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President Obama is exceptionally lucky when it comes to the weaknesses of the Republican field and its stunning penchant for mutually assured destruction. Who would have expected, for instance, that Newt Gingrich’s billionaire-backed super-PAC, aiming to destroy front-runner Mitt Romney, would produce a documentary advertisement on private equity slightly to the left of what we might have expected of Michael Moore? Or that Gingrich, reprimanded by leading free-market ideologues, would then request that the ad be pulled? In this hilariously bungled caper, Marx meets the Marx Brothers.

But it remains to be seen whether Obama will be as lucky when it comes to the shape of the economy as the election year unfolds. Some of what will occur this year is partly within the president’s control; much is not.

Consider the several vulnerabilities of the still fragile recovery:

The Jobs Mirage. Democrats were cheered and Republicans caught off guard when the Labor Department’s December jobs numbers showed a net increase of 200,000 jobs — a nice improvement over previous months. However, a closer look showed that some 42,000 of these were seasonal courier jobs — all the people hired to deliver holiday gifts purchased via Amazon and other online vendors.

Jared Bernstein, the former senior Administration economic advisor now at the Center on Budget and Policy Priorities, calculates that the 200,000 jobs number should be deflated by about 30,000. This brings it closer in line with other recent months, and suggests that the economy is still a ways from a strong recovery.

The biggest problem retarding a strong recovery is that wages are lagging far behind the economy’s productivity growth. Recent Federal Reserve statistics show that consumers increased their borrowing to finance their holiday spending, but that can’t last unless wages begin following. (more…)

In America, when gangs of bullies torment school children, pushing them around and extorting their lunch money, parents know only one response effectively counters the abuse: confrontation. Running, whining, negotiating — none of that works.

For the past year, since Republicans took the majority in the U.S. House of Representatives, they’ve behaved like young thugs, extorting Democrats to get what they wanted. Employing the blackmail techniques of schoolyard gangs, House Republicans repeatedly threatened to hurt the American people and the American government if Democrats didn’t submit.

Then President Obama confronted them. In recent weeks, he finally internalized and implemented the advice of American parents on dealing with bullies. He stood his ground. He called the GOP bluff on the payroll tax. And they backed down. He recess appointed four officials, defying GOP attempts to thwart service to American workers and borrowers.

Apparently, it’s a new day in Washington, one in which Democrats, who control the presidency and the majority in the U.S. Senate, are fed up and not going to take GOP extortion anymore.

For a year, Republicans leveraged their demands with blackmail.  If Democrats didn’t accept draconian and economic recovery-starving budget cuts, Republicans would shut down the government. If Democrats didn’t agree to slash the budget by exactly the amount Republicans required, the GOP would destroy the country’s credit rating.

In December, House Republicans overplayed. Initially, they’d opposed President Obama’s proposed extension of the payroll tax break that puts about $1,000 a year back into the pockets of working Americans. Just before the holidays, they changed their minds and said they’d accept a one-year extension, if it were offset by cuts in the federal budget. A dispute ensured between Democrats and Republicans about what to cut. As time ran out before the scheduled holiday break, the Senate compromised and passed a two-month extension, with the remaining 10 months to be settled later. The approval was overwhelming, 89 to 10. The Senators went home.

That bi-partisan action in the Senate left House Republicans with the choice of approving a two-month extension of a tax break they claimed to support or rejecting it, which would increase payroll taxes for 160 million workers.

For days, House Republicans refused to accept the Senate measure, threatening workers with a tax increase. The House Republicans claimed they wanted a one-year extension, but what they really wanted was a one-year extension paid for by cuts they chose without Democratic input. They demanded Senators return to Washington and vote on cuts to support a one-year deal.  Or they’d increase taxes.

The Senate refused. Obama refused. They confronted the bullies.

And the bullies blinked. The House passed the two-month extension. (more…)

A senior White House official has confirmed that Vice President Joe Biden will take the lead on the administration’s next phase China policy.

