December 2011
Views and Opinions

 

Carelessly Mistaking Theater For Policy
Posted: December 30, 2011
Source: Paul Krugman, in Truth Out
One crucial thing you need to understand about political journalists in the United States is that, with some honorable exceptions, they don’t know or care about actual policy.

In a way, that makes sense — the skills needed to cultivate contacts, to get the inside scoop on what’s going on in Congressional scheming or campaign war rooms, are very different from the skills needed to interpret spreadsheets from the Congressional Budget Office.

The problem, however, is that all too often political journalists mistake the theater of policy for reality (or don’t care about the difference).

Hence, the awful decision of Politico to give Representative Paul Ryan, the chairman of the House Budget Committee, an award as the health care policy maker of the year.

Even if you like the thrust of Mr. Ryan’s ideas, even if you think privatizing Medicare and turning it into a voucher scheme is fine, what became painfully, embarrassingly clear during the debate over the Ryan plan was that Mr. Ryan is, well, incompetent. The plan was a mess, from its invocation of ludicrous Heritage Foundation projections to its crazy assertions about what would happen to discretionary spending. It’s true that the plan “got everyone talking,” as Politico says — but mostly it got people talking about what a mess Mr. Ryan’s effort was.

Oh, and it was pretty clear that Mr. Ryan wasn’t being honest about his own numbers.
Read the complete source story here

Back to top of page

Why people hate Congress
Posted: December 28, 2011
Source: The Washington Post
Want to know why Americans hate Congress?

Well, here’s a big part of the reason.

The Washington Post and New York Times this week have done stories about how Congress is getting richer, and Roll Call is well-known for its “Richest Members of Congress” feature, which showed the same thing last month.

The fact that members of Congress are getting richer (and 57 members come from the top 1 percent, according to USA Today) confirms what Americans suspect about the people who are running this country: that they don’t empathize with normal people.

The fact that rich people are in Congress isn’t usually that big a deal. But when Congress struggles mightily to take care of the economic business of the country — from the recent payroll tax extension fight to the debt limit fight — it starts to seem pretty evident to the average, everyday voter that members really don’t understand the economic problems their constituents face.

So should we expect Americans to start voting out the wealthy and voting in the middle class? Not exactly.
Read the complete source story here

Back to top of page

 

Keeping Students from the Polls
Posted: December 26, 2011
Source: The New York Times
Next fall, thousands of students on college campuses will attempt to register to vote and be turned away. Sorry, they will hear, you have an out-of-state driver’s license. Sorry, your college ID is not valid here. Sorry, we found out that you paid out-of-state tuition, so even though you do have a state driver’s license, you still can’t vote.

Political leaders should be encouraging young adults to participate in civic life, but many Republican state lawmakers are doing everything they can instead to prevent students from voting in the 2012 presidential election. Some have openly acknowledged doing so because students tend to be liberal.

Seven states have already passed strict laws requiring a government-issued ID (like a driver’s license or a passport) to vote, which many students don’t have, and 27 others are considering such measures. Many of those laws have been interpreted as prohibiting out-of-state driver’s licenses from being used for voting.

It’s all part of a widespread Republican effort to restrict the voting rights of demographic groups that tend to vote Democratic. Blacks, Hispanics, the poor and the young, who are more likely to support President Obama, are disproportionately represented in the 21 million people without government IDs. On Friday, the Justice Department, finally taking action against these abuses, blocked the new voter ID law in South Carolina.

Republicans usually don’t want to acknowledge that their purpose is to turn away voters, especially when race is involved, so they invented an explanation, claiming that stricter ID laws are necessary to prevent voter fraud. In fact, there is almost no voter fraud in America to prevent.

William O’Brien, the speaker of the New Hampshire State House, told a Tea Party group earlier this year that students are “foolish” and tend to “vote their feelings” because they lack life experience. “Voting as a liberal,” he said, “that’s what kids do.” And that’s why, he said, he supported measures to prohibit students from voting from their college addresses and to end same-day registration. New Hampshire Republicans even tried to pass a bill that would have kept students who previously lived elsewhere from voting in the state; fortunately, the measure failed, as did the others Mr. O’Brien favored.
Read the complete source story here.

