Blog

Robert Borosage
Co-Director Campaign for America's Future

This week, President Obama will travel to Austin, Texas to call for action on jobs. The proposals the president put forth in his State of the Union address – investing in infrastructure, expanding preschool, bolstering manufacturing assistance centers, raising the minimum wage – have been blocked in the Congress, and disappeared from the public debate.

The president wants to revive his jobs agenda while still touting the economic recovery. In his commencement address at Ohio State University last weekend, he reassured students:

“While things are still hard for a lot of people, you have every reason to believe that your future is bright. You’re graduating into an economy and a job market that is steadily healing.”

The White House points to 38 straight months of private sector jobs growth, but in reality, jobs have been largely left behind in the recovery. The stock market is setting new records, but over 20 million people still are in need of full-time work. The labor force participation rate – the percentage of workers who have a job or are looking for one – is down to levels not seen since 1979. The jobs being created pay less with fewer benefits than the jobs that were lost.  As a result, inequality is still growing; the middle class is still sinking. And young people are graduating into one of the worst jobs markets since the Great Depression.

In many ways, the fact that the economy is “steadily healing” back to the old economy is the problem, not the solution. That economy featured growing inequality and a declining middle class. It was built on debt and speculative bubbles. Trade deficits hit new records as multinational companies shipped good jobs abroad.

In his first year in office, President Obama argued that we couldn’t go back to that economy and shouldn’t want to. We had to build a new foundation for growth. But in fact, gridlock in Washington has virtually ensured that we would drift back into the old economy.

Once more the Federal Reserve offers the only ballast for the economy by holding interest rates at record lows. The big banks have emerged from the recession bigger and more concentrated than ever. That virtually ensures a reach for increasing risk as we wait for the next bubble. The trade deficit is back over $1 billion a day, despite the natural gas explosion that reduces U.S. dependence on imported oil. The assault on unions has escalated. Part-time minimum-wage jobs proliferate. The richest 1 percent of the country captured a staggering 112 percent of the income growth in the first two years coming out of the recession. The 99 percent on average lost ground. (more…)

A century ago, workers were a lot more “flexible” than they are now. Veritable Gumbies in the mills and mines and factories they were, distorting their lives to slog 10 or 12 hours a day, six – even seven – days a week.

Then came the 40-hour week. And weekends. And eventually sick days. And paid vacation days. Now, bosses at mills and mines and factories regard these rules as coddling and consider the workers accustomed to them as unyielding to corporate demands.

The GOP has an app for that. It’s called the Working Families Flexibility Act. This legislation that the Republican majority in the U.S. House is expected to pass this week would force some old-time flexibility into 21^st century workers. The forced flexibility act would award bosses the power to “offer” compensatory time off instead of overtime pay. Bosses, not workers, would determine when the comp time could be taken. The proposal puts control in corporate hands, obliging wage earners to bend over backward for bosses exactly like their Gumby ancestors were compelled to.

Trade unionists and labor rights activists died to achieve the goal of eight-hour days and 40-hour weeks. They were shot and beaten in the streets during demonstrations organized by the eight-hour movement. Their slogan was: “Eight hours for work; eight hours for rest; eight hours for what we will.”

Finally, in 1938, President Franklin Delano Roosevelt signed the Fair Labor Standards Act (FLSA) as part of the New Deal, which gave workers and families rights and security that previously had been exclusive to the wealthy.

FLSA enforces the 40-hour week with a simple measure. It requires employers to pay time and a half to wage earners for each hour worked beyond 40 in a week. That creates a financial disincentive for bosses to order work beyond 40 hours. That also creates a financial incentive for companies to avoid overtime pay by hiring more workers. That was a significant bonus during the Great Depression. (more…)

It’s a damning report because it says America has endangered itself by allowing both its manufacturing sector and its infrastructure – like dams, roads and bridges — to deteriorate.

