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David Sirota

By David Sirota
Political journalist, best-selling author and syndicated newspaper columnist

For those still clinging to quaint notions of the American ideal, these have been a faith-shaking 10 years. Just as evolutionary science once got in the way of creationists’ catechism, so has politics now undermined patriots’ naive belief that the United States is a functioning democracy.

The 21st century opened with a handful of Supreme Court puppets appointing George W. Bush president after he lost the popular vote – and we all know the costs in blood and treasure that insult wrought. Now the decade closes with another cabal of stooges assaulting the “one person, one vote” principle – and potentially bringing about another disaster.

Here we have a major congressional push to fix a health care system that leaves one-sixth of the country without coverage. Here we have 535 House and Senate delegates elected to give all 300 million of us a voice in the solution. And here we have just 13 of those delegates holding the initiative hostage.

In the Senate, both parties have outsourced health care legislation to six Finance Committee lawmakers: Max Baucus, D-Mont.; Kent Conrad, D-N.D.; Jeff Bingaman, D-N.M.; Mike Enzi, R-Wyo.; Charles Grassley, R-Iowa, and Olympia Snowe, R-Maine. The group recently announced it is rejecting essential provisions like a public insurance option that surveys show the public supports. Meanwhile, seven mostly Southern House Democrats have been threatening to use their Commerce Committee votes to gut any health care bill, regardless of what the American majority wants.

This, however, isn’t about the majority. These lawmakers, hailing mostly from small states and rural areas, together represent only 13 million people, meaning those speaking for just 4 percent of America are maneuvering to impose their health care will on the other 96 percent of us.

Census figures show that the poverty rates are far higher and per-capita incomes far lower in the 13 legislators’ specific districts than in the nation as a whole. Put another way, these politicians represent exactly the kinds of districts whose constituents would most benefit from universal health care. So why are they leading the fight to stop – rather than pass – reform?

Because when tyranny mixes with legalized bribery, constituents’ economic concerns stop mattering.

Thanks to our undemocratic system and our corrupt campaign finance laws, the health care industry doesn’t have to fight a 50-state battle. It can simply buy a tiny group of congresspeople, which is what it’s done. According to the Center for Responsive Politics, health interests have given these 13 members of Congress $12 million in campaign contributions – a huge sum further enhanced by geography.

Remember, politicians trade favors for re-election support – and the best way to ensure re-election is to raise money to for TV airtime (read: commercials). The result is an amplifier of tyranny: Precisely because the undemocratic system unduly empowers legislators from sparsely populated (and hence cheap) media markets, industry cash can more easily purchase tyrannical obstruction from those same legislators. In this case, that means congresspeople blocking health care reform that would most help their own voters.

Of course, there is talk of circumventing the 13 obstructionists and forcing a un-filibuster-able vote of the full Congress. Inside the Washington palace, the media court jesters and political aides-de-camp have reacted to such plans by raising predictable charges of improper procedure, poor manners, bad etiquette and other Versailles transgressions.

But the real crime would be letting the tyrants block that vote, trample democracy and kill health care reform in the process.

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David Sirota is the bestselling author of the books “Hostile Takeover” (2006) and “The Uprising” (2008). Find his blog at OpenLeft.com or e-mail him at ds@davidsirota.com

David Sirota

 By David Sirota
Political journalist, best-selling author and syndicated newspaper columnist

Mitch “Tuesdays with Morrie” Albom has made millions of dollars writing books about sick people and death. His writing tends to be a bit sappy and cliche for my taste, but I’ve always assumed that because his writing comes into contact with the most gut-wrenching parts of health care system, and because he portrays himself as a shining beacon of compassion and selflessness, that he is, in fact, a somewhat compassionate human being. Unfortunately, his new column in the Detroit Free Press (yes, in the newspaper of quite literally the most economically devastated city in the United States) proves me wrong — and proves that Albom is a run-of-the-mill royalist and right-wing psychopath.

In this, arguably the most important week for health care reform in decades, Albom could have written about the need to expand health care coverage to as many people in his economically destroyed city as possible. He could have written about the human tragedy of a health care system that currently allows 22,000 of his fellow countrymen to die every yearfor lack of coverage. Instead, he opts to devote his entire column to bewailing the plight of the top 1 percent and attacking the tax proposal that would finance universal health care with a tiny levy on millionaires. I shit you not:

Those high income earners currently shell out around 35% in income taxes, the highest rate, plus state income taxes, local income taxes, property and other taxes that likely chew up between 45% and 50% of their money. If Obama’s tax-related plans all go through, it could, for some, approach 60%…
Look. It would be one thing if we had a flat tax in the United States or if you could shelter your income or hide it offshore. But most wealth experts will tell you tax shelters for individuals are long gone, and offshore is a rapidly disappearing corporate trick.