While the Departments of State and Treasury have held important functional roles in conducting the China-US Strategic and Economic Dialogue meetings, raising the bilateral status of US-China relations with ongoing meetings between two senior US Executive Branch officials with two of China’s most senior leaders, Vice Premier Li Keqiang and State Councillor Dai Bingguo, there has been a general sense that neither Timothy Geithner nor Hillary Clinton and her team were comprehensively driving US-China policy.

The White House official made clear that the coming shift in the locus of US-China policy management was not a critique of either Clinton or Geithner’s management of the China portfolio — but rather, the rise of Hu Jintao heir apparent and current Vice Premier Xi Jinping as the likely next President of China created certain practical challenges in dealing with him on a same-status level throughout much of 2012 until Xi’s accession to the presidency is formalized.

The view of some of the administration’s China-handlers is that management of US-China policy has become so central to a vast array of other policy challenges that the administration’s approach needs to be both broad and managed with “a deep and senior bench.”  The evolution of many functional offices at the Department of State and Treasury tasked with various line items in the China-US Strategic and Economic Dialogue has helped stabilize many aspects of the relationship and has helped to benchmark meeting to meeting progress on core concerns. (more…)

Mr. President, we heard what you said last week in Kansas — about the dangers to our economy and democracy of the increasing concentration of income and wealth at the top.

We agree. And many of us are prepared to work our hearts out to get you reelected — as long as you commit to doing what needs to be done in your second term:

– Raise the tax rate on the rich to what it was before 1981. The top 1 percent has an almost unprecedented share of the nation’s wealth and income yet the lowest tax rate in 30 years. Meanwhile, America faces colossal budget deficits that have already meant devastating cuts in education, infrastructure, and the safety nets we depend on. The rich must pay their fair share. Income in excess of $1 million should be taxed at 70 percent — the same rate as before 1981.

– Raise capital gains taxes to the same level. It’s absurd that the 400 richest Americans — whose wealth exceeds the wealth of the bottom 150 million Americans put together — should pay an average 17 percent tax on their incomes, the rate day laborers and child-care workers pay. That’s because so much of the income of the super-rich is considered capital gains, now taxed at only 15 percent. Close this loophole. (more…)

The President’s speech this week in Osawatomie, Kansas — where Teddy Roosevelt gave his “New Nationalism” speech in 1910 — is the most important economic speech of his presidency in terms of connecting the dots, laying out the reasons behind our economic and political crises, and asserting a willingness to take on the powerful and the privileged that have gamed the system to their advantage.

Here are the highlights (and, if you’ll pardon me, my annotations):

For most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefitted from that success. Those at the very top grew wealthier from their incomes and investments than ever before. But everyone else struggled with costs that were growing and paychecks that weren’t — and too many families found themselves racking up more and more debt just to keep up.

He’s absolutely right — and it’s the first time he or any other president has clearly stated the long-term structural problem that’s been widening the gap between the very top and everyone else for thirty years — the breaking of the basic bargain linking pay to productivity gains.

For many years, credit cards and home equity loans papered over the harsh realities of this new economy. But in 2008, the house of cards collapsed.

Exactly. But the first papering over was when large numbers of women went into paid work, starting the in the late 1970s and 1980s, in order to prop up family incomes that were stagnating or dropping because male wages were under siege — from globalization, technological change, and the decline of unions. Only when this coping mechanism was exhausted, and when housing prices started to climb, did Americans shift to credit cards and home equity loans as a means of papering over the new harsh reality of an economy that was working for a minority at the top but not for most of the middle class.

We all know the story by now: Mortgages sold to people who couldn’t afford them, or sometimes even understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets — and huge bonuses — made with other people’s money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn’t have the authority to look at all.
It was wrong. It combined the breathtaking greed of a few with irresponsibility across the system. And it plunged our economy and the world into a crisis from which we are still fighting to recover. It claimed the jobs, homes, and the basic security of millions — innocent, hard-working Americans who had met their responsibilities, but were still left holding the bag. (more…)

Campaign finance in this country is in a very bleak place after decades of direct attacks and equally sad unintended consequences. The Supreme Court’s 2010 landmark decision in Citizens United v. FEC was the final straw in the corporate hijacking of our political system which began fully thirty years ago.

