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Robert Kuttner

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

Question for the day: Where is the economic recovery going to come from?

We are still at the stage of the recession where economic downdrafts are producing more downdrafts. Reduced purchasing power leads to fewer retail and factory sales and more layoffs, further reducing consumer demand. The Obama stimulus package, about 2.5 percent of GDP for each of two years, doesn’t make up enough of the difference. But the federal deficit, caused mainly by falling revenues and not by increased public spending, is alarming the budget hawks. The administration worries, correctly, that deficits will be high for several years to come and wonders who will keep lending Uncle Sam the money. Yet cutting back spending before recovery comes would be suicidal.

In addition, the financial sector has not yet returned to health, despite outsized profits (and bonuses) reported by the likes of Goldman Sachs. This is the kind of purely financial engineering that caused the collapse. The fevered activity at Goldman is a sign of lingering economic illness, not economic health. The rest of the economy, which depends on the financial sector for real investment capital, is still deeply depressed.

Louis Uchitelle’s piece in Sunday’s New York Times provides some instructive numbers.

Every major sector that reflects the purely private economy has been losing jobs, the only exception being energy extraction plus a tiny increase in computer systems design and management consulting. All of the other expanding sectors that are actually adding jobs reflect government spending – education, health, general government. But the declines in the workhorse parts of the private economy such as manufacturing, construction, and retailing are huge.

With purchasing power still declining and unemployment still rising, where will the recovery come from? White House economic chief Lawrence Summers, in a major speech at the Peterson Institute July 17, emphasized the good news.

“We were at the brink of catastrophe at the beginning of the year but we have walked some substantial distance back from the abyss,” he said. And, ever the empiricist, Summers reported that a Google search revealed that “hits for economic depression have returned to baseline levels.” That’s nice, but what Summers did not forecast was a robust recovery.

And if we stay on the present path, recovery will not come for a long time. Federal deficits will be large enough to raise questions about who will keep lending us the money – but not large enough to power a real recovery that increases real incomes and provides good jobs. The last time we had a massive financial meltdown like this, it took the hyper-stimulus of a war – World War II – to recapitalize industry and re-employ workers.

What, then, is the moral equivalent of war for the 21st century? Let’s think way, way outside the box.

We might begin with a serious strategy for rebuilding American manufacturing. American corporations and politicians have been cavalier about just letting manufacturing go. Uniquely among advanced and developing nations, we have no national strategy for nurturing manufacturing at home. There’s even an office in the Commerce Department that helps companies outsource.

As a result, even a modest uptick in purchasing power will not produce enough American jobs because there are so many things that America no longer makes.

We could start with clean energy, and move on to mass transit, and reclaim America’s capacity to make things. Right now, even if we massively shifted to wind and solar energy, other nations would get most of the production jobs because most solar panels and wind turbines are not made here, while Americans would just get the temporary installation jobs.

We could also get serious about insisting that other trading nations not coerce or bribe our manufactures to locate facilities overseas as a condition of doing business – a flagrant violation of trade law. We could start having a real industrial policy for commercial industry in the way that we have long had a tacit industrial policy for products deemed essential to the military.

The administration is confused about how to reconcile industrial goals with trade law. It had to do a lot of backing and filling so that tens of billions of taxpayer dollars to modernize the auto industry didn’t end up subsidizing more outsourcing of jobs to China. If trade law interferes with our ability to revive American manufacturing, then there’s something wrong with trade law and let’s change it.

For a fine summary on how to revive domestic manufacturing, take a look at the new book, Manufacturing a Better Future for America, edited by Richard McCormack and written by some of America’s best experts on reviving manufacturing.

The book is published by the Alliance for American Manufacturing.

After manufacturing, we need to get serious about investing in a new generation of public infrastructure – everything from smart-grid electrical systems to broadband and modern water and sewer and transportation systems. That will produce lots of good jobs, and make for a more efficient and productive economy.

As far as the deficit is concerned, it will probably need to get bigger before it gets smaller. During World War II, when the nation was a lot poorer and nearly half of our national output went to defeat the Axis powers, my parents and grandparents and tens of millions of Americans like them bought war bonds.

We didn’t depend on foreign borrowing, even though the deficits were far larger. Today, the government should create Recovery Bonds and market them to Americans, so that we can finance our own social investment and cease to be financial wards of foreign dictatorships.