For the most part, if you earn a lot of money in America today, you have to pay your taxes on it. Capital gains are taxed at a lower rate, but in most cases, before you have money to buy and sit on stocks, you have to earn it and therefore pay taxes on it.

So let’s see — The richest one percent earn the largest share of America’s income since 1929 and pay the lowest taxes they’ve paid in 20 years. Meanwhile, two-thirds of corporations pay no taxes at all; the IRS says most of the more than $300 billion in unpaid taxes (ie. the “tax gap”) is from individual tax evaders; there’s a huge and well-known problem with offshore tax havens; and IRS audits of millionaires have plummeted so precipitously that President Bush repeatedly admitted in public that it’s almost impossible to collect taxes from the super-wealthy because they can evade taxes. On top of this, tax, regulatory and corporate welfare policies are literally handing away trillions of taxpayer dollars to the richest 1 percent at a time that 22,000 Americans are dying every year because of a lack of health care.

And yet, Albom — the guy who has made his pile by trumpeting his alleged compassion for the plight of the sick and dying — is spending the most crucial week in the health care debate insisting that the superwealthy pay too much in taxes and never avoid paying what they owe. And more importantly, Albom spends this week insisting the major problem facing America is a “class warfare” that would ask a Goldman Sachs executive making $1 million a year to devote just 9-tenths of one percent more of his taxpayer-subsidized income to a universal health care program. And he’s doing all this in the flagship paper of the city that has been most devastated by the economy.

Promoting oneself as a compassionate chronicler of end-of-life issues, and then penning right-wing diatribes defending the richest 1 one percent…these are the tell-tale signs of a truly disgusting human being.

UPDATE: Albom is not just a disgusting human, he’s also a fool. You’ll note he asserts that under the surtax proposal, “a family earning a million dollars a year” would” now have to “cough up $54,000 of that — in addition to all the other taxes it pays — to cover health care for people who may not pay a penny of new tax themselves.” That’s factually inaccurate as atwo-second Google search shows. Because the 5.4% surtax applies only to income above $1 million (and not on the $1 million in total), someone making $1 million a year would pay just $9,000 a year more in taxes, not $54,000. Here’s FAIR’s dispatch nailing Albom for his idiocy.

Robert Kuttner

By Robert Kuttner
Co-Founder and Co-Editor of The American Prospect

The New York Times recently reported that the latest scheme–or scam–on Wall Street is something called High Frequency Trading. Very sophisticated financial firms, such as Goldman Sachs, are tipped off by the New York Stock Exchange’s own computers to pending buy and sell orders. Armed with ultra sophisticated computer algorithms, the insiders anticipate the direction of the market based on what they learn about supply and demand for a given security. They can make an extra penny here and an extra penny there at the expense of us suckers, adding up to billions.

“Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed,” wrote the Times‘ Charles Duhigg in a front page piece that was the talk of New York and Washington. “High-frequency trading is one answer.”

As debates in the blogosphere in the last couple of days have made clear, there are a couple of possibilities of what is at work here. One is that Goldman and others are literally using privileged information to make trades ahead of markets, in which case they are committing a felony. Specifically, the abuse is known as “front-running,” or trading ahead of customers, and it is an explicitly illegal form of market manipulation. Front running is epidemic on Wall Street–the whole point of an investment bank trading for its own account is to take advantage of its specialized knowledge of markets–and the SEC or the Justice Department shuts down front-running when it becomes too blatant to ignore.

The other possibility is that the Goldmans of the world have found themselves a nice loophole. Tapping into the Stock Exchange’s own computers and other sources of trading activity is something that anyone in theory could do, but only a few privileged insiders have the sophistication to exploit what they find. Often orders are placed, only to be cancelled. Their purpose is to figure out what the market is willing to pay, and then get in ahead of it.

But suppose that High Frequency Trading doesn’t violate any law. It still is the essence of what’s wrong with the recent metastasis of money markets into private game preserves for insider-traders.

Consider for a moment some first principles. The legitimate and efficient function of financial markets is to connect investors to entrepreneurs, and depositors to borrowers. There is no legitimate reason whatever for this to be done by the millisecond. At bottom, the process is pretty simple. The intermediary–the bank, savings institution, or investment bank makes its fees for making a judgment about risk and reward. How likely is the loan to be paid back? How high an interest rate should it charge? How should a new issue of securities be priced? The investor decides whether to indulge a taste for risk or for prudence.

