Oil barons Charles and David Koch held their annual billionaires' summit in Palm Springs on Sunday, Nancy Goldstein reports in The Nation. Every year, the Kochs gather with fellow plutocrats, prominent pundits, and Republican legislators to plan their assault on government regulation and the welfare state. This is the first year that the low-profile gathering has attracted protesters.
Tonight, President Barack Obama will deliver his State of the Union address. A major theme of the speech will be jobs and the economy. Let's hope the president spares a few minutes for Wall Street reforms that might prevent a repeat of the economic collapse that we're slowly starting to recover from.
The 2010 elections can be described in many ways, but one way to view them is as a repudiation of the congressional factions with which the Obama Administration has negotiated with (and/or capitulated to) over the last two years.
Blue Dogs and "moderate/centrist" GOPpers were overwhelmingly defeated in primaries and in the general election.
The progressive wing of the Democratic party did not suffer such defeat. It is time that the President join the winning wing of his chosen political party.
At a minimum President Obama owes the progressives a nod of thanks and respect for their demonstrated ability to stave off the recent Republican Wave.
This chart only includes economic issues (health care registers at 14%--more than twice the level of taxes and the deficit combined). As Eskow says:
Only 6% of Americans think Congress should concentrate on reducing the deficit or changing the tax code, according to the latest CBS News poll. Nearly ten times as many people, 56%, want it to focus on creating jobs and fixing the economy. Guess which set of policies is the center of attention in Washington right now?
Americans overwhelmingly say that the midterm election results that gave Republicans control of the House represented a rejection of the Democrats and not a mandate for the GOP, according to a CNN/Opinion Research poll conducted Nov. 11-14. (Story; Poll data). Seventy percent of those surveyed said the results were a rejection of Democratic rule in the House while 17 percent called it a mandate for Republicans. Eight percent answered "neither" and 5 percent had no opinion.
The Democrats lost because they didn't address the people's number one concern. How hard is that to understand? Of course, they did address it sporadically and inadequately--which only makes matters worse, actually. It shows that Democrats know the problem exists, they just don't care enough to actually take it seriously. For all the GOP lies about Democrats "not sharing your values", this truth is far more devastating.
Only 6% of the public is concerned about the deficit. The only thing Washington elites are concerned about is the deficit. The rest of us live on the other side of the planet from the people in DC who make the policies. Maybe the other side of the solar system.
You can see how this divide affects policy. There is a "deficit commission" but no jobs commission. There are millions of people needing jobs and millions of jobs that need doing, but Washington won't "spend," even on badly-needed infrastructure investment. People over 50 (laid off because they were paid more or their health care was expensive) can't find jobs but the DC elite discuss raising the retirement age to 70. The deficit commission proposes cutting back the already-meager "safety net" while cutting tax rates for the really rich even more.
And while all of this goes on the rest of the people in the country are worried about jobs, foreclosures, bills, jobs, wages, jobs, and jobs - the things that matter to regular people. And they are feeling the consequences of the DC/rest-of-us divide.
In 2008, we expected the Democrats to recognize the obvious, side with the vast majority of the American people, and thereby cement long-term majority support. It was no-brainer. Unfortunately, the Democrats showed us they have no brains.
There is, of course, an explanation for this: the elite dominance of American politics, as described and explained, for example, by Thomas Ferguson's investment theory of political parties. In fact, the complete ignoring of the people's overwhelming #1 priority is about the most striking bit of evidence one could ask for proving such elite dominance. The question is, however, why that elite dominance has turned so short-sighted and self-destructive.
Weekly Audit: Curbing the Deficit, Cat Food, and You
by Lindsay Beyerstein, Media Consortium blogger
The deficit commission released its much anticipated list of helpful money-saving tips for the federal government last week. These tips include tax cuts for the rich, reducing unnecessary printing costs, and cutting the jobs of federal contractors.
