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Dean Baker

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

It is amazing that angry mobs have not risen up and chased all the economists out of the country. While the greed of the Wall Street gang provided the fuel for the bubble, the economists played an essential role as enablers. This was most directly true for economists in policymaking positions, like Alan Greenspan at the Fed.

It was Greenspan’s job to stop the housing bubble. A competent and honest Fed chair would have recognized the bubble by 2002 and taken whatever steps were necessary to rein it in. And we should be 100 percent clear, in spite of all the song and dance about how the financial reform bill will prevent another bailout, the Fed absolutely had all the tools needed to stop this disaster. They just lacked either the competence or the integrity, or both.

But the economists in policymaking positions are just the beginning. There are thousands of macroeconomists across the country, in government, academia and private industry who track the economy as a full-time job. It is actually a well-paid job, with many drawing six-figure salaries and big name types getting close to $1 million a year.

Given the high pay for this profession, it was reasonable to expect that they would be able to see something like the $8 trillion housing bubble that eventually wrecked the economy when it collapsed. But you can count on your fingers the number of economists who raised warnings about the housing bubble. The rest either did not see it, or didn’t think it worth mentioning. (more…)

Robert Kuttner

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

The financial reform bill that passed both houses of Congress was far less than we needed. But it was a start — enough of a start that the bankers have spent tens of millions trying to kill it. And now, with the House-Senate conference version of the bill coming back to Senate for final approval, the reform is in jeopardy yet again.

On May 29, the bill passed the Senate, 59-39, just enough to block a filibuster. Four Republicans voted in support and two progressive Democrats voted no to protest its weaknesses. But the banking lobby has used the Congressional recess to work the four Senate Republicans.

And, sure enough, three of the four Republican supporters have gone wobbly. Olympia Snowe of Maine voted for the Senate bill, but is now making equivocal noises about whether she’ll support the conference bill (which is weaker in some respects than the Senate’s version.) Likewise Chuck Grassley of Iowa.

The always wily Scott Brown of Massachusetts threatened to withhold his vote until the House and Senate leaders agreed to scrap a $19 billion tax on large banks. He voted for the senate bill, but now Brown is warning that he may vote against the final bill anyway. Apparently there is no honor among thieves. The financial industry was the largest donor to Brown’s Senate campaign.

Among Republicans, only Susan Collins of Maine is standing firm in her support. The fewer Republicans who are still officially committed to the bill, the easier it is for the banking lobby and the GOP leadership to intimidate or seduce others. (more…)

Richard Trumka

 By Richard Trumka
President, AFL-CIO 

Millions of Americans are living in fear–for their jobs. When a job disappears, working people are gripped with a fear that high-flying hedge fund managers not only refuse to grasp, but ridicule. Because the only thing Wall Street really fears is accountability for its actions and oversight of its unfettered profit-making at the expense of the rest of us. 

Today, we’ll be back in the street to take on The Street–this time on Washington, D.C.’s infamous K Street, haven for the big-monied Wall Street lobbyists. We in the union movement, together with allies like Americans for Financial Reform, are building on our grassroots action last month on Wall Street–where tens of thousands of mad-as-hell workers demanded Wall Street pay for the mess it made and start putting our taxpayer money back into generating jobs. We’re also carrying out our promise to America’s working people to make Congress prioritize passage of Good Jobs Now. 

The recent uptick in job creation is good news–but far from enough. Job creation is the top priority for the millions of working- and middle-class voters in this country. Some 21 percent of employed U.S. workers believe it is “very” or “fairly” likely they’ll get fired or “downsized” within the next year, according to a recent Gallup Poll. That’s the highest level of fear about economic security and job loss since Gallup began gathering the data back in 1975. According to Gallup: 

Further reflecting today’s lack of job security, 38 percent of Americans employed full- or part-time say they are “not at all likely to lose their jobs over the next year”–down 19 points from April 2007, and by far the lowest level of self-professed job security Gallup has measured since 1975. 

If laid off, 44 percent of U.S. workers say they could go barely a month before experiencing significant financial hardship. 

That’s the basis for real fear. 

Meanwhile, as millions of high school and college students graduate in coming weeks, the class of 2010 faces the worst job market in a generation, with unemployment among high school graduates averaging 22.5 percent over the past year and 9 percent for college grads under age 25. Economists know the longer high unemployment persists, the worse off young workers will be in terms of lifetime earnings. 