The good people at Goldman Sachs can demonstrate their patriotism – not by offering to make money as financial middlemen – but by buying the first issue of these bonds as an investment. The government needs no investment bankers to market these bonds. It can sell them directly to citizens

Gentle reader, we are in a national economic emergency. This is not just about talking up the economy by emphasizing good news. The administration needs to stop smoking its own green shoots and offer strategies equal to the magnitude of the crisis.

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Robert Kuttner is co-editor of The American Prospect, and a Senior Fellow at Demos. His latest book is Obama’s Challenge.

Leo W. Gerard

By Leo W. Gerard
International President

Just days ago, America celebrated her birthday with fireworks, spontaneous renditions of the Star Spangled Banner and chants of, “We’re Number One!”

In a crucial area, health care, the chant is untrue. Many of us love the individual doctors who may have saved our lives or the lives of loved ones. But the health care system in this country is not top-ranked.  It’s not even close to number two. Its poor quality and excessive expense are sucking the life out of America. For the health of the nation, both physically and economically, we need a system with a public option – that means a government-sponsored and managed alternative. And we need it now.

First, the issue of ranking. In the year 2000, the last time the World Health Organization stacked up countries’ health systems, the United States came in 37^th, behind the likes of Chile, Morocco, Cyprus, even drug war-torn Colombia, to which the U.S. donates hundreds of millions in foreign aid. The U.S. Centers for Disease Control and Prevention pointed out late last year that the U.S. ranked 29^th in the world for infant mortality in 2004, a statistic that steadily worsened since 1960, when the U.S. ranked 12^th. Twenty-two countries’ rates were below 5 deaths per 1,000 live births. The U.S. rate was 6.78 deaths.

Similarly, the U.S. ranks 42^nd for life expectancy, down from 11^th two decades ago. Contributing to that decline is the parallel drop in Americans covered by health insurance, researchers said. While 46 million Americans lack insurance, Canadians and residents of European Union countries benefit from universal health care.

We are 37^th – Yea! We are 29^th – and falling! We are 42^nd — and dying! These are not the chants of proud Americans. These are not the chants of vibrant Americans. In fact, these are not the chants of Americans who could continue financially supporting this sick system even if they wanted to. And they don’t.

The cost of the American system, with its private health insurance industry in the business of profiting off of illness by limiting care, cutting corners and denying access to those with “pre-existing conditions,” is suffocating the U.S. economy. In this one unenviable area – spending — the U.S. is number one. Health care expenditures are a shocking 16 percent of U.S. gross domestic product (the value of all goods and services produced in a nation in a year), far ahead of the closest competitor. That would be France, where it’s only 11 percent. That’s followed by Switzerland, Germany, Belgium, Canada and Austria, where it ranges from 10.8 down to 10.1 percent. These are all countries that provide national health care.

Looking at it another way, the average expenditure per individual, America remains in the undesirable position of most profligate spender. The average for an American was $7,290 in 2007, the latest year for which comparable statistics were available. But the average for the 30 countries in the Organization of Economic Cooperation and Development was a mere $2,964, with the closest to the U.S. being Norway at $4,763.

Those costs marginalize U.S. manufacturers as they attempt to do right by their American workers while scrambling to compete in international markets. Here’s how Dr. Atul Gawande put it in his June article, “The Cost Conundrum,” in “The New Yorker:” “Spending on doctors, hospitals, drugs, and the like now consumes more than one of every six dollars we earn. The financial burden has damaged the global competitiveness of American businesses and bankrupted millions of families, even those with insurance . . . By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of health care. It’s not even close.”

President Obama warned the American Medical Association, which opposes national health care, about exactly the same thing in June when he said this: “If we do not fix our health care system, America may go the way of G.M.” Would those wealthy physicians bail out the government then?

Clearly these costs don’t contribute to quality since U.S. rates of infant mortality and life expectancy are so relatively poor. And they factor large in personal bankruptcies and delay of care as individuals are unable to keep up with medical care’s morbidly obese costs.

A Kaiser Family Foundation poll in February found that 53 percent of Americans cut health care because of cost in the previous year. A quarter reported putting off health care they needed such as doctor’s visits and surgery, and twenty percent said they have not filled a prescription. Another part of the poll explains this: “13 percent say they have used up all or most of their savings trying to pay off high medical bills in the past 12 months, and just as many say their medical debt means they have difficulty paying other bills.  A similar proportion (12%) say they have been contacted by a collection agency, while a smaller share (7%) report being unable to pay for basic necessities like food, heat or housing.”

