Super Committee Out Of The Way -- Now Back To Reality?

By Dave Johnson, cross-posted from Campaign for America's Future

Let's hope that the failure of the "super committee" quest to take money out of the economy clears the media mist for a minute, so people can focus on real issues that matter to real people. What are the chances of that? Will our government now focus on creating jobs, reducing inequality, fighting climate change, providing health care, increasing justice, balancing trade, increasing education, enabling small business to compete against the multinational?

Real Issues

People are in the streets across the country, demanding that the government start addressing real issues that matter to real people. But the increasingly irrelevant Congress has instead focused on things like blocking the government from making school lunches more nutritious.

Create Jobs

We have millions of people out of work. And we have millions of jobs that we have been putting off getting done.

And, guess what, as of today we can get the money to hire those millions of people to do those millions of need-to-get-done jobs for the lowest cost in history. That's right, the US government can borrow money at the lowest rates ever. Marketwatch: U.S. sells 5-year debt at record-low yield,

The Treasury Department sold $35 billion in 5-year notes on Tuesday at a yield of 0.937%, the lowest level on record and below where traders expected the sale to come.

That just puts the lie to any claim that the world is concerned about our deficits, and that we "don't have the money" to spend on maintaining and modernizing our infrastructure. "The markets" are so confident in the US that they are offering to lend money at the lowest rate ever.

Climate

Maybe it isn't in the news like it was, but the problem of global warming and resulting climate change is just getting worse and worse, and may be reaching the "tipping point." AP: Greenhouse gases soar; no signs warming is slowed,

Heat-trapping greenhouse gases in the atmosphere are building up so high, so fast, that some scientists now think the world can no longer limit global warming to the level world leaders have agreed upon as safe.
New figures from the U.N. weather agency Monday showed that the three biggest greenhouse gases not only reached record levels last year but were increasing at an ever-faster rate, despite efforts by many countries to reduce emissions.

Did you get that? It turns out that the worst-case scenarios we heard about, back when we were hearing about it, were not as bad as what it turns out is really happening. The operative words here: really happening.

That is reality. So where is the government? Where is the media?

Captured

Why can't we get anything done for the people of the country anymore? Because our Congress and government is almost completely "captured." Watch this segment of 60 Minutes, in which convicted Congress-briber Jack Abramoff explains how it's done, Jack Abramoff: The lobbyist's playbook - 60 Minutes - CBS News

You let a Congressional staffer, or agency regulator, or even a member of Congress know that there is a "job" waiting for them later, and you get what you want.

Regular people don't have this kind of money to dangle in front of government and elected officials. It isn't just campaign contributions, it's lucrative jobs after you leave government, that is corrupting our system. It is corporate money, being used to enrich the 1% at the expense of the rest of us. The solution is not just to ban corporate money from our politics, it is to ban the use of corporate money for any purpose other than running the corporation. Otherwise it will just leak out and be used to corrupt the system -- and us.

I'm sounding like a broken record.

Super Committee Headlines You'll Never See

By Richard (RJ) Eskow, cross-posted from Campaign for America's Future

Discussion of the "Super Committee" debacle continues to misguide and misinform the public in an all-too-familiar way. Once again the consensus in the media and among political leaders reflects the misperceptions of an insular Washington culture, rather than the economic or political realities of most Americans.

The Republican and Democratic co-chairs said today that "we end this process united in our belief that the nation's fiscal crisis must be addressed." That's how this exercise in misplaced priorities ends: With a "bipartisan" statement about the urgency of our "fiscal crisis" - deficits - rather than our massive and much more immediate economic crisis of jobs and stagnating wages. And with that, the media onslaught begins. Now we'll see hundreds of new headlines screaming that the Committee "failed."

What we won't see are headlines explaining what really happened: That this failure was inevitable; that it reflects the wishes of most people, Republicans as well as Democrats; that Occupy Wall Street played a large part in the outcome; that Republicans never intended to compromise and Democrats shot themselves in the foot; that this "failure" will be good for most businesses - and for the rest of us too; or that a misguided and right-leaning consensus turned leaders of both parties into cheerleaders for ill-timed budget cuts even as the economy continued to burn down all around them.

Here are seven more accurate - and more eye-catching - headlines you won't see in your major media outlets.

OCCUPY MOVEMENT WINS MAJOR VICTORY
Unpopular 'Supercommittee' Deal Stymied by Popular Opinion
 
Democrats tried. They really tried. They were ready to accept deal points that the polls - and their hearts - should have forced them to refuse: Benefit cuts to Social Security and Medicare. A permanent extension of the Bush tax cuts for the wealthy. A deal that was heavily weighted toward spending cuts, rather than revenues, even during an economic crisis.

They might very well have done it, too, except for one thing: The Occupy movement has changed the subject from the Washington-driven theme of deficits to the economic hardships faced by most people in this country. Sure, the Tea Party is getting credit (yes, I said "credit") for killing a disastrous deal, and it's true that it played an important role.

But so did the Occupy movement. There was talk of occupying Congress, and even occupying the "Super" meeting's meeting space in the now-infamous Room 200. A march and rally is scheduled for tomorrow, and an Occupy group walking from Wall Street to Washington is scheduled to arrive the day after tomorrow.

Democrats who signed on to this deal were going to feel the wrath of the 99%, and there's no way they couldn't have known it. People who have spent the last two years wishing that they had a Tea Party of their own, one that would pressure Dems the way the Tea Party pressures Republicans, can now rest easy. It's here. And it's changing things.

The moral for Democrats? Embrace jobs and growth, not cuts and austerity. You'll thank yourself next November. Some Republicans will probably thank you, too ...


GOP VOTERS HOLD "EXTREME" VIEW OF CUTS - EXTREMELY "LIBERAL," THAT IS
"Left" Anti-Supercommittee Views Supported by Almost 3 Out of 4 Republicans
 
We're already hearing that the unwillingness of some Democrats to sign on to cuts in Social Security and Medicare - the few, the proud, the real Dems - is a sign of "ideological rigidity on the extreme left." Pundits are referring to Senators like Bernie Sanders and Representatives like the members of the House Progressive and African-American Caucuses.

Extreme left? Their position is supported by three out of four voters - Republican voters, that is. A new poll confirms what previous polls have shown: Once voters have these proposed deals explained to them, they hate them.

Nearly three out of voters are against changing Social Security's cost of living adjustment (COLA), as the White House and some Democratic supercommittee members were prepared to do. That includes 70% of Republicans and 78% percent of seniors, who turn out to vote in larger numbers than other age groups.

The next time somebody says these Democrats were being too ideologically rigid, ask them what's wrong with representing the party's rank and file. Especially when that includes other party's rank and file too.

GOP 'COMPROMISE' HOAX SPREAD BY PRESS, PUNDITS
Supposed "compromise" was actually more extreme than ever

It seems almost unkind to point to this piece by Ruth Marcus, who said last week that she was "uncharacteristically optimistic" that the Committee actually would reach a deal. Then we're reminded that she writes for the Washington Post, newspaper for the Federal government's "company town."

Why was Ms. Marcus optimistic? Because, as her headline reads, "Republicans were (making) room for tax increases after all." Why? Because far-right Sen. Pat Toomey and far-right Rep. Jeb Hensaerling were moving away from their "no new taxes" rhetoric and offering, in her words, "a deal that included — gasp! — a net increase in tax revenue from the current level."

She added: "I don’t mean this in a disrespectful way, but pigs are flying here, folks."

Flying? No. Squealing? I wouldn't say that - too disrespectful. But why the enthusiasm from Ms. Marcus? Because, she says, "he once-sacred principle of not raising taxes — any taxes, ever — has been breached."

But it hadn't been. As she herself is fair enough to point out, Republicans were still offering a tax cut, given that Bush's cuts are due to expire. And the deal they offered wasn't a cut for most Americans - only for the wealthiest among us. They were actually proposing another slashing of the high-end rate, which is scheduled to go back to 39+%, down to 28%. In return they were offering "revenues" - by eliminating tax deductions the middle class depends on, especially in these difficult time.

