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On Tuesday, the Peter G. Peterson Foundation will hold its third annual fiscal summit. We need this event like we need a mass outbreak of sado-masochism.

If you wonder why all right-thinking people seem to have concluded that austerity is the royal road to economic recovery from a severe financial collapse made on Wall Street, look no further than the Peterson Foundation. Pete Peterson, a Republican with prodigious Democratic and media connections, who made his fortune in private equity, has committed a cool billion dollars to the task of persuading less affluent Americans to tighten their belts. He is the cynical center’s answer to the Koch Brothers.

The Bowles-Simpson commission on deficit reduction, the idea of automatic triggers to cut deficits in a recession, the goal of a grand bargain to raise taxes and slash Social Security, the covey of bipartisan deficit hawks, the blurring of the issue of long term solvency for Medicare and Social Security with the issue of a recovery strategy, are all part of the Peterson Foundation’s grand design. The Washington Post‘s Lori Montgomery faithfully echoes Peterson’s line, as do one tedious column after another by the likes of Tom Friedman on the center-left and David Brooks on the center-right.

The Peterson Foundation has relentlessly promoted the idea that the main economic challenge today is to set a target ten years down the road for a reduced ratio of public debt to GDP, on the premise that this will somehow restore economic growth. President Obama has dutifully obliged, targeting ten year cuts of $4.4 trillion in his FY 2013 budget. The House Republicans, using far more inventive accounting, target $5.3 trillion. The two budgets are far apart in how they treat taxes and social spending. Obama would raise taxes and defend social outlay, while the Republicans would cut both. Yet, at a time when Democrats and Republicans agree on nothing else, they bizarrely agree on belt-tightening in a recession.

However, the fact remains that the very idea what we can specify budget cuts in a deflationary recession, and imagine that they will lead is to a predictable debt ratio, is economic fantasy. Why? Because the budget cuts themselves will reduce the economy’s overall purchasing power, leading to slower growth and reduced revenues — and larger deficits. (That’s the real analogy with Greece.) The reduced debt ratio thus is a mirage. (more…)

Another month and another terrible trade deficit report. Why is it that DC elites who profess to care so much about deficits say so little about our worst deficit? The trade deficit drains money from our economy, lowers our wages and forces us into an ever-lower standard of living.

Trade Deficit Rises 14%

BusinessWeek: Trade Gap in U.S. Widens More Than Forecast,

The trade deficit widened more than forecast in March as American demand for crude oil, computers, automobiles and televisions propelled imports to a record.

The gap grew 14 percent to $51.8 billion, the Commerce Department reported in Washington today. The median estimate of economists surveyed by Bloomberg News called for an increase to $50 billion. A 5.2 percent jump in imports, the biggest in more than a year, swamped the 2.9 percent gain in exports, which also reached a record.

… Imports from China climbed 12 percent in March after plunging the prior month as the Lunar New Year holidays extended into early February. The March trade gap with China widened to $31.5 billion from $28.1 billion, today’s report showed.

A trade deficit of $51.8 billion in one month (half of that with China alone) is an annual rate of $621.6 billion, which is 4% of our currently $15,461.8 billion GDP. So we’re currently bleeding out at a rate of 4%. Not good at all, and we’ve been bleeding out like this for decades.

This is called a trade deficit, but really it isn’t. Continually selling to us and and not buying from us is not “trade.” This continual bleeding of money our of our economy is the reason we are losing our jobs, factories and entire industries. This is the result of a different kind of deficit — a democracy deficit. We, the People have not been able to stop this, even when all polls show that the people want this to stop. Because there are powerful interests getting rich(er) off of it. (more…)

Based on a technicality, a federal judge Monday rejected commonsense rules making National Labor Relations Board (NLRB) union elections fairer.

U.S. District Judge James Boasberg said the NLRB did not technically have a quorum when it adopted the rules last year. The NLRB had three members at the time; two approved the rules and the third, Republican Brian Hayes, took no action.