But the hyperactive trading markets and creations of recent decades such as credit default swaps and high speed trading algorithms add nothing to the efficiency of financial markets. They add only two things–risk to the system, and the opportunity for insiders to reap windfall profits.

Therefore, whether or not Goldman’s lawyers have figured out how it can engage in High Frequency Trading and stay within the law, there is a strong case that this entire brand of financial engineering should be prohibited. The whole game should be slowed down. Bona fide investors should get in line under the rule of first come, first served. Anything else should be considered illegal market manipulation. No dummy transactions. There is absolutely no gain to economic efficiency from having prices of securities change in milliseconds, and much gain to the opportunities for manipulation.

The need to restrain traders from exploiting their privileged knowledge is an old fight. During the New Deal, for example, many reformers proposed that floor specialists for investment bankers and brokerage houses simply be prohibited from trading for their own accounts. They should be there simply to execute buy and sell orders for customers. Otherwise, the conflict of interest would be overwhelming–and this was before computers. These reformers were overruled, but insider trading was explicitly prohibited (and good luck catching it.)

Now, as then, it is a mark of Wall Street’s stranglehold on politics that the most sensible of remedies seem impossibly radical. One very good way to damp down the dictatorship of the traders, and raise some needed revenue along the way, would be through a punitively high transactions tax on very short term trades. Genuine investors should get favored tax treatment. Pure traders should be taxed, and very short term manipulation taxed into oblivion.

If the financial crisis has proven anything, it is that capital markets have become an insiders’ game in which trading profits crowd out the legitimate business of investment. The whole business-models of the most lucrative firms on Wall Street are a menace to the rest of the economy. Until the Obama administration recognizes this most basic abuse and shuts it down, it will be more enabler than reformer.

***

 
Robert Kuttner is co-editor of The American Prospect, and a senior fellow at Demos. His recent book is Obama’s Challenge.

David Sirota

 

By David Sirota
Author of “The Uprising: An Unauthorized Tour of the Populists Revolt”

Taking a moment away from my book and column-writing, I just want to make a really important point that we all need to remember about the so-called “Blue Dogs” and “conservative Democrats” who are working their asses off to prevent real health care reform.

The Villagers in the D.C. media (ie. the power-worshiping pundits and journalists who preen around the nation’s capital telling the Rest of Us what to think) continue to claim that “Blue Dogs” and “conservative Democrats” come from “moderate districts,” and this is supposed to clearly explain their opposition to health care reform and progressive taxation to pay for said health care reform. This is propaganda at its worst – or, propagandists might say, at its best.

Polls have long shown us the country is basically unified in support of progressive economic positions. Indeed, there have been so many polls showing Americans strongly supporting universal government-sponsored health care, more progressive taxation, fairer trade deals, a Wall Street crackdown, and an end to grotestque bailoutism that I’m frankly sick of linking to all of them so much.

If we are a divided nation, we are divided on some hot-button cultural issues (guns, god, gays, yadda yadda…we’ve all heard it before). So sure, when Villagers in D.C. portray a senator like Max Baucus (D-MT) as representing his state’s fondness for guns when he votes against gun control, that’s an accurate portrayal. But when Villagers depict Baucus, who represents one of the poorest states in the country, as opposing real health care reform because he’s from a “conservative state” and is merely forwarding along his constituents alleged desire for insurance-industry shilling, that’s a lotta horse$&*%. And it’s the same for “Blue Dogs” from Appalachia and the rural South – when they differ with Obama on cultural issues, it’s probably because their constituents differ with Obama on cultural issues. But when they differ with him on a core economic issue like, say, taking on the health insurance vipers and reforming the system, they are, for the most part, $&*% ing all over those same constituents.

What’s really going on is this: “Blue Dogs” and “conservative Democrats” tend to represent swing states and districts – that is, states and districts that are among the very few that aren’t gerrymandered and therefore actually play host to competitive elections. Because of this, their re-election races tend to be especially expensive, which means these politicians have to raise a ton of cash for television ads. How, pray tell, do career politicians raise a ton of cash? They trade their votes and legislative maneuvers for corporate campaign money, most of it coming from special interests in Washington who have little to no grassroots support/connection to the politician’s state/district. The special-interest, D.C.-centric nature of these bribes is only enhanced by the fact that many of the “Blue Dog” and “conservative Democratic” districts/states are rather poor, meaning the money-sucking politicians are all but compelled to rely on out-of-state cash for their warchests.