(Yes, I already did a diary about this during the week. But there's going to be an intense anti-environmental backlash in the House, and it doesn't hurt to be reminded of this once again, and maybe discuss what you might have already seen along these lines. - promoted by Paul Rosenberg)
[This post is written by NRDC Action Fund's Rob Perks, who is the Director of NRDC's Center for Advocacy Campaigns]
The role of federal climate legislation in the mid-term Congressional elections, to paraphrase Mark Twain, is being greatly exaggerated. For instance, Politico was quick to blame last year's vote on the American Clean Energy and Security Act (ACES) for the defeat of House Democrats.
In reality, 160 Democratic representatives who voted for the House climate bill won their elections yesterday. (This does not include four races that are still too close to call as of this writing.) On the other hand, 19 of 34 representatives who voted against the bill went down in defeat. (This excludes two races that were not decided as of this writing.)
[UPDATE, 11/04: E&E Daily has a story today that echoes my analysis, with a headline that is on point: "Being a Democrat, rather than voting for cap and trade, was the true political killer." (Sorry, no link provided because subscription is required.) As the article explains: "According to conventional wisdom, House Democrats who voted for a sweeping climate change bill last year paid a steep price for it on Election Day. But the theory of greenhouse gas emissions limits as ballot-box poison only goes so far, according to an E&E Daily analysis of competitive races. Among the Democratic-held House seats rated most endangered on election eve by the nonpartisan Cook Political Report, 61 percent of incumbents who voted for the 2009 cap-and-trade bill lost their races. But the most threatened incumbents who opposed the legislation fared even worse, with 79 percent falling despite their resistance to a measure the GOP savaged as "cap and tax." The better overall performance by vulnerable House Democrats who survived after backing the climate plan - a camp that ranges from the Mountain West to the South and includes three Iowans - is hardly a vindication of a legislative process that left even some environmentalists soured on the final cap-and-trade bill. It does suggest, however, that many Democrats in swing districts were brought low by voter discontent with a bad economy and an ambitious federal agenda, not the 1,200-page climate plan specifically."]
It seems that disgruntled independent voters tipped the election away from the party in power toward Republicans. So, whether this election is viewed as a sign of antipathy toward or flat-out repudiation of the Democrats over the lackluster economy or any other policy frustrations, one thing is clear: concern about the ill-fated cap-and-trade climate legislation barely registered with voters.
Indeed, according to a survey released today by Greenberg Quinlan Rosner, when voters who chose the Republican candidate were asked in an open ended question to name their biggest concern about the Democrat, only 1 percent cited something related to energy or cap and trade. And when offered a list of six arguments Republicans made against Democrats, only 7 percent of voters selected the so-called "cap and trade energy tax."
There you have it: the mid-term election was about the economy, stupid - not clean energy and climate legislation.
But make no mistake, voters of all political stripes still care about those issues. Indeed, polling from across the country shows that Americans overwhelmingly support clean energy policies and comprehensive efforts to protect our air and water.
And in California, voters resoundingly rejected Proposition 23, a move by Texas oil companies to roll back the state's landmark clean energy and climate law.
So the takeaway from the contentious mid-term elections is this: voters may disagree on a number of political issues but there is common ground to be found on the issue of clean energy - and elected leaders should take notice.
The Opportunity Agenda has created a series of tools for advocates and policymakers to use as they advocate for equal opportunity in the economic recovery process.
MINNEAPOLIS-Former House Speaker Newt Gingrich is advising Republican candidates on November's ballots to frame the choice for voters between Democrats as "the party of food stamps" while selling the GOP as "the party of paychecks."
...
"Most Americans would like to get a paycheck," Gingrich said. "Most Americans would not like to be forced to have food stamps handed out by liberal Democrats."
