Blog

By Leo W. Gerard
International President

Protestors disrupted a convention of mortgage financers in San Francisco this week, storming the stage as former Bush advisor Karl Rove spoke, heckling bankers with bullhorns, and badgering a panel with demands for a foreclosure moratorium.

Fear and frustration compelled ordinary citizens to harangue the green-visor set at their normally-staid annual meeting. Middle class Americans are losing their jobs and their homes and their hope while watching Ben Bernanke and Hank Paulson spend their tax dollars to bail out the infinitely-wealthy on Wall Street whose reprehensible risk-taking caused the country’s financial crisis. The middle class want their piece of the American pie.

Congress is trying to dish it out in the form of a second stimulus package that would extend unemployment insurance and food stamps and create jobs through programs such as highway construction projects.

Republican candidates John McCain and Sarah Palin oppose it. They’re running around the country with caricatures of Joe the Plumber and Joe Sixpack, pretending the GOP ticket represents the best interests of the working class and small business owners. It’s all false rhetoric and no real action. McCain and Palin object to intervention for anyone other than the wealthy, for whom they plan to enshrine tax cuts; for overfed CEOs, for whom they believe the $700 billion bailout was justified, and for themselves, for whom they believe the Republican National Committee appropriately opened its purse to purchase haute couture wardrobes, hair stylists and makeup artists.

McCain wants to brand a socialist S on Barack Obama although both voted for the bailout plan under which the U.S. government is nationalizing banks.

Unlike McCain, however, Obama is a man of the people and believes not in socialism but in the religious concept of everyone serving as their brothers’ keepers.  This is how he explained it in his acceptance speech at the Democratic National Convention:

“What — what is that American promise? It’s a promise that says each of us has the freedom to make of our own lives what we will, but that we also have obligations to treat each other with dignity and respect.
It’s a promise that says the market should reward drive and innovation and generate growth, but that businesses should live up to their responsibilities to create American jobs, to look out for American workers, and play by the rules of the road.
Ours — ours is a promise that says government cannot solve all our problems, but what it should do is that which we cannot do for ourselves: protect us from harm and provide every child a decent education; keep our water clean and our toys safe; invest in new schools, and new roads, and science, and technology.
Our government should work for us, not against us. It should help us, not hurt us. It should ensure opportunity not just for those with the most money and influence, but for every American who’s willing to work.
That’s the promise of America, the idea that we are responsible for ourselves, but that we also rise or fall as one nation, the fundamental belief that I am my brother’s keeper, I am my sister’s keeper.
That’s the promise we need to keep. That’s the change we need right now.”

That philosophy has great appeal with unemployment at a five-year high of 6.1 percent, with the poverty rate rising to 12.5 percent in what is supposed to be the richest country in the world; with 47 million without health insurance; with 1 million homes lost to foreclosure in the past two years and another 1.5 million in the process, and with the chronically ill across American skipping medications because they can’t afford them, as the NYT reported this week.

Because this philosophy is popular, Palin and McCain are trying to channel it, to steal it just as they did the “change” slogan, to try to make Americans believe that they would best serve the middle class. The problem is that everything they do belies their claims.

Sarah “Sixpack” Palin definitely has an elitist eye for clothing, hair styling and makeup. She spent $150,000 of Republican National Committee money on designer duds for herself and her family since accepting the nomination on Sept. 3. That’s three times the annual income for a typical American family. If she doesn’t shell out another dime, she’ll have spent $2,400 a day on clothing between the convention and the election. The vice presidential candidate’s taste includes a $2,500 Valentino Garavani jacket from Saks Fifth Avenue that she wore to the convention.

In addition, she and McCain decided their most important advisor, the one they would reward with the highest salary in the first two weeks of October as the stock market crashed, was Sarah Palin’s makeup artist. Her earnings for proper Palin powdering were $22,800 for two weeks, nearly twice the salary McCain and Palin gave their second highest paid staffer – their chief foreign policy advisor. They paid him $12,500, just $2,500 more than the $10,000 they ponied up for Palin’s hair stylist, whose compensation was fourth highest. The total for Palin’s hair and makeup in two weeks: $32,800.

While you’re scrimping and saving and shopping at Costco to prevent foreclosure of your home, just remember what Palin told CNN reporter Drew Griffin about providing a stimulus package to help the middle class: “But now that we’re hearing that the Democrats want an additional stimulus package or bailout package for what, hundreds of billions of dollars more, this is not a time to use the economic crisis as an excuse for reckless spending and for greater, bigger government and to move the private sector to the back burner and let government be assumed to be the be all, end all solution to the economic challenges that we have.”

So, for Palin, great big government is okay to bail out Wall Street fat cats, but not to help the middle class. Palin’s knee-jerk Republican “let-the-private-sector-solve-it” attitude shocks the consciousness after the indiscretion of the private sector just landed this country in financial crisis. We’re not inclined to trust them, frankly, Ms. Palin.

McCain said the same, backing the bailout for the reckless on Wall Street, and damning attempts by Democrats to help those on Main Street – of course, all the while dragging up the image of Joe the Plumber and contending he’s the guy’s advocate.