All of this creates a closed circuit that serves the status quo. A “conservative Democratic” politician from a swing state needs to raise millions to finance a competitive campaign. There’s not a lot of loose money lying around the district, considering the recession and the destitution of the very kind of district “conservative Democrat” tend to come from. So the “conservative Democrat” ends up relying on money from D.C. special interests like, say, health insurers - interests that are largely hated in the “conservative Democrat’s” state and have little grassroots connection to the state. That money then buys votes that prevent stuff like health care reform that would most benefit the constituents of economically struggling states like the “conservative Democrat’s” state.

In the end, because of this kind of transaction, the state remains destitute, and the politician remains in office, keeps raising out-of-state cash, and keeps insisting with a $&*%-eating grin that it’s crazy – just crazy! – for anyone to think their votes could be influenced by millions of dollars. Meanwhile, the cycle starts right over on whatever new economic issue is coming down the pike – all while the $&*% Villagers in D.C. use euphemisms like “conservative Democrats” and “moderate districts” to explain it all away with an absurd storyline that insists because a politician comes from a state that loves guns, he has to oppose health care reform.

This is the swamp of propaganda and corruption that passes for “democracy.” At least we can be aware of it, and stop pretending rank-and-file voters’ cultural conservatism automatically means they want their congressman to be an economic corporatist.  

 ***

David Sirota is a fellow at the Campaign for America’s Future. Find his blog at OpenLeft.com or e-mail him at ds@davidsirota.com

David Sirota

By David Sirota
Political journalist, best-selling author and syndicated newspaper columnist

The health care debate has reminded us that there really are three separate but coordinated armies that defend the status quo in Washington — and will defend that status quo, whether on health care or any other economic issue. In my newspaper column today, I look at who these factions are, and what their motives are. You can read the column here.

In a nutshell, you have the Land Rover Liberals, many coming from the 14 out of 25 wealthiest congressional districts that Democrats now represent. Right now, their opposition to health care and tax reform is being led by Boulder, Colorado Rep. Jared Polis (D).

You also have the Corrupt Cowboys — those lawmakers from very poor, mostly Southern and Western parts of the country. These people give themselves Americana sounding nicknames like “Blue Dog Democrats” or “Main Street Republicans” so as to pretend their opposition to health care comes from their being down home guys “representin’ the folks back home.” Of course, these same lawmakers are among the most rapacious corporate fundraisers and lobbyist-connected insiders in Congress. And as I pointed out yesterday, there’s no evidence that the districts and states the Corrupt Cowboys represent despise health reform by virtue of the fact that they are culturally conservative bastions. In fact, Nate Silver says there’s exactly the opposite evidence:

There’s not really any evidence that health care reform is unpopular in the Blue Dog districts. Although there are exceptions, most of the Blue Dog districts are fairly poor. A Quinnipiac poll released earlier this month suggested that while 53 percent of voters overall think “think it’s the government’s responsibility to make sure that everyone in the United States has adequate health care,” 61 percent of voters making under $50,000 do. Also, while Quinnipaic did not break out the results for moderate and conservative Democrats, which are plentiful in these Districts, one can reasonably infer them. In this poll, 79 percent of liberals agreed with the statement as did 77 percent of Democrats — not a very big difference. Since almost all liberals are Democrats and about half of all Democrats are liberals, that suggests that support for health care reform among non-liberal Democrats is something like 75 percent.

Thus, the story about the honest, god-fearing, good ol’ boy cowboys opposing health care reform out of representational obligation has only been able to become conventional wisdom through the Millionaire Media — the elite national press corps, chock full of very wealthy people, that disseminates the most pernicious kind of anti-reform propaganda. These are the same people who insisted we should immediately rush $12 trillion in bailout cash out to Wall Street speculators, and who now insist that 64 years of debates over a $1 trillion health care proposal is inappropriately “rushing” health care reform. They are also the voices who are actually deriding health care reform as an inhumane proposal to legislatively waterboard the poor, persecuted richest one percent.

In the column, I look at the motives of all these groups, and give President Obama huge props for taking them on. As a sometime critic of Obama, I really think he’s doing a fantastic job right now, and the news this morning from the New York Times that “the president planning trips across the country” to campaign for health care reform is just fantastic. He’s going to have to take on the three groups I discuss in my column — and if he can beat them, we’re going to get universal health care.

Read the whole column here.

The column relies on grassroots support — and because of that support, it is getting wider and wider circulation (a big thank you to all who have helped with that). So if you’d like to see my column regularly in your local paper, use this directory to find the contact info for your local editorial page editors. Get get in touch with them and point them to my Creators Syndicate site. Thanks, as always, for your ongoing readership and help contacting local editors. This column couldn’t be what it is without your help.