But, as 'twas said back in Truman's day, "To live like a Republican, you need to vote like a Democrat":
The red line is actual job growth under Bush. The blue line is what job growth would have been, at the rate of job growth under Clinton. So, tens of millions more jobs under a Democratic president. But it's not just the number of jobs. It's also the little matter of income, as I pointed out last year in the following chart from "New Census Data--Same Old Bad Bush Economy--Only Moreso":
Those at the top got hurt most in dollar terms. So much for voting their self-interest. Tax cuts really aren't that great when your income is actually declining, as another chart from that same diary showed:
Tens of thousands of Americans rallied for jobs and justice at the Lincoln Memorial in Washington, D.C. on Saturday. Organizers say that 175,000 people turned out for the One Nation Working Together rally, which was organized by labor unions, the NAACP, and other progressive groups. In an interview with GritTV's Laura Flanders, AFL-CIO president Richard Trumka, a leader of the One Nation coalition, summed up the agenda: "Jobs, jobs, and more jobs."
America isn't working
In total, 8 million jobs have been lost in this recession and 2.5 million homes have been repossessed. According to the official figures, about 10% of Americans are unemployed. The true number may be much higher because the official stats don't count those who have given up looking for work. In AlterNet, NAACP President Benjamin Todd Jealous, another featured speaker at One Nation, points out that the black unemployment rate is nearly twice that of whites. Another 11 million Americans are underemployed, according Trumka.
No end in sight
An already bleak job market is about to get even bleaker. Last week, Senate Republicans scuttled a popular emergency fund to create jobs and an extension of long-term unemployment insurance benefits, as Andy Kroll reports in Mother Jones.
Steve Benen of the Washington Monthly offers more details on the now-defunct job creation program known as the Temporary Assistance for Needy Families (TANF) emergency fund. The fund provided cash to create jobs in the public and private sectors. Over 240,000 people in 32 states and the District of Columbia worked at jobs created with TANF subsidies. Last week, Senate Democrats lost their fight to extend the program for another 3 months. With the TANF money gone, layoffs will soon follow.
The Department of Labor will release the its monthly unemployment statistics on Friday. One group of independent analysts predicts that September's unemployment rate will be higher than the previous month, according to Brian Beutler of Talking Points Memo. Unemployment rose from 9.6% in July to 9.7% in August and experts surveyed by Bloomberg News expect the trend to continue. It's doubtful that the economy produced enough new jobs to make up for all the census workers whose temporary jobs ended.
Job skills for America
On the bright side, President Barack Obama is scheduled to unveil a new job training program this week, Annie Lowrey reports in The Michigan Messenger. The program is called Skills for America's Future. The goal of the project is to encourage partnerships between community colleges and corporations. Colleges and companies will work together to identify areas of rapid job growth and train students to fill those jobs. So far, five companies have agreed to participate in the program, including the Gap., Accenture, United Technologies, PG&E and McDonald's.
Lowrey argues that this kind of training program will do little to help unemployment in the short term. Right now, companies aren't hiring because there's an economy-wide lack of demand, not because they can't fill positions for lack of trained workers. Demand is low because unemployment is high. Quite simply, people buy less when they don't have jobs, or fear that they will lose their jobs. It's a Catch-22. The jobs won't come back because not enough people have jobs.
Food stamps are stimulus
At the most basic level, an economic stimulus package is designed to break the no jobs/no demand/no jobs impasse by injecting large amounts of cash into the economy. Extending unemployment benefits makes for very effective stimulus because the unemployed typically spend their money quickly. Food stamps are another very efficient stimulus because recipients redeem them right away. To give you some indication of how quickly, consider the Wal-Mart at Midnight effect, which Lowrey discusses in the Washington Independent.
Wal-Mart managers are noticing that increasing numbers of customers are buying staples like bread, milk, and baby formula at midnight on the first of the month. That's because state governments directly deposit welfare and food stamp benefits into debit accounts at midnight. Wal-Mart says it brings in extra staff to keep up with the influx of customers during this period.
By contrast, tax cuts are an inefficient stimulus, especially if the cuts go to people who are already wealthy. In tough times, people who already have everything they need may prefer to save their extra money instead of blowing it on luxuries. Rich people will not throng Best Buy at midnight on tax refund day, no matter how big their checks are.
