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Mike Lux
Co-founder and CEO, Progressive Strategies

I have been thinking a lot about my old boss President Clinton the last few days. I still have a great deal of respect and affection for him, and remain a fan of his political skills and the many good things he did as President — more than a lot of people realize. But one thing you always knew as a staffer of his was when he did make a mistake it was a doozy. And as his Bain Capital statement reminds us, he has always had an incredible blind spot for the Wall Street crowd.

The biggest political mistake of his presidency was to allow himself to be seduced by the slick Wall Street guys who convinced him the further deregulation of the financial industry — the repeal of Glass-Steagall and failing to regulate derivatives — would be good for the economy. You would think after the crash of 2008 and all that it has wrought he would be wary of defending Wall Street again, but it appears his massive blind spot is still there.

In the 1992 campaign I was so proud to be part of, Bill Clinton promised to fight for the American middle class who “worked hard and played by the rules.” And he did fight for those middle class and working poor folks in much of his presidency. Family and Medical Leave; children’s health insurance; raising the minimum wage; the Brady Bill; expanding our national parks; standing up to Gingrich’s assault on Medicare, Medicaid, school lunches, Head Start, and education; lowering taxes for the working poor and raising them for the wealthy: all of those policies mattered greatly to millions of middle-class Americans’ real lives. But when Clinton let the big banks free to rampage at will in the economy, the American middle class he had been helping in all those other ways got crushed. It was a terrible mistake that sadly tarnished his legacy and wiped out much of the good he had done.

Now he is defending Wall Street again. Clinton said that Romney’s work at Bain Capital was “not bad work, but very good work” and that Romney’s business career at Bain was “sterling.” But Mitt Romney and Bain Capital made money by playing with a stacked deck — stacked in favor of Wall Street and against those people in the middle class who worked hard and played by the rules. Bain used the facts that debt was deductible and that carried interest and capital gains were taxed dramatically less than regular workers’ taxes to make money while the companies they bought frequently got drained of their value. Romney got rich while firing and outsourcing workers and slashing their wages and benefits. Romney got rich even when the companies he bought went bankrupt because of the way the rules were stacked in his favor. He got richer while most of the rest of us got poorer. No, strike that: he got rich because most of the rest of us got poorer. Bain made most of its money by firing people and slashing their wages, not by creating new high-wage, high-quality jobs. (more…)

Dean Baker

By Dean Baker
Co-Director, Center for Economic and Policy Research

That is the question that supporters of Social Security should be asking as we brace for President Obama’s State of the Union address next week. Specifically, the question is whether Senator Majority Leader Harry Reid will keep up his spirited defense of Social Security or whether he will buckle to the pressure from the financial industry and the Washington insiders.

For those who missed it, Senator Reid distinguished himself by saying the obvious on one of the Sunday talk shows two weeks ago. He said that Social Security is not contributing to the deficit and that the shortfall it faces is still distant and relatively minor. He said he was tired of people picking on this program, which is vital to the financial security of tens of millions of retirees and disabled workers and their families.

Truth is rare in Washington, so Senator Reid’s comments really stood out. If the Senator is prepared to hold his ground, he can save the program.

There is no doubt that the forces arrayed against Social Security are enormously powerful. The wealthy hate the idea of government money going to anyone but them, and since the vast majority of Social Security benefits are going to low and middle-income families, the program is an outrage to their sensibilities. (more…)

Mike Lux

By Mike Lux
Author, “The Progressive Revolution: How the Best in America Came to Be”

I wrote my initial post in such a hot rage over the proposal to cut Social Security and Medicare benefits that I didn’t take the time to edit my blog post (sorry about those strange sentence structures), or take the time to look at the details of the proposal. So now that I have calmly taken some time to do that, I have to admit that I was wrong: this thing is even worse than I originally thought, and I way understated the problems with it. The co-chairs and staff found every conceivable way to screw the middle class in ways big (very big) and small, but barely nicked the bankers who caused the meltdown of the economy, or the wealthy whose massive tax cuts ended the big budget surpluses as far as the eye could see coming out of the Clinton years. Look at some of the different ways middle class and poor people will be gauged by this proposal (and I am probably missing some):

Raises the retirement age for Social Security and Medicare to 69.