Back to top of page

 

Putting Paychecks at Risk
Posted: December 20, 2011
Source: The New York Times, editorial
If the House had actually voted on Tuesday on the two-month extension of the payroll tax cut in the Senate's bill, there is a chance that it would have passed. There is a chance a truly ugly legislative wreck could have been avoided and that the take-home pay of 160 million workers would not be reduced in less than two weeks.

But the House refused to vote on the compromise. Instead, it voted on a piece of parliamentary trickery devised by Speaker John Boehner and his lieutenants to ensure the tax cut couldn’t possibly pass. The measure simply sent the tax-cut issue back to a nonexistent conference committee. Unlike the bipartisan Senate vote, this one was supported only by Republicans and was designed to produce only one possible outcome.

As a result, it looks increasingly likely that the payroll tax cut will end on Jan. 1, along with extended unemployment insurance for three million jobless workers. After the vote, President Obama urged Mr. Boehner and House Republicans to put politics aside and extend the tax cut for two months while negotiators work on making it last for a full year. But he was immediately repudiated by Mr. Boehner, appearing with his caucus, who said the Senate would have to return to Washington and negotiate.

In a year full of dangerous standoffs, led by extremist House members, this one may be the most intractable.

Many House Republicans never wanted the president’s tax-cut proposal to pass, in part because it might contribute to economic growth in an election year. But they could not be seen as voting against it, so they used one of Congress’s many methods to kill a bill without appearing to have done so. Earlier in the month, they passed a one-year extension full of provisions designed to sink it, including big cuts to discretionary spending, a significant reduction to jobless benefits and utterly irrelevant provisions allowing industries to spew more pollution and forcing a decision on the Keystone XL oil pipeline.

They wanted the Senate to vote down that bill so the House wouldn’t be blamed. Instead, the Senate approved a two-month extension, hoping to use that time to reach agreement on how to pay for the next 10 months. The blame has returned to the House side.

Assigning blame, or avoiding it, has come to replace actual governing in the Congress. If the tax cut dies, Democrats will accuse Republicans of killing it, and they will be absolutely right to do so. It might even help them regain the House next year among an electorate disgusted with partisan gridlock. But the cost to individual families and the nation is too high a price to pay.
Read the complete source story here.

Back to top of page

 

A Fraction of a Tax Cut
Posted: December 19, 2011
Source: The New York Times, editorial
If you looked quickly at what the Senate did on Saturday, it seemed as if it agreed to President Obama's proposal for short-term middle-class relief by extending the payroll tax cut and unemployment insurance. In fact, that's not quite what happened.

The two programs were approved in a severely diminished form. Because Republicans rejected a millionaire’s tax surcharge to pay for the extension, negotiators could not reach agreement on a full year’s offset, and instead settled for a measly two more months.

In exchange for those eight short weeks of stimulus, Republicans won a provision that forces the president to make a decision on the Keystone XL oil pipeline from Canada in the next 60 days, instead of waiting until after the election. In a sense, the provision liberates Mr. Obama to do the right thing and immediately reject the pipeline, an environmentally treacherous proposal that would create few jobs. The State Department will not have enough information to approve the pipeline in such a short period.

Speaker John Boehner and other Republicans had insisted on the pipeline rider in the hopes of falsely tarring Mr. Obama as a jobs-killer if he rejected the project, even though the pipeline would create only a handful of permanent jobs. Then, after winning that demand, Mr. Boehner pulled yet another of his political bait-and-switch maneuvers. He declared on Sunday morning that he and the House majority could not accept a payroll tax cut for only two months rather than a full year.

This was disingenuous, to put it politely. Democrats say Mr. Boehner had fully signed off on the short-term plan until hard-line conservatives in the House expressed outrage on Saturday afternoon that they had not won more than the pipeline provision. If Mr. Boehner’s House had really wanted a 12-month tax cut, it would not have passed a bill earlier in the month full of poison-pill riders designed to kill it. That bill severely cuts jobless benefits, especially in the states with the highest unemployment; eliminates controls on a particularly bad form of industrial pollution; and would make health insurance exchanges more expensive to undermine health care reform.
Read the complete source story here.