Had Hayes voted or indicated his choice to abstain, that could have signified a quorum, according to the judge.

“We think the judge’s ruling is flat-out wrong,” says AFL-CIO General Counsel Lynn Rhinehart. “Brian Hayes was a sitting, working, paid member of the NLRB when the rule was adopted, and remains so today….The judge’s ruling, while in our view incorrect, is solely based on technical issues that speak to the procedure of the board and not the rule itself.” (more…)

With almost $500 billion in annual revenues, ExxonMobil is one of the world’s truly powerful corporations. With all its resources and riches, the mammoth energy firm—the largest on the Fortune 500 list—Texas-based ExxonMobil is not loyal to America. Former CEO Lee Raymond made clear that his company’s only loyalty was to maximizing returns for shareholders when he pronounced, “I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.” Or, Raymond might have added, based on what’s good for U.S. workers and communities.”

The company has been resisting implementing a safety agreement at a Louisianan refinery that it already has agreed to around the country. “ExxonMobil has been trying to undercut the rest of the oil industry on health and safety standards,” says Patrick Young of the United Steelworkers (USW) special campaigns department.

At a refinery employing 900 workers in Baton Rouge, La., the company has been resisting the appointment of a person for the crucial newly-created post of “process safety management representative,” Young says. The Process Safety Management Representative, under the terms of a national agreement reached February 1 between the USW and the oil industry, would be selected by the union, subject to approval by the company and responsible for calling attention to safety hazards and demanding that they be addressed.

The issue is part of larger negotiations between USW Local 13-12 and ExxonMobil, which are a new three-year contract. Local 13-12 members refused to vote on the company’s latest offer because it didn’t include the safety measure that is part of other union contracts at other refineries. (more…)

On June 5th, voters in Wisconsin will go to the polls in an historic recall election, where they will decide who will serve as Governor, Lieutenant Governor, and State Senator in several districts for the rest of the current term. Nearly all the elected officials targeted by recall, who are in danger of being removed from office on the June 5th ballot, have something else in common: past or present affiliation with the American Legislative Exchange Council, or ALEC.

At the center of the firestorm is Governor Scott Walker, who earned the ire of Wisconsin voters for his relentless drive to restrict collective bargaining rights for 350,000 state workers, as well as his negligence toward Wisconsin’s job crisis. But before he became a household name, Walker served in the State Assembly from 1993-2002, where he was an ALEC member from 1995-1998.

During that time, Walker worked with fellow ALEC politician Governor Tommy Thompson to pass a model “Truth in Sentencing Bill,” which was developed by ALEC’s now-shuttered Public Safety and Elections Task Force. The bill required all criminal defendants to serve “no less than 85 percent” of the sentence imposed. For those convicted of violent crime, the bill called for them to serve 100 percent of the sentence imposed by the court; no parole, and no chance for early release.

This bill was developed specifically to benefit an ALEC member corporation, Corrections Corporation of America (CCA), which for many years housed overflow Wisconsin inmates in other states. CCA was on ALEC’s Criminal Justice Task Force at the time. (more…)

J.P. Morgan Chase & Co., the nation’s largest bank, whose chief executive, Jamie Dimon, has led Wall Street’s war against regulation, announced Thursday it had lost $2 billion in trades over the past six weeks and could face an additional $1 billion of losses, due to excessively risky bets.

The bets were “poorly executed” and “poorly monitored,” said Dimon, a result of “many errors, “sloppiness,” and “bad judgment.” But not to worry. “We will admit it, we will fix it and move on.”

Move on? Word on the Street is that J.P. Morgan’s exposure is so large that it can’t dump these bad bets without affecting the market and losing even more money. And given its mammoth size and interlinked connections with every other financial institution, anything that shakes J.P. Morgan is likely to rock the rest of the Street.

Ever since the start of the banking crisis in 2008, Dimon has been arguing that more government regulation of Wall Street is unnecessary. Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets).

Dimon argued that the financial system could be trusted; that the near-meltdown of 2008 was a perfect storm that would never happen again.