Ms. Marcus and dozens of other commentators have successfully pushed the idea that "both sides were willing to compromise," but were styming by "extremists" in their own party. Not true. Extremists run the Republican Party. And as for the Democrats ...

DEMS DEMAND TO GO ON RECORD AS EAGER TO CUT SOCIAL SECURITY, MEDICARE
Party Leaders Deny Defending Popular Programs, Insist They Were Prepared to Gut Them 
 
There's a great narrative for the Democrats here, if they're willing to take it: We said 'no' to cutting your benefits to protect rich people. Instead they're insisting on making it clear to the American people that they did no such thing. White House Press Secretary Jay Carney said that it was Republican intransigence on taxes, not Democratic willingness to bend on these programs, that scuttled the deal. Combined with Carney's past statements supporting that unpopular COLA cut, that means the Administration is still on record as saying it wasn't prepared to defend these benefit from cuts that the public despises. Instead, Carney bemoaned the GOP's refusal to sign on to a 'grand bargain' that would have done exactly that.

The Democratic supercommittee members were even more flatfooted. "If we fail to do this it will define 2012 going forward," Sen. John Kerry said last week. That's insisting on defining a victory - "We defended your benefits from the party of the rich!" - as failure.

If Dems had any illusions that Republicans wouldn't use this against them, they should already have been dispelled. "“It is another example of failed leadership," said Mitt Romney. "(Obama) has not taken personal responsibility to get the super committee to find ways to balance the budget and cut spending.”

Which gets us to our next headline.

WASHINGTON MOURNS MISSED CHANCE TO ENSURE A 'LOST DECADE'
Leaders lament lost opportunity to create a decade of economic misery 
 
From CNBC: "The austerity measures being rolled out in countries across Europe will have a devastating effect on the living standards of its population, an economist told CNBC Friday.

"These reforms are going to be devastatingly impacting (sic) on the population in these countries. We are looking at a decade of lost living standards across most of Europe."


The economist, James Shugg from Wespace, added that austerity measure, while "part of the solution, will "deepen the downturn." Here's the paradox: They're only "part of the solution" because no one in Washington seems willing to address our real economic problems in a genuine way.

BUSINESS LEADERS CELEBRATE SUPERCOMMITTEE FAILURE
At least they won't make things worse, executives say. 
 
We keep hearing that "business" wants these cuts, but that's only true for the mega-corporations and billionaires that dominate the Washington conversation. What do the other businesses say, the ones that hire people and help to grow the economy?

As Business For Shared Prosperity reports in a new pess release, some of their leaders are celebrating the "defeat."

“Demand drives business, not tax cuts,” said Lew Prince, said the managing partner of a St. Louis music store. “I hire more workers if I think I’ll do more business." Austerity cuts means a stagnating economy. That means people don't buy as much as they once did at Lew Prince's store. And that means fewer jobs.

Frank Knapp, who is the President and CEO of the South Carolina Small Business Chamber of Commerce and Vice Chairman of the American Sustainable Business Council, was even more blunt: “I’m sick of people who wrecked the economy and their defenders in Congress blaming others for killing jobs. The high-end Bush tax cuts are a big part of the problem – not the solution. We need revenue for real job creation and economic renewal, not more job-killing budget cuts, job-killing corporate tax dodging and job-killing millionaires and billionaires not paying their fair share of taxes."

Which gets us to our last headline:

IN SURPRISE DEVELOPMENT, TERRIBLE IDEA NOT WORKING OUT WELL
Pundits, Washington leaders today expressed surprise and dismay at failure of unpopular committee to agree on widely-hated cuts 
 
That's it. No body, just the headline. Some stories just write themselves.

Stopping The Austerity Train Wreck

Robert Reich explains on his website with his usual clarity how "Washington is on another planet" and that whether or not the Super Committee reaches an agreement or not, "Washington is on the road to making budget cuts that will slow the economy, increase unemployment, and impose additional hardship on millions of Americans."

 
 He lists four "super principles" that ought to guide the Super Committee:

FIRST: no cuts before jobs are back – until unemployment is down to 5 percent. Until then, the economy needs a boost, not a cut. Consumers – whose spending is 70 percent of the economy – don’t have the money to boost the economy on their own. Their pay is dropping and they’re losing jobs.

SECOND: Make the boost big enough. 14 million Americans are out of work, and 10 million are working part time who need full-time jobs. The President’s proposed jobs program is a start but it’s tiny relative to what needs to be done. It would create fewer than 2 million jobs. We need a big jobs program – rebuilding America’s crumbling infrastructure, and including a WPA and Civilian Conservation Corps.

THIRD: To pay for this, raise taxes on the super-rich. It’s only fair. Never before has so much income and wealth been concentrated at the very top, and taxes on the top so low. Go back to the 70 percent marginal tax we had before 1980. And include more tax brackets at the top. It doesn’t make sense that any income over $375,000 is taxed at the same 35 percent, even if it’s a billion dollars. And tax all sources of income at the same rate, including capital gains.

FOURTH: Cut the budget where the real bloat is. Military spending and corporate welfare. End weapons systems that don’t work and stop wars we shouldn’t be fighting to begin with, and we save over $300 billion a year. Cut corporate welfare – subsidies and special tax breaks going to big agribusiness, big oil, big pharma, and big insurance – and we save another $100 billion. 

 Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

Where's The Middle?

Dead Armadillo

As the right keeps moving right, the mainstream media keeps trying to find the center.  The rules of the game require that we have two opposing camps with reasonable solutions to be found in the middle.  All we need is a little bipartisanship and compromise and everything will be alright.

This means blaming "Congress" as a whole, ignoring that one side is too willing to compromise and the other refuses to budge.  It has led pundits like Thomas Friedman to chastise President Obama for not seeking policies he has clearly sought, and tiresome pleas for a Third Party, which advocates for exactly what Obama and centrist Democrats are hoping to achieve.

Greg Sargent puts it this way:

Self-styled “centrist” columnists have a perennial problem on their hands. They have built reputations by calling for middle-of-the-road solutions to our problems. Yet they can’t acknowledge that Obama and Democrats are the ones who are offering solutions that are genuinely centrist, because that would constitute “taking sides.” This would imperil their “brand,” which rests heavily on transcending partisanship, and on their ongoing insistence that the future depends on following a middle ground between the parties.

 Today, Paul Krugman writes that the Republicans will not pay any political price for its intransigence when the Super Committee fails because the news media won't point out that only one side refused to compromise.  In a not-so-veiled swipe at Friedman, Krugman makes the point perfectly:

Oh, and let me give a special shout-out to “centrist” pundits who won’t admit that President Obama has already given them what they want. The dialogue seems to go like this. Pundit: “Why won’t the president come out for a mix of spending cuts and tax hikes?” Mr. Obama: “I support a mix of spending cuts and tax hikes.” Pundit: “Why won’t the president come out for a mix of spending cuts and tax hikes?”
You see, admitting that one side is willing to make concessions, while the other isn’t, would tarnish one’s centrist credentials. And the result is that the G.O.P. pays no price for refusing to give an inch.

Occupy Needs To Just Say No To The Super Committee

by Fuzzyone

I have been thinking a lot about the Occupy Movement and its potential to move the larger political debate lately, but I have been having a difficult time crystallizing those thoughts into a form coherent enough to write down (and whether I have managed to do so here is an open question).  A couple of recent posts here at Fair and Unbalanced have helped me out.  First, there was the excellent testimony of Robert Borosage at the Congressional Progressive Caucus's hearing on jobs.  He lays out the problems we face, why the ideas coming out of the Super Committee are bad, and what we need to do.  His main proposal is the passage of the People's Budget, something I have talked about before (but which, lets face it, is not going to happen).  Then there was this morning's post by lovechilde on the Occupy Movement at two months.