Cuts Social Security benefits.

Ends the mortgage tax deduction.

Ends the tax deduction for workers’ health benefits.

Freezes salaries for federal workers for 3 years.

Establishes co-pays for veterans at VA health services.

Raises fees to visit the national parks and the Smithsonian.

Merges the Small Business Administration into an agency (Commerce) that has always prioritized helping bigger businesses, and cuts their budget.

Eliminates the Office of Safe and Drug Free Schools. (more…)

Robert Borosage

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

It’s an unending sequel. The election ends; Democrats crash; the circular firing squad opens up. Already conservative Democrats are urging the president to fire his advisors, trim his sails, “move to the center,” and spend less attention catering to his base and more trying to appeal to independent voters.

This is a staple of conservative Democratic rump groups from the Coalition for a Democratic Majority (that transmuted into Reagan neocons), the Democratic Leadership Council (that flirted with a third party after the 1994 debacle), and now the Third Way, esteemed advisors to the Blue Dogs that just lost half of their members in the election debacle.

The argument is old-doughnut stale. Progressives say Democrats were hurt because the base was discouraged and disengaged. Turnout among young voters was down dramatically (from 18 in 2008 to 11 in 2010), and they gave Democrats a lower percentage of their votes (56% down from 63%). [All data from a Campaign for America's Future-Democracy Corps poll by Greenberg Associates found here.]

Turnout among African Americans was down (from 13% in 2008 to 10%) and they too offered up a somewhat lower percentage of their vote. The rising American electorate (single women, minorities, and the young) that constituted 46% of the electorate in 2008 declined to about 40% in 2010, and again gave Democrats a lower percentage (60% compared to 67% in 2008.) The electorate that showed up in 2010 probably would have elected John McCain. Had the base been engaged, Democratic losses would have been far smaller. As it was, Latinos, roused by the right, helped staunch the tea party wave in the West. (more…)

Robert Borosage

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

In the wake of what he described as a shellacking, President Obama repeatedly detailed his willingness to sit down with Republicans, share ideas, find areas of agreement, compromise.

But the press didn’t mention the elephant in the room — so to speak. There is little reason to believe that Republican leaders have either the desire or the capacity to compromise — particularly on jobs.

The Republican job program — keep all taxes where they are, cut domestic sending by $100 billion next year, repeal the Recovery Act and TARP funding, and give small businesses a tax cut — will cost more jobs than it creates. Rep. John Boehner, the perpetually tanned future Speaker of the House, was truculent in his election eve remarks, arguing the voters message to the President was “change course.” And the way to do that was to make government smaller and cut spending. Rep. Eric Cantor, future majority leader, said the first thing for Republicans to do is to repeal the health care bill. Not exactly, a “let’s reason together” position.

Moreover, it isn’t at all clear Boehner has the capacity to compromise even if he wanted to. Republicans are now terrified by their tea-party base — and from Sen Jim DeMint to Sarah Palin, they’ve made it clear that they will oppose any compromise with Obama. (more…)

Robert Creamer

By Robert Creamer
Political organizer, strategist and author

President Obama has proposed to eliminate the massive deficit-busting Bush tax breaks for the top 2 percent of Americans — while maintaining tax cuts for 95 percent of Americans. He is spot on.

The Bush tax breaks are set to expire at year’s end, so there is real pressure on Congress to act. Congress should maintain the cuts for individuals earning $200,000 or less, and families earning $250,000 or less. And it should restore the Clinton-era tax rates to the very rich.

It is the right thing to do economically, politically and morally.

First the economics. When it comes to creating jobs, the last people who need more money in their hands are the wealthiest 2 percent of Americans.

