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Appearing before Congress, Fed Chair Ben Bernacke predicted that the economy would not improve unless Congress addressed looming spending cuts and the expected increase in taxes. In response, Senator Charles Schumer of New York said that because Congress was unable to act it was the Fed’s job to stimulate the economy. Therefore, the Fed should get to work. And yet it is this passing the buck that is really the problem. For too long Congress and the White House have relied on the Fed to stimulate the economy through monetarism because it effectively absolves the political institutions of responsibility that typically accompanies fiscal policy. Still, each approach by itself is limited, and what is needed is the two together along with another tool, an incomes policy.

Monetary policy is essentially a bottom down approach that assumes that if interest rates can be lowered enough, investment will be stimulated and jobs created. All the Fed can do at the moment is get more money into the economy either through lowering interest rates again and more quantitative easing. Interest rates are already at their lowest level in years, and so far to little effect. The problem with the monetary approach is that it rests on faulty assumptions. Pumping more money into the economy, in and of itself, will not create jobs. Job creation requires a more grassroots approach. In order for there to be jobs creation, there needs to be aggregate demand for goods and services. Therefore, it matters not how much interest rates are lowered. If there is insufficient aggregate demand because individuals lack the financial wherewithal to demand goods and services, nothing is going to happen. To a certain extent, fiscal policy can help in this regard. By lowering taxes, individuals will have more money in their hands and will be able to demand more. But the current debate about extending the Bush era tax cuts is not really a serious discussion of fiscal policy. Extending the tax cuts is not the same as putting more money in people’s pockets; rather it simply prevents more money from being taken out of people’s pockets. What is needed is lowering taxes in conjunction with monetary policy, which would also require serious tax reform. But this too isn’t enough. (more…)

It’s truly unbelievable: At no time in modern memory has the privileged class been richer, the middle class more endangered, or the number of people in poverty been so high. And yet the Republican Party, whose leaders are overwhelmingly wealthy themselves, is openly and shamelessly proposing to give more tax cuts to millionaires and billionaires — including heirs and heiresses who have done nothing to earn their riches — while actually raising taxes on millions of poor and middle class people.

There will be a time to engage in argument. But first let’s take a moment to gaze in wonder at the nakedness of their greed.

Okay, moment’s up. Now it’s time for the argument.

In Plain Sight

Yesterday the Senate voted on a Democratic proposal to extend the Bush-era tax breaks for all income below $250,000 per year. Everybody would get that tax break, even billionaires. Taxes would go up for anything earned above that amount, and for some kinds of investment income. The bill would also preserve a number of tax breaks for middle class and lower-income working people.

Forty-eight Senators voted against the Democratic bill. Forty-four of them then promptly voted for the Republican proposal, which would keep the Bush tax cut for earnings above $250,000 — a cut which provides greater and greater tax breaks as you climb the earnings scale toward “millionaire” status and eventually ascend to the rarefied atmosphere of the billionaires’ club.

They didn’t even try to hide what they were doing. They didn’t bury it in loopholes, or under pages of indecipherable legal language. They just … put it all out there.

This is a stick-up.

The GOP bill would actually increase the average tax bill for 25 million households who earn less than $250,000. The Republican proposal would also end the Tuition Tax Credit, raise the “marriage penalty” (hey, welcome to our world, gay newlyweds!), and increase the tax burden for working families with kids.

Put up your hands, Mr. and Ms. America. This is a stick-up.

Bill Scher notes that the Senators who voted to raise taxes on the poor and the middle class while cutting them for the wealthy, then rejected the bill that extends tax cuts for the middle class alone, were now on record as believing that “the rich pay too much and the poor pay too little in taxes.”

For his part, Senator Joe Lieberman voted neither nor against the Democratic bill, officially placing himself on record as believing that “nonpartisanship” consists of standing for absolutely nothing.

Class Warfare Against Our Children

The Republicans want to impose these new tax burdens on the struggling middle class while giving an average cut of $160,000 in income and estate tax cuts for households that earn a million dollars or more. And if those households earn a billion or more, the breaks could run into tens of millions annually.

But tax deductions so a working family can send their kids to college, which is already all but impossible? No can do. Perhaps they feel that parents who want a better life for their kids should “know their place” instead.

The Republican proposal for taxable estates doesn’t change life for ordinary households but, as the Center for Budget and Policy Priorities documents, rich kids inheriting their parents’ money would receive an average $1.1 million in tax breaks — while parents working to support their children or put them through college would pay more.

The GOP proposal is nothing less than an all-out assault on any but the wealthiest children, closing the door to every struggling generation’s dream of a better life. It’s enough to leave a guy speechless. (more…)

It’s not the workers’ fault that they get sick or injured. But it is the fault of our misnamed “Workers’ Compensation” system. The United States has the worst record on workplace health and safety among industrialized nations. The separate state-by-state laws (with each state competing to cut costs to employers and benefits to workers) are designed to protect employers from liability for creating the unsafe and unhealthy workplaces, which sicken us.

