Blog

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

The biggest question among activists now occupying Wall Street and dozens of other cities is how to strike back against the nation’s almost unprecedented concentration of income, wealth, and political power in the top 1 percent.

The two questions are related. With so much income and wealth concentrated at the top, the vast middle class no longer has the purchasing power to buy what the economy is capable of producing. (People could pretend otherwise as long as they could treat their homes as ATMs, but those days are now gone.) The result is prolonged stagnation and high unemployment as far as the eye can see.

Until we reverse the trend toward inequality, the economy can’t be revived.

But the biggest question in our nation’s capital right now has nothing to do with any of this. It’s whether Congress’s so-called “Supercommittee” — six Democrats and six Republicans charged with coming up with $1.2 trillion in budget savings — will reach agreement in time for the Congressional Budget Office to score its proposal, which must then be approved by Congress before Christmas recess in order to avoid an automatic $1.5 trillion in budget savings requiring major across-the-board cuts starting in 2013.

Have your eyes already glazed over?

Diffident Democrats on the Supercommittee have already signaled a willingness to cut Medicare, Social Security, and much else that Americans depend on. The deal is being held up by Regressive Republicans who won’t raise taxes on the rich — not even a tiny bit.

President Obama, meanwhile, is out on the stump trying to sell his “jobs bill” – which would, by the White House’s own estimate, create fewer than 2 million jobs. Yet 14 million people are out of work, and another 10 million are working part-time who’d rather have full-time jobs.

Republicans have already voted down his jobs bill anyway. (more…)

By Robert Creamer
Political organizer, strategist and author

The speech included provisions that Republicans in Congress may actually agree to pass — like continuing the payroll tax holiday that if allowed to lapse would affect the paychecks of virtually every American worker. But it also made the case for bold initiatives to rebuild America’s infrastructure and directly create jobs through a teacher corps and youth jobs program. These bolder proposals are critically necessary to jump start the economy, and Obama is betting — correctly — that if they fail to support them, Republicans will pay a political price next year.

What was needed was a package of proposals that were bold, projected urgency, and will create jobs now. The president delivered.

Obama explicitly rejected the dangerous, fallacious notion that the path to long-term economic growth runs through the valley of economic austerity.

He clearly defined the fundamental difference in values — and economic philosophy — between progressive Democrats and right wing Republicans. (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

After a week of non-stop Osama Bin Laden, Washington is now returning to the battle over the budget deficit and the debt ceiling.

All over Capitol Hill Republicans and Democrats are debating spending caps and automatic triggers, and whether to begin them before or after Election Day.

But if you don’t mind my asking, what about the economy? I’m not talking about the economy five or ten years from now, when projections show the federal budget wildly out of control or when foreigners might start dumping dollars.

I’m talking about the here and now economy — the one Americans are living in day to day.

The Labor Department reported today that unemployment for April was 9 percent, up from 8.8 percent in March. And of course that official figure doesn’t count the percent of Americans working part-time who’d rather have full-time jobs. (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

This week’s biggest economic show occurs Wednesday when Fed chair Ben Bernanke steps in front of the cameras for the Fed’s first-ever news conference. The question on everyone’s mind: Will the Fed signal it’s now more worried about inflation than recession?

Much of Wall Street thinks inflation is now the biggest threat to the U.S. economy. As has been the case in the past, the Street is dead wrong. The biggest threat is falling into another recession.

The most significant economic news from the first quarter of 2011 is the decline in real wages. That’s unusual in a recovery, to say the least. But it’s easily explained this time around. In order to keep the jobs they have, millions of Americans are accepting shrinking paychecks. If they’ve been fired, the only way they can land a new job is to accept even smaller ones.

The wage squeeze is putting most households in a double bind. Before the recession, they’d been able to pay the bills because they had two paychecks. Now, they’re likely to have one-and-a half, or just one, and it’s shrinking. (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

Paul Ryan says his budget plan will cut $4.4 trillion over ten years. The president says his new plan will cut $4 trillion over twelve years.

Let’s get real. Ten or twelve-year budgets are baloney. It’s hard enough to forecast budgets a year or two into the future. Between now and 2022 or 2024 the economy will probably have gone through a recovery (I’ll explain later why I fear it will be anemic at best) and another downturn. America will also have been through a bunch of elections — at least five congressional and three presidential.

The practical question is how to get out of the ongoing gravitational pull of this awful recession without cow-towing to extremists on the right who think the U.S. government is their mortal enemy. For President Obama, it’s also about how to get reelected.

(Yes, we also have to send a clear signal to global lenders that America is serious about reducing its long-term budget deficit. But in truth, global lenders don’t need much reassurance. Bond market yields in the U.S. are now lower than they were when the government was running a budget surplus ten years ago.)

Seen in this light, Obama’s plan isn’t really a budget proposal. It’s a process proposal. (more…)

Stan Sorscher

By Stan Sorscher
Labor Representative, Society for Professional Engineering Employees in Aerospace (SPEEA)

Public attitudes toward workers send a weird mixed message lately. We are busy ripping out support for wages and benefits, while simultaneously asking why the recovery is going badly. Diane Ravitch’s bitter joke captures the spirit of this contradiction: “It reminds me of an old Soviet joke where a peasant says, ‘My neighbor has a cow and I have none, I want his cow to die.’”

Economic growth is a chicken-and-egg story. Workers will have jobs when businesses hire them. Businesses will hire when they have prosperous customers.

This leads to two important realizations. First, workers are also consumers. Second, the real obstacle to hiring is lack of customers.