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David Sirota is the bestselling author of “Hostile Takeover” (2006) and “The Uprising” (2008). Contact him at ds@davidsirota.com.

Leo W. Gerard

By Leo W. Gerard
International President

This week the minimum wage rose by 70 cents to $7.25 an hour, a beggar’s lot really, but still corporations across America decried it. Good times or bad, somehow Wall Streeters walk away with $700,000 bonuses, you know, on top of their salaries, but a 70-cent minimum wage hike is never affordable.

That’s why America’s workers must seize control of their own fates. President Obama said: “Our destiny is not written for us. It is written by us.” Well, on a sweltering July 11, 1,500 civil rights, human rights and workers rights activists in Little Rock began writing a new destiny for American workers.

That destiny includes the freedom to form and join a union and to collectively bargain for a piece of the wealth they helped create. That destiny includes passage of the Employee Free Choice Act.

The 1,500 met in Little Rock because Arkansas is the home state of Sen. Blanche Lincoln, a Democrat who turned her back on the Employee Free Choice Act this year, succumbing to pressure from the likes of Wal-Mart, a notoriously anti-union corporation headquartered in the Razorback State. Many Wal-Mart workers will be getting a 70 cent raise this week – thanks to that minimum wage hike.

Rich Trumka, secretary-treasurer of the AFL-CIO, and I met with Sen. Lincoln a couple of weeks before the rally, and she kept telling us how she had passed legislation to help children and how she really wanted to help families. The best way to help families is to let them help themselves through collective bargaining.

I’ll tell you what I told the 1,500 in Little Rock that day. Write her. Call her. E-mail her. “Tell her the best way to help the children, the best way to help families, the best way to help the seniors, the best way to get to the middle class is for workers to have the right to join a union and bargain collectively for a piece of the pie that they helped to make and for a piece of the wealth they helped to create.”

That is what the Employee Free Choice Act does.

The rally in Little Rock started at Central High School where nine Black youngsters braved violence to desegregate in 1958. Fifty-one years later, we are engaged in another civil rights struggle. And Rev. Wendell Griffin, a Baptist pastor and judge on the Arkansas Court of Appeals, expressed that best.

Rev. Griffin asked the 1,500, “Are we free?”

No one yelled yes.

He repeated, “Are we free?”

Again, no affirmative response.

He explained, when one person is not free, all people are not free. “We are brothers and sisters, and when one worker is not paid fairly, all workers are not paid fairly.”  And, he said, the way for all workers to be paid fairly, is for workers to have the right to organize.

He told the story of his father working, without a union, in a saw mill; how he later got  union representation, a raise, a pension and better working conditions. And, importantly, how that changed his family’s life.

Finally, he told the crowd:  “What my father had is what every worker ought to have in Arkansas.”

Every worker should have the right to join a union, receive a pension and labor in safety.

He noted that the people of Arkansas have given that to Blanche Lincoln – voted to provide her with a government job, good benefits and a pension.

“Now is our time,” he said.

“Employee Free Choice Act Now.”

Watch the Video.

Dean Baker

By Dean Baker
Co-Director, Center for Economic and Policy Research

There is a long history of mediums who claim to communicate with the dead. They sell their services to people anxious to talk to relatives or great figures of the past. Such exercises can be dismissed as harmless entertainment — people spend a few dollars to be treated to tall tales.

There is a Wall Street equivalent to these seances. People who claim to be knowledgeable about financial markets tell policy makers and reporters what the financial markets are thinking about current policy. These Wall Street seers claim to interpret events in financial markets for those of us who are less familiar with the mysteries of market movements.

In recent weeks, the Wall Street seers have been spinning stories about how the financial markets are very worried over the U.S. budget deficit.

They have told us that the markets are concerned about the government’s ability to repay its debt. The seers tell us that the markets may soon demand much higher interest rates, if the government does not get its deficit under control.

The seers tell us that the government must take steps to rein in the budget deficits projected for the future by cutting back Medicare and Social Security. They also warn us about the risks of adding to the deficit with health care reform. And the seers tell us that we certainly should not try to tackle the problem of 25 million unemployed or underemployed workers with another big round of stimulus. That would make the financial markets very angry.

Those of us who were not born with the gift of being able to communicate with financial markets cannot directly evaluate the information that the financial markets are passing on to the Wall Street seers. However, we can easily determine the risk that investors assign to holding long-term U.S. government debt. This requires looking at interest rates.