This is not the economic future I want to leave for our nation’s children. So why does Wall Street want it–and why are so many Washington, D.C., lawmakers doing its bidding? 

The American people have long recognized the disparity between our paychecks and those of limo-lounging CEOs. Now we see the Wall Street-Washington nexus: the Big Banks that spend billions to kill financial reform in Congress and the puppets who carry their water–former Capitol Hill lawmakers bought and paid for by Wall Street. But, as economist Simon Johnson writes, the American people know what’s going on and 

understand that Wall Street took over Washington and has run it, in large part, for too long. 

Big Banks are spending $1.4 million a day to fight financial reform and employing 940 former federal officials. The current crop of revolving-door lobbyists includes 54 former staffers on the Senate Banking, Housing and Urban Affairs Committee and the House Financial Services Committee (or a current member of that committee), 33 former chiefs of staff and 28 former legislative directors. Citigroup leads the Big Banks with 55 revolving-door lobbyists, though the federal government was its largest shareholder for much of this period (2009-2010), according to a report out this week. 

Our chance to slow Wall Street’s takeover of Washington, the Wall Street Accountability Act, is making great progress in Congress–and its passage will go a long way toward repairing the damage done to our nation by a failed generation-long experiment in market radicalism. 

But the act also needs to be strengthened so it covers private equity funds as well as hedge funds and gives the U.S. Securities and Exchange Commission the power to force disclosures by these funds to their investors. Wall Street should be taxed not just for the direct costs of the Troubled Asset Relief Program, as President Obama rightly proposes, but also for the real costs of addressing the job loss that continues and for the trillion-dollar subsidies the Federal Reserve gave to the financial sector in the form of free credit. 

Lawmakers need to recognize that a strong Wall Street Accountability Act is necessary for the nation–and also for their own self-interest. Because let’s face it: Right about now, lawmakers too timid to hold Wall Street accountable or too tied in with the Big Banks’ lobbying industry should be getting a good taste of what it’s like to fear losing your job.

Eric Lotke

By Eric Lotke
Research Director at the Campaign for America’s Future

The White House announced its economic initiatives for middle class families, described as a preview of the State of the Union Address. They’re all good ideas and I hope every one of them passes. But something is missing.

Mostly, the new initiatives don’t create jobs. Doubling the child tax credit, limiting student loan payments to ten percent of income, expanding tax credits to match retirement savings – they’re just relief. They are designed to help underpaid or unemployed people to cope when they don’t have enough money. They don’t create jobs or generate wealth.

Many people are hoping for more. Both middle class people looking for work, and activists looking for something to fight for.

The House of Representatives started the ball rolling with a $154 billion jobs bill in December, with half the money coming from TARP. At a minimum, Obama could help push this bill through the Senate.

More robust economic packages are out there, on the shelf, ready to be used. The AFL-CIO jobs plan puts people to work rebuilding our crumbling roads and bridges, and laying new track for high speed rail. It covers the basics like aid to the states so they don’t have to lay off teachers and fire fighters

The Economic Policy Institute offers a similar plan with greater detail. Rebuilding our infrastructure and offering public service jobs when the private sector fails, EPI estimates the plan will create over 4.6 million jobs in the first year, at a gross cost of roughly $400 billion. The entire cost would be recouped within ten years by a financial transactions tax, which would take effect three years after enactment.

We need our president to take the lead and show us the way. Times are tough. It’s no time to compromise and settle for less. Obama needs to recapture the fighting spirit of the 2008 campaign.

The hole we’re in was many years getting dug. Unfunded wars and supply side tax cuts created trillion dollar deficits. Conservative deregulation turned our banks into gambling houses and crashed the whole economy. Many years will be needed to dig our way out. The Recovery Act was one small step in the right direction.

Put people to work building those wind turbines, fixing our leaky old schools and laying new railroad tracks with steel made in America. Solve our deficit the American way, by investing in a dynamic, growing economy of the future. Not with small, Clintonian mini-initiatives.

The White House shared those proposals in advance as a preview. In case it matters, that’s what I saw.

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Eric Lotke is the author of  2044, a novel describing a world of consolidated multi-national corporations, mass produced culture and too much stuff.

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This piece originally appeared at the Campaign for America’s Future.