The report, Preparing for 21^st Century Risks, issued by the Alliance for American Manufacturing last week, recommends a two-part solution. First is restoring America’s infrastructure lifelines:  its electrical grid, its public water and sewer systems, its railroads and dams. And second is doing it with American-manufactured steel and concrete, glass and aluminum – all American components and all American labor.

The result would be a nation more capable of fending off and recovering from natural and man-made disasters. And it would be a nation with a stronger economy based on a solid manufacturing base.

The Preparedness report was written by two security experts. One is Tom Ridge, the former Republican governor of Pennsylvania and first Assistant to the U.S. President for Homeland Security. The other is Robert B. Stephan, a former Assistant Secretary of Homeland Security for Infrastructure Protection.

It discusses the danger of America’s increasing dependence on foreign-made materials and supplies and concludes:

“The American way of life is dependent upon a vibrant economy, the existence of which is based upon a skilled work force, innovation and a world-class critical infrastructure. Much of this critical infrastructure is vulnerable to attack, catastrophic weather events and obsolescence and deterioration. Immediate national security, preparedness and economic needs require an equally strong domestic manufacturing base which, for many reasons, has eroded over the years.”

Risks noted in the report, such as this year’s devastating forest fires and nearly nationwide drought, in addition to the constant threat of terrorism, coincidentally were echoed twice in New York Times stories last week.

The first story described infrastructure problems caused by triple-digit heat, difficulties that are expected to continue with sustained extreme weather. They included excessive temperatures in nuclear plant cooling pools, a train derailed by heat-kinked track and a taxiing jet mired in melted asphalt. (more…)

The Romney v. Obama economic smack down in Ohio last Thursday failed to deliver half the punch of remarks the men made earlier in the week.

President Obama said the nation must focus on the public sector, which continues to lay off thousands of teachers, cops and firefighters, even while the private sector has recovered sufficiently to consistently add jobs. Romney said he would fire more teachers, cops and firemen.

This gets to the dispute between Democrats and Republicans. The GOP has contended for 30 years that the primary function of government is to serve corporations and the 1 percent, and that when they thrive, the 99 percent may receive hand-me-down benefits. Democrats believe the principal function of government is to serve the majority of people and that when they benefit, the economy thrives for everyone.

For all the fancy talk in Ohio on Thursday, it comes down to this: Do Americans want a government of the people by the people for the people, one conceived in liberty and dedicated to the proposition that all men are created equal? Or do Americans want a government of the corporations by the corporations for the corporations, one dedicated to the proposition that the rich are better than everyone else?

For the rich, like Mitt Romney, the proposition that they are better than everyone else is a given. Romney believes that he, the son of a wealthy car company executive and governor, the youth who attended exclusive private schools and wallowed in every privilege, is a self-made man.

That is basic Republican philosophy: Every wealthy person and every successful corporation achieved that all by themselves. They didn’t inherit; they didn’t benefit from taxpayer-funded infrastructure like roads, schools and patent enforcement; there was no luck involved. They achieved it alone by virtue of their own grit, hard work and dedication.

Anyone can do it, the GOP believes, if they would just buckle down, work hard and follow all the rules. As a result, in Republican world, anyone who isn’t rich has only himself to blame.

Therefore, in GOP-logic, the poor and middle class are inferior beings. Government should not serve them. The government, Republicans think, should bow to the successful, who earned service. The government must not, according to the GOP, reward shiftlessness by providing benefits to middle class scallywags who have failed to do what it takes to get rich. (more…)

By Robert Creamer
Political organizer, strategist and author

The chief goal of our economic policy is to increase per capita economic output — measured by per capita Gross Domestic Product. That’s what allows people to live better next year than they did the year before. That’s what allows our children to live a better life than we do. That is the basis of the American Dream.

Increased per capital economic output is made possible by increases in productivity. When productivity increases, the same number of hours of work generate more goods and services.