I think that the problems that lovechilde talks about are very real.  I live in Oakland and have been involved in and listening to conversations about the Occupy Movement since it began, and particularly since the first, violent eviction of the occupiers in Oakland.  Some of those conversations have been with people who are sympathetic to the movement but put off by the tactics, not only the violence of the very small number of idiots but also the negative impact on small business and the cost to a city that is already in a dire financial situation.  One of the things I found particularly interesting was the different take that the members of two local list-serves have on the movement.  One, a neighborhood list which is mostly focused on crime prevention and neighborhood watch in one of the more affluent neighborhoods in Oakland, mostly anti-Occupy.  The posts ranged from sympathy for ends but dislike of means to full on Fox crazy talk of, I kid you not, Bolshevik revolution.  The other is an Oakland Public School Parents list where there is almost universal approval of the movement (with a few concerns expressed about tactics) especially because of its support for those fighting the proposed closure of five Oakland Elementary Schools. 

One of the things that I found most troubling, and that I think emphasizes the challenges the movement faces and that lovechilde discussed, is that even those who were sufficiently well informed to know that the violence comes from a very small minority, and that the majority had attempted to stop it, were still dismissive of the movement in large part because of that.  Another significant source of opposition was the perceived (though there is disagreement about that even among business owners) harm that the movement was doing to small business in a city that is desperate to increase business and investment.

As lovechilde said the Occupy Movement will need to evolve if it is going to continue to have broad appeal and an effect on what happens in this country.  The fact that this is on the mainstream media radar is, I think, a good sign and I think that Occupy can and will continue to be a force.  The problem is that we are quickly running out of time.  The Super Committee deadline is fast approaching and there is every sign that democrats are preparing to surrender once again.  I assume that anyone who has been awake for the Obama Presidency needs no explanation of why that is entirely likely, but if you do you can look here or here.



This is all going to happen very soon, like this week, and it is not clear that the Occupy Movement can have much more impact on the immediate process than it already has.  There are however, two points that the movement, and progressives in general, can focus on.

First, there can be no deal that does not include significant increases in tax revenues focused on increasing the taxes on the wealthiest, especially those who destroyed the economy.  It seems clear that the Republicans are not going to accept anything close to a fair deal on revenues and that leads to point two: Do Nothing.

As E.J. Dionne, among others, have recently argued, the best outcome might be to do nothing.  While the automatic across the board cuts would be bad, they are probably no worse than what a super committee deal that Republicans would endorse.  Moreover, inaction would lead to the end of the Bush tax cuts.  This would, all told, reduce the deficit by $7.1 trillion over ten years.  In addition, a recent CNN poll indicates that the Republicans would get the blame:

The poll indicates that 42% say they would blame the Republicans in Congress, with 32% blaming the Democrats, and another one in five volunteering that they would hold both parties equally responsible.

The danger is that one Democratic defection on the Super Committee, if it leads to something a Republican House would pass, would mean the Democrats would have to block the deal in the Senate, which would likely change the public opinion picture.  That is why it is so important to focus on the idea that no deal is better than a bad deal and to avoid Republican traps, like the proposal to leave the details of tax increases for later (we know how that will work out).

By inserting into the debate the issues of income inequality and the responsibility of the rich, especially those in the financial industry (who by the way are, unlike anarchists, free to loot and pillage without fear of retribution), for our current financial difficulties the Occupy Movement has created at least the possibility that Democrats will not fold this time.  And then maybe we can talk about this country's urgent and immediate problem: Jobs.

The Super Committee Must Fail

Donkey Hotey

Robert Borosage has long been a leading voice for progressive politics in the United States. He is the founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future, vital organizations which develop policies, message and issue campaigns to help forge an enduring majority for progressive change.  The following is prepared testimony from Borosage delivered today to the Congressional Progressive Caucus's Hearing on Jobs, cross-posted from Campaign for America's Future.

I thank the Congressional Progressive Caucus for holding this hearing. I am honored by the invitation to participate. I want to the salute the CPC, and its co-chairs Rep. Keith Ellison and Rep. Raul Grijalva, for being a voice of reason in a Congress and a Capitol that has lost its way. Your leadership – from the People’s Budget, to this summer remarkable Jobs Tour, to the “Rebuild the American Dream” Jobs Framework that you have championed – has provided Americans with a clear way out of the mess that we are in. And now, as we head towards what is a foolish debate about the potential recommendations of the Super Committee, that misbegotten offspring of the calamitous debt ceiling deal this summer, your leadership and your voice are more important than ever.

Today, I want to speak candidly about the situation this nation faces. Tomorrow, tens of thousands of Americans across this country will demonstrate to demand jobs, not cuts, from the Congress. They demand action on jobs, and opposition to cuts in Social Security, Medicare, Medicaid and services vital to Americans. These demonstrators represent the 99%. As poll after poll has shown, they give voice to the priorities of the vast majorities of Americans. Authorities can remove Occupy Wall Street from Liberty Park, but they cannot silence an idea whose time has come. And this Congress should take heed.

Let me lay out the case clearly and make three points. 1. For this nation to succeed, the Super Committee must fail. 2. It is time to put people to work. 3. Shared Sacrifice is for suckers.


1. The Super Committee Must Fail

If a drunken bus driver were careening down the wrong road that leads directly off a steep cliff, we would want him to fail to get where he is going. That is exactly the case with the Super Committee. They are headed down the wrong road and it will be ruinous if they succeed in getting where they are going.

This is a nation with 26 million people in need of full-time work. Wages are not keeping up with prices. Poverty, now at record levels, is spreading. One in five homes with a mortgage is underwater. Companies are sitting on trillions in profits waiting for customers. Over the past eleven years, we have added 30 million more people and lost 1.8 million private sector jobs.

And next year, an economy that is barely growing will be hit with severe shocks. The boost provided by recovery act spending will come to an end. If unemployment insurance and the payroll tax cut are also not renewed, JPMorgan Chase analysts project that will cut growth by 1.5 to 2%. More and more mortgages in arrears will face foreclosure, with ruinous effect on their neighbors. Even if the Euro somehow survives, Europe is headed back into recession, with knock-off effects on our exposed banks and investment houses and on export markets.

We should be having a fierce argument about how to put people to work and get this economy going. Republicans should be demanding tax cuts, Democrats public investment and jobs programs. Instead the Super Committee is peddling austerity, pushing Republicans to accept tax hikes (or at least pretend to accept them) and Democrats to embrace cuts in Social Security and Medicare. This is grand folly.

The best deficit reduction plan is to put people back to work. In fact, America does not have a short-term debt problem. If we have a recovery, then our deficits will come down to manageable levels by the end of the decade. If we don’t have a recovery, then austerity will simply make things worse – forcing more workers onto food stamps and unemployment insurance, and lowering revenues.

We see the effects of austerity in Europe. The European Commission now predicts that Europe’s economy will “stagnate well into 2012” and threatens a “deep and prolonged recession.” In Greece, severe budget cuts have combined with economic recession to constrict GDP by 5.5% this year, with unemployment soaring. In Portugal, austerity cuts led the government to project the economy will shrink there by 5%. And, as Sprach Analyst and other global economic firms note, “the slower the growth, the harder the European debt crisis will be to resolve. Government austerity is actually making matters worse.”

We need a sizable, sustained and serious jobs program now. And we cannot turn to austerity, to getting our books in order, until we put people back to work. If the Super Committee were to be useful, it would report out – with its expedited voting powers – a bold and sustained jobs proposal, combining increases in spending – on infrastructure, on direct public jobs programs, on aid to states and localities, on mortgage relief for homeowners – with cuts in taxes to enlist Republicans. It would then make the trigger for any turn to austerity not an arbitrary date, but when Americans are going back to work, and unemployment is down to 4 or 5%.

Instead what we have is Washington’s version of an old Steve Martin routine. “I can tell you,” he used to say, “how to make a million dollars and not pay taxes. First, assume a million dollars, then don’t pay taxes.” The Super Committee says it can tell us how to recover and reduce deficits without paying much in taxes. First, assume a recovery.