Back to top of page

 

Inconvenient Income Inequality
Posted: December 17, 2011
Source: Charles M. Blow, in The New York Times
Is income inequality becoming the new global warming? In other words, is this another case where the facts of an existential threat lose traction among a weary American public as deniers attempt to reduce them to partisan opinions?

It’s beginning to seem so.

A Gallup poll released on Thursday found that, after rising rather steadily for the past two decades, the percentage of Americans who said that the country is divided into “haves” and “have-nots” took the largest drop since the question was asked.

This happened even as the percentage of Americans who grouped themselves under either label stayed relatively constant. Nearly 6 in 10 Americans still see themselves as the haves, while only about a third see themselves as the have-nots. The numbers have been in that range for a decade.

This is the new American delusion. The facts point to a very different reality.

An Associated Press report this week on census data found that “a record number of Americans — nearly 1 in 2 — have fallen into poverty or are scraping by on earnings that classify them as low income.” The report said that the data “depict a middle class that’s shrinking.”

An October report from the Congressional Budget Office found that, from 1979 to 2007, the average real after-tax household income for the 1 percent of the population with the highest incomes rose 275 percent. For the rest of the top 20 percent of earners, it rose 65 percent. But it rose just 18 percent for the bottom 20 percent.

And a report released in May by the Organization for Economic Cooperation and Development found that “the gap between rich and poor in O.E.C.D. countries has reached its highest level for over 30 years.” In the United States, the average income of the richest 10 percent of the population had risen to around 14 times that of the poorest 10 percent.

Our growing income inequality is a fact. So is the possibility that it could prove economically disastrous.
Read the complete source story here

Back to top of page

 

Shutdown Deal Cuts Winter Heating Aid For Low-Income Families, Boosts Defense Spending
Posted: December 17, 2011
Source: Crooks and Liars
We have to remove every last one of these scumbag Republicans and any Democrat who enables them. This is downright despicable. The Democrats should have made them stay and work right through the Christmas recess instead of allowing them to kick America's poor while they're down:

Congress reached a deal Thursday to avert a shutdown that would have begun at midnight tonight, and in doing so, Republicans found another low-income program to target, cutting funding for subsidies that help the poor stay warm during the winter by nearly 25 percent. At the same time, however, the Pentagon’s budget is getting a 1 percent boost, as the Associated Press noted:

Highlights of the $1 trillion-plus 2012 spending legislation in Congress:

—$518 billion for the Pentagon’s core budget, a 1 percent boost, excluding military operations overseas. [...]

—$3.5 billion for low-income heating and utility subsidies, a cut of about 25 percent.

The Low-Income Home Energy Assistance Program (LIHEAP) has become increasingly vital for American families affected by the recession, and it is utilized more and more by military families. One of every five families using LIHEAP is a military family, a 156 percent increasefrom 2008. Congress, however, decided to cut that program to give a boost to a budget that already makes up 20 percent of the country’s total budget and has been spared in multiple spending agreements this year (the super committee trigger a notable exception).

Plenty of evidence exists that Congress should be focused on investing into programs that boost economic growth and job creation, rather than chasing fiscal austerity toward another recession. If it insists on cutting spending to deal with the deficit now, however, the least it could do is not take the knife to each and every program that helps the poor.

Back to top of page

 

Politics Over Principle
Posted: December 15, 2011
Source: The New York Times, editorial
The trauma of Sept. 11, 2001, gave rise to a dangerous myth that, to be safe, America had to give up basic rights and restructure its legal system. The United States was now in a perpetual state of war, the argument went, and the criminal approach to fighting terrorism — and the due process that goes along with it — wasn't tough enough.

President George W. Bush used this insidious formula to claim that his office had the inherent power to detain anyone he chose, for as long as he chose, without a trial; to authorize the torture of prisoners; and to spy on Americans without a warrant. President Obama came into office pledging his dedication to the rule of law and to reversing the Bush-era policies. He has fallen far short.