The high cost of economic inequality
It would be nice to think that unemployment is part of a cyclical downturn, but there is mounting evidence that short-term unemployment is a symptom of a deeper problem: pervasive and growing inequality. Sam Petulla of the American Prospect interviews economist Jacob Hacker and political scientist Paul Pierson about their new book, Winner Take All Politics: How Washington Made the Rich Richer and Turned its Back on the Middle Class.
The authors note that the U.S. has greater inequality than other industrialized countries. Since the 1970s, the richest Americans have gotten much richer while the rest of us lagged further behind. The authors found that almost 40% of household income gains from 1979-2007 went to the richest 1% of households. The trend is accelerating: the top 1% of households pocketed over half of the economic gains of the 2000s. Hacker and Pierson blame tax cuts for the wealth, lax financial regulations that allow the wealthy to rake in unprecedented profits, and stagnating middle class wages for the widening gap between the ultra-rich and the rest of society.
This brings us back to the old demand/jobs paradox. Contrary to the platitudes of trickledown economics, shoveling an ever greater share of society's resources to the ultra-rich doesn't make everyone else better off. Shocking, right?
Right wing economists say that letting the ultra-rich accumulate still more wealth is good for the economy as a whole because the rich have more money to invest in businesses, which are the main source of jobs. The ultra-rich aren't stupid, however. They aren't going to start businesses unless they foresee demand for goods and services; and everyone knows that demand is flat because there are no jobs. Trying to stimulate the economy by making the rich richer is like shoving money into a black hole. The tried and true way to end a recession is to create jobs and provide social services for people who need the money enough to spend it.
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Picking a new head for the National Economic Council is an important moment for the President's rapidly realigning White House staff. It is an opportunity to do two very critical things at once going into the President's crucial final full year before the re-election campaign gets into full swing. The first of these is the most urgent project of this next year: finding some way in this badly damaged economy to start seriously generating some new jobs. The second mission is possibly even more important to the President's re-election and long term political health and legacy: restoring the balance in the Democratic coalition.
Ever since William Jennings Bryan's Cross of Gold speech at the 1896 Democratic convention, after which the populists merged their movement and their party with the Democrats, the political party I am proud to call mine has on economic issues been an uncomfortable coalition of those working-class populists and urban business leaders. Woodrow Wilson was the first Democratic President to govern with this uncomfortable coalition, and he chose fairly evenly between the two. FDR and Truman were more clearly on the populist side, JFK was more in the middle between the two, and LBJ went more with the populists, but all of those Presidents had significant business figures as part of their advisers and political coalition. Carter and Clinton both leaned much more heavily toward the business (increasingly Wall Street) wing of the party but both had more populist progressive advisers as well. Having smart guys like Joe Stiglitz and Bob Reich on the same side as me during those White House policy fights didn't mean we won half the time, but us progressives inside won a few rounds at least.
Flip to the transition period in late 2008. As the economy was on the verge of crashing around us, the President-elect decided to make his bet overwhelmingly with the Wall Street-oriented side of the party, the folks who were proteges and aligned ideologically with Bob Rubin. There were a couple of exceptions (Volcker and Jared Bernstein) but they were relegated to relatively minor positions. I had the sense at the time that Obama felt that he needed to have people who understood the financial sector and industry players really well, and that in a time of crisis he was looking for a team that wouldn't be too torn apart ideologically to make clear quick recommendations. But whatever the reasons, what had become the wing of economic thinkers with a sizable edge in the Clinton years became virtually the only view Obama has heard since he became President. With Tim Geithner's mentor and ideological twin Larry Summers leaving the NEC, now is the time to restore a measure of balance to the President's economic.
The biggest reason that is so important is because of the jobs issue. The macroeconomic Wall Street-oriented guys like Geithner and Summers have never been focused on the specifics of how you produce jobs in the short term- it is just not how they think. Macroeconomists think in terms whether the GDP is going up or down, whether finance is flowing and the banks are healthy. They tend to think, as administration officials used to say ad nauseum until someone in the political team finally got them to stop, that jobs are a lagging indicator that will come back around someday, after the banks get more financially comfortable and start lending again. The problem is that the shock to this economy from the damage done by the financial crisis has made classical macroeconomics a dead-end street. Banks are more comfortable but they are still not lending money because (a) there are a lot of toxic assets still on the books, (b) no one thinks main street businesses will be making money anytime soon, and (c) the Wall Street banks think they can still make more money in speculative trading than in boring investment.