But we can’t assume a recovery that is not taking place. First, stop going down a road that leads over a cliff. And start putting people to work.

2. Put People To Work

We know how to put people to work in a recession. The CPC “Rebuild the American Dream” Jobs Framework details the basic elements. The People’s Budget shows that the country can afford to do it – indeed can’t afford not to do it. Let me focus on a couple of elements of this agenda.

First, it is bizarre that those who claim we should let markets rule then choose to ignore what markets are saying. We will never have a better opportunity to rebuild America than we have right now. The need to renovate America’s decrepit and outmoded infrastructure is apparent. It is now dangerous to our lives and costly to our economy. Across the country, the construction industry is idle, with millions of skilled and unskilled workers ready to work. Work to be done and people to do it. And at this moment, investors across the world are, in essence, paying the US to allow them to store their money in our bonds. They are paying us to borrow money from them. Anyone with any business sense would jump at this alternative. We should be borrowing money, essentially for free, in large amounts to rebuild this country and put people to work.

Second, youth unemployment in this country for those aged 16-19 is at the same level it was in Egypt when the Arab Spring erupted. For the first time in half century, a majority of young people from 16-24 is not working. We have a generation of veterans returning from wars, students graduating from high school that can’t find jobs. This crushes hopes and destroys self-confidence. We’re witnessing 18 suicide attempts among veterans a day. No nation can afford to write off a generation. We should make government the employer of last resort for every person under 25. Create urban and green corps; subsidize small businesses and non-profits to put people to work. Let’s have this debate across the country.

Third, the other elements of the CPC Jobs Framework – a manufacturing strategy based on making it America, transforming our trade and industrial policies, a commitment to taking a lead in the green industrial revolution that is sweeping the world, an investment agenda in education and training to insure that our people are the best trained in the world – are vital to building a new foundation for growth and shared prosperity. The stark reality is that we can’t go back to the old economy and should not want to. That economy was not working for most Americans. The top 1% captured all of the rewards of growth over the last decade, while the typical household lost ground. It was built on bubbles and debt and unsustainable trade imbalances. I salute the CPC for demanding a new strategy for growth, not simply a short-term stimulus that cannot work
.
3. Shared Sacrifice is for Suckers

Once the economy recovers and people go back to work, it will then be time to face our long-term debt challenge, and get our accounts in order. Here too, however, the Super Committee is headed down the wrong road.

Republicans have argued that we should balance our budget with spending cuts only – calling for dismantling Medicare, cutting Medicaid and Social Security, and exacting deep cuts in everything from education to child nutrition. Democrats have called for “shared sacrifice,” offering to trade cuts in Medicare and Social Security for tax increases on the rich.

But, when the rewards of growth are not shared, shared sacrifice is for suckers. The reality is that we face a huge mess because Wall Street went on a wilding that blew up the economy. Most Americans weren’t even invited to the party. Now under the banner of shared sacrifice, they are being asked to clean up the mess. Bull. Send the bill to those who had the party. And in fact, seniors and savers and homeowners are already paying a steep price for Wall Street’s excesses, as the policies of the Treasury Department and the Federal Reserve -- focusing on propping up otherwise insolvent banks – has resulted in seniors getting low returns on their savings, homeowners getting no relief on their mortgages, and taxpayers paying the price of the economic ruin left by the banks.

To then suggest that the most vulnerable in the society “share in the sacrifice” or pay more to clean up the mess is an insult.

Worse, it gets our long-term debt problem wrong. We need to hike taxes on the wealthy and on Wall Street to help pay for the mess they created and to provide the funds, once people are back to work, to continue investing in America.

But our long-term debt problem is not a spending problem or a tax problem. It is the product of a broken health care system. We pay nearly twice per capita what the rest of the industrial world pays on health care, with worse results. If we paid simply the average per capita of the industrial world, we would project surpluses in our long-term projections.

Cutting Medicare -- raising the eligibility age as some Democrats have proposed, dismantling it and turning into a voucher as Republicans have suggested -- does nothing for the soaring costs of our health care system. It simply pushes more of those costs on to those least able to afford them -- the elderly, the poor, the disabled.

The cure to our long-term budget problem is to get health care costs under control. That requires taking on the drug companies, the insurance companies and the private hospital complexes that drive prices. Obama’s health care plan is a first step down that road. A public option and negotiating bulk savings on prescription drugs would save even more. The Veteran’s Administration has modeled other savings, in electronic records and more. Medicare for all is where we will eventually end up.

But whatever the solution, no one should be confused about the problem. It isn’t out of control spending. It isn’t greedy seniors, generational warfare, or an “entitlements crisis.” It is a broken health care system, a service that every other industrial country has handled better than we have. Don’t ask the vulnerable to pay more of the out of control costs. Get the costs under control.

You can’t get the right answer if you aren’t asking the right question. At this point, the Super Committee is asking all the wrong questions, and coming up with all the wrong answers. I urge the Progressive Caucus members to do whatever they can to insure that it fails in its effort to drive this economy back over a cliff.

Super Collusion: Will Obama and The Democrats Betray The Middle Class, Seniors And The Poor?

By Richard (RJ) Eskow, cross-posted from Campaign for America's Future

Two new reports suggest that the President and Congressional Democrats are about to betray everything Democrats once stood for. Under pressure from Barack Obama, Democrats on the "Super Committee" have sketched out an appalling "compromise" proposal that would almost certainly doom both their 2012 electoral chances and his own.

They'd have it coming. Their draft plan literally takes crutches away from poor people to protect tax breaks for the wealthy.

Unfortunately, middle class and impoverished Americans would suffer much more than they would. Career politicians can always look forward to comfortable sinecures from the wealthy interests who will benefit from their proposal. But the rest of us would once again be punished for the excesses of the rich, then left to the untender mercies of our new Republican leaders.

That, and not the fate of a President or a party, would be the real tragedy.

Pain Threshold

The President's actively pressuring Super Committee members from both parties to come up with a budget-slashing deal, according to a report in today's Washington Post. In addition, Obama is also urging them not to cancel the automatic $1.2 trillion in cuts that would be triggered under current law if they fail to make an agreement.

Another story, from the Huffington Post's Sam Stein, gave details on the Democrats' latest proposed "compromise." These two stories paint the picture of a President and a party who are willing to keep taxes low for the wealthy, and who would pay for it by proposing cuts that punish seniors, doctors and the poor.

Why? So they can say they "successfully governed" with extremist Republicans? To please international markets that, in reality, couldn't care less? So the President can campaign as "above left and right," as if differences in principle are a bad thing? Because they've been spiritually suffocated by the cultural norms of Washington's insular culture?

There are more questions than answers. Here's one more: With Democrats like this, who needs Republicans?


Low rates for the wealthy

Stein reports that the Democratic proposal would keep tax rates for the wealthiest Americans at the historically low Bush-cut rate of 35 percent to please the GOP. (That rate was 91 percent under Eisenhower, 50 percent at the start of Reagan's term, and 39 percent under Clinton.) The very wealthiest among us would continue to savor these unusually low tax rates to sweeten the fruits of ever-increasing wealth inequity.

The Dems would also accept the principle of "corporate tax reform to enhance competitiveness," which sounds a lot like a bid for lower tax rates for corporations. That would be offset by reductions in overly indulgent tax breaks, such as those that apply to corporate jets. But corporations would still retain expensive accountants and even more expensive lobbyists. I'll bet you a big chunk of your future Medicare benefits how that would turn out.

Oh, wait. These Democrats are already placing that bet. We'll get to that shortly.

Those are the breaks

The party's internal discussion document includes "triggers" that would take effect if Congress can't cut these deductions itself. One of those triggers is described as "a Feldstein-type limitation on itemized deductions for higher income taxpayers." They're referring to Martin S. Feldstein, the former Reagan advisor who wants to eliminate tax breaks for solar panels or electric cars. More significantly, Feldstein also wants to cap tax deductions at 2 percent of income -- for everyone.

