By Robert Kuttner
Co-Founder and Co-Editor of The American Prospect
This is a fateful week for financial regulation and the financial system.
European leaders are trying to reach a consensus on how to give Greece some breathing room to salvage its economy and to recapitalize the continent’s banks. Since the banks are heavily invested in Greek bonds, the more relief the Europeans give Greece, the more they will have to spend recapitalizing their own banks.
Meanwhile, on this side of the Atlantic, regulators are grappling with two momentous issues: how to implement the so-called Volcker Rule, which seeks to limit the ability of federally insured banks to engage in inherently speculative trading activity; and how to carry out another key section of the Dodd-Frank Act, which gives regulators the authority to take over large failing financial institutions.
The Financial Stability Oversight Council, a body created by Dodd-Frank made up of senior bank regulators, is meeting today on the issue of how to deal with failing banks. Meanwhile, the Federal Deposit Insurance Corporation is issuing regulations to carry out the Volcker Rule. (more…)
UPDATE: This event has been moved to the Russell Senate Office Building in the Kennedy Caucus Room, SR 325. Click here for more information and directions.
The U.S. Senate this week may vote on legislation that would enable some 400,000 teachers, police officers and firefighters to return to work or stay on the job. At a rally on Capitol Hill tomorrow, they will urge the Senate to act quickly and warn lawmakers who try to block or defeat the bill that they will have to answer for their no votes.
The rally—sponsored by AFT, AFSCME, the Fire Fighters and other unions—is set for 2 p.m. EDT on the Senate side of the U.S. Capitol.
The bill, the Teachers and First Responders Act, mirrors a provision in President Obama’s American Jobs Act that Senate Republicans blocked with a filibuster last week. In his most recent weekly address, Obama said provisions of the bill will be broken out for individual votes.
Robert Borosage
Co-Director Campaign for America's Future
Wall Street’s excesses blew up the economy. Now the question is who pays to clean up the mess. And across the country, our children are already paying part of the bill – as their schools are hit with deep budget cuts. A new report – Starving America’s Public Schools: How Budget Cuts and Policy Mandates are Hurting our Nation’s Students – released today by the Campaign for America’s Future and the National Education Association looks at five states to detail what this means to kids in our public elementary and secondary schools.
Every study shows the importance of early childhood education. Analysts at the Federal Reserve discovered that investments in childhood development have, in the words of Fed Chair Ben Bernanke, such “high public as well as private returns” that the Fed has championed such investments, noting they save states money by reducing costs of dropouts, special education, and crime prevention. Yet across the country, states are slashing funding for pre-kindergarten and even rolling back all day kindergarten. Now only about one-fourth of 4-year-olds are served by pre-K programs. Ten states have eliminated funding for pre-K altogether, including Arizona. Ohio eliminated funding for all-day kindergarten.
Every parent and teacher knows the importance of smaller classes, particularly in the early years, when individual attention is vital. Yet across the country, schools are facing layoffs of nearly 250,000 workers next year, many of them teachers. In Chester Upland, Pa., 40 percent of the teachers were eliminated, with class sizes rising from 21 to 30 in elementary schools and to 35 in high schools, prompting students to walk out.
America is facing historic choices that will shape our economy, our society and our democracy for decades to come, AFL-CIO President Richard Trumka said today.
Speaking at the prestigious Brookings Institution, he said, “Our nation does not have a debt crisis. We have a jobs crisis.”
America isn’t broke. Our nation’s basic promise—an ever-rising, ever-widening prosperity—is being broken.
It is being broken by three decades of a contradictory economic strategy based on low wages and consumption, he said. As a result, the rich have gotten much richer, the poor have gotten poorer and those left in the middle are struggling to hang on. U.S. trade policies have decimated our nation’s manufacturing base and our tax policies promote inequality.
Sometimes it is hard to believe it has been ten years since that awful day September 11, 2001. Sometimes it is hard to believe the avowed enemies of the United States killed more than 3000 non-combat civilians in New York’s Twin Towers, the Pentagon, and that lonely Pennsylvania Field.
But it has been ten years and our lives and country have changed greatly in that time.
My son, Sam, with whom I flew that day, has grown into an eleven year old boy-skateboarder, drummer, and baseball catcher. He and I were at Chicago’s O’Hare Airport that day when they announced the ground stop that awful morning.
We all allot more time when we leave for the airport. Some of us may nervously survey the other passengers with our own eyes and bemoan the security lines. (more…)
By Robert Kuttner Co-Founder and Co-Editor of The American Prospect
President Obama’s jobs speech last Thursday evening heartened Democrats and progressives, but yesterday’s meeting of the “super-committee” reminds us how much Obama has already given away and the traps he has set for himself (and the recovery) going forward.