The last research project, undertaken with a half million dollar grant from outgoing Pennsylvania Gov. Bob Casey, conducted by the Pennsylvania Center for the Study of Labor Relations, was of the Pennsylvania workers’ comp system. One conclusion —  workers would be healthier and workplaces safer if the protection against suits for damages —  the primary purpose and effect of so-called “workers” compensation laws —  were repealed and employers had to face, and face up to, the risky, dangerous, sometimes deadly, workplace environments they create.

Martin Morand, Professor Emeritus
Indiana University of Pennsylvania

It’s a damning report because it says America has endangered itself by allowing both its manufacturing sector and its infrastructure – like dams, roads and bridges — to deteriorate.

The report, Preparing for 21^st Century Risks, issued by the Alliance for American Manufacturing last week, recommends a two-part solution. First is restoring America’s infrastructure lifelines:  its electrical grid, its public water and sewer systems, its railroads and dams. And second is doing it with American-manufactured steel and concrete, glass and aluminum – all American components and all American labor.

The result would be a nation more capable of fending off and recovering from natural and man-made disasters. And it would be a nation with a stronger economy based on a solid manufacturing base.

The Preparedness report was written by two security experts. One is Tom Ridge, the former Republican governor of Pennsylvania and first Assistant to the U.S. President for Homeland Security. The other is Robert B. Stephan, a former Assistant Secretary of Homeland Security for Infrastructure Protection.

It discusses the danger of America’s increasing dependence on foreign-made materials and supplies and concludes:

“The American way of life is dependent upon a vibrant economy, the existence of which is based upon a skilled work force, innovation and a world-class critical infrastructure. Much of this critical infrastructure is vulnerable to attack, catastrophic weather events and obsolescence and deterioration. Immediate national security, preparedness and economic needs require an equally strong domestic manufacturing base which, for many reasons, has eroded over the years.”

Risks noted in the report, such as this year’s devastating forest fires and nearly nationwide drought, in addition to the constant threat of terrorism, coincidentally were echoed twice in New York Times stories last week.

The first story described infrastructure problems caused by triple-digit heat, difficulties that are expected to continue with sustained extreme weather. They included excessive temperatures in nuclear plant cooling pools, a train derailed by heat-kinked track and a taxiing jet mired in melted asphalt. (more…)

Our economy doesn’t function well without strong government oversight, regulation and demand-creating “stimulus.” We also need strong government to empower and protect us from those (foreign and domestic) who would keep us down and under their control. But the ones making big money from things that hurt our economy — and us — use that money to weaken our government, keeping us from stopping them.

Paint this picture in your mind. When a downturn in the “business cycle” begins:

1) Every company seeks to maximize its own profits, and cut its losses. Companies try to employ as few people as possible and pay as little as possible. (When there are more customers they hire to meet the demand, when there are fewer cutomers they lay off.) This is in the interest of each individual company but:

2) The people who work at one business are the customers of other businesses. When all of the businesses are minimizing the number of workers and cutting wages, businesses find themselves with decreasing sales (Falling demand.). So they have to lay more people off and cut wages further. In the larger overall economy:

3) This becomes a self-reinforcing downward cycle. People are laid off or their wages are cut so they cut back their own spending, which means they are not going into stores, buying cars, etc. so those businesses lay people off and cut wages… Falling demand causes demand to fall. (The economy lost 815,000 jobs in Bush’s last month in office.)

4) Individual businesses cannot worry about whether laying people off hurts the larger economy’s customer base (demand), they are just dealing with the effect on their own business now. They can’t look at the bigger picture of the economy. This is not their job. But it has to be someone’s job. So:

5) Businesses need a government that manages the bigger picture for an economy to work. Government is the authority that looks at the larger picture. Government is We, the People asking if individual actions are good for all of us when everyone does them — are they good for the larger economy? — and what can we do to make sure actions when done by everyone are not hurting the bigger picture. Government can also ask what can we do to compensate for the effect of individual actions on a mass scale (stimulus). It can work to mitigate the damage (unemployment benefits, food stamps).

This is why the “stimulus” stopped the crash that was occurring in the economy. Look at this chart and you can clearly see that the stimulus reversed the downward spiral that was occurring. The red lines, heading downward, were the self-reinforcing downward spiral. The blue lines, heading back upward, show how the stimulus reversed that.

(more…)

Americans United for Change: Big Banks Write Romney Checks So They Can Write Their Own Rules

OMG, look up! Is that a flying pig? That was my thought when I read the latest bulletin from the Republican-controlled House Education and Workforce Committee announcing a hearing that would be “Examining Proposals to Strengthen the National Labor Relations Act (NLRA).”

Wow! What a change of heart. This is the same committee that has spent the past two years trying to scale back workers’ rights—especially the right to join unions. The committee also has tried to gut the agency, the National Labor Relations Board (NLRB), that is in charge of protecting workers’ rights on the job.

Then I took a closer look. Two of the key witnesses were from a right-wing think tank—the Hudson Institute—and one of the most extremist anti-worker organizations—the National Right to Work Legal Defense Foundation.

OK, but what about the proposals to “strengthen” labor law and workers’ rights?