We are Number One? This is cruel. This is wrong. This must stop.

I know that many Americans view my native land, Canada, not as a country, but as an unofficial 51^st state. But the difference between Canada and the 50 states is that Canada has national health care, thanks to Tommy Douglas, the former premier of Saskatchewan, and a party leader. One huge difference between the American system and Canada’s national health care is the extreme cost of administering private insurance in the U.S. A study published in 2003 in the New England Journal of Medicine showed that administrative costs were $1,059 per person in the U.S. but only $307 per person in Canada. That excessive $752 in administration costs paid in the U.S. for each insured person has only grown larger in the ensuing years. The study concluded: “A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system.”

In 2004, the Canadian Broadcasting Company conducted a poll to determine the country’s greatest citizen. People everywhere could vote, for anyone they wanted, so an actor, like Tommy Douglas’ grandson, Kiefer Sutherland, could have won, or a famous singer like Celine Dion or Shania Twain. But Canadians chose a politician — Tommy Douglas, the father of national health care. That’s how we feel about the national health care system in Canada.

Don’t let the Republican Party-of-No stop this. Don’t let big vested interests like the pharmaceutical, insurance, and for-profit hospital corporations keep America down. In poll after poll, Americans have made it clear they want a public option. They want care as good as Canadians get. They’re paying more than twice the price for it. To ensure that America is Number One, Congress better deliver it before the end of August.

Stewart Acuff

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

On Saturday, July 11, we made history in Arkansas. We; civil rights and community leaders, local elected officials, and union activists and leaders–1500 of us; held the largest ever demonstration in Arkansas to demand that Sen. Blanche Lincoln vote for and support the Employee Free Choice Act.

We began at the iconic symbol of civil rights, Central High School integrated in 1958 by nine brave Black teenagers, with Steelworkers President Leo Gerard thundering workers rights are civil rights. Then African-American Little Rock Judge and Rev. Wendell Griffin told the story of his family and how life changed for the better when his father’s job at a nonunion sawmill became union. AFL-CIO Executive Vice President Arlene Holt Baker talked about how the freedom struggle of the workers rights movement is an extension of the freedom struggle of the civil rights movement. African-American Little Rock State Senator State Senator Joyce Effiott welcome us to her district and talked about the fight to restore the freedom to form unions and bargain collectively.

After Sen. Elliott, USW President Gerard kicked off the mile long march in 100 degree heat to the State Capitol.

After the 45 minute march, AFL-CIO Secretary-Treasurer and soon to be President Rich Trumka made the case for Sen. Lincoln to support the Employee Free Choice Act. With all the passion and vigor of his call a year ago for union members to support Barach Obama, Trumka talked about the unfinished business of freedom in America and he thanked labor’s allies–the ministers and imams and other faith leaders, Interfaith Worker Justice, the local African-American elected officials and community organizations.

There were many more speeches in the course of that very hot midsummer day in Arkansas at the Capitol and at the subsequent catfish fry–more ministers, State Representatives Carrell and Nickell, Maxine Nelson, Chair of Arkansas ACORN all calling for Sen. Blanche Lincoln to vote for the Employee Free Choice Act.

Strategists on both sides of the fight agree that Arkansas and its two moderate Democratic Senators is ground Zero in the history-making campaign to pass the Employee Free Choice Act.

July 11 had started with six buses picking up activists in Texarkana, Ft. Smith, and Pine Bluff taking them to meet the multitudes of Little Rock activists.

This huge and historic march is the latest in a series of tactics in Arkansas that are much more reminiscent of the modern Civil Rights movement than a typical legislative campaign. The AFL-CIO Employee Free Choice Act campaign has included a statewide 24-hour candlelight prayer vigil, a previous march and rally, mobilization of faith leaders, and other creative movement activities.

But on July 11, all other tactics were eclipsed by Arkansas largest ever march and rally.

Posted: June 26, 2009 08:47 AM from the Huffington Post

Stewart Acuff

May you live in interesting times goes the old blessing. Well for all of us the times could hardly be more interesting. As Charles Dickens wrote in a Tale of Two Cities–”It was the best of times and the worst of times.”

The nation’s economy is almost in free fall. We now measure economic progress not by whether unemployment is going down or up–because it is always going down but whether we lost more or fewer jobs than we lost the month before. The government has had to take over the once iconic symbol of American capitalism, General Motors, and bail out the onetime pillars of American capitalism, our largest banks and financial institutions.