Since then, J.P. Morgan’s lobbyists and lawyers have done everything in their power to eviscerate the Volcker rule — creating exceptions, exemptions, and loopholes that effectively allow any big bank to go on doing most of the derivative trading it was doing before the near-meltdown.

And now — only a few years after the banking crisis that forced American taxpayers to bail out the Street, caused home values to plunge by more than 30 percent and pushed millions of homeowners underwater, threaten or diminish the savings of millions more, and send the entire American economy hurtling into the worst downturn since the Great Depression — J.P. Morgan Chase recapitulates the whole debacle with the same kind of errors, sloppiness, bad judgment, excessively risky trades poorly-executed and poorly-monitored, that caused the crisis in the first place. (more…)

Is this guy a presidential candidate from a major party, or a fringe nut? He sounds like Rush Limbaugh. HuffPo: Mitt Romney: Obama ‘Takes Marching Orders From Union Bosses,‘

Speaking to a crowd at a campaign stop in Lansing, Mich., on Tuesday, presumptive GOP presidential candidate Mitt Romney took a swipe at both President Barack Obama and organized labor, saying the president “takes his marching orders” from unions that cost American jobs.

“Liberalism once taught that unions would ensure lasting prosperity for workers,” Romney said at Lansing Community College. “Instead, they too often contributed to disappearing companies, disappearing industries and disappearing jobs. But like many politicians of the past, President Obama takes his marching orders from union bosses, rails against right-to-work states, fights to win union elections by eliminating the vote by secret ballot, and even denies an American company the right to build a factory in the American state of its choice.”

When People Have A Say

People who follow Romney’s line of reasoning think that we need to be more “business friendly” with low wages, low benefits, low environmental protections and low taxes on the rich so we can compete with countries like China. Here’s the thing, in countries like China the people don’t have a say. When people have a say they say that they want higher wages, benefits, good schools, environmental protections and the rest of the prosperity that democracy brings to all the people, instead of huge amounts accumulating in the hands of just a few people.

Unions Drove Wages And Benefits Up

Romney’s argument that unions “contributed to disappearing companies, disappearing industries and disappearing jobs” is based on the idea that unions drove wages and benefits up. He believes that good wages and benefits—namely US—are a “cost” instead of the reason that We, the People decided to develop the body of laws that allow corporations to exist, to use our infrastructure and educated people and laws and courts and police and all the other “public structures” as a foundation for doing business. We, the People did that so that we—all of us—could benefit. All of us, not just a few of us.

In that respect Romney is correct, unions and democracy brought us higher pay, benefits, “the weekend,” vacations, 40-hour workweeks and things like that. Before unions came along to enforce the idea of democracy we didn’t, after unions we did. Before unions we had 12-hours a day workdays, seven days a week. Before unions we had low pay. Before unions we had no benefits. Before unions we didn’t get vacations. Before unions we could be fired for no reason. Unions are why we have had a middle class. (more…)

AFL-CIO President Richard Trumka today said our national security depends on reviving the nation’s manufacturing and industrial base. He called for adding 4 million manufacturing jobs and eliminating the trade deficit within five years.

In a wide-ranging speech at the Center for National Policy (CNP), Trumka said economic strength is crucial to America’s national security and economic standing, and manufacturing is central to economic strength. That’s a connection that most people understand, he said.

For the first time in a long time, pundits and economists have begun to talk about the revival of good jobs—of making things in America—as a measure of our national economy instead of simply pointing to whatever’s happening in the financial markets.

Watch the full discussion here.

Trumka credited President Obama for being “a genuine leader on manufacturing and national security.”

He has made the pivot to focus on Asia as a cornerstone of his foreign policy, while at the same time being willing to make the hard decisions necessary to revive U.S. manufacturing.

Yet more needs to be done, Trumka said. The biggest obstacles have been misguided budget cuts in the name of government austerity and unwillingness by some politicians to talk sensibly about taxes. America and the world face a choice between government austerity and economic growth, Trumka said. Leaders “need to shed the notion that government austerity is virtuous—when austerity means starving our economy of public investment.”