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  Dean Baker

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

When Congress debated the TARP last fall, the political elites insisted that the bill must be passed immediately or the economy would collapse. For example, Federal Reserve Board President Ben Bernanke told Congress that the commercial paper market was shutting down, which meant that the country’s largest companies would soon be unable to meet their payrolls and pay other bills. (He neglected to mention that the Fed could single-handedly support the commercial paper market by directly buying commercial paper. Bernanke took steps to begin purchasing commercial paper the weekend after Congress voted.)

Under this pressure, Congress didn’t take the time to ensure that the country would share in the upside from bailing out the banks. It didn’t put in restrictions that ensured that bank executives would not get huge bonuses as the economy continued to sink. Nor did it impose any conditions that would curb the speculative excesses that fueled the bubble and led to the disaster.

The political elites said that the banks needed the money right away, and Congress buckled under the pressure. After all, no one wants to be responsible for the collapsing the economy. So, the banks got the blank check they needed to ensure that they would be largely protected from economic maelstrom that they had created.

Since the TARP escapade worked so well, the Wall Street gang is now trying another round of hostage taking, possibly for even bigger stakes. This time the plan is go after Social Security and Medicare. The Wall Street crew knows that members of Congress are not likely to vote to gut these two hugely popular programs under normal circumstances. These programs are essential to the economic well being of tens of millions of retirees, disabled workers, and their families. In fact, these programs are now more important than ever, since the collapse of the housing bubble has destroyed most of the savings of middle-income families.

Under normal circumstances, members of Congress who voted to cut these programs would be looking to an early retirement: hence the hostage-taking route. The plan is to hold up legislation for raising the debt ceiling unless a provision is included for establishing a commission for the purpose of cutting future deficits. This commission in turn would be stacked with people who want to cut Social Security and Medicare.

The bill also provides that the commission’s report to Congress would be fast-tracked so that it would not be subject to normal procedures. It would not be subject to the same debate or amendment process as other bills. Finally, the commission would issue its report after the November 2010 election, with a vote required before the end of the year. This means that people who were just voted out of office would be able to decide the future of Social Security and Medicare.

The lead culprits in this venture are Senators Kent Conrad and Judd Gregg. The latter is best known for his brief stint as President Obama’s Commerce Secretary designate before he realized this his deeply-held convictions required him to decline the position that he had previously sought. Another leading proponent of this measure is the foundation financed by Peter Peterson, the Commerce Secretary under Richard Nixon who is best known for pocketing tens of millions of dollars through the investment fund manager’s tax break.

The country got suckered by the hostage-taking tactics used to pass the TARP. But, we don’t have to get fooled again. It would be disastrous to create a situation in which the country could not legally finance its debt, but the Peter Peterson Wall Street gang stands to lose much more in this story than the rest of us. If they want to put a gun to their head and threaten to pull the trigger, we should tell them to go ahead and shoot.

We have an elected Congress. If Peterson, Conrad and Gregg want to bring their ideas to be debated, we have the forum. If they have problem with democracy; they can look for a dictatorship somewhere.

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Dean Baker is the author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy” as well as the books “The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer” and “False Profits: Recovering from the Bubble Economy.”

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This piece was first published on Huffington Post.

Liz Shuler

By Liz Shuler
AFL-CIO Secretary-Treasurer

 As newly elected secretary-treasurer of the AFL-CIO, I traveled the country this fall, talking with workers and hearing their concerns. The economic crisis is causing a lot of pain. So many people have no jobs, no health care–and many are losing their homes. And as I looked into the faces of young workers, the reality hit home that these young people are part of the first generation in recent history likely to be worse off than their parents.

This is a tragedy.

The AFL-CIO and our community affiliate, Working America, recently surveyed young workers–and I’m not talking about 17- and 18-year-olds. I’m talking about 18- to 34-year-olds. In the past 10 years, young workers have suffered disproportionately from the downturn in the economy:

• One in three young workers is worried about being able to find a job–let alone a full-time job with benefits.
• Only 31 percent make enough money to cover their bills and put some aside–that is 22 percentage points worse than it was 10 years ago.
• Nearly half worry about having more debt than they can handle.
• One in three still lives at home with parents.

Young workers are living the effects of a 30-year campaign to create a low-wage workforce. It has succeeded.

For decades, the far right led an anti-government, anti-investment, feed-the-rich-and-starve-the-poor drive that gave us an era of deregulation, privatization and job exporting.

At the same time, corporations and government attacked unions and workers’ freedom to form unions and bargain for decent wages and benefits. When unions are strong, paychecks grow and workers have benefits like health care and pensions.