The ticket clearly lacks both introspection and economic expertise. McCain said it himself last year – that he was no authority on the economy.  By contrast, a person with some degree of economic proficiency, Federal Reserve Chairman Ben S. Bernanke, this week endorsed additional fiscal stimulus, saying it was appropriate now because the economy is likely to be weak for several quarters. In addition, economic expert and Nobel Laureate Paul Krugman said this week that additional government spending now – for a stimulus package – is appropriate, particularly for infrastructure improvement, which would provide real value and create jobs.

Though McCain and Palin clearly don’t understand, it’s time for everyday Americans to share in the American pie. At a rally in Florida this week, Obama talked about how the policies of the Bush administration have shrunk the pie and permitted the wealthy to grab the few remaining crumbs. He told he crowd he has no desire to reapportion the pie, as McCain keeps accusing him wanting to do – as a socialist, you know. Also, Obama objects to the McCain-Palin policy of continuing to feed the rich all of the crumbs, which is particularly evident in the GOP tax plan.

Obama told the group his goal is to expand the pie to ensure that all Americans get a piece. The crowd responded with a spontaneous chant of, “We want pie!”

That’s what is going on in America. That’s why protestors accosted mortgage bankers at their California convention. The middle class won’t stand for the rich wolfing down all of the pie anymore.

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

So much for the $700 billion bailout of Wall Street. Clearly, once the bailout passed, investors took a good look at the real economy and went to the mattresses. We’re headed into a great reckoning. And at the heart of that, as illustrated in the new Institute for America’s Future op ad in the New York Times – “Even the Rope we’re Hanging Ourselves with is made in China”: — is this country’s unsustainable global strategy. To see the ad and supporting charts go here.
This is a result, as Barack Obama has stated, of a failed economic philosophy – the “market fundamentalism” that dominated Washington over the last thirty years, the notion that markets are efficient and self-correcting and, as Sarah Palin repeated in the last debate, governments should just get out of the way.
What that meant in practice was the worst forms of crony capitalism. Abroad, global corporations and banks essentially wrote the constitution of the new global economy, protecting property rights but not workers, consumers or the environment. Financial flows were deregulated opening the casino up for business. Banks were favored; the military industries protected; agribusiness subsidized.
At home, Reagan launched the war on unions, and rolled back government and regulation. The minimum wage was frozen for a decade. Undocumented workers exploited to undermine wages and standards. Banks got rid of the protections built during the Great Depression. Companies used globalization as a club against workers. Pensions and health care benefits were rolled back… Over the last eight years, productivity and profits rose, but wages lost ground. We lost one in five manufacturing jobs. Now some 15 million service jobs are at risk of off-shoring.

Global economy

Yet this global economy depends on American consumers as the buyers of last resort. Sustaining a low wage, high consumption economy is no mean trick. The gulf was bridged by mountains of debt and successive asset bubbles. Household debt soared to unprecedented levels, as Americans loaded up on credit cards and cashed out their homes. And the US is now the world’s largest debtor, having added over $4.4 trillion in foreign debt since 2001. We must borrow or sell off assets with $2 billion a day simply to cover our trade deficits. We now run a high tech trade deficit with China. Mexico exports 50% more cars to the US than the US exports to the rest of the world.
What can’t go on indefinitely, won’t. And with the bursting of the housing bubble, the reckoning is here.
Clearly we need to change course. We need a national economic strategy for a global economy, a strategy for the nation, not for the multinationals that have very different interests.
Yet our political debate is still frozen into a silly spit ball fight about “free trade” and “protectionism.” Barack Obama questions NAFTA-type accords and is charged with “protectionism” in editorials across the country. John McCain, a stalwart of the failed policies of the last two decades, still intones the old “free trade” mantras, denouncing critics as lacking “faith in the American worker.”
This mindless debate has been going on for three decades, as the country has sunk deeper and deeper in debt. Surely in the wake of the current crisis, it is time for an adult conversation about a strategy that would sustain a prosperous middle class in a global economy.
That means deciding if America will remain a center of innovative manufacture. A concerted drive for energy independence will not only reduce the half of our trade deficits that go to oil, but could capture the green technologies that will drive the markets of the future.

Broad middle class

It means deciding if we are going to sustain a broad middle class. That would require forcing business to compete within the framework of a high wage economy – not by tearing that framework down. Empower workers to organize, raise the minimum wage, and build a public social contract starting with health care and pensions to replace the promises the corporations are shredding.
Then we’ve got to change our federal priorities from policing the globe and top end tax cuts to making the vital investments here at home — in education and life long learning, in R and D, in the most efficient infrastructure.
Finally we’ll need to dispel the myth that the mercantilist nations like China are playing by the same set of rules. With China now our leading creditor, this won’t be easy. But we must find ways to bring our trade with that country into balance – either by currency adjustment, by managing our trade, or by a surcharge on imports that will force the change.
These aren’t the only answers; they may not be the best ones. But surely the question of our national strategy in the global economy can’t be put off. That’s why McCain’s decision to turn his campaign over to the Karl Rove’s protégés in character assassination is so dishonorable. We deserve a debate worthy of a great nation in trouble. Brickbats about Bill Ayers or Palin’s Alaskan separatist husband are simply insults. Americans deserve better. And McCain and Palin may find out that they just may demand it.