Official presidential candidate Hillary Clinton will have to answer questions on the campaign trail that she has been able to avoid as secretary of state and as a private citizen.
Since Clinton ended her first campaign for the presidency in 2008, the financial crisis badly wounded middle-class America. Strong income growth for families remains elusive for most families. Meanwhile, the national debt has roughly doubled, and the growing cost of entitlements such as Medicare has begun squeezing out other government spending priorities.
Here are the biggest questions on economic policy that Clinton will have to answer shortly as she hits the campaign trail:
1. Will she distance herself from Wall Street?
In the past few years, the Democratic Party has become more populist as its size has shrunk in Congress, and Sen. Elizabeth Warren of Massachusetts has pushed for tighter regulation of Wall Street.
Clinton, however, is generally viewed as closer to Wall Street and big business.
Liberals remember that it was her husband, Bill Clinton, who signed into law deregulatory bills, including a repeal of the New Deal-era Glass-Steagall law separating commercial from investment banks, that they blame for allowing the financial crisis.
In her post-State Department career, Clinton has earned millions giving speeches to business groups, including financial giants Goldmans Sachs and the Carlyle Group. Her two biggest campaign contributors over her career, according to the Center for Responsive Politics, are Goldman and the megabank Citigroup.
More recently, Clinton has seemed to move closer to the populist point of view on finance. In a campaign appearance with Warren in Massachusetts last fall, Clinton tried to appropriate Warren’s populist rhetoric, saying “I love watching Elizabeth give it to those who deserve to get it” and telling the crowd, “don’t let anybody tell you that it’s corporations and businesses that create jobs.”
But it will be hard for Clinton to narrow the gap between herself and the Warren wing of the Democratic Party, which increasingly wants to reinstate Glass-Steagall or break up the banks outright.
Martin O’Malley, one of the few likely Democratic challengers to Clinton, previewed a possible left-wing criticism of Clinton in Iowa in March, calling for Glass-Steagall and accountability for financial executives engaged in wrongdoing. “Triangulation is not a strategy that will move America forward,” O’Malley told a gathering of Democrats, in an apparent reference to the Clinton White House’s strategy of appealing to the political middle.
2. Will she appease the Democratic base on trade?
Liberal congressional Democrats are currently embroiled in a disagreement with the Obama White House over trade agreements. Clinton will have to state where she comes down on the issue.
Obama and business strongly favor pursuing the Trans-Pacific Partnership, a trade agreement with Asian nations, to boost commerce and growth. Liberals, such as House Ways and Means Committee ranking member Sander Levin, have raised concerns about features of trade agreements, especially the investor-state dispute settlement mechanism for resolving legal issues across borders.
Warren suggested Thursday in an interview with CBS that she would like to see Clinton oppose the investor-state provision in the U.S. push for an Asian trade deal.
It “basically would permit multinational companies to sue other countries when they try to put regulations in place to protect their own workers to protect their own citizens,” Warren said, adding later that “I’d like to see it taken out.”
Although Bill Clinton signed the North American Free Trade Agreement into law over liberal objections, Hillary criticized parts of it as a senator, and voted against the Central America Free Trade Agreement in 2005.
3. Will she swear off entitlement reforms?
The U.S. is facing a debt problem, with the federal debt held by the public currently 74 percent of economic output and expected to grow as the Baby Boom generation enters retirement and takes up programs like Social Security and Medicare.
Progressives want the Democratic nominee to commit to opposing spending reductions on entitlements. In recent weeks, activists and lawmakers have tried to push for expanding Social Security, rather than cutting it, as many fiscal hawks have said is necessary to prevent further debt problems.
Yet Clinton will also have to come up with a plan to shrink the debt or at least curb its growth, raising the question of how she will navigate between fiscal math and the liberal base.
4. Will she have a new plan to address inequality?
Democrats have become increasingly concerned about inequality, a major theme of the 2014 midterm elections.
Although Obama has at times mentioned inequality as a top problem facing the U.S., calling it the “defining challenge of our time” in late 2013, in recent months he’s focused his rhetoric on promoting opportunity and bolstering the middle class. In part, his reticence to talk about inequality directly is shaped by the fact that it doesn’t poll well as a campaign issue and is viewed as divisive by many voters.
Clinton will likewise have to decide whether to talk about inequality directly. If she does, she’ll need policy ideas to boost the prosperity of lower-income Americans that won’t be perceived as class warfare or old-school redistribution.