The Republicans charge that eliminating these tax breaks on the rich — and returning them to Clinton-era levels — would be a “job-killing tax hike in the midst of a recession.” Let’s recall that while the Clinton-era tax rates applied to the rich in the 1990′s, the economy created more than 22.5 million jobs in less than eight years — the most jobs ever created under a single administration. Moreover, the Federal deficit had turned into a surplus for as long as the eye could see. The number of private sector jobs created during the Bush years: zero. The Republican position amounts to nothing more than baseless pandering to the greed of their many wealthy donors.

To create more jobs, our economy needs more economic demand. We need people who are willing to go out and buy products and services. Our economic problem is not that we lack enough people who will go out and work to create the products and services we need to have better lives. Our problem is that there is not enough demand to entice businesses to increase their work forces or buy new plants and equipment. (more…)

David Sirota

By David Sirota
Political journalist, best-selling author and syndicated newspaper columnist

In the last 72 hours, we’ve finally seen the outlines of the inevitable Democratic civil war that’s been brewing over taxes and spending. Both sides argue that their way is the path to economic prosperity – and so the question is, which side represents a fact-based argument, and which side represents fact-free theorizing?

Before answering that question, let’s first outline which side is which.

On one side is the Obama administration and progressive Democrats, pledging to keep its promise to let the Bush tax cuts for the very wealthy expire on schedule. Most on this side want to reinvest some or all of the recovered tax money and plow it into domestic spending that would rebuild crumbling infrastructure and economically support those hard-hit by the recession.

On the other side are conservative Democrats in Congress who are becoming increasingly brash in their declarations that either today’s middle-class Americans or tomorrow’s middle-class Americans (via. debt interest payments) should have to pay higher taxes or suffer through slashed services/benefits in order to prevent today’s wealthy from paying any more. This is a varied group, but a nonetheless powerful one in its diverse motivations.

For instance, you have many “Blue Dog” Democrats. Afflicted with a debilitating case of Selective Deficit Disorder, these Democrats cite their devotion to deficit hawkery as reason to vote against unemployment benefits – but also defend policies like the Bush tax cuts. Democratic Sen. Ben Nelson is about the best example of this. (more…)

Dean Baker

By Dean Baker
Co-Director, Center for Economic and Policy Research

In the middle of the worst downturn since the Great Depression, with unemployment projected to remain at elevated levels for most of the next decade, we have the bizarre spectacle of a presidential commission on the deficit. The commission is supposed to issue a report to Congress by the end of the year on how to get the long-term deficit under control.

This commission contains more than a bit of the theater of the absurd. At the moment, the only force sustaining the economy and keeping unemployment from rising further is the large deficit being run by the government. If we snapped our fingers and eliminated the deficit tomorrow, we would see the unemployment rate rise well into the double digits. The deficit creates demand in the economy. It is really simple; if the government spends more money, then it will employ more people. If we cut back this support for the economy, fewer people would be employed.

But Washington politicians have trouble saying what is obviously true. So, instead of talking about putting 15 million people back to work, we are talking about curbing the deficit. This would be like creating a commission on water conservation as we struggle to get enough water to quench a fire threatening the capital. But that’s where politics in the United States is right now.

The deficit commission’s co-chairs, former Wyoming Sen. Alan Simpson and Erskine Bowles, a former chief of staff to President Clinton, insist that everything is on the table. In particular, they have both touted their willingness to support cuts in Social Security. It is always impressive to see wealthy and well-connected people who have the courage to take away benefits for which middle-income people have worked and paid.

As the Social Security trustees report shows, Social Security benefits will be fully funded by its designated tax through 2037. The Congressional Budget Office projects that the payroll taxes will be sufficient to pay full benefits through 2044. So, when Simpson and Bowles say that they are anxious to cut workers’ Social Security benefits, they are pledging to take away benefits that these workers have already paid for with their taxes. These guys probably rip off employees on their wages too.