The old economic models are broken, and a little entrepreneurial populism is exactly what is needed right now: someone with fresh ideas re how to spur manufacturing, how to jump-start new industries and companies. You need someone to provide a balance to Geithner's classical macroeconomic thinking, someone who wants to invest in middle class jobs not somewhere in the future when the economy has healed itself a lot more, but now. Right now. The President needs to face the fact that there aren't a lot of creative new ideas coming from the financial macroeconomists and Rubin proteges.
Here's what is also true on the political side: whatever happens, there are few economic thinkers anywhere that believe prosperity and big job gains are right around the corner. We are very likely to still have an economy in the doldrums in the fall of 2012. If Obama stays with the an economic team all drawn from the same crowd as he has now, and they all keep advising him to do the same things he has been trying all along, no one is going to give him any political credit two years from now. He has to be seen as FDR was in 1936: things were still bad, but he was willing to keep trying and trying and trying some more on new ideas to spur the economy, and at least some working class folks- Social Security recipients, WPA workers, etc- had a little bit of money to spend. If Obama brings in a new economic team with some new middle-class jobs-oriented ideas, it will help him immeasurably in terms of keeping voters' patience. The other politically crucial thing it will do is that it will unite his party. The populists in the Democratic coalition- labor, poor people, working class women, immigrant laborers- want to feel like their President is on their side, that he is taking chances and trying new things that will help them economically.
There are a lot of good candidates from the progressive populist wing of the party. A former Senator like Byron Dorgan or Don Riegle or Jon Corzine (in spite of being a former Goldman Sachs guy, Corzine is a serious economist populist). A former labor guy like the brilliant Ron Bloom, who is already in the administration. Lots of good economic writers and thinkers as well. But I know the administration wants to check either the former CEO box or the woman box in terms of their symbolic hirings, so let me throw one choice into the ring that fits one of those two boxes: Leo Hindery. I'll admit some bias, as he is a friend of mine. But the economist I respect as much as any other, Rob Johnson (who would also be a great candidate but doesn't want it), said to me the other day that he thought Leo was the best candidate he could possibly think of, and I have to agree with him. One of the most successful CEOs in the country over the last couple of decades, a great manager, a longtime writer on issues of manufacturing and trade, he would be hard for business leaders to say he wasn't qualified. But Leo is a tried and true populist, a close friend of the labor movement in spite of being a retired CEO. He has great political relationships on Capitol Hill, and a good working relationship with new White House COS Pete Rouse. The only political downside, if you can call it that, is that he has been a critic of White House economic policy, but I think hiring him would show that Obama was open to new ideas.
Leo is not the only good candidate, but hiring him or someone like him, someone who will restore balance to the President's economic team and political coalition, and someone who will walk in the door with a raft of fresh ideas that Geithner and Summers haven't been thinking about, would go a long way in getting the President ready to take on the economic challenges of the next two years. The bottom line for me isn't a particular candidate, it is that the President understands that he, his party and governing coalition, and our country need an NEC head who is not tied to traditional Wall Street-oriented ideas about the economy, or someone from corporate America that isn't bothered by the outsourcing of jobs and the trade deficit. We need an NEC chair who has a track record of caring passionately about manufacturing jobs, our crumbling infrastructure, our trade deficit, and new approaches to creating good paying jobs for middle and working class Americans. Having someone like that to run the NEC to balance Geithner's macroeconomic financial sector orientation at Treasury is crucial to rebuilding our economy, and to rebuilding confidence in this administration that they care about the middle class who has lost so much in the last ten years.