In Citizens United, the Court, after determining that corporations are in effect “people”, concluded that the First Amendment prohibits the government from censoring political broadcasts in candidate elections when those broadcasts are funded by corporations or unions. Specifically, Citizens United struck down provisions of the McCain-Feingold “Bipartisan Campaign Reform Act of 2002″ which prohibited all corporations — both for-profit and not-for-profit — and unions from broadcasting “electioneering communications”: i.e., advertisements or other communications that mention a candidate within 60 days of a general election or 30 days of a primary.

While Citizens United did not strike down the ban on direct contributions from corporations or unions to candidate campaigns or political parties in races for federal office — such contributions remain illegal — by giving back to corporations and unions the unlimited ability to fund political ads specifically mentioning candidates in newspapers, magazines and all forms of television, it handed to a relatively small group of CEOs near-unlimited powers of persuasion in what the Founding Fathers intended as the quintessential democratic process of the Republic.

Perhaps worse, in an electioneering system in which, as former California State Assembly Speaker and Treasurer Jesse Unruh famously said, “Money is the mother’s milk of politics,” it makes almost inevitable the accommodation, if not the sponsorship, of corporate interests by a relatively small number of sitting elected officials, never mind by aspiring candidates.

Individual citizens, who are mostly limited to roughly $5,000 per candidate per cycle, must now come together in staggering numbers for their contributions to have the same effect in a campaign that the spending of just one determined, large corporation could have. For example, President Obama raised $748 million for his 2008 campaign (through year-end 2008). Of that, more than $659 million was raised from individuals, a staggering, never-before achieved level of democratized campaign capitalization. Is it so hard to imagine, however, Big Oil, Big Pharma and the Big Banks funding their own $1 billion in an all-out bid to elect a Presidential candidate, never mind certain Senators and Members of Congress. And the self-interested involvement of such companies on a smaller — but still relatively massive — scale is all but assured in coming elections. (more…)

Voting doesn’t work anymore. If it did, Americans would get what they want — or at least some of it — from Washington.

But they don’t.

Instead of the people’s priority, which is jobs, country club conservatives in Congress stubbornly fixate on deficits. Instead of ensuring millionaires and corporations pay their fair share, House Republicans passed a budget that would destroy Medicare and Medicaid.

Corporate and clandestine campaign contributions have undermined the power of traditional voting, the kind done at polls on election day. Rather than voters, politicians now serve donors — billionaires and banksters — who invest untold millions and demand returns in the form of self-serving policy.

This is demoralizing to those who cherish democracy and the sanctity of one person, one vote.

Hope, however, arrived with the debit card fee victory. The 99 percent forced Bank of America to back off its proposed fee. Average Americans accomplished this by voting differently, not at the ballot box but at the twitter account, the Occupy march and the teller window, where 1 million depositors went to move $4.5 billion from the big Wall Street banks to community banks and credit unions. They found another way to exercise their franchise and force the powerful to respond.

The 99 percent must exploit the method of this triumph to get what they need. Because politicians sure as hell aren’t giving them what they want.

The numbers don’t lie. Coin-operated conservatives in Congress have rejected President Obama’s jobs plan, parts of the jobs plan and Obama’s pitch to raise taxes on the rich to pay for it.

And yet, the electorate strongly supports both surtaxing millionaires and the elements of the jobs plan. In a CNN poll in October, 75 percent favored sending federal money to the states to hire teachers and first responders and 72 percent favored infrastructure investments.

A whopping 76 percent wanted millionaires to pay higher taxes.

In that same CNN poll, there’s another compelling statistic. Sixty-one percent said reducing unemployment was the most important issue. Reducing the deficit didn’t even come close at 35 percent.