If Simpson and Bowles really gave a damn about the deficit, they would look to where the money is and support a tax on financial speculation. A modest set of financial transactions could easily raise more than $100 billion a year. A modest tax on trades (e.g. 0.5 percent on stock trades and 0.02 percent on trades of futures and credit default swaps) would have almost no impact on ordinary investors. In fact, such taxes would just raise transactions costs back to where they were in the late 80s or early 90s, years when the United States certainly had a vibrant capital market. However, even these modest taxes would impose substantial costs on traders who are actively speculating in these markets, and they could raise lots of money.

The United Kingdom raises the equivalent of $40 billion a year in the United States by just taxing stock trades. Applying the tax to trades of futures, options, credit default swaps, and other derivative instruments traded by banks would substantially increase this amount.

The opponents of this tax insist that it will not raise much revenue and that it is not possible to do without an international agreement. These objections are just excuses to protect Wall Street. The experience of the UK shows that the claims are not true (i.e. lies). The UK shows that it is possible to have the tax in one country and that it can raise plenty of revenue. When people tell us otherwise, we should just tell them to go collect their paycheck from Goldman Sachs and stop bothering us with nonsense.

So, when the deficit commission issues its report, if it comes with a recommendation to cut Social Security and without a recommendation for a FTT, we know what to do with it. Such a report would be worth as much as one of Lehman’s Repo 105′s or a credit default swap from AIG. Congress should send this deficit commission report back to Wall Street and tell them where to put it.

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Dean Baker is author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy,” PoliPoint Press, LLC. This piece was first published on Truthout.

Natasha Chart

Throughout last year, they were far more likely than other age groups to have reported unemployment in their households. Labor force participation for those ages 16-24 has decreased to its lowest levels since WWII as a Pew report on the graying work force notes that the recession has tilted the job market towards older workers and those with degrees.

Those college costs are usually financed instead by loans which are currently not eligible for bankruptcy protection. Loan repayment therefore eats up larger percentages of future earnings which have been plummeting for 8 years for those under 55. Bad timing for anyone who’s taken out student loans in recent years in the hopes that the job market would catch up to their education expenditures, and worse luck if their parents’ declining wages reduce the possibility for family assistance.

A third of adults under 27 also lack health coverage, with nearly half of those young adults earning less than $14,000 per year. Since wages for most people have been effectively stagnant, they have not kept pace with health coverage increases, and the lower you go down the economic ladder, the truer that is. Especially because there’s been an ongoing decline in employer-based coverage that has disproportionately affected low-income workers and the small businesses that create the most jobs.

For another worrying indicator, an AARP poll earlier this year indicated that around a quarter of adults 18 and over are living with parents or in-laws. Another 15 percent were worried they might have to do so soon, while one in seven lived with a sibling.

I don’t know about you, but the American Dream I was sold didn’t include worse buying power and relative wealth than my blue-collar, high school-educated parents for myself , my peers and those who came after me.

The United States’ lack of an industrial policy has been cherished for its ability to bring us ever cheaper consumer goods by steadily outsourcing manufacturing work to other countries. It’s been great for people who already had money, it’s destroyed opportunities for entry-level blue collar work that leads to a reasonable degree of financial security.

You can see the results in the balance sheets of young adults’ households and the narrowing of their prospects. They’re being pressured to take on the increasingly bad investment of the typical college education to go after a declining pool of jobs that provide dwindling levels of wage and health benefit compensation.

Maybe we don’t have to make all the same things we used to make, but our current and future workforce needs the upward pressure on wages and benefits that entry-level and longstanding manufacturing careers used to create. The United States can’t continue to support export-led growth elsewhere in the world if our upcoming workforce continues losing the ability to sell their labor in return for a reasonable standard of living. It stands to reason that if financial capital isn’t invested in the American workforce producing things that others want to buy, these trends will only continue as the US spends down the accumulated gains of previous productivity.

If Americans want a better future for their children, there needs to be a concerted effort to make more things in America.

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This piece was first published on the Campaign for America’s Future Blog