It is now beyond debate that 30 years of continuous deregulation across the economy, unmitigated greed, the devaluation of work and disdain toward workers, assaults on our unions and the middle class, and turning Wall St. into the world’s largest casino has plunged our country and our people into the worst inequality and the greatest economic crisis since 1929 and the Great Depression.

But as Dickens said, it is also the best of times. Finally, led by a brilliant, principled and disciplined President Obama, our government and our country are facing up to long-term problems and immediate crises. We are debating and struggling to fix our healthcare crisis that haunts almost 100 million of our people–50 million of us with no healthcare, another 40 million with inadequate or unreliable healthcare. We are re-regulating financial services, stimulating the economy wisely with $150 billion of long needed, jobs producing infrastructure investment, billions more to rebuild our electricity grid and invest in renewable energy and trying to make higher education affordable again.

Most of all and most importantly, we are engaged in a great struggle between Corporate America and their radical rightwing Republican allies on one side and America’s workers, unions and people of good will on the other side to restore one of the most fundamental freedoms in any democracy–the freedom to form unions and bargain collectively.

The 30 year assault on workers and unions effectively destroyed this freedom so that now upwards of 30,000 workers every year are illegally retaliated against for exercising legally protected union activity, 1 in 5 union activists trying to form unions are fired, and according to Cornell scholar, Dr. Kate Bronfenbrenner, management intimidation against workers trying to organized has reached an all time high.

This assault and destruction of freedom has had devastating consequences:
–20% more Americans in poverty since George Bush was elected president.
–90–100 million Americans suffering from lack of healthcare.
–30 years of stagnant and declining wages while workers productivity climbed by 75%.
–lower take home pay than in 1973.
–Yawning inequality. The average CEO in 1980 made 40 times as much as the average worker. Today the average CEO makes 400 times as much as the average worker.
–And the biggest problem in our economic crisis is the lack of consumer demand or buying power. Americans no longer make enough money to drive the great American economic engine. And our great middle class is being squeezed and squeezed and squeezed.
–Now more Americans say they expect their kids and grandkids to do worse than today’s generation instead of better.

This last fact makes me ashamed–ashamed of myself and my generation, ashamed of what we squandered, ashamed of our lack of stewardship, ashamed of those we allowed to lead us–ashamed that in spite of 4000 years of human history and wisdom, 4000 years of Judeo-Christian teachings and traditions we allowed a bankrupt business-government ethos that greed is good and you’re on your own to dominate our culture.

But it is the best of times because we can change all that right now. We can pass the Employee Free Choice Act now, this summer.

We can change it all right here in Arkansas. We have one senator, Mark Pryor, who is working hard to build the 60 votes to pass the Employee Free Choice Act. We have another, Blanche Lincoln, who was once a co-sponsor of the Employee Free Choice Act but now Wal-Mart and Tyson’s Chickens have convinced her that maybe she ain’t for the Employee Free Choice Act anymore.

I don’t have to tell this crowd that the Employee Free Choice Act does three very simple, straightforward, common sensical things:

• Real penalties on employers who violate the law and workers rights. $20,000 civil fines and triple damage back pay for firings.
• Guarantee first contracts by allowing for arbitration if the corporation refuses to bargain in good faith.
• Allows workers to form or join a union just like young workers volunteer to go to Afghanistan–simply by signing up and when 51% sign up the union is established.

It is past time for Sen. Lincoln to be a real Democrat and commit to support fundamental labor law reform.

So on Saturday July 11 led by President Ed Hill and Leo Gerard of the Steelworkers and Rich Trumka we’re gonna help Sen. Lincoln find her backbone, her conscience, and her Democratic Party.

We’re gonna caravan from all over Arkansas to Central High in Little Rock, meet together and march. Presidents Hill and Gerard and Trumka, faith leaders, elected officials, African-American leaders, and every constituency of the Democratic Party will call on her to vote for and support the Employee Free Choice Act. Will you be there? If Ed Hill and Rich Trumka can come from Washington, DC, can you be there?

And to finish it all off, after the rally, we will have an old-fashioned Arkansas catfish fry free–so bring your families but do not miss this.

Sen. Lincoln is feeling the heat. She’s feeling our pressure. And she doesn’t like it and is complaining to every body who will listen. It is uncomfortable. But in every campaign like this, we have to go through this kind of pressure and heat to get to yes. And we have to get to yes.