Feldstein's op-ed in the New York Times explained that " Taxpayers with incomes of $25,000 to $50,000 would pay about $1,000 more in taxes; those with incomes of more than $500,000 might pay $40,000 more." In other words, the poor must pay part of the bill for the excesses of the rich.

To be sure, the Democratic proposal says it would target "higher income taxpayers," which is not Feldstein's plan. But who'll have better lobbyists when those tax exemptions are being defined -- the rich and the corporations, or the middle class? And we learned what conservatives mean by "higher income" when the Concord Coalition suggested that anyone earning over $20,000 per year should be targeted for Social Security means testing when they retire.

That's the kind of person the Dems would be dealing with in their detailed tax negotiations.
Here's more thing these Democrats should understand and explain: Tax breaks for items like solar power or electric cars are a good thing. They serve the public interest, which is what public policy is supposed to do. They reduce our dependence on foreign oil, protect our environment, and improve public health. That saves us money, too.

The unkindest cuts of all

The Democratic proposal also includes cuts of $250 billion to providers under Medicare. Unless they're very well designed (they won't be), that will mean problems with access to doctors and adequacy of care.

There's also a cut of $100 billion in benefits for seniors. That would affect every single person in the United States who reaches retirement age, along with those who become disabled.
Depending on how those "Feldstein tax increases" were structured, many retired Americans could see their Medicare benefits reduced -- and lose a tax deduction for paying those costs out of their own pockets.

There would also be cuts to Medicaid's prevention and public health trust fund, one of the most "Democratic" aspects of last year's health care bill. So the proposal would subvert one of the provisions in the law they just passed. This cut doesn't just target the vulnerable. It's also economically foolish, since it cuts programs that can prevent costlier illnesses later on. And the Democrats would also cut $5 billion for Medicaid's "DME," which presumably means "durable medical equipment" like crutches and wheelchairs.

It looks like Democrats will literally propose taking wheelchairs away from poor people so we can keep tax rates low for the wealthy.

Tone Deaf

The White House issued a stunningly inappropriate statement about the Committee, saying the automatic "trigger" cuts the President's defending were "agreed to by both parties to ensure there was a meaningful enforcement mechanism to force a result from the Committee." The statement went on to say:

"Congress must not shirk its responsibilities. The American people deserve to have their leaders come together and make the tough choices necessary to live within our means, just as American families do every day in these tough economic times."

That's not merely an economically silly statement, although it's certainly that. The analogy between the U.S. budget and that of a family is fatuous (how many families print their own currency, which is the world's standard?), misleading (even families will invest in their future sometimes), and ruthless (few families would argue that a balanced budget is more important than a wheelchair or crutches for Grandma).

This statement revives the troubling question of whether this White House and this President have lost their moral compass along with their understanding of economics.

It's true that President and Congress should not "shirk their responsibilities" -- to provide jobs for the unemployed and reduce the swelling ranks of the impoverished. It's devastating that the President chose to apply those words to a lopsided, premature, and misguided exercise in austerity economics instead.

The Bottom Line

There comes a time when ethical people have to take a stand, and this is one of them. Democrats must reject the premise behind these negotiations. If they don't it raises serious questions about their party's values, future and social worth.

Today's deficits were caused by wild and reckless tax cuts for the wealthiest among us, along with the cost of two unnecessary wars and the consequences of bank greed and recklessness. It's a terrible mistake to ask the Americans who were wounded most by deficit-causing behavior to carry so much of the cost of fixing it. And to propose cuts to Medicare and Medicaid simply to preserve low tax rates for the wealthy is nothing less than a moral obscenity.

In these dark times, here are the President's and Congress's real and unshirkable responsibilities: To help 25 million un- or under-employed Americans get back on their feet. To stop Wall Street looters from making off with our nation's riches. To restore tax fairness and economic justice. To invest in our crumbling infrastructure. To create economic growth that will fix deficits in the long term. To ensure retirement security for all Americans. To ensure genuine access to health care for all. And to stem the growing tide of poverty.

Maybe these professional politicians are constitutionally hardwired to compromise and deal, and are therefore incapable of recognizing when doing so is to reinforce great wrongs. But if they can't see it, we'll have to show them -- with phone calls, emails and a very clear message about the consequences they'll face next November if they go through with this plan.

This proposal, along with the whole Super Committee process, is a dying gasp from the failed "bipartisan" economic consensus that brought us deregulation, the financial crisis, rampant banker criminality, and inequitable distribution of wealth. It must be discarded with all the other refuse of that cynical, tragical, failed experiment.

Politicians who don't understand that may wind up being discarded, too.

Trigger Happy: Why Deficit Cuts Should Only Happen When Unemployment Reaches 5 Percent

By Robert Reich, cross-posted from his website

On planet Washington, where reducing the federal budget deficit continues to be more important than creating jobs, everyone is talking about “triggers” that automatically go into effect if certain other things don’t happen.

Yet no one is talking about the most obvious trigger of all — no budget cuts until the official level of unemployment falls to 5 percent, its level before the Great Recession.

The biggest trigger on the minds of Washington insiders is $1.2 trillion across-the-board cuts that will automatically occur if Congress’s supercommittee doesn’t come up with at least $1.2 trillion of cuts on its own that Congress agrees to by December 23.

That automatic trigger seems likelier by the day because at this point the odds of an agreement are roughly zero.

Here’s the truly insane thing: The triggered cuts start in 2013, a little over a year from now.

Yet no one in their right mind believes unemployment will be lower than 8 percent by then.

The cuts will come on top of the expiration of extended unemployment benefits, the end of a payroll tax cut, and continuing reductions in state and local budgets — all when American consumers (whose spending is 70 percent of the economy) will still be reeling from declining jobs and wages and plunging home prices. Even if Europe’s debt crisis doesn’t by then threaten a global financial meltdown, this rush toward austerity couldn’t come at a worse time.

In other words, what will really be triggered is a deeper recession and higher unemployment.


Democrats on the supercommittee are acting as if they haven’t met an unemployed person. They’re proposing $2.3 trillion in deficit reductions — half from spending cuts (including $350 billion from Medicare), half from tax increases. To make the tax increases palatable to Republicans, Democrats want to give Congress a chance to find the new revenues by overhauling the tax code. If that effort fails, automatic tax increases would be triggered. The top tax rate won’t rise (another bow to Republicans) but top earners’ itemized deductions will be limited.

Oh, and by the way, under the Democrats’ proposal, spending cuts and tax increases, triggered or not, would start in 2013.

The President (remember him?) is still hawking his $450 billion jobs bill, but he’s having a hard time being heard above the deficit-reduction din — in large part because he himself is simultaneously calling for deficit reduction, and most people outside Washington can’t make sense of how we do both.

The public is confused because they don’t get it’s a matter of sequencing. We need to do more spending now in order to bring back jobs and growth, then do less spending in the future — after the economy is once again generating jobs and growth.

That’s why it make more sense for Democrats to propose a deficit reduction plan that goes into effect only when jobs are back. The trigger should be the rate of unemployment — and a 5 percent rate would signal we’re back on track.

True, the unemployment rate is an imperfect measure of how bad things are (it doesn’t include everyone who’s working part-time but needs a full-time job, and those too discouraged to look for work), but at least it’s a useful way of comparing how much worse or better we are than we’ve been. And it can’t be fiddled with (the Bureau of Labor Statistics guards the calculation like gold in Fort Knox).

Deficit hawks in both parties fear if we put off the spending cuts we’ll never do them. But if we cut now, the ratio of deficit to the total economy just gets worse — because the economy stagnates and the swelling ranks of unemployed don’t pay taxes.

So the best of all worlds is to have a big jobs plan now, and also commit to automatic cuts triggered when unemployment falls to 5 percent.