Mr. Obama refused to entertain any investigation of the abuses of power under his predecessor, and he has been far too willing to adopt Mr. Bush’s extravagant claims of national secrets to prevent any courthouse accountability for those abuses. This week, he is poised to sign into law terrible new measures that will make indefinite detention and military trials a permanent part of American law.

The measures, contained in the annual military budget bill, will strip the F.B.I., federal prosecutors and federal courts of all or most of their power to arrest and prosecute terrorists and hand it off to the military, which has made clear that it doesn’t want the job. The legislation could also give future presidents the authority to throw American citizens into prison for life without charges or a trial. The bill, championed by Republicans in the House and Senate, was attached to the military budget bill to make it harder for Mr. Obama to veto it.

Nearly every top American official with knowledge an experience spoke out against the provisions, including the attorney general, the defense secretary, the chief of the F.B.I., the secretary of state, and the leaders of intelligence agencies. And, for weeks, the White House vowed that Mr. Obama would veto the military budget if the provisions were left in. On Wednesday, the White House reversed field, declaring that the bill had been improved enough for the president to sign it now that it had passed the Senate.

This is a complete political cave-in, one that reinforces the impression of a fumbling presidency. To start with, this bill was utterly unnecessary. Civilian prosecutors and federal courts have jailed hundreds of convicted terrorists, while the tribunals have convicted a half-dozen.
Read the complete source story here.

Back to top of page

 

Debt isn't immoral
Posted: December 14, 2011
Source: Ezra Klein, in The Washington Post
On first read, I thought Jared Bernstein’s essay rethinking debt was a bit simplistic. There’s nothing really new there. Which, on further reflection, is exactly the point. We don’t need a new understanding of debt. We just need an understanding of debt.

Bernstein doesn’t put it quite like this, but the basic problem with Washington’s conversation over debt is we’ve taken a fiscal tool and recast it as a moral sin. Head over to Mitt Romney’s Web site and look at what it says across the top: “We have a moral responsibility not to spend more than we take in.” Really? Why? And over what time frame?

If you pressed Romney on this, I think he would say something like, “it’s irresponsible to pass a massive load of debt onto our children.” But as good as that sounds, no one really believes it. World War II left America with one of the highest debt burdens in the country’s history. But it would have been much more irresponsible to pass on a world in which the Nazis controlled Europe to our children.

The right way to think about debt is as a trade-off: Is it better to pay for something now or later? Is it better to borrow to finance a purchase or forego the purchase altogether? Faced with specific choices rather than abstract slogans, even the most stringent deficit hawk will occasionally opt to borrow. A few examples:

Read complete source story here.

Back to top of page

 

The Insidious Fine Print
Posted: December 14, 2011
Source: The New York Times
It looks like a small throwaway line in a 2012 spending bill: no federal funds may be used to carry out chapters 95 or 96 of the Internal Revenue Code. A little digging shows that those chapters happen to authorize the presidential election public financing system. A few House Republicans, who have long hated the system, thought they could get rid of it by inserting the line in a bill to keep the government from shutting down this weekend.

The provision will eventually be deleted, but it is only one of scores of policy riders that Republicans have tried to insert in the spending bill. Most have nothing to do with Congress’s basic job of financing the government, but nongermane provisions have become standard procedure for conservative lawmakers to pursue ideological goals with a few words in must-pass bills. Like pieces of shrapnel, they have to be extracted one at a time, but a few always seem to remain, doing a great deal of damage.

The 2012 omnibus spending bill was actually proceeding rather smoothly. Lawmakers from both parties had largely reached agreement on how much money would be given to the various federal departments, in part because the overall spending limit was set by the debt-ceiling deal last summer. But that made it a more attractive target for the ideologues, and it quickly began to sag under the weight of its attachments.

Some riders border on the ridiculous. One would end the ban on firearms and crossbows on water projects managed by the Army Corps of Engineers. Representative Paul Gosar, a Republican of Arizona, (supported by a few Democrats, as well) said campers on corps lakes need to be able to defend themselves.

Another would ban the Energy Department from enforcing incandescent lighting standards. The president would be banned from hiring an aide on climate change issues. The Corporation for Public Broadcasting could no longer buy NPR programs.

