifteen and six seats as the margin separating the Democrats from control of the House and Senate, respectively.

The Republican response to the Democratic Party onslaught has been one of three tactics, two defensive, and one preemptive. On the former front the party either begs for mercy by requesting exemptions to the pro minimum wage hike bills in their state legislatures, or it assumes a rigid ideological purist position (courtesy of its think tank and business constituent groups.) On the latter, it seeks to take the initiative by pushing through softer pro- minimum wage hike bills before more ambitious ones are passed. An example is that of the Michigan legislature, which in March successfully raised the minimum wage before a stronger measure got on the state ballot.

But the current approach to matters by the GOP seems akin to giving a school crossing guard the charge of stopping an oncoming Amtrak train. National polls show support for increases in the range of 70 to 80 percent, and in elections the issue clearly transcends partisan affiliation. In 2004, a constitutional amendment to raise the minimum wage was passed and received 71% of the vote while, President Bush only earned 52%. Interestingly, John Kerry never endorsed the Florida minimum wage. It may have cost him the election. Consider that in Florida, President Bush defeated Kerry by 381,000 votes, while voters favored the minimum wage increase by 3.1 million votes (71.3 % to 28.7 %.) In Nevada, Bush beat Kerry by just 21,500 votes, but voters backed the wage increase by 293,328 votes (68.3 percent to 31.6 percent). The minimum wage ballot initiative won in every county in both states, even in the most wealthy of locales.

Again, it is plausible that John Kerry lost the 2004 presidential election because he did not support the minimum wage more openly and more aggressively.

Red-State Arizona, like Nevada, looks likely to fall to the issue. An independent survey in March showed that 62 percent of those questioned strongly support the proposed $1.60-an-hour hike in the minimum wage, with another 19 percent saying they are somewhat supportive. But in the key battleground state, what is the position of the Republican nominee, U.S. Senator, John Kyl? No one knows, as the nervous incumbent has not revealed his position on his state’s minimum wage ballot initiative. Although favored, he faces a significant challenge from Democrat Jim Pederson, a rabid pro-minimum wage supporter.

In another Red-State, Ohio, the issue could tighten the U.S. Senate race between Republican incumbent Mike DeWine and Democratic candidate, Rep. Sherrod Brown. While Senator Dewine opposes the minimum wage, Congressman Brown looks to tie his campaign closely to the state’s ballot initiative. The Democrat may find fertile ground. Ohio's minimum wage stands at $4.25 an hour, nearly a dollar lower than the federal minimum wage. The Ohio Fair Minimum Wage Amendment would raise it to $6.85 an hour beginning in January 2007, and would index it to keep up with inflation.

Rather than praying for it to go away; begging for mercy; or dying on an ideological sword, the GOP should consider a pro-minimum wage offensive, head quartered right out of the RNC war room. A coordinated but centralized strategy would enable it to take the issue away from the Dems, in time to save enough seats in the House and even Senate, and retain control. All that is required is a critical mass of supply-side/economic growth Republicans – candidates, opinion leaders or political consultants – to accept the political reality and advance a position that grasps the nuances of the redistribution of wealth versus economic growth debate and the balance between capital and labor in the economy.

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First, the GOP must not be pulled away from reality and certain facts in order to serve the ideological agenda of many of its think tanks. For example, why hasn’t any major right-leaning think tank complaining about the size of the social safety net recognized - like Mark Wilson, executive vice president of the Florida Chamber of Commerce - that when the Florida minimum wage was passed in 2004, an estimated 18,000 Florida children were taken off of health insurance because their parents made too much money to qualify for public assistance health insurance? This information may not be something to campaign on in front of the masses (Democrats would demonize it in a minute), but it does suggest that the minimum wage can affect a decrease in the social safety net. That should appeal to conservative ideologues, fiscal conservatives and Republican constituents looking for savings in the budget or more money to fund pet projects and issues. Informing them of how big government can actually be shrunk by the minimum wage may be an appealing pitch.

Second, it must be accepted that an electorate with disposable income squeezed by gasoline prices while oil companies reap windfall profits, is going to be sympathetic to almost any person that asks them, “Don’t you think you should be making more money?” The public wants a wealth transfer, not from rich to poor, but from capital to labor. It also wants a better response to the disequilibrium in the capital to labor ratio that has been caused by the rise in immigration levels since 1965. Remember, the refrain of Democrats (and Lou Dobbs) is, “President Bush is wrong when he says ‘immigrants do jobs that Americans won’t ’. It isn’t that Americans won’t do these jobs, they passionately argue. Rather, they won’t do them at the wage being offered.” Significant segments of the electorate will give credit to anyone who appears responsive to this argument.

Third, the reality is that the minimum wage could have easily been raised a long time ago to keep pace with inflation. The federal minimum wage, unlike entitlements, is not indexed for inflation. The increasingly left-friendly Economic Policy Institute is telling all who will listen that, “If the minimum wage in 1979 had been indexed for inflation, it would be $6.92 today (2004 dollars). In other words, the inflation-adjusted minimum wage is 26% lower today than in 1979.” From the supply-side perspective, the general monetary inflation that began when President Nixon severed the tie between the dollar and gold in 1971 justifies an increase in the minimum wage. With the current gold price signaling excess liquidity in the system, the Fed’s jawboning notwithstanding, labor will want its cut as the monetary standard declines.

