Robert Kuttner

The Theory of Power

Over the past three decades, laissez-faire economics has had an im-mense impact on our society, mostly for the worse. The elements have included privatization of public services, an assault on social benefits, and most important, deregulation of finance. Though free-market ideas are hotly debated in classrooms, op-ed pages, and journals, their influence on events has come not in a Platonic fashion, through the power of argument, but through power itself. Free-market theory has conveniently provided ideological coherence.

Desperately Seeking Dirt on Warren

Elizabeth Warren's surprise lead in Massachusetts polls only days after she got into the Senate race to oust Republican Scott Brown has thrown GOP operatives off balance.

Their first storyline was that Warren was either a creature of the Beltway or a pointy-headed Harvard professor. Neither seems to be sticking.

On Tuesday, when the Democratic-affiliated polling firm, Public Policy Polling, reported Warren narrowly leading Brown, 46 to 44 among likely voters, Brown spokesman Colin Reed put out a statement contending that "we have always known that Scott would be the underdog against whichever candidate wins the Democratic primary next September."

Forced Fed

The Federal Reserve's announcement that it will sell $400 billion of short-term Treasury securities and buy $400 billion of longer-term government bonds as a way of locking low interest rates and stimulating the economy is a good idea. Unfortunately, it is far from sufficient.

The government should be borrowing at least a trillion dollars at today's very low interest rates and investing the money in infrastructure projects as a way of jump-starting a catatonic private economy. But that idea, of course, is off the table. Republicans would block it, and not even President Obama, despite his newly assertive progressive self, is proposing it.

So financial markets took the Fed's announcement not as a sign that help is on the way but as a sign of just how bad things are.

Our Classy President

Republicans and many pundits have faulted President Obama for engaging in the politics of class warfare. Addressing the realities of class in America is in fact long overdue. Republicans and conservative Democrats are outraged because if class ever becomes a question that can be openly discussed, the right loses, America becomes a more decent society, and Democrats become the normal majority party.

You want to know about class warfare?

Medicare Cuts: Not the Way to Voters' Hearts

Last week, Obama finally got some traction with a speech that had a clear, consistent message -- jobs, jobs, jobs. Even the Republicans were reluctant to oppose him frontally.

Now, once again, Obama will mix his own message by emphasizing belt tightening in general and cuts in Medicare in particular. There is one silver lining:

The latest White House leaks suggest that a lobbying effort by progressives in Congress and nationally has persuaded the president not to increase the Medicare eligibility age from 65 to 67 as part of his deficit plan to be released today (Monday). Campaign for America's Future deserves particular thanks for its heroic efforts on this issue.

Snatching Defeat out of the Jaws of Victory

President Obama's jobs speech last Thursday evening heartened Democrats and progressives, but yesterday's meeting of the "super-committee" reminds us how much Obama has already given away and the traps he has set for himself (and the recovery) going forward.

While he tries to coax the economy into producing more jobs with one hand, Obama has set in motion an inexorable process that will lead to more economic contraction. The process will also deprive the Democrats of clarity in defending their most popular crown jewels -- Medicare and Social Security -- against unpopular Republican assault.

A Good First Step

President Obama's jobs speech was the right narrative and the right tone. It suggested a president who was a capable leader in a crisis, who gets America's pain. He also boxes in the Republicans -- and by offering a plan that includes elements that many Republicans support, he makes it much harder for them to oppose it.

Obama's Big Speech: More Weak Tea?

After a terrific speech on Labor Day in Detroit, President Obama is likely to offer fairly modest proposals tonight, adding up to a program too weak to cure a rapidly deflating economy, and a politics too weak to draw clear lines between himself and his Republican opposition.

While the rhetoric may be a little hotter than usual, according to White House leaks, the centerpiece of the plan will be a temporary payroll tax cut, offered by Obama in the hopes of enlisting Republican support. This is better than nothing but is far from the kind of stimulus that the economy requires. And it is one more olive branch rather than a Trumanesque line in the sand.

Obama's Inner Truman

The president we elected in November 2008 gave a terrific speech on Labor Day in Detroit.

It's been a long time coming. This president's trademark seems to be that he doesn't find his inner fighter until his back is to the wall (along with ours). Obama's approval rating, at just 40 percent according to Gallup, 44 percent according to a new Wall Street Journal-NBC poll, is his lowest ever -- putting Obama in one-term-president territory. A recent Rasmussen poll has him losing to Texas Governor Rick Perry, 44-41.

More Bad News on Jobs -- Will Obama Keep His?

The nation’s employers added no new jobs in August, according to the Labor Department, adding pressure on President Obama to deliver a far-reaching speech next Thursday on a strategy to deal with persistent joblessness. However, all of the preliminary indicators, including White House leaks, suggest a very modest speech filled with cautious proposals that cost little if any new money and appeal to the prejudices of the business elite.

How Not to Solve the Jobs Problem

There is a lot of circumstantial evidence that President Obama is planning to include in his eagerly anticipated post-Labor Day jobs speech a variation on a truly lame state program called Georgia Works.

The program, begun in 2003, pays people on unemployment insurance a small additional stipend, currently $240, if they agree to work 24 hours a week, for no wages, for a private employer while unemployed, in exchange for some form of training by the employer.

Exit Bloom, Enter Krueger

While we mourn the exit of Ron Bloom as the administration's point man on manufacturing (who was not permitted to utter the dread words "industrial policy"), we can welcome the appointment of Alan Krueger to chair the Council of Economic Advisers.

Given the administration's penchant for naming Wall Street people to key economic posts, Krueger is rather better than we dared hope for. He is thoroughly mainstream in all his credentials, coming from a senior post at Princeton. But with two notable differences:

First, he was editor of the Journal of Economic Perspectives from 1996 to 2002. This is the most heterodox of the major economic journals, hospitable to dissenting viewpoints.

New Democrats Keep Getting It Wrong

How to address the jobs crisis? President Obama has promised a major speech after Labor Day.

Bill Galston, one of the premier New Democrat intellectuals, has a piece in The New Republic, ghostwriting what he thinks the president should say.

Galston is a very smart academic and a kind person, but this proposed speech epitomizes how New Democrats get politics and economics fatally wrong.

Galston would have Obama begin:

Bernanke's Disappointing Speech at Jackson Hole (But the stock market loved it.)

Federal Reserve Chair Ben Bernanke's closely watched annual speech at this morning's session of the Fed's Jackson Hole Conference is a good illustration of why Thomas Carlyle referred to economics as the dismal science. Chairman Bernanke was doubly dismal, not just as an economic pessimist but as a political coward.

Bernanke's assessment of the economy was typically qualified with on-the-one-hand-this, on-the-other-hand-that, to reassure financial markets. But worse, it was gutless in terms of the proposed solutions to the crisis.

Say It Ain't So, Joe

When Joe Nocera was promoted from The New York Times business section to an op-ed column of his own, I was ambivalent. On the one hand, this rather neo-liberal writer has been somewhat radicalized by the financial crisis. He had been doing good work in the business section, and it was good to have a relatively liberal writer expert in finance joining the lonely voice of Paul Krugman on the op-ed page.

Nocera, seemingly, had come a long way since his days as a naive celebrant of the allegedly democratized investment economy, epitomized in a truly dreadful 1995 book whose subtitle says it all: "A Piece of the Action: How the Middle Class Joined the Moneyed Class."  

If only.