When unions are under attack, paychecks shrink. Pensions vanish. Health care becomes the emergency room.

What’s left is not working for young people–or for any of us. It will take a broadly shared sense of wartime urgency to replace today’s low-wage economy with a high-wage, high-skills economy. The first step must be immediate action to address the nation’s jobs crisis, with five essential steps:

1. Extend the lifeline for jobless workers.
2. Rebuild America’s schools, roads and energy systems and invest in green technology and green jobs.
3. Increase aid to state and local governments to maintain vital services.
4. Fund jobs in our communities.
5. Put TARP funds to work for Main Street with job-creating loans to small businesses.

We took these initiatives to the White House Summit on Jobs on Dec. 3 and are pushing Congress to take action now. The first reports from the Jobs Summit are encouraging, and we look forward to working with the Obama administration and Congress to carry on this momentum.

It’s time to rebuild an economy that works–an economy based on prosperity, an economy we can be proud to pass on to our children and their children. And we need young people to lead the way. That survey I mentioned earlier shows they are ready.

· Young workers have a whole new level of civic engagement, with the surge of new voters in the 2008 election.
· They are well-informed and following government and policy news.
· They believe in collective action and understand the power of having a union.
· They have hope for the future and the vision of a savvy, diverse movement to bring about progressive change.

We’re planning a major summit for young workers after the first of the year to bring all our ideas and voices together. When crises hit, it’s young people who drive change.
Martin Luther King Jr. was 26 when he led the Montgomery bus boycott. At 25, César Chávez was registering Mexican Americans to vote. Walter Reuther headed strikes demanding GM recognize its workers’ rights starting when he was 30. Elizabeth Cady Stanton was 33 when she drafted the declaration of women’s rights.

Young people are being hard in this jobs crisis. But I believe they provide much of the fuel we need to get out of it.

Richard Trumka

By Richard Trumka
President, AFL-CIO

We’ve got a jobs crisis in this country, and we need to fix it–now!

This fact shouldn’t come as a surprise–in fact, a look around our nation makes it painfully obvious. The “official” unemployment rate is 10.2 percent–that’s one in every 10 workers without a job–but that doesn’t include the millions who have been unemployed and discouraged in the long term, and the millions more who are barely getting by with part-time work.

While millions go without work, some people are talking about “recovery”–as though numbers on Wall Street or profits at the big banks are the same as the real economy for working families. Wrong. We’re still in crisis–and if we don’t create jobs now, we will slide even further.

We have to put America to work–at good jobs that support families. We’ve tried out the everything-must-go, trickle-down, bubble economy for the past decade, and it’s been a disaster. If we’re really going to have a recovery–not just a recovery on Wall Street or for the big banks, but for real people–we absolutely must create new jobs.

Last summer at an event in Ohio, I met a young woman who is facing this crisis head-on. Lacey, who is not yet 20 years old, wants to become a teacher. But after her dad’s factory closed and he was laid off, she had to put off her hopes of attending college to help her parents keep a roof over their heads. Lacey took a job in a school cafeteria–until the state budget got cut, and she got laid off, too. After months in which she and her father were both searching for jobs, Lacey said she felt lucky to find a part-time, fast-food job that pays half of what the cafeteria paid. Lacey has more unemployed friends than friends with jobs, and, like a third of workers her age, she’s still living with her parents. Here’s what Lacey said to me that day:

I wanted to be a teacher to help children get the education they need to get ahead. But now I feel like I’m just going backward myself. I’m really scared for the kids my age. We want to work. We need jobs.

We owe Lacey our support. We owe Lacey and millions like her a future to be hopeful about–not one to be feared. Lacey and her generation could find their future permanently stunted, their potential never fully met. That’s unacceptable. We can’t afford to let that happen.

The recovery package passed by Congress this year was a major accomplishment, and it saved our country a million jobs, but it only takes us part of the way toward repairing the damage done to our economy. We need serious, active investment in job creation. Our economy has lost more than 8 million jobs since the recession began in December 2007–that’s a big hole to fill.

What does our jobs agenda look like? It’s based on five key points that will give working families the help they need now and set us on a better course in the long term. Congress and the Obama administration must take these steps to turn around our dangerous slide.

