Robert Kuttner

Glacial Progress on Jobs

The December jobs numbers are good news—sort of—for the economy and the Obama re-election campaign. The economy added 200,000 new jobs, and the duration of unemployment is down slightly. Wages and hours worked are up, too. We can anticipate continuing progress between now and November. But the bad news is that though the trend is in the right direction, the progress is glacial. As Heidi Sherholz of the Economic Policy Institute (EPI) reports , the deficit of jobs needed to keep up with the normal growth of working age population is still upwards of ten million. Even at December’s modestly improved rate of net job-creation, it will take until 2019 for the US to recover its pre-recession rate of unemployment. Moreover, as EPI points out, if we factor in workers who have dropped out of the labor force by looking at the ratio of employment to population (which is still down almost five percentage points since the beginning of 2007), the adjusted unemployment rate would be 9.5 percent. The...

Tocqueville for Toffs

O n any given day in Washington, D.C., the city’s hotels teem with civic activity. Trade associations, lobbies, corporations seeking government contracts, lawyers looking to influence agency rules—all form a beehive of action. At last count, there were 12,200 registered lobbyists in Washington, according to opensecrets.org, and that doesn’t include the many thousands of corporate attorneys who are technically not lobbyists. Of the top-spending trade associations or issue organizations, the U.S. Chamber of Commerce leads the list with a budget of more than $46 million. Only one quasi-liberal group, the AARP, is even in the top 20. This is the vision of Alexis de Tocqueville made flesh, with one notable difference: Nearly