The easiest way to see what labor feels is to measure the purchasing power of the minimum wage in terms of gold. Click here (and then scroll down). We chart the price of gold on the day the minimum wage was increased (since 1971); the minimum wage; and how many hours it takes to buy an ounce of gold.

Interestingly on Monday, Nov. 1, 2004, the day before the election, and the minimum wage at $5.15, and gold at $428.85, it took 83.27 hours of work to buy an ounce. Today with the minimum wage still at $5.15 and the price of gold as of June 8, 2006 at 614.00 it takes 119.22 hours to buy an ounce of gold!

The electorate feels the difference in what it is getting in return for its labor.

Fourth, the timing of a proposed increase in the minimum wage is as important as whether or not it is justified by inflation measures. A higher minimum wage would not cause problems for entry-level workers when the economy is booming, but if the economy were to slump, it would – especially for young men and women, minorities and the less skilled who might otherwise get jobs in an economy with a sudden surplus of labor. With Republicans shouting at the top of their lungs that we are in a boom, they are making the case, from a supply-side perspective that a higher minimum wage can be tolerated.

This year the dollar price of gold has climbed so high – to $700 – that the $5.15 per hour wage was so low that almost no employer would be able to find workers willing to work at that pay. That is, the market for workers would clear above that level anyway, so putting it up to say, $6.50 or maybe $7.00 would only cause unemployment, if at all, in rural areas and small towns where the cost of other factors of production made the higher rate impossible. Small businesses in Mississippi for example would feel the burden far more than those in industrial states. So, raising the minimum wage requires some relief for those who are more negatively affected than others.

Fifth, the primary argument against the minimum wage from the perspective of capital is that it hurts the bottom line of employers – both small businesses and corporations. This is not hard to imagine on first glance when one can see clearly that increasing a 40-hour, 52-week minimum wage worker's salary by $1 would cost an employer $2,080 a year. But what a wonderful opportunity for that willing GOP soul capable of arguing that any increase in the minimum wage should be accompanied by a ‘lessening of the tax burden on truly small business owners and those larger companies that are creating jobs in distressed urban and rural areas.’ The language is carefully crafted here in order to take advantage of the Small Business Administration’s official designation as a small business as one with $6 million or less in revenue and 20 or fewer employees. The campaign message also must not unnecessarily alienate the core GOP corporate constituency that is paying the bills. The electorate won’t necessarily accept just ‘another tax cut for the wealthy corporations’ as the Dems will describe it. They will, however accept, for example, an increase in the tax credit a business receives when it hires those hardest to employ in areas that need job creation.

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What should be the GOP response?

There are a few possibilities. First the GOP could propose 1) an increase of $2,000 in the Renewal Community Employment Credit (and do the same for the Empowerment Zone Employee Credit), which is currently $1,500 per employee 2) a renewal and two year extension of the Work Opportunity Tax Credit that allows a tax credit of $2,400 for each employee it hires from groups with high unemployment rates or special needs, including youth aged 18 to 24 and 3) An increase of $2,000 annually in the two year credit against federal taxes received by businesses that hire long-term family assistance recipients (Welfare-to-Work).

Another option with more populist appeal is for the GOP to simply propose that the minimum wage increase not apply to those officially designated as a ‘small business’ by the Small Business Administration.

But the best of all options would be to raise the minimum wage to say, $7 an hour and index it for inflation at the same time that the capital gains tax is indexed and reduced to say, 12%. Since the recent fight to extend the capital gains tax may have exhausted Republican will to campaign for a lower rate during an election year, a compromise might be to leave the rate alone and work on the holding period required to qualify for the favorable long term capital gains tax rate of 15%. The effect on capital formation might be even more dramatic than a cut, if the GOP could advocate a reduced holding period from one year to say, six months (and reduce the holding period from five years to one for businesses that operate in Renewal Communities, Empowerment Zones and Enterprise Communities.)

If distressed rural areas are taken care of the only other area likely to be adversely affected by raising the minimum wage would occur not within the mainland of the United States, but in Puerto Rico. The Commonwealth has its own tax structure, but has to match the U.S. minimum wage. The minimum wage burden could be resolved by suggesting to Puerto Rico that it also match adjustments in U.S. capital gains rates.

Maybe if the Republicans lose control of Congress, run over by the Democratic Party’s minimum wage locomotive, it might be worthwhile to turn attention to Puerto Rico.

Who knows, maybe politicians there will be more sensitive to the capital to labor ratio than those here.

Yes, the minimum wage, in a time of contraction, is a wall between entry-level workers and marginal producers who can stay in business if they can hire entry-level workers at a competitive wage.

But in a time of economic boom or a relatively robust phase of growth, as Republicans campaign we are living in, there is no excuse for the lack of an effective strategy to better appeal to those dependent upon employment earnings as their only source of capital.

Failure to properly interpret the minimum wage revolution could come at quite a cost to Republicans this November.

Just ask John Kerry.