Interest rates appear to be directly contradicting the seers’ assertions about financial markets. The interest rate on 10-year Treasury bonds is currently near 3.5 percent. The interest rate is not determined by people rattling off their visions about future debt defaults. It is determined by investors putting their money on the line.

These investors are willing to hold hundreds of billions of dollars in long-term government debt at a return of just 3.5 percent. By contrast, they demanded a return of more than 5% in 2000, back when the U.S. government was running a large budget surplus. If there is widespread fear in financial markets of a default on government debt, it is difficult to understand why investors would be willing to hold it at such a low rate of return. Usually investors demand high returns for holding risky assets.

In addition to interest rates, we could evaluate the seers’ assessment by trying to carry through other implications of the bad news debt default scenario. Presumably, the stock market would be headed downwards with the financial sector stocks leading the way. After all, a default on U.S. government debt would be cataclysmic for the U.S. economy and especially for the banks who hold trillions of dollars in government debt or government-backed debt.

Here also the news doesn’t seem to fit the seers’ vision. The markets have been rallying lately, and many financial stocks are doing quite well.

One piece of evidence that these seers have occasionally used to support their case is the fact that the price of credit default swaps on U.S. debt has risen. Credit default swaps (CDS) are in effect insurance against default. If the price of this insurance rises, then presumably the markets judge default to be a more likely event. That is the reason that people in their 60s pay more for life insurance than people in their 20s.

There is one problem with this story. The payoff of a CDS depends not only on the default but also, as those who did business with AIG know, on the ability of the counter-party to pay. What is the likelihood that JP Morgan, Goldman Sachs or anyone else will be left standing in a world where the US government has defaulted on its debt? It’s not clear what the price of CDS issued on US government bonds means, but it is not a straightforward assessment of the probability of default on the government’s debt.

It should not be surprising that the vision of the Wall Street seers seem to be far from reality. After all, their crystal balls could not see the $8 trillion housing bubble, the collapse of which has wrecked the economy.

In fact, the self-proclaimed seers are using their visions to try to discourage the public from supporting policies that the seers don’t like. These people want to see cutbacks in Social Security, Medicare and other social programs. They are more concerned that higher deficits could mean higher taxes on the wealthy at some point in the future than they are about the tens of millions of unemployed or under-employed today.

In short, those who want fantastic stories about the unknowable would be much better off visiting the people who promise to communicate with the dead than listening to the Wall Street spokespeople. They will learn more and be associating with people of greater integrity.

***

Dean Baker is the author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy.”

This piece was first published on Huffington Post.

Robert Borosage

By Robert L Borosage
Co-Director Campaign for America’s Future

Washington’s special genius is for gridlock. As we’re seeing in the health care debate, the entire system is designed to frustrate action — even when Democrats have a popular president, 60 votes in the Senate and a large majority in the House. Moneyed interests trump party loyalty. Partisan politics trumps national purpose. Congressional rules and egos favor dithering and delay.

So on health care, Republicans have lurched into partisan opposition, hoping that obstructing change will lead to Obama’s “Waterloo,” and they can replay 1994 and take back the Congress. Blue dog Democrats remain lap dogs for special interests, blind to the fury that they will face if reform fails.

But at least on health care, the administration is leading the charge. We haven’t even begun an adult conversation about the fundamental question of America’s global economic strategy. What is the economy we will build out of the ashes of the old?

Obama has raised the subject. He understands that we can’t go back to the old economy — and shouldn’t want to. We can’t go back to borrowing $2 billion a day, largely from the Chinese, to serve as consumer to the world. We can’t go back to an economy in which finance captures 45% of the nation’s profits. We can’t keep shipping good jobs, technology, and manufacturing capacity abroad and expect to sustain a broad middle class at home. We’ve got to start making it in America again. As Obama has declared, “The fight for American manufacturing is the fight for America’s future.”

As Louis Uchitelle in the New York Times reports, the United States now ranks behind every industrial nation except France in the percentage of overall economic activity devoted to manufacturing. We’ve been shedding manufacturing jobs for years, and the recession has been brutal, with nearly two million industrial jobs disappearing since it began.

But we haven’t even begun a serious conversation about what it would take to revive manufacturing in a global economy. The president’s trade representative, Ron Kirk, seems clueless, intent on passing free trade agreements with Panama, Columbia and South Korea that are but tribute to the old unsustainable ways. The president calls sensibly for investment in education and training, in 21st century infrastructure, in research and development — but his budgets project reducing domestic expenditures to levels lower as a percentage of GDP than the early 1960s. And conservatives in both parties say that isn’t low enough.