Update: This post was written yesterday before I had the chance to look at the stunning NYTimes story in this morning's paper. Entitled "Cheap Debt for Corporations Fails to Spur Economy", it summarizes better than anything I could write why the classical macro-economic model embraced by the Bob Rubin wing of the Democratic Party is not working in the deeply damaged economy of 2010. The article describes how one major corporation after another is borrowing "vast sums of money for next to nothing- simply because they can", but instead of using that borrowing to invest and create jobs, they are using it to (a) stockpile cash against worries of future weakness in the economy; (b) invest in new technology that allows them to "be more efficient and cut jobs"; (c) lower their next year's tax bill; (d) buy long term bonds (in one case mentioned, a 100 year bond); and (e) finance new mergers and acquisitions.
In case you are keeping track at home, none of those 5 things creates jobs or benefits workers.
The old economic model is fundamentally broken, torn apart by the incredibly deep damage done to this economy by the last decade of erosion of middle class buying power, and the Bush recession and financial market collapse of 2008. We need an NEC head who will bring fresh ideas and a different economic model to the administration.
So bipartisanship isn't dead. By a vote of 348-79, Democrats and Republicans alike put aside their acrimonious differences and agreed, at least for a moment, to stop blaming each other for the sad state of American economic life. Instead, they agreed to blame China.
The bill authorizes the president of the United States to impose tariffs on Chinese goods in response to what it considers an illegal subsidy of Chinese exports in the form of an undervalued currency. It helps that the supporters in the House know that this bill has precious little chance of becoming law; it will not pass the Senate and it is unlikely that it would be signed into law by Obama if it ever came to that. As a result, the bill is the perfect campaign gesture, bombastic, angry, self-righteous, and without much real-world consequence.
The office AFL-CIO union leader Richard Trumka issued a statement that encapsulated the thinking behind the bill: "the House of Representatives voted to put an end to the Chinese government's currency manipulation, which has destroyed millions of good American manufacturing jobs. For more than a decade, the Chinese government has deliberately manipulated the value of its currency, ballooning our trade deficit with China and costing American communities good jobs....Working people continue to mobilize to elect candidates who will put America's workers first and are committed to rebuilding an economy that values working people. This November we will send a powerful message that we will support those who vote for an economy that works for everyone."
President Barack Obama's decision to appoint Elizabeth Warren to set up the new Consumer Financial Protection Bureau (CFPB) couldn't have come at a more critical time.
The Opportunity Agenda was founded with the mission of building the national will to expand opportunity in America, a reflection of the core American belief that where we start out in life should not determine where we end up. The vision that we will have a country in which your possibilities are determined by you is central to the American self-concept.
A new poll shows that 53% of Americans support the ending of tax cuts for the Wealthy 1% while maintaining them for the Middle Class. John Boehner , however, comes out today saying it is not time to increase taxes on anyone (so I assume he's in that 1%... or is dominated by it.) At the same time, the US poverty rating has now increased by 43%... more of us are impoverished by this economy and the lack of jobs is seen as the major cause.
S0 let's look at that Wealthy 1%. As the major business investors (in terms of money, if not in the creation of new businesses), these folks have NOT created new jobs... at least not in the US. While China and the far east have gotten more employees (for pennies!) and Mexico has received new factories that used to be in Indiana and Illinois and Ohio, the Wealthy 1% have held onto their dough and have not used it to, as the trickle-downers maintain they would, "save America."
For those of us who can still even stomach it, the first Friday of the month—the usual day for the release of the previous month’s federal Employment Situation Summary, known informally as the jobs report—has become a fairly pathetic ritual, particularly for optimists. We hope for some proof, any proof, that a real recovery is underway. If jobs were shed across the board, but the unemployment rate trended lightly downward, we try to pretend that it wasn’t because still more people have pulled themselves out of the formal count by giving up looking for work entirely. If private sector job growth and public sector job loss cancel each other out, we put on our market fundamentalist wishful thinking caps and talk about how private sector jobs are somehow more sustainable than their public sector equivalents. And when modest job growth does occur, even when it’s below even the basic replacement rate needed to accommodate a growing workforce, well, that’s when we bring out the champagne.
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