Our economy has money to invest. Businesses are sitting on trillions in profits, and banks have trillions in excess reserves. Similarly, the obstacle to hiring is not high taxes. GE and a large fraction of all US businesses paid no federal income taxes last year. Businesses pay a shrinking share of federal taxes — only 6.6% in 2009 — while households pay in increasing share.

What’s happened to family income? Wages have been stagnant for 30 years, while productivity more than doubled in the same period. As business and government shift costs to households, we have less to spend on other things. Health care costs are shifting steadily to families as employers and governments reduce their social commitments. Families pick up a greater share of education costs. Pensions have transformed from a social and legal contract, to an inconvenience that can be cast aside. Job security is so last century. In the global economy, no worker can count on a long stable career. (more…)

Harold Meyerson

By Harold Meyerson
Editor-at-Large of The American Prospect

Suppose the economy recovers but everyone still feels lousy.

It could happen. In fact, it’s happening right now.

Our current recovery, alas, is different from all previous recoveries that America has experienced since the end of World War II. The earlier ones were marked by wage increases. As the economy picked up and more revenue started flowing to business, those businesses shared the revenue with their employees. Mark Whitehouse of the Wall Street Journal looked at how businesses were dividing up the pie 18 months into every previous recovery since 1947 and found that 58 percent of their increases in productivity trickled down to their workers in increased wages.

This time around, the numbers are starkly different. Productivity increased 5.2 percent from the recovery’s start in mid-2009 to the end of 2010, he found, but wages rose by a minuscule 0.3 percent. That means just 6 percent of productivity gains have gone to our newly more-productive workers.

Where is the other 94 percent going? To profits, which have been increasing at a record clip for the past three quarters. To funds on the corporations’ balance sheets, which the Federal Reserve calculates at nearly $2 trillion. To shareholders. To the companies’ stock buybacks. (more…)

Robert Kuttner

By Robert Kuttner
Co-Founder and Co-Editor of The American Prospect

My friend, the late Mike Harrington, used to describe his politics as “on the left wing of the possible.” It’s a fine aspiration. But if anything, economic problems have become more politically intractable since Mike died in 1989.

Scanning the various economic ills afflicting our Republic and its citizens, it’s evident that nearly all of the solutions lie beyond what is currently deemed thinkable in mainstream politics — beyond the left edge of the possible.

It’s not that my own views and values have become more radical in two decades. What has changed is that the American political center has shifted further to the right, while the twin assault on the good society by the private financial system and the organized right has become more intense.

There are only two possibilities: either we act to expand the boundaries of the possible, or we suffer the consequences.

Consider these five prime economic challenges:

Economic Recovery and the Budget. We are told by Beltway solons of both parties that the prime malady harming the economy is the budget deficit. But nobody can explain how fiscal austerity will promote economic recovery. On the contrary, the more we cut, the more we retard economic recovery and the more we remove the cushions that make the recession slightly more bearable for regular people. (more…)

Robert Reich

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

Put your ear to the ground and you can almost hear the bulls stampeding. The Dow closed above 12,000 Tuesday for the first time since June 2008. The Dow is up 4 percent this year after increasing 11 percent in 2010. The Standard & Poor 500 is also up 4 percent this year, and the Nasdaq index, up 3.7 percent.

“The U.S. economy is back!” says a prominent Wall Streeter.

Ummm. Not quite.

Corporate earnings remain strong (better-than-expected reports from UPS and Pfizer fueled Tuesday’s rally). The Fed’s continuing slush pump of money into the financial system is also lifting the animal spirits of Wall Street. Traders like nothing more than speculating with almost-free money. And tumult in the Middle East is pushing more foreign money into the relatively safe and reliable American equities market.

It’s simply wonderful, especially if you’re among the richest 1 percent of Americans who own more than half of all the shares of stock traded on Wall Street. Hey, you might feel chipper even if you’re among the next richest 9 percent, who own 40 percent. (more…)

Robert Creamer

By Robert Creamer
Political organizer, strategist and author

Last week’s employment report served to reinforce the utter bankruptcy of Republican economic policy — and the absolute necessity of remembering the lessons of the last century of economic history.

The private sector job market is slowly stumbling out of the economic ditch into which it was steered by the policies of the Bush Administration. Sixty-four thousand private sector jobs were created by the economy last month — well short of what is necessary to allow the job market to achieve lift-off velocities and long-term sustained growth — but a least a positive number.

But that growth was entirely offset by the loss of 159,000 government jobs. Some of them were temporary census jobs. But the bulk — including the loss of 26,000 teachers — came from layoffs caused by the fiscal crunch of state and local governments. State and local governments cut jobs at the fastest rate in almost 30 years. The loss in jobs would have been even more massive if Democrats in Congress had not passed a bill to aid state and local government before they adjourned for the August recess. That bill was passed over virtually unanimous Republican opposition.

The Republicans have traditionally offered four major elixirs as their prescriptions for economic growth:

1) Cut taxes — especially for the wealthy. In fact, of course, tax breaks for the rich are mainly about giving more money to the Republicans’ major constituency — the wealthiest of our citizens. The fig leaf they have used to cover this self-serving policy used to be described as “supply-side” economics: the idea that if you give the wealthy and big corporations more money they will automatically invest it in new economic ventures that generate jobs.

Of course this proposition completely ignores actual economic history. The Bush tax cut policy was in place for much of the last decade. But his administration created a net increase of zero new private sector jobs — zero. In fact, of course, it is still in place today — due to expire at the end of the year, unless Republicans have their way — and it has done absolutely nothing to create new jobs. In fact, just the opposite. (more…)