Obama has suggested that America must lead in the green industries that surely will grow in the future — new energy, more efficient appliances, more sophisticated building efficiencies — and the supply chains associated with windmills, solar cells, batteries, fast trains, electric cars and more. Yet, Obama opposed the weak “buy America” provision put into the stimulus bill. His energy bill contained no serious effort at insuring that these products would be built here. Amendments designed to help manufacturers here were introduced into the bill in the dead of night because the administration needed the votes of industrial state Democrats to pass it. And because Ohio Senator Sherrod Brown and the Apollo Alliance had put together elements of a new energy industrial policy that House members could elbow into the legislation.

Contrast that with China. China has determined that new energy will be one of its strategic industries. It is now the largest manufacturer of solar panels — exporting 95% of its production, largely to Europe and the U.S.

While Obama felt it necessary to distance himself from the “buy America” provisions put in the stimulus bill, China has no such compunctions. As the Times reports, “when China authorized its first solar power plant this spring, it required that at least 80 percent of the equipment be made in China. When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data.”

The European companies weren’t exactly foreigners. They had built turbine factories in China to meet the government’s requirement that the turbines contain 70 percent local content. But having no doubt benefited from that transfer of technology and engineering experience, the Chinese contracted with home-grown companies, rejecting the bids of the Chinese-based European companies while approving those of Chinese companies that had never built a turbine before. European wind turbine makers have now stopped bidding on Chinese contracts, concluding that their bids had no chance.

China is intent on dominating the new energy markets of the future. If its past practices are any indication, it will subsidize exports, manipulate its currency, buy China at home, force multinationals to transfer technology and partner with Chinese companies, and engage in industrial piracy to make its way.

If the U.S. wants new energy to be the centerpiece of a new economy in which — in the president’s words, the U.S. “consumes less and produces more,” then it will have to have an industrial strategy. It doesn’t have to mimic the Chinese, but it has to respond to them, rather than invoking old shibboleths about “free trade,” and ignoring the reality of the world marketplace.

A new book issued by the Alliance for American Manufacturing with the ungainly title of Manufacturing for a Better Future for America shows how China is not alone, detailing the practices that our trading partners use to sustain their industrial capacity and export markets.

A new global strategy is essential. But getting there won’t be easy. Just as the insurance companies impede sensible reforms in health care, and big oil and coal block vital changes in energy, and Wall Street guts vital reform of finance, global corporations and banks will spend a lot of money to defend the unsustainable trade policies of the old economy.

This can lead to cynical resignation or to fury. But one thing is clear. Little will get done until Americans show politicians that while the lobbies can pay for their campaigns and provide employment in retirement, they can’t defend them against the justified anger of a citizenry no longer willing to put up with gridlock.

Scott N. Paul

By Scott N. Paul
Executive Director of the Alliance for American Manufacturing

Our nation faces rising unemployment, staggering debts, shrinking trade, and no sense of when (and if) a real recovery — one that reaches Main Street and working families — will take hold.

As the federal government responds to these concerns, and especially since President Obama was sworn in, shrill warnings against protectionist measures have been issued by editorial pages and foreign officials. The specter of widening and deepening the current recession, or returning to 1930s Smoot-Hawley trade policies, has been repeatedly invoked.

But American protectionism is a myth. If one wishes to point fingers, they should be directed toward Beijing, Tokyo, Brussels, and Seoul, where mercantilism and subsidies still reign supreme.

This is the untold story of protectionism: the barriers that other governments erect to block American goods and the mercantilist measures they utilize to gain market share in the U.S. These practices range from China’s currency misalignment and massive industrial subsidies to non-tariff barriers in Korea and Japan. All these impediments have been well documented by U.S. trade officials, but the mere act of identifying these practices is now viewed as protectionism, even though taking action to eliminate them would expand world trade, reduce global imbalances and preserve the free market.

The obsession with American protectionism is nothing more than a diversion from the real questions that need to be answered. How do we end global imbalances and achieve a balance between our exports and imports? How do we revitalize our nation’s manufacturing sector, which is responsible for a large share of America’s innovation and production? How do we begin growing jobs again in this difficult business environment?

Congress took a very small step forward in the stimulus package passed in February by requiring some materials used in infrastructure projects to be sourced domestically to the extent permitted by U.S. trade obligations. The value of the materials affected is only a small fraction of the $4 trillion in two-way trade that crosses the U.S. border annually, but it is providing a much-needed boost to the American manufacturing sector. Contrary to widely held perceptions, this Buy America rule is not a new requirement, nor does it make America a renegade nation.