Many of the riders are more serious, including several attempts to roll back environmental regulations on interstate air pollution, toxic power-plant emissions, and water pollution from mining.
Read the complete source story here.

Back to top of page

 

JOBS will cure what ails Washington state
Posted: December 13, 2011
Jobs Now!Source: The Stand
As the 30-day special session of the State Legislature enters its third week, it is all but certain that legislators are unlikely to address the $2 billion revenue shortfall that is the reason for this holiday season assembly. There appears to be general agreement that more cuts — on top of the $10 billion already slashed from the state budget — must be mitigated by some form of new revenue. Gov. Chris Gregoire has proposed a temporary half-cent increase in the state sales tax, but discussions continue about what revenue proposal will be put before voters this spring.

Instead, legislators are poised to approve hundreds of millions million in cuts that both Democrats and Republicans agree must be made, and leave the rest of the shortfall and the revenue issue for the 2012 session that begins in January.

This continued bloodletting of state government cannot go on. At a time when legislators are seriously considering letting prisoners out of jail early and cutting their supervision, increasing class sizes (again) and shortening the school year, completely eliminating health care assistance for the working poor, and dozens of other cost-cutting ideas that would have been unthinkable just a couple of years ago, it’s fair to say our state government is in intensive care. It’s time for lawmakers to get proactive. It’s time to stop dealing with the symptoms and to treat the disease. What Washington needs to fully recover from the Great Recession is JOBS.

The clearest way for state government to create jobs is to hire people. Right now, budget cuts are doing the opposite: taking away thousands of public-sector jobs from Washington families. There’s insufficient revenue in the general fund to maintain those jobs and services. But capital budget revenue can be leveraged to support substantial job creation. Washington is in position to frontload that money and create real jobs NOW by investing in public buildings and infrastructure.
Read the complete source story here.

Back to top of page

 

Depression and Democracy
Posted: December 12, 2011
Paul Krugman, in The New York Times
It's time to start calling the current situation what it is: a depression. True, it's not a full replay of the Great Depression, but that's cold comfort. Unemployment in both America and Europe remains disastrously high. Leaders and institutions are increasingly discredited. And democratic values are under siege.

On that last point, I am not being alarmist. On the political as on the economic front it's important not to fall into the "not as bad as" trap. High unemployment isn't O.K. just because it hasn't hit 1933 levels; ominous political trends shouldn't be dismissed just because there's no Hitler in sight.

Let's talk, in particular, about what's happening in Europe — not because all is well with America, but because the gravity of European political developments isn't widely understood.

First of all, the crisis of the euro is killing the European dream. The shared currency, which was supposed to bind nations together, has instead created an atmosphere of bitter acrimony.

Specifically, demands for ever-harsher austerity, with no offsetting effort to foster growth, have done double damage. They have failed as economic policy, worsening unemployment without restoring confidence; a Europe-wide recession now looks likely even if the immediate threat of financial crisis is contained. And they have created immense anger, with many Europeans furious at what is perceived, fairly or unfairly (or actually a bit of both), as a heavy-handed exercise of German power.

Nobody familiar with Europe's history can look at this resurgence of hostility without feeling a shiver. Yet there may be worse things happening.

Right-wing populists are on the rise from Austria, where the Freedom Party (whose leader used to have neo-Nazi connections) runs neck-and-neck in the polls with established parties, to Finland, where the anti-immigrant True Finns party had a strong electoral showing last April. And these are rich countries whose economies have held up fairly well. Matters look even more ominous in the poorer nations of Central and Eastern Europe.

Last month the European Bank for Reconstruction and Development documented a sharp drop in public support for democracy in the “new E.U.” countries, the nations that joined the European Union after the fall of the Berlin Wall. Not surprisingly, the loss of faith in democracy has been greatest in the countries that suffered the deepest economic slumps.
Read the complete source story here

Back to top of page

 

The 1 Percent Club's Misguided Protectors
Posted: December 11, 2011
Source: The New York Times
The Republican right is pushing back hard against the 99 percent movement and its focus on the widening chasm between the fortunes of the few at the summit of the income scale and everybody else. Newt Gingrich, who led the field of Republican presidential candidates last week, argued that the concept of the 99 percent versus the 1 percent is “un-American.” His rival Rick Perry, who led the Republican pack in September, answered a question about taxes and inequality by saying “I don’t care about that.”