Well, we have a little problem there, too. One of the bills—the so-called RAISE Act—would give employers the right to circumvent collective bargaining agreements’ provisions on wage increases. (more…)

Suppose Mitt Romney ekes out a victory in November by a margin smaller than the number of young and minority voters who couldn’t cast ballots because the photo-identification laws enacted by Republican governors and legislators kept them from the polls. What should Democrats do then? What would Republicans do? And how would other nations respond?

As suppositions go, this one isn’t actually far-fetched. No one in the Romney camp expects a blowout; if he does prevail, every poll suggests it will be by the skin of his teeth. Numerous states under Republican control have passed strict voter identification laws. Pennsylvania, Texas, Indiana, Kansas, Tennessee and Georgia require specific kinds of ID; the laws in Michigan, Florida, South Dakota, Idaho and Louisiana are only slightly more flexible. Wisconsin’s law was struck down by a state court.

Instances of voter fraud are almost nonexistent, but the right-wing media’s harping on the issue has given Republican politicians cover to push these laws through statehouse after statehouse. The laws’ intent, however, is entirely political: By creating restrictions that disproportionately impact minorities, they’re supposed to bolster Republican prospects. Ticking off Republican achievements in Pennsylvania’s House of Representatives, their legislative leader, Mike Turzai, extolled in a talk last month that “voter ID . . . is gonna allow Governor Romney to win the state of Pennsylvania.”

How could Turzai be so sure? The Pennsylvania Department of State acknowledges that as many as 759,000 residents lack the proper ID. That’s 9.2 percent of registered voters, but the figure rises to 18 percent in heavily black Philadelphia. The law also requires that the photo IDs have expiration dates, which many student IDs do not.

The pattern is similar in every state that has enacted these restrictions. Attorney General Eric Holder has said that 8 percent of whites in Texas lack the kind of identification required by that state’s law; the percentage among blacks is three times that. The Justice Department has filed suit against Southern states whose election procedures are covered by the 1965 Voting Rights Act. It is also investigating Pennsylvania’s law, though that state is not subject to some provisions of the Voting Rights Act. (more…)

The Seven Up series on British TV is now 49 years old, and the latest, 56UP, aired earlier in the summer. The series has followed the same set of children from different class backgrounds since 1964, when they were seven. The first film, initiallya one-off special of a general documentary programme World in Action, tested the proposition attributed to Francis Xavier (1506-1552), co-founder of the Jesuit order: “Give me a child until he is seven, and I will give you the man.” The program’s idea has been copied in various parts of the world, including the USA, but nowhere has it been as successful or long-lasting as here in Britain. Since 1964, every seven years a camera crew has followed up on the group of four girls and ten boys. Some of the group have declined to continue, while others have dropped out and then reappeared. The participants were, and are, asked to reflect on various aspects of their lives. In earlier shows, the director, Michael Apted, asked the children to project their lives forward into adulthood. In mirror images now, he invites them to ponder their pasts. In its own modest way, the series is both gripping and profound in the way it explores the lived reality of the British class system. Each new set of programs adds a new layer of complexity in the way we see people mature and the impact class has on their lives.

The original premise of Seven Up was heavily focused around class. The director wanted in part to show that the class trajectories of those involved had largely been decided before the point of active citizenship, or even prior to birth. On the whole this thesis has proved to be correct, with the working-class kids largely getting working-class jobs, and their middle-class counterparts enjoying upward mobility.

All the middle-class members of the Seven Up group have done pretty well with the exception of one who has suffered mental health problems since his twenties. All the others have experienced a predictable, safe, and stable rise in living standards. For the working-class members of the group, the story is somewhat different. One has moved up in class status as she has risen through the ranks of university administration. Interestingly, she recognizes that chance has played a part in her career, seeing her life chances and those of her family as contingent on wider social forces as well as considerable personal effort and talent. One of the working-class boys has found social mobility as an academic, working in the USA. Here, too, success is underpinned by state-funded schooling, especially at the university level.

While other members of the cohort do enjoy some sense of stability, as they get older the program has lighted upon the role aging and especially ill health plays in people’s classed experience. What seems largely a non-issue for the middle-class group is far harder felt with those for whom the working class is home. Ill health plays out in a variety of ways, limiting life chances here just a bit or seriously compromising the ability to work at others. One participant, Jackie, for example, developed health issues in her early fifties, so that she cannot work consistently and is forced onto the benefits system. While claiming benefits is not a great option at the best of times, the current government ‘crack-down on the benefits culture,’ in part driven by the financial crisis, means that her claim is under regular scrutiny and sustained threat of being taken away. This situation is compounded by the fact that she lives in social housing in Glasgow and is divorced with three adult sons. The power of these films is in the way they pose so many ‘what ifs?’ Jackie was originally from London. Had she stayed there, had she not got divorced, or had she not developed health problems, her life may well have been radically different. Recent statistics show that life expectancy in the UK is heavily driven by class position, and Jackie has found herself in the worst location, statistically, for life expectancy. Men in Glasgow City live to 71.6 years compared to 85.1 years for those in wealthy parts of London. Jackie, as a woman, is slightly better off — the figures for females are 78 and 89.8 respectively. (more…)

Made strong. Made with pride. Made to last.
Made in America…