The numbers aren’t flukes. Another survey, taken a week later by CBS found the same thing. (more…)

Republicans jammed together a mess of old, failed and vague schemes and called it a jobs bill. Sen. John McCain conceded the reason for the rehash:  “Part of it is in response to the president saying we don’t have a proposal.”

They still don’t.  This despite the fact that they promised voters during their campaign to take control of the U.S. House one year ago that they’d create jobs. That they’d focus on jobs. That nothing was more important to them than jobs.

Now, what they’ve offered instead of actual jobs is a polyglot of GOP talking points. It’s certainly no vision to move the country forward. It’s a plot to set the country back – to repeal the health care law that will soon help provide coverage for the nearly 50 million Americans without insurance, to rescind the Wall Street reform law designed to prevent another financial sector-caused meltdown, and to thwart regulations, like those that stopped distribution of listeria-infected cantaloupe that killed 25.

GOP Sen. Rob Portman of Ohio called the Republican polyglot a “pro-growth proposal to create the environment for jobs.” It is, in fact, a pro-business proposal to permit corporations to destroy the environment for humans.

It is another GOP ploy to appease, accommodate and absolve corporations. It is another GOP ruse to firmly establish in America an economy designed for, dedicated to and directed by corporations rather than a just economy controlled by and beneficial to the 99 percent.

Republicans offered up their “Jobs Through Growth Act” mishmash after the GOP minority in the Senate wielded the filibuster again to block a vote on President Obama’s $447 billion American Jobs Act, a measure that even Republican economists determined would create 1.9 million jobs and reduce the nation’s aching 9.1 percent unemployment by as much as 1 percent.

The Republican measure, by contrast, could hurt the economy, according to Gus Faucher, director of macroeconomics at Moody’s Analytics, an independent firm whose chief economist advised the McCain presidential campaign. Here is what Faucher said:

“Should we look at regulations and make sure they make sense from a cost benefit standpoint? Certainly. Should we reduce the budget deficit over the long run? Certainly.  But in the short term, demand is weak, businesses aren’t hiring, and consumers aren’t spending. That’s the cause of the current weakness, and Republican Senate proposals aren’t going to address that in the short term. In fact, they could be harmful in the short run if the focus is on cutting spending.”

(more…)

A long time ago, in an historical America, lawmakers determined a progressive tax code to be the fairest and most logical for all.

The legislators asked more of those who had benefitted most from the advantages America provides. They asked less of those who benefitted least.

As time passed, the rich and wealthy corporations perverted the progressive tax code.  Now what America’s got is a flip-flop under which the fabulously wealthy pay taxes at rates lower than the middle class.

This week, President Obama proposed returning the tax code to a time closer to equity and sensibility. He asked that millionaires and corporations pay taxes at the same rate as the middle class. Not more, as they once did. But at an equal rate. It’s not revolutionary. It’s retro. And it would help create jobs.

It’s an idea whose time has come – again. And it should be implemented immediately. (more…)

The Wall Street Journal and other media are reporting definitively on the Obama deficit plan to be announced on Monday. The big news: the President will not propose raising the Medicare eligibility age. So the millions of older workers and unemployed people now desperately trying to hold on until they reach age 65 will not end up resenting Democrats for trying to make a difficult life even more difficult. And young people without pensions will enjoy a little more confidence that one party is on their side.

After today, the policy choice will be even clearer: Almost all Republicans voted for the Ryan plan to dismantle Medicare. And now Democrats can clearly say they will fight any attempt to cut Medicare benefits or raise the Medicare eligibility age.

Coming after the President’s $447 billion jobs plan, unveiled in his September 8 address to a joint session of Congress, many progressives were worried that the President in Monday’s speech on deficits would break his jobs momentum. We feared Obama would revert to the offers he made to Republicans in a futile effort to reach a “grand bargain” during negotiations over raising the debt ceiling. (more…)