This indifference is grounded in a proposition that has for decades dominated American debate over redistributive policies like steeper taxes for the rich: that inequality is an expected outcome of economic growth, and that efforts to tamp down inequality would slow growth down. As President Obama said in his speech in Kansas last week, this strain of thought goes back to at least the turn of the last century when “there were people who thought massive inequality and exploitation of people was just the price you pay for progress.”

Why, conservatives ask, would people exert themselves, study more and work harder if they could not reap extra rewards from the effort? Trying to fix inequities would only blunt incentives to work and invest. As Mr. Gingrich put it, “You are not going to get job creation when you engage in class warfare because you have to attack the very people you hope will create jobs.”

This argument is — at best — incomplete. Some inequality may be necessary to encourage investment for growth. But as recent research shows, intense inequality actually stunts growth, making it more difficult for countries to sustain the sort of long economic expansions that have characterized the more prosperous nations of the world.

The first chart, based on research by Andrew Berg and Jonathan Ostry, economists at the International Monetary Fund, reveals the link between inequality and the sustainability of economic growth. Igniting growth is easier than maintaining it. They found that in high-inequality nations spurts of growth ended more quickly, and often in painful contractions.

The chart reports inequality with the so-called Gini index, which is 0 when all households have the same income and 100 when all the income goes to only one household. It shows that regions with high inequality, like sub-Saharan Africa and Latin America, have recorded shorter periods of sustained economic growth since 1950 than regions with lower inequality like East Asia. The average stretch of robust growth among relatively equitable industrial countries lasted more than 24 years. In Africa the average was less than 14 years.

The economists found that income distribution contributes more to the sustainability of economic growth than does the quality of a country’s political institutions, its foreign debt and openness to trade, the level of foreign investment in the economy and whether its exchange rate is competitive.
Read the complete source story here.

Back to top of page

 

The Koch Brothers, ALEC and the Savage Assault on Democracy
Posted: December 9, 2011
Source: The Nation
Billionaire brothers Charles and David Koch finally got their way in 2011. After their decades of funding the American Legislative Exchange Council, the collaboration between multinational corporations and conservative state legislators, the project began finally to yield the intended result.

For the first time in decades, the United States saw a steady dismantling of the laws, regulations, programs and practices put in place to make real the promise of American democracy.

That is why, on Saturday, civil rights groups and their allies will rally outside the New York headquarters of the Koch brothers to begin a march for the renewal of voting rights in America.

For the Koch brothers and their kind, less democracy is better. They fund campaigns with millions of dollars in checks that have helped elect the likes of Wisconsin Governor Scott Walker and Ohio Governor John Kasich. And ALEC has made it clear, through its ambitious “Public Safety and Elections Task Force,” that while it wants to dismantle any barriers to corporate cash and billionaire bucks’ influencing elections, it wants very much to erect barriers to the primary tool that Americans who are not CEOs have to influence the politics and the government of the nation: voting.

That crude calculus, usually cloaked in bureaucracy and back-room dealmaking, came into full view in 2011.

Across the country, and to a greater extent than at any time since the last days of Southern resistance to desegregation, voting rights were being systematically diminished rather than expanded.

ALEC has been organizing and promoting the assault, encouraging its legislative minions to enact rigid Voter ID laws and related attacks on voting rights in more than three dozen states.

With their requirements that the millions of Americans who lack driver’s licenses and other forms of official paperwork go out and purchase identification cards in order to cast ballots, the Voter ID push put in place new variations on an old evil: the poll tax.

“We are in the midst of the greatest coordinated legislative attack on voting rights since the dawn of Jim Crow,” says NAACP President Benjamin Jealous. “Voter ID laws are nothing but reincarnated poll taxes and liter acy tests, and ex-felon voting bans serve the same purpose today as when they were created in the wake of the Fifteenth Amendment guaranteeing ex-slaves the vote—suppressing voting numbers among people of color.”
Read the complete source story here.