The hawks should find this acceptable. Reasonable Republicans (if any are left) will, too. Democrats, if they still care about jobs, should lead the way.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

A Super Committee "Failure" Wouldn't Hurt The Economy; But A "Success" Sure Would

By Richard (RJ) Eskow, cross-posted from Campaign for America's Future

An alarmist editorial in today's New York Times urges the Super Committee to reach a deal before their rapidly approaching deadline.  The Times warns that "walking away at this point would be an embarrassment for Congress and a far-reaching blow to Washington’s financial credibility."  As for the first concern, can Congress really be further shamed or embarrassed at this point?  And does it matter?  As for whether the Super Committee's failure would be financially damaging to the country, RJ Eskow writes below that reaching an agreement would be worse.  -- Lovechilde

DonkeyHotey

Some Democrats have come under a lot of criticism lately, much of it deserved, for abandoning popular and important programs that were historically associated with their party. But some of the other Democrats - the ones who are trying to act in the country's best interests - are genuinely concerned about what will happen to the economy if the Super Committee fails to come up with a plan.

This message is for them - and anyone else who has the same concern. You need to know that the evidence is clear: A Super Committee failure won't hurt the economy at all.
But its "success" almost certainly would.

Economic Y2K

Every month it seems as if there's another "bipartisan" process designed to impose austerity on the American people. And every month we're told there will be terrible consequences in the world's markets if it doesn't succeed. These predictions are the economic equivalent of "Y2K" - always apocalyptic, never true, and all too frequently believed.

Democratic officials and staffers are being bombarded by these predictions, delivered by think-tank operatives from their own party who have been steeped in the cult of austerity. It doesn't matter how many times they're refuted by impeccably constructed papers, or by the observations of Nobel Prize winners. And it doesn't matter how many times these predictions are proven wrong.

Some of the experts warning of doom if the "Super Committee" fails said the same thing about last year's Deficit Commission, too. What happened when that "bipartisan" body deadlocked, and the private plan put forward by its co-chairs went nowhere?

Nothing.

Now the same players are telling us the stock market will plummet without a Super Committee plan. They're saying there will be more downgrades of the US government by credit rating "agencies," and that this will bring disastrous consequences. And they're saying that international markets will lose confidence in Treasury bonds.

But recent history teaches us that the exact opposite is likely to happen.


Over-Rated

Here's the story the doomsayers like to tell about credit ratings: Without the committee's cuts, ratings agencies will stop believing that our country has the "political will" to handle its long-term deficit problem. (It must be remembered that these so-called "agencies" are actually for-profit, publicly traded companies whose clients are the very wealthy individuals and banks that benefit from austerity economics.)

Even so, Moody's has already said that it would be "informative, but not decisive" if the committee fails to come up with a plan. As for S&P - Well, it depends on which S&P is speaking today. Just a few weeks before it downgraded the US economy it was saying that it wasn't concerned about deficits for at least three years. That was a pretty good call, since we'll need about two to three years of government investment in jobs and growth to turn this economy around.

So why did they change their mind so suddenly? That's what a lot of people would like to know. Since S&P benefits from a lot of government regulations, Congress would be smart to hold hearings looking into that question. But there's no evidence that a Super Committee failure would lead to downgrades.

Still, what if it does happen? Fortunately, we already know the answer to that.

Summer Stocks

Today the austerity crowd has rewritten history to suggest that markets plunged when S&P issued its inexplicable adowngrade over the summer. But that's not what happened at all. There was a big drop, all right - after the President and John Boehner concluded an austerity deal to end the debt ceiling crisis. It's the first vertical line on this chart:

 The second line marks the "downgrade apocalypse" we'd been hearing about for months - the long-dreaded downgrade, a moment we were told would lead to a plunge in the stock market. What happened the next day? The stock market went up.

Investors know that austerity programs like that deal - and the Super Committee's expected proposals - inflict damage on a nation's economy. So when the last austerity plan passed they did what any sensible investor would do: they sold. They'd already seen how destructive these programs had done to Great Britain's economy.

Austerity economics suppresses hiring and wages. That leaves people with less money to spend and less confidence about spending it. So companies that provide goods or services lose revenue. That makes investors lose confidence in sales and service-driven stocks.

Investors and other business people may be greedy sometimes - but they aren't stupid.

The Name Is "Bonds"

What about the bond markets? Inexplicably, a lot of policy types continue to dread what Paul Krugman calls the "invisible bond vigilantes" and the "cruel bond cult," those ruthless - and mythical - skeptics of the dollar who will drive the value of our bonds into the ground unless we show political resolve by slashing Social Security and Medicare.

Prediction after prediction of bond-market disaster has proven false, yetthe fear remains. Budget expert Stan Collender had it exactly right when he wrote this:

"In spite of the consistent warnings that they were about to unleash the hounds of hell on interest rates, there continues be no sign whatsoever that bond-market vigilantes have returned (or even really exist, for that matter). Quite the opposite might be true: Given the current fragile nature of the economic recovery, the bond and equity markets are just as likely to be spooked by the short-term federal spending reductions and revenue increases the super committee members might recommend ..."

That makes sense. An imploding economy, with unimproved or declining employment and wages, means a loss of tax revenue - along with the possibility of social upheaval and political unpredictability. These "bond vigilante" scare tactics may create exactly the problem they're claiming to prevent.

The Austerians will tell you that these markets won't be satisfied with anything less than the sacrificial blood of America's seniors, even though Social Security doesn't contribute to the deficit, because entitlement cuts have long-lasting effects. But they don't. Benefit cuts are just as reversible as any other spending reduction - and they're much more harmful to the economy.
If you throw Grandma from the train to impress somebody that doesn't exist, you gain nothing. But you're sure gonna tick Grandma off.

Stimulus/Response

Ben Bernanke is a Republican and a traditionally pro-market economist. But he's finally stating clearly that this is not the time to cut spending. Last month he said the economy "is close to faltering," that unemployment continues to be a "national crisis," and that "We need to make sure that the recovery continues and doesn't drop back and that the unemployment rate continues to fall downward."

This week Bernanke added this comment: "While I do not shirk the responsibility of the Fed having to do what it can to meet its mandate, obviously a broad range of policies can affect growth and employment and I hope that there will be a range of actions that will complement and supplement the Federal Reserve's efforts."

In other words: Government, get off the dime and start investing in jobs and growth.

Bernanke's Fed is not the only austerity-minded institution to accept the fact that we need more government spending right now, not less. The IMF, which is usually known for forcing austerity on client nations, has been urging European countries to "adjust their austerity programs to a changed situation and consider measures to drive growth."

IMF head Christine Lagarde also said: "If the United States launches a credible middle-term adjustment program (i.e., stimulus spending), there is possibly room to abandon the short-term austerity measures and to introduce some measures to drive growth."

In other words, don't be in a mad rush to do what the Super Committee is trying to do, which is to impose cuts that begin in 2013. That may sound far away. But the Simpson-Bowles austerity cuts sounded far away, too, when the two men proposed them last year. But if they had been enacted, they would have begun taken effect less than eight weeks from now.

The truth is it's reckless to propose arbitrary dates and dollar-figure targets, as the Super Committee is doing. A smart, balanced deficit program would be designed to take effect after the government has done what's needed to fix today's crisis. And it would not be based on figures that were established years before we knew what the overall economic picture was going to look like.

Failing Up

The other concern that policymakers have is political in nature. Democrats in particular are worried about appearing to have failed if they can't reach a compromise with Republicans, and they're afraid the voters will punish them for it.

That's only possible if they keep insisting that a Super Committee agreement is the only measurement of success. But if they make it clear that they weren't willing to accept destructive, one-sided cuts, the voters will reward them for it. Nothing would be more reckless than to pass a budget-slashing plan based on arbitrary dates and figures in an economy that's this stagnant and in this much danger.

Voters already believe that Obama has been acting in good faith to fix the economy, and that the Republicans are not. If Democrats defend Social Security in the process of saving their government, polls show that voters (including many Republicans) will reward them for it.