Buy America has served as an effective jobs generator and a smart economic policy for decades. It applied to materials used in the construction of the interstate highway system in the 1950s. In the midst of a recession during the early 1980s, President Reagan signed legislation that strengthened Buy America requirements. Some sort of domestic sourcing requirement has applied to most major infrastructure expenditures passed by Congress since World War II, so it would have been a surprise if a requirement had not been attached to the stimulus spending.

And Buy America can create good jobs. A study prepared earlier this year by economists at the University of Massachusetts at Amherst estimates that strong domestic sourcing requirements create about one-third more manufacturing jobs than otherwise would be the case.

In fact, Buy America won’t just help the United States. For example, because of integration, the provision works to the benefit of the entire North American steel and auto industry, including in Canada.

Buy America policies also reward other nations with reciprocal government procurement agreements by exempting them from certain types of restrictions. Current procurement rules allow states and some localities to opt out of reciprocal obligations, leaving decision-making in the hands of local officials, who know far better than bureaucrats in Geneva or Washington what is best for their local economies.

There will never be a repeat of the Smoot-Hawley tariffs, at least not in America. We have not asked for sky-high tariffs. We have not asked for domestic procurement measures that violate our trade obligations. But we will continue to insist that countries like China honor the commitments they made to gain access to our market and stop their cheating, and we will work with Congress to ensure that tax dollars devoted to infrastructure spending are reinvested in the American economy.

The success of American manufacturing depends on a fair application of international trade rules. Buy America is fully consistent. But the market-distorting practices emanating from places like China are not. Let’s stop protectionism where it really festers.

Stewart Acuff

By Stewart Acuff
Special Assistant to the President, AFL-CIO

I was on Fox News last week doing an interview with right-wing talking head Stuart Varney. He began what became a very hostile interview by charging that the labor movement is using Pope Benedict’s Papal Encyclical for political purposes, part of our effort to pass the Employee Free Choice Act.

Given, what the Pope wrote, that charge may be the only defense of the Right against the Pope’s clear, unambiguous, and strong language: “Through the combination of social and economic change, trade union organizations experience greater difficulty in carrying out their task of representing the interests of workers, partly because Governments for reasons of economic utility, often limit the freedom or the negotiating capacity of labor unions. Hence traditional networks of solidarity have more and more obstacles to overcome. The repeated calls issued within the Church’s social doctrine, beginning with Rerum Novarum (60), for the promotion of workers’ associations that can defend their rights must therefore be honored today even more than in the past, as a prompt and far-sighted response to the urgent need for new forms of cooperation at the international level, as well as the local level.”

Sounds like an unambiguous call for the Employee Free Choice Act to me.

Pope Bendict’s Encyclical Letter called “Caritas in Veritae” or “In Charity and Truth” seems to be a guide for the social teachings of the Church in a time of profound global economic change. Certainly, as we’ve shown the Pope is clear about the necessity of unions and workers rights, but he is also critical of the kind of greed and unfettered capitalism that has led the US to yawning inequality and economic crisis:

“Profit is useful if it serves as a means toward an end that provides a sense both of how to produce it and how to make good use of it. Once profit becomes the exclusive goal, if it is produced by an improper means and without the common good as its ultimate ends, it risks destroying wealth and creating poverty… The world’s wealth is growing in absolute terms, but inequalities are on the increase. In rich countries, new sectors of society are succumbing to poverty, and new forms of poverty are emerging.”

And what does the Pope say about the common good?

“The more we strive to secure a common good corresponding to the real needs of our neighbors, the more effectively we love them. Every Christian is called to practice this charity, in a manner corresponding to his vocation and according to the degree of influences he wields in this polis. This is the institutional path — we might also call it the political path…”

So he is calling for political action based on his words. On politics and market economics the Pope also says: “Economic activity cannot solve all social problems through the simple application of commercial logic. This needs to be directed towards the pursuit of the common good, for which the political community in particular must also takes responsibility.

Therefore, it must be borne in mind that grave imbalances are produced when economic action, conceived merely as an engine for wealth creation, is detached from political action, conceives as a means for pursuing justice through redistribution.”

I’m neither a Roman Catholic scholar nor a Biblical scholar, but I can read and the Pope’s language is crisp and clear. He has laid out the moral imperative for all of us to engage political action to bend the market towards the common good, to restrain the greed of the markets, to protect workers and collective bargaining rights, to pass the Employee Free Choice Act, and to see that those rights and other aspects of the common good are not sacrificed on the altar of profit for profit’s sake.