While he tries to coax the economy into producing more jobs with one hand, Obama has set in motion an inexorable process that will lead to more economic contraction. The process will also deprive the Democrats of clarity in defending their most popular crown jewels—Medicare and Social Security—against unpopular Republican assault.
Ironically, while Republican front-runner Rick Perry was getting hammered by other GOP leaders for playing fast and loose with Social Security—creating an opening for Democrats with seniors—President Obama is on the verge of proposing an increase in the Medicare eligibility age from 65 to 67.
By Dean Baker
Co-Director, Center for Economic and Policy Research
Sorry deficit fanatics, this one has nothing to do with the cost of the stimulus or the deficits run-up during the Obama years. We’re talking real money here. We’re talking about plans to raise the age of Medicare eligibility to 67.
To deficit hawks everywhere this is a great way to save the government money. Life-expectancy at age 65 is roughly 20 years. Therefore raising the age of eligibility for Medicare by two years would shave roughly 10 percent off the program’s budget. (The actual saving would be somewhat less since it is cheaper to treat people when they are 65 and 66 than in their 80s or 90s.) For a program that is projected to cost more than $1 trillion a year (at 5 percent of GDP) in a decade, and even more in following decades, this would amount to real savings.
But the cost of this savings is a much higher health care bill for beneficiaries. As it is now, millions of people in their 60s struggle to hang onto jobs that provide health care insurance or do without, hoping that they can make it until 65 without a major medical problem. This proposal pushes the magic age out two more years. (more…)
More than 100 workers rallied at the Wells Fargo in Minneapolis calling on the bank to stop funding job killing politicians and use some of the federal bailout funds to aid Minnesota job seekers. (more…)
By Harold Meyerson
Editor-at-Large, The American Prospect
Herewith, a few tips for our beleaguered president:
Good that you’re taking your bus trip through the Midwest, but you should probably can your usual August escape to Martha’s Vineyard if the economy continues to crumble. I know you need a break, but you’re headed toward a long break starting Jan. 20, 2013, unless you change course.
Mr. President, it’s time to go big on the economic solutions. It’s time to propose a massive second stimulus, offset by some serious tax hikes and budget cuts once the economy regains a semblance of good health. Republicans won’t go for it, but they don’t go for small economic solutions either, be they extensions of unemployment insurance or a miniaturized infrastructure bank. (The current level of GOP commitment to infrastructure would about cover the purchase of a Lego set.)
Economically, the case for a massive stimulus is a good deal stronger than the case for the rather minimal one that you’re calling for — extending unemployment insurance and the payroll tax cut, and establishing an infrastructure bank. A major stimulus is the only conceivable source of substantially increased economic activity and jobs for at least several years. Even before the 2008 crisis, our multinational corporations were shedding jobs at home and creating them abroad. The crisis only intensified their flight to the low-wage and faster-growing nations of the developing world. They’re probably not coming back. Our non-luxury retailers and small businesses won’t expand so long as American consumers can’t purchase more, and American consumers will need years, and luck, to diminish their debt and start buying again. State and local governments are shrinking sharply, too. As blogger Matt Yglesias noted last month, public-sector employment rolls have declined by 500,000 jobs since you took office.
Which leaves us with this stark reality: If the federal government doesn’t intervene massively to help the economy, the economy will oscillate between neutral and reverse for many years.
Germany, with a 6% unemployment rate, relatively low by economic measures both in Europe and USA has found that strengthening unions is an important way for reducing unemployment. It is also and important policy for reducing economic inequality.
The New York Times on June 8, reporting on the German economy stated, “Germany, with its 6% unemployment rate against the US 14 % unemployment rate,” enacted policies based on strengthening and building unions as a way of increasing consumer spending through higher wages paid to union workers. Thus this policy reduces unemployment by increasing workers purchasing power.
In addition, German policies encouraging union building and negotiation power found that it was able to reduce economic inequality. Proof of this is the fact that the top 1% of German households earns 11% of all income, virtually unchanged since 1970. However, in the US the top 1% makes more than 20% of all income, up from 9% in 1970. It should be noted that Germany has the tightest market regulation of banks in Europe.
Germany does not have a smaller deficit than the US, because it spends less; it has a smaller deficit, because its tax policies take a heavier toll from huge corporations. Thus, this reduces the total amount of governmental deficits that it carries. Unlike the US, the German government believes that fairness demands that its huge corporations pay a heavier share of taxes which increases their general government revenue stream. It is the obverse of US tax policies as illustrated by the Bush tax cuts. (more…)