The committee's members are being warned that all of them will suffer in any future bids for leadership if the committee "fails" to put forward a plan. The economic and polling data make the answer to that clear: Not if they "fail" like leaders.

Now is the time for Democrats to explain why there are more important things at stake than peace at any price within the Super Committee - and why the kind of deal Republicans want is worse than no deal at all.

Will We, The People Have A Say On The Supercommittee's Austerity Plan?

By Dave Johnson, cross-posted from Campaign for America's Future

by DonkeyHotey

Congress' "supercommittee" of the 1% is preparing an austerity plan for the 99%. Will We, the People be allowed to vote on this plan, or, like Greece, will the elites just tell us how it is going to be? Our deficits were caused by tax cuts for the rich and huge increases in military spending. But instead of addressing these causes the elite supercommittee is said to be preparing to take money out of the economy by cutting the things We, the People do for each other. That's right, at the very time when 99% of us need more we will get less so that the 1% can enjoy record-low tax rates -- and it looks like We, the People will have no say in it.

Last week Greek Prime Minister George Papandreou proposed a referendum on the austerity plan that European governments are preparing for the country. "The markets" -- another name for the 1% -- went berserk in reaction. Pressure was applied, and now the Greek people will not be allowed to vote on their austerity plan after all, they will just be told. Richard Eskow writes about this elite veto power over democracy, in Vetoing Democracy: In Athens or Washington, Elites Still Call the Shots,

And what was most striking was the assumption the elite - the 1%, if you will - have veto power over the democratic process. In most of the commentary that flowed from the powerful and the press, a surprising number of world leader didn't even acknowledge that Greece had the right to its own democratic decision-making process.
South Korean President Lee Myung-bak, whose nation will benefit from "bipartisan" U.S. actions to create a free trade agreement between the two countries, said that "The world has plunged into fears again because of the Greek prime minister's radical step to hold a referendum." Closer to home, French President Sarkozy said that "the Greek's gesture is irrational and, from their point of view, dangerous."
The first part of that statement is a slur against democracy. The second part is, of course, a threat.

Here we are a year after our first post-Citizens United election, in which corporations were allowed to use money to directly influence our elections (as compared to indirectly influencing elections by funding the conservative movement and their organizations, think tanks, media, operatives, propaganda machine, smear machine, etc.). Here we are with the results, a year with no jobs plan from the corporate-elected House majority and a year of filibusters of jobs plans by the corporate-elected Senate Republicans. Here we are with people in the streets, like in Greece, being met with police force, like in Egypt. Meanwhile our Congress pretends it can just ignore the will of We, the People. Mubarak tried that - didn't end so well for him.

So, will We, the People be allowed to have a say over this austerity plan, or will it be like Greece all over again, told by the 1% how it's gonna be?

Or, maybe, Egypt?

Washington Pre-Occupied

By Robert Reich, cross-posted from his website

The biggest question in America these days is how to revive the economy.

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.

The disconnect between Washington and the rest of the nation hasn’t been this wide since the late 1960s.

The two worlds are on a collision course: Americans who are losing their jobs or their pay and can’t pay their bills are growing increasingly desperate. Washington insiders, deficit hawks, regressive Republicans, diffident Democrats, well-coiffed lobbyists, and the lobbyists’ wealthy patrons on Wall Street and in corporate suites haven’t a clue or couldn’t care less.

I can’t tell you when the collision will occur but I’d guess 2012.

Look elsewhere around the world and you see a similar collision unfolding. The details differ but the larger forces are similar. You see it in Spain, Greece, and Italy, whose citizens are being squeezed by bankers insisting on austerity. You see it in Chile and Israel, whose young people are in revolt. In the Middle East, whose “Arab spring” is becoming a complex Arab fall and winter. Even in China, whose young and hourly workers are demanding more – and whose surge toward inequality in recent years has been as breathtaking as is its surge toward modern capitalism.

Will 2012 go down in history like other years that shook the foundations of the world’s political economy – 1968 and 1989?

I spent part of yesterday in Oakland, California. The Occupier movement is still in its infancy in the United States, but it cannot be stopped. Here, as elsewhere, people are outraged at what feels like a rigged game – an economy that won’t respond, a democracy that won’t listen, and a financial sector that holds all the cards.

Here, as elsewhere, the people are rising.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

Austerity Class Warfare

We all know that during high unemployment and a stagnant economy, what is needed is a boost from the federal government -- or what one might call "stimulus."  (As John Maynard Keynes explained 75 years ago, and Robert Reich continues to instruct us today, when consumers and businesses can’t boost the economy on their own, the responsibility must fall to the government.)  But instead, the focus over the last two years has been on the need for less federal spending and the overarching concern has been to reduce the long-term deficit.  Only recently, thanks to Occupy Wall Street and the President's belated "pivot" to jobs has the conversation begun to change.  But this still leaves the question why the deficit fetishists remain so prominent  -- why failed policies of the past that involve tax cuts for the rich, reduced federal spending and more federal regulation continue to remain so influential -- and not just in Republican circles.

Ari Berman, in a great new piece in The Nation, describes this as "a central paradox" in American politics:

How, in the midst of a massive unemployment crisis—when it’s painfully obvious that not enough jobs are being created and the public overwhelmingly wants policy-makers to focus on creating them—did the deficit emerge as the most pressing issue in the country? And why, when the global evidence clearly indicates that austerity measures will raise unemployment and hinder, not accelerate, growth, do advocates of austerity retain such distinction today?

Berman provides the answer:

An explanation can be found in the prominence of an influential and aggressive austerity class—an allegedly centrist coalition of politicians, wonks and pundits who are considered indisputably wise custodians of US economic policy. These “very serious people,” as New York Times columnist Paul Krugman wryly dubs them, have achieved what University of California, Berkeley, economist Brad DeLong calls “intellectual hegemony over the course of the debate in Washington, from 2009 until today.”

Its members include Wall Street titans like Pete Peterson and Robert Rubin; deficit-hawk groups like the CRFB, the Concord Coalition, the Hamilton Project, the Committee for Economic Development, Third Way and the Bipartisan Policy Center; budget wonks like Peter Orszag, Alice Rivlin, David Walker and Douglas Holtz-Eakin; red state Democrats in Congress like Mark Warner and Kent Conrad, the bipartisan “Gang of Six” and what’s left of the Blue Dog Coalition; influential pundits like Tom Friedman and David Brooks of the New York Times, Niall Ferguson and the Washington Post editorial page; and a parade of blue ribbon commissions, most notably Bowles-Simpson, whose members formed the all-star team of the austerity class.

This "austerity class" is a relentless presence in Washington and in the mainstream media.  Its various strands "form a reinforcing web that is difficult to break. Its think tanks and wonks produce a relentless stream of disturbing statistics warning of skyrocketing debt and looming bankruptcy, which in turn is trumpeted by politicians and the press and internalized by the public."  The result is what Greg Sargent calls "a Beltway Deficit Feedback Loop, wherein the hypothetical possibility of a US debt crisis somewhere in the future takes precedence over the very real jobs crisis now."

In addition, much to our misfortune, this group is profoundly influential over the current Administration:

Obama and his main economic advisers (Tim Geithner, Orszag, Larry Summers) were devotees of former Clinton Treasury Secretary and Goldman Sachs/Citigroup alum Rubin, who co-founded the pro–Wall Street Hamilton Project think tank at the Brookings Institution in 2006. The Hamiltonians had warned of “the adverse consequences of sustained large budget deficits” during the Bush administration and advocated “painful adjustments,” namely cuts to social insurance programs like Social Security and Medicare in exchange for more liberal policies like tax increases and healthcare reform. Obama entered office with the Hamilton plan in his back pocket.