Back to top of page

 

All the G.O.P.'s Gekkos
Posted: December 9, 2011
Source: Paul Krugman, in The New York Times
Almost a quarter of a century has passed since the release of the movie "Wall Street," and the film seems more relevant than ever. The self-righteous screeds of financial tycoons denouncing President Obama all read like variations on Gordon Gekko's famous "greed is good" speech, while the complaints of Occupy Wall Street sound just like what Gekko says in private: "I create nothing. I own," he declares at one point; at another, he asks his protégé, "Now you're not naïve enough to think we're living in a democracy, are you, buddy?"Yet, with the benefit of hindsight, we can see that the movie went a little off at the end. It closes with Gekko getting his comeuppance, and justice served thanks to the diligence of the Securities and Exchange Commission. In reality, the financial industry just kept getting more and more powerful, and the regulators were neutered.

And, according to the prediction market Intrade, there's a 45 percent chance that a real-life Gordon Gekko will be the next Republican presidential nominee.

I am not, of course, the first person to notice the similarity between Mitt Romney's business career and the fictional exploits of Oliver Stone's antihero. In fact, the labor-backed group Americans United for Change is using "Romney-Gekko" as the basis for an ad campaign. But there's an issue here that runs deeper than potshots against Mr. Romney.

or the current orthodoxy among Republicans is that we mustn't even criticize the wealthy, let alone demand that they pay higher taxes, because they're "job creators." Yet the fact is that quite a few of today's wealthy got that way by destroying jobs rather than creating them. And Mr. Romney's business history offers a very good illustration of that fact.

The Los Angeles Times recently surveyed the record of Bain Capital, the private equity firm that Mr. Romney ran from 1984 to 1999. As the report notes, Mr. Romney made a lot of money over those years, both for himself and for his investors. But he did so in ways that often hurt ordinary workers.

Bain specialized in leveraged buyouts, buying control of companies with borrowed money, pledged against those companies' earnings or assets. The idea was to increase the acquired companies' profits, then resell them.

But how were profits to be increased? The popular image — shaped in part by Oliver Stone — is that buyouts were followed by ruthless cost-cutting, largely at the expense of workers who either lost their jobs or found their wages and benefits cut. And while reality is more complex than this image — some companies have expanded and added workers after a leveraged buyout — it contains more than a grain of truth. One recent analysis of "private equity transactions" — the kind of buyouts and takeovers Bain specialized in — noted that business in general is always both creating and destroying jobs, and that this is also true of companies that were buyout or takeover targets. However, job creation at the target firms is no greater than in similar firms that aren't targets, while "gross job destruction is substantially higher."

So Mr. Romney made his fortune in a business that is, on balance, about job destruction rather than job creation. And because job destruction hurts workers even as it increases profits and the incomes of top executives, leveraged buyout firms have contributed to the combination of stagnant wages and soaring incomes at the top that has characterized America since 1980.
Read the complete source story here.

Back to top of page

 

The Real Way to Help Small Business
Posted: December 8, 2011
Source: The New York Times, editorial
With only a week to go before Congress adjourns for the holidays, Congress has yet to renew federal unemployment benefits or the payroll tax cut that will expire at year-end. Unfortunately, Republican leaders seem far more interested in advancing their partisan aims than helping millions of struggling American families.

The House leadership weighed in on Thursday with a particularly bad proposal. It would extend the current payroll tax cut but gradually reduce the duration of unemployment benefits. And it proposes to pay for both with changes to social spending programs and by freezing pay for federal workers. The bill is also larded up with deplorable amendments, including one that would weaken clean air rules and another that would rush ahead with a potentially dangerous oil sands pipeline from Canada.

In the Senate, the debate has focused on how to pay for a renewal of the payroll tax cut. Democrats want a surtax on incomes over $1 million a year. Republican leaders, wrapping themselves in a populist mantle, claim the surcharge would hurt small businesses and the economy since small businesses are "job creators."