A manufacturing revival depends on massive public and private investments in energy and transportation infrastructure and in our system of public education and lifelong skill development. (more…)

Ohio (along with my own California) has one of the nation’s biggest tax give-aways to the fossil fuel industry. It’s severance tax on natural gas is essentially zero — only 0.42 percent. Texas levies 7.5 percent, Oklahoma 7.1 percent, and neighboring West Virginia and Pennsylvania 5.79 percent.

So it might seem sensible that Governor John Kasich, whose proudest credential when he served in Congress was that he was serious about budgets and deficits, called on the Ohio legislature to raise the severance tax very modestly — 1.4-4 percent, but only on oil and natural gas liquids and only 1 percent on methane itself. So small were the increases that groups concerned about the state’s huge financial shortfall and cuts to education blasted them, pointing out that if Kasich had simply gone along with Texas, “enough money would be generated to pay for damages to local roads and infrastructure, stop the layoffs of thousands of police, fire and other public safety workers — or prevent increases in local property taxes that pay for schools.”

Former Presidential candidate Rick Santorum loudly proclaimed the Koch Brothers-Tea Party orthodoxy on such efforts to eliminate tax give-aways to oil and gas so they would “drive up the cost of energy, destroy this economy and do so at the behest of a bunch of radical environmentalists who do, in fact, want to drive up the cost of energy and slow down this economy…”

Of course Santorum was talking about President Obama, so you couldn’t be sure if this was simply a partisan slam, or a serious, principled policy position — that taxes on fossil fuels companies are bad, regardless of how low. But the reaction of the Tea Party in Ohio to Kasich’s efforts is revealing; it shows just how far the oil industry’s hold on the Tea Party faction of the Republican party goes, and how irrational the opposition to fair taxation has become.

Kasich was careful to make clear that he wasn’t going to raises overall; the increases severance revenues would all go to fund a billion dollar cut in the state’s income taxes. That didn’t buy him any cover at all. First the Ohio Oil and Gas Association came out against the tax — or any tax on natural gas liquids, the petroleum like substance that makes Ohio gas drilling profitable. (more…)

Arizona Governor Jan Brewer and her allies in the state legislature are seeking to use millions of dollars intended for struggling homeowners to pay for prison construction and tax cuts instead, echoing a policy put in place earlier this year in Wisconsin by Governor Scott Walker.

Remember the $26 billion foreclosure settlement, the one agreed upon by the five biggest banks and 49 state Attorneys General? As one of the hardest his states, Arizona is getting $1.6 billion, as well as an additional $97.7 million to be overseen by the office of Attorney General Tom Horne, to be used for “housing counselors, legal aid, hotlines, and to help stressed homeowners with their payments.”

Two main things to understand about these funds: they are wildly insufficient given the scale of the problem, but all the same they are extremely crucial. In March, Arizona had the highest foreclosure rate in the country, according to RealtyTrac, with 9,497 foreclosures. If any state needs all the help it can get when it comes to homeowner education, assistance, and relief, it’s Arizona.

Even so, Governor Brewer and Republican state legislators want to siphon $50 million from those funds to “relieve pressure on the budget.” So in other words, use money intended to help homeowners for…other things.

Lawmakers say the money amounts to a pricey outreach and education fund. It won’t hurt to take half of it, House Speaker Andy Tobin said.

“We’re using the funds to relieve the pressure on the budget,” said Tobin, R-Paulden. Those stresses range from a push to replace welfare dollars lost to federal budget cuts to prison construction, he said.

How is this justified? You can thank a loophole in the settlement language, which says the funds can be used “to compensate the state for costs resulting from the alleged unlawful conduct of the defendants.” Arizona lawmakers like House Speaker Tobin are claiming that since foreclosure fraud hurt homeowners, which in turn hurt tax revenues and by extension the state budget, they can use the money for whatever they damn well please. (more…)