It is thus no coincidence that in February 2009, "just weeks after the stimulus passed, Obama pivoted to the deficit, holding a Fiscal Responsibility Summit at the White House and assuring Blue Dog Democrats he supported a special deficit-reduction commission."  And that in his 2010 State of the Union address, Obama "announced a three-year freeze on nondefense discretionary spending . . . along with the creation of Bowles-Simpson."  Adopting the Republican framing of economic policy, he told us:  “Families across the country are tightening their belts and making tough decision. The federal government should do the same.”

Of course, this was exactly the wrong prescription.  As Jared Bernstein, former chief economist to Vice President Biden explains, “When families are tightening their belt in a recession, the government has to loosen its belt.”

 “Having gotten a stimulus that he knew was too small, Obama should have said, This is a good first step, but we’re likely going to need more,” says Dean Baker, co-director of the Center for Economic and Policy Research. “And gone on the offensive. Instead he turned to balancing the budget. That set the stage for the Tea Party and the Peterson crowd, because ‘deficits’ were all anyone heard.” Indeed, conservatives were emboldened by Obama’s speech. “If the arguments in the coming years are between spending freezes and spending cuts, then we’ve already won,” wrote Jim Geraghty of National Review in January 2010.

As Berman continues, "the austerity-class chorus grew louder following the release of the Bowles-Simpson report shortly after the 2010 midterm elections and framed the debate for 2011."

Instead of rolling back the Bush administration policies that had turned Clinton’s surplus into a deficit—such as the Bush tax cuts, Medicare Part D plan and costly wars in Afghanistan and Iraq—the commission took aim at the social safety net and promoted pet conservative causes, like cutting the federal workforce by 10 percent, cutting funds for the Corporation for Public Broadcasting and capping medical malpractice lawsuits.

Obama's budget for 2012 "proposed cutting discretionary spending to its lowest share of GDP since the Eisenhower administration."  Still not good enough for the Republicans, who demanded even more cuts.  And "by the time of the summer debt ceiling showdown, the parties were trying to out-cut each other, with the president increasingly espousing conservative talking points (such as the discredited ideas that government budgets are like family budgets, that spending cuts will create jobs and that slashing the deficit will return “confidence” to the market)."

The triumph of the austerity class set the stage for Obama’s “grand bargain” offer to House Speaker John Boehner, which included $3 trillion in spending cuts in exchange for $800 billion in new revenue (roughly the equivalent of letting the Bush tax cuts for the rich expire). Times columnist Brooks called it “an astonishing concession” by the White House and “the deal of the century” for the GOP. Yet Boehner balked when Obama asked for $400 billion in additional revenue to help balance the lopsided plan. The parties agreed instead to $917 billion in cuts over the next decade, with the supercommittee tasked with finding $1.2 trillion in additional savings. The austerity debate is guaranteed to last until Christmas, at the very least.

With most dissident voices sidelined, the "Washington debate seems permanently skewed to the right," and it is doubtful that "Obama’s belated pivot back to jobs will break the power of the austerity class."  This is in large part due to "the administration’s schizophrenic approach to the economic crisis has left voters perplexed about where it stands on the biggest issue of the day."  Obama's current position, "more spending to boost the economy, followed by deficit reduction once the economy recovers" is pretty nuanced, while the “the Republicans’ message, ‘Government spending is a problem,’ is much easier to penetrate.” Unfortunately, the administration is failing to make the point that creating jobs will reduce the deficit.

Berman concludes that "the austerity class has done such a good job of demonizing deficits that it’s difficult to make the case for their necessity, even in the short term. 'The damn thing has such a bad rap, it’s almost unimaginable for a policy-maker to argue that we need a bigger deficit,' says [Jared] Bernstein. 'But there are times when that argument is absolutely correct.'  Now is one of those times."

The Moral Question On Taxes And Budget Cuts

By Robert Reich, cross-posted from his website

We dodged another shut-down bullet, but only until November 18. That’s when the next temporary bill to keep the government going runs out. House Republicans want more budget cuts as their price for another stopgap spending bill.

Among other items, Republicans are demanding major cuts in a nutrition program for low-income women and children. The appropriation bill the House passed June 16 would deny benefits to more than 700,000 eligible low-income women and young children next year.

What kind of country are we living in?

More than one in three families with young children is now living in poverty (37 percent, to be exact) according to a recent analysis of Census data by Northeastern University’s Center for Labor Market Studies. That’s the highest percent on record. The Agriculture Department says nearly one in four young children (23.6) lives in a family that had difficulty affording sufficient food at some point last year.

We’re in the worst economy since the Great Depression – with lower-income families and kids are bearing the worst of it – and what are Republicans doing? Cutting programs Americans desperately need to get through it.


Medicaid is also under assault. Congressional Republicans want to reduce the federal contribution to Medicaid by $771 billion over next decade and shift more costs to states and low-income Americans.
It gets worse. Most federal programs to help children and lower-income families are in the so-called “non-defense discretionary” category of the federal budget. The congressional super-committee charged with coming up with $1.5 trillion of cuts eight weeks from now will almost certainly take a big whack at this category because it’s the easiest to cut. Unlike entitlements, these programs depend on yearly appropriations.

Even if the super-committee doesn’t agree (or even if they do, and Congress doesn’t approve of their proposal) an automatic trigger will make huge cuts in domestic discretionary spending.

It gets even worse. Drastic cuts are already underway at the state and local levels. Since the fiscal year began in July, states no longer receive about $150 billion in federal stimulus money — money that was used to fill gaps in state budgets over the last two years.

The result is a downward cascade of budget cuts – from the federal government to state governments and then to local governments – that are hurting most Americans but kids and lower-income families in particular.

So far this year, 23 states have reduced education spending. According to a survey of city finance officers released Tuesday by the National League of Cities, half of all American cities face cuts in state aid for education.

As housing values plummet, local property tax receipts are down. That means even less money for schools and local family services. So kids are getting larger class sizes, reduced school hours, shorter school weeks, cuts in pre-Kindergarten programs (Texas has eliminated pre-Kindergarten for 100,000 children), even charges for textbooks and extra-curricular activities.

Meanwhile the size of America’s school-age population keeps growing notwithstanding. Between now and 2015, an additional 2 million kids are expected to show up in our schools.

Local family services are being cut or terminated. Tens of thousands of social workers have been laid off. Cities and counties are reducing or eliminating their contributions to Head Start, which provides early childhood education to the children of low-income parents.

All this would be bad enough if the economy were functioning normally. For these cuts to happen now is morally indefensible.

Yet Republicans won’t consider increasing taxes on the rich to pay for what’s needed – even though the wealthiest members of our society are richer than ever, taking home a bigger slice of total income and wealth than in seventy-five years, and paying the lowest tax rates in three decades.

The President’s modest proposals to raise taxes on the rich – limiting their tax deductions, ending the Bush tax cut for incomes over $250,000, and making sure the rich pay at the same rate as average Americans – don’t come close to paying for what American families need.

Marginal tax rates should be raised at the top, and more tax brackets should be added for incomes over $500,000, over $1,500,000, over $5 million. The capital gains tax should be as high as that on ordinary income.

Wealth over $7.2 million should be subject to a 2 percent surtax. After all, the top one half of 1 percent now owns over 28 percent of the nation’s total wealth. Such a tax on them would yield $70 billion a year. According to an analysis by Yale’s Bruce Ackerman and Anne Alstott, that would generate at least half of $1.5 trillion deficit-reduction target over ten years set for the supercommittee.

Another way to raise money would be through a tiny tax (one-half of one percent) tax on financial transactions. This would generate $200 billion a year, and hardly disturb Wall Street’s casino at all. (The European Commission is about to unveil such a tax there.)

All this can be done, but only if Americans understand what’s really at stake here.

When Republicans recently charged the President with promoting “class warfare,” he answered it was “just math.” But it’s more than math. It’s a matter of morality.

Republicans have posed the deepest moral question of any society: whether we’re all in it together.

Their answer is we’re not.

President Obama should proclaim, loudly and clearly, we are.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.