But it should be obvious to anyone that if all of the income that results from increases in economic output flow to the top one percent of the population, then the rest of us won’t have that income to buy the increasing number of products and services that result from the increased productivity.

What happens, then, is simple: economic growth stalls. Companies won’t hire people to produce more products and services if no one has the money to buy them, so they lay people off. Taken as a whole, the economy then has even fewer people with the money to buy new goods and services.

Simply put, increasing economic inequality is a straight-forward formula for economic stagnation.

At the beginning of the Great Depression, income inequality, and inequality in the control of wealth, were very high. Then came the great compression between 1929 and 1947. Real wages for workers in manufacturing rose 67 percent while real income for the richest 1 percent of Americans fell 17 percent. This period marked the birth of the American middle class. Two major forces drove these trends — unionization of major manufacturing sectors, and the public policies of the New Deal.

Then came the postwar boom 1947 to 1973. Real wages rose 81 percent and the income of the richest 1 percent rose 38 percent. Growth was widely shared, but income inequality continued to drop.

From 1973 to 1980, everyone lost ground. Real wages fell 3 percent and income for the richest 1 percent fell 4 percent. The oil shocks, and the dramatic slowdown in economic growth in developing nations, took their toll on America and the world economy. (more…)

In public squares across the country, Occupy protesters honor Rev. Martin Luther King’s memory on this holiday devoted to him. Their tribute is more meaningful and enduring than the granite monument that President Obama dedicated to Rev. King in Washington, D.C. last year.

That’s because the Occupiers are pressing for a cause – economic justice – that Rev. King had embraced in the months before his assassination in 1968. And they’re pursuing it with the technique he advocated – nonviolent protest.

Rev. King’s final crusade, his Poor People’s Campaign, and the Occupiers’ championing the nation’s 99 percent are remarkable in their similarities. It’s tragic that in the 44 years since Rev. King launched his campaign for an economic Bill of Rights that the nation’s poor and middle class have lurched backward instead of forward. It’s hopeful, however, that a whole new generation of idealists has taken up the dream of economic justice.

In the year before Rev. King was gunned down, he persuaded the Southern Christian Leadership Conference to join him in a movement devoted to securing for all citizens the basic needs that would enable them to pursue the American Dream, to pursue happiness. He believed every able-bodied person should have access to a job with a living wage. And he believed every American should have decent housing and affordable health care. Without economic security, he said, no man is free.

Rev. King’s dream has its roots in the progressive movement, containing key elements of Democrat Franklin D. Roosevelt’s proposed Economic Bill of Rights. Roosevelt, the beloved president who gave the country Social Security, pushed the Economic Bill of Rights in the waning days of the war. (more…)

David Woolner
Senior Fellow, Hyde Park Resident Historian, Roosevelt Institute.

With unemployment still hovering at over 9 percent nationwide, and with some economists and historians arguing that the present economic crisis should not be referred to as the “Great Recession,” but as the “Great Depression II,” a good deal of anticipation has arisen over what President Obama will propose in his message to Congress on Thursday. Despite widespread Republican opposition to further government spending, many economists and business leaders — not to mention liberal members of the Democratic Party — argue that what the country desperately needs is another stimulus package. A jobs program could provide hope and relief to the millions of long-term unemployed, restore confidence, and stem the U.S. economy’s steady slide back into recession. Even the ever demure Chairman of the Federal Reserve, Ben Bernanke, has indicated that “putting people back to work” must be made a priority if the country wishes to avoid long-term damage to the economy. (more…)

Robert Creamer

By Robert Creamer
Political organizer, strategist and author

Republicans have proposed legislation that would cap federal spending at 20.6% of the country’s Gross Domestic Product (GDP) — just below the average of the last forty years. Sounds reasonable, right?

Only if you like the idea of another Great Depression.