Research shows that a mere 1 percent of small business owners make more than $1 million per year. Only about 5.4 million of the nation's 20 million small businesses pay any wages at all. The Republican claim about wealthy small business job creators, it turns out, is based on a convenient and overly broad definition of "small" that includes partnerships and S-corporations, like hedge funds, accounting firms, law practices and other often big businesses.

So when they claim to be protecting small business from high-end taxes, Republicans are really talking about protecting big companies whose owners fall into the one-half of 1 percent of taxpayers who are millionaires or better. A surtax would certainly not hurt them.
Read the complete source story here.

Back to top of page

 

I'm rich, but I'm not a job creator; middle-class consumers are
Posted: December 5, 2011
Source: The Stand
It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.

Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.

I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc.

Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.

That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.

When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around.
Read the complete source story here

Back to top of page

 

What Is to Be Done about the Oligarchy?
Posted: December 4, 2011
Source: Firedog Lake
We can’t afford this miserable oligarchy any more; so what should we do? There are two basic approaches. One is to cut down on the material inequality between the oligarchs and the rest of us. Another is to hem in the behaviors of Oligarchs so that their ability to damage the rest of us is significantly reduced. We can try both at the same time. However, I hardly need point out how difficult it will be to accomplish anything in a country as fractured as ours.

Oligarchy is based on material power. The richest among us have power just because of that wealth. It enables them to make massive campaign contributions to people who will vote their interests at the expense of the rest of the public. It enables them to spend wildly to change public perceptions of issues important to the very rich. And wealth gives them ability to hire tools like lawyers and accountants to undo and weaken regulation and avoid taxation.

But material wealth is not the only source of power. In his book Oligarchy, Jeffrey Winters discusses four other sources of power in a democratic society.

1. Formal political rights, including one-person one vote, the ability to express views without repression, and access to information.

2. Official positions, which give the holders temporary power granted to the offices. This includes both elected and appointed positions.

3. Coercive power, which can take the form of personal coercive power, or the use of official positions to direct the police or other armed people in ways that the person favors. Thus, Michael Bloomberg with his private army of heavily armed police can direct the police to use coercive power against Occupiers; and feudal lords were able to use their little collections of vassals, or mercenaries, to control peasant uprisings.

4. Mobilization power, which has two aspects. For leaders it is the ability to get large groups aroused to action. Examples include Gandhi and Oprah Winfrey. For actors, it leads to a dramatic increase in their own personal sense of strength and responsibility, which arises from acting in concert with others.

Progressives need mobilization power, because we have little or none of the other sources of power. In the past, we have been able to mobilize in times of crisis, and force changes onto the system, improving the lives of millions of us. We haven’t succeeded in doing that in the aftermath of the Great Crash.

Perhaps the Occupy movement will stimulate mobilization power for its members and thus lead to change. The labor movement is a kind of model: it was the result of a combination of mistreated workers whose misery was transformed into action, at least in part with the guidance of charismatic leaders, but primarily by their own actions, led by local people selected by the workers themselves.

If mobilization were to reach powerful levels in our society, it would be a real threat to oligarchs. With nothing more that a bit of press attention to income and wealth inequality, it suddenly emerged into the public awareness that the public supports increased taxes on the oligarchy and the top 1%. If the movement can do that with so little real action, think what it could accomplish with a larger number of mobilized and activated citizens.
Read the complete source story here

Back to top of page

 

The Republican Attack on Federal Workers
Posted: December 1, 2011
Source: The New York Times
Congressional Republicans said yesterday they would support an extension of the payroll tax cut, but refused President Obama’s proposal to make millionaires pay for it with a small surcharge on their earnings. Instead, they want middle-class federal workers to offset the cost.

The Republican plan would extend the two-year pay freeze on federal workers for another three years, and would reduce the size of the federal workforce through attrition by 10 percent, or 200,000 jobs. In other words, they would make working for the government increasingly painful, and when employees quit in frustration or retire, only one out of three positions would be filled.

So a payroll tax cut designed to stimulate employment would actually lower federal employment by 200,000, all to protect the income of millionaires. But that’s fine with Republicans, who have long believed that government jobs aren’t really jobs. They’re parasites, sucking the nation’s economic resources from the much more important private sector.
Read the complete source story here.

Back to top of page