1. We must extend the lifeline for jobless workers. The families who have been hit by this economic crisis are at risk of losing unemployment benefits, food assistance and health care benefits at the end of the year. We need to act now to prevent the human suffering and economic damage that would result.
2. Rebuild America’s schools, roads and energy systems. We must put people to work to fix our nation’s broken-down school buildings and invest in transportation, green technology, energy efficiency and more.
3. Increase aid to state and local governments to maintain vital services. State and local governments and school districts have a178 billion budget shortfall this year alone–while the recession creates greater need for their services. States and communities must get help to maintain critical frontline services, prevent massive job cuts and avoid deep damage to education just when our children need it most.
4. Fund jobs in our communities. While workers go without jobs, important work is left undone in our communities. These are not replacements for existing public jobs. They must pay competitive wages and should target distressed communities.
5. Put TARP funds to work for Main Street. The bank bailout helped Wall Street, not Main Street. We should put some of the billions of dollars in leftover Troubled Asset Relief Program funds to work creating jobs by enabling community banks to lend money to small- and medium-size businesses. If small businesses can get credit, they will create jobs. The administration can act on this immediately.

Families like Lacey’s are hurting, and they need support. Millions are losing not only their jobs but also their homes, their health care and their hope. We can’t afford to do nothing–America’s working families are demanding action now and we intend to fight for them. We’ll work with businesses, government and community organizations to make a jobs agenda a reality. We’ll call out and fight back against those who would block progress, and we’ll work hard to support leaders who do the right thing.

We need jobs now.

David Sirota

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

I wrote a newspaper column this week noting the rank hypocrisy in political and media circles when it comes to their supposed concerns about the deficit. I noted that Tea Party protesters are among the biggest hypocrites – and chief among them is political terrorist Glenn Beck, because, as you’ll see, the truth is the bailout is the Beck Bank Bailout.

As Frank Rich notes, Beck has been promoting himself not only as a racist culture warrior, but as an economic populist who rails on government giveaways to Wall Street. In that sense, he’s sort of trying to be a neo-Buchananite…except, there’s just one problem with his economic argument: Glenn Beck championed the Wall Street bailout he claims to be leading the fight against. In fact, when progressives were fighting tooth and nail against the bailout (and taking significant criticism for doing so) Beck was promoting it, offering criticism only for it not being bigger:

“I think the bailout is the right thing do. The “REAL STORY” is the $700 billion that you’re hearing about now is not only, I believe, necessary, it is also not nearly enough, and all of the weasels in Washington know it.” – Glenn Beck, CNN, 9/22/08

That’s right – this is the Beck Bank Bailout. So the next time you hear Glenn Beck railing on government spending and corporate giveaways and the failure to crack down on Wall Street largesse, remember – Glenn Beck is railing on the very largesse that Glenn Beck intensely promoted and supported on the national Glenn Beck television show.

(huge h/t to Jenkins Ear and ThinkProgress)

NOTE: Beck sometimes calls the stimulus bill a “bailout” – but let’s be clear: As you can see from the transcript, he’s referring not to the stimulus bill, but to the TARP bailout that he now rails on.

UPDATE: Time magazine, and its reporter David Von Drehle, just published a cover story puff piece on Beck. The fact that the magazine devoted substantial resources to such a piece – and didn’t bother to even mention this central hypocrisy of Beck – is not only an absolute embarrassment, it shows exactly why journalism is in a severe crisis.

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David Sirota is the bestselling author of the books “Hostile Takeover” (2006) and “The Uprising” (2008). Find his blog at OpenLeft.com or e-mail him at ds@davidsirota.com

Michael Hiltzik

Watching people desperately trying to hang on to their little all following a disaster is an experience, as Aristotle would have appreciated, certain to excite pity and terror in the human breast.

If only we didn’t have to spend so much time these days watching bankers and corporate executives do it.

Every day seems to present yet another example of the disjunction between the financial community’s sense of entitlement and the real world occupied by everybody else.

The other day, the inspector general for the government’s financial bailout program, known as TARP, revealed that Chrysler’s lending arm requested $750 million in new money but was turned down because its top 25 executives wouldn’t all agree to the compensation limits TARP requires.

That’s after the government had already given Chrysler Financial $1.5 billion. (Chrysler says, for its part, that it decided it didn’t need the additional money after all. Nothing to do with the pay caps, it says. But of the original $1.5 billion, so far it has repaid only $3.5 million.)

Meanwhile, a passel of Wall Street professionals unburdened themselves to New York magazine about the punitive cuts in pay and bonuses they’re suffering — imposed, to their minds, by jealous people less talented and successful than they.  More

This column was first published April 23, 2009 in the Los Angeles Times.