Over the last forty years federal spending has averaged about 20.7% of Gross Domestic Product (GDP), so Senator Bob Corker (R-TN) has proposed the “altogether reasonable” idea that Federal spending should be capped at 20.6%. To exceed this cap, a two-thirds majority of the House and Senate would be necessary. Unfortunately, this proposal has been endorsed by several Senate Democrats.

But — as the events of the last two years should have made clear to everyone — this reasonable- sounding proposal is actually a prescription for economic suicide. Had it been in effect when the recklessness of the Wall Street banks collapsed the economy in 2008, the Great Recession would have nose dived into another Great Depression.

As most economists will confirm, the major factor that saved us from another depression was the very fact that Federal spending as a percentage of GDP substantially increased in 2009 and 2010 — to about 24.7% of GDP.

When the bottom fell out of the economy, the GDP shrunk. The level of spending by consumers and businesses — and demand for American exports — also declined. As a result, millions of people lost their jobs and had less money to spend, so there was even less demand and more people were laid off. That downward economic cycle can only be broken when some actor has the ability to increase economic demand and break the downward spiral. (more…)

Robert Borosage

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

How does America dig out of the hole we are in? Surely the focus must be on first principles, how do we recreate an economy that works for working people? With the right talking about a return to the principles of the Constitution, it is worth remembering how Americans thought about first principles coming out of the last great economic calamity.

Today is the 67th anniversary of Franklin Delano Roosevelt’s historic 1944 State of the Union address that put forth an Economic Bill of Rights for all Americans. (Michael Moore presented to modern audiences in his Capitalism: A Love Story)

Roosevelt spoke as the Great War was drawing to a close. Attention was turning to the transition to peace, with widespread fears about whether the economy would revert to the depression that only the mobilization for war brought to an end. An entire nation had mobilized and sacrificed for war, what would peacetime bring?

Roosevelt argued that the sacrifices made in war demanded a strategy not only for “a lasting peace,” but for “an American standard of living higher than ever before known” — and one that was as widely shared as the wartime sacrifices were:

We cannot be content, no matter how high that general standard of living may be, if some fraction of our people — whether it be one-third or one-fifth or one-tenth — is ill-fed, ill-clothed, ill-housed, and insecure. (more…)

Les Leopold

By Les Leopold
Author, “The Looting of America”

“Thus the real reason for Thanksgiving, deleted from the official story, is: Socialism does not work; the one and only source of abundance is free markets, and we thank God we live in a country where we can have them.” ~ “The Great Thanksgiving Host,” The Ludwig Von Mises Institute - a Tea Party favorite re-write of American History.

Just think, only two years ago Wall Street’s billionaires were on their knees begging for help. Their reckless financial games had crashed the economy. Every firm on Wall Street teetered on the edge of collapse. Without trillions of dollars of government bailouts and asset guarantees, they were finished — kaput. (Please see The Looting of America for the blow by blow on how the “abundance” of financial markets failed.)

But then… a reprieve! The billionaires were bailed out. Congress passed the mildest financial reforms possible. The biggest banks — the survivors — came out of the recession even bigger than before. Wall Street got richer again, and bonuses are now back to near-record levels. Sure, they have to pay back TARP money. Big deal. The profits and bonuses that money leveraged is theirs to keep as if nothing had happened. Is this a great country or what?

But while things are booming on Wall Street, the rest of our economy is in serious trouble. It won’t take much to push us into another downward deflationary spiral, sending unemployment even higher. (Already, year-to-year core inflation has hit its lowest level since this statistic was first recorded back in 1957.) We need 22 million new jobs to get back to full-employment and it’s ludicrous to believe that the private sector can create them on its own in the next decade. But Federal job creation is unthinkable with Congress in gridlock. Meanwhile the states are engaged in a massive anti-stimulus program as they cut back spending in response to crumbling revenues. It seems that the only institution left with a modicum of will and means to prime the economic pump is the Federal Reserve, with a plan called QE2 (a second round of quantitative easing, which means pumping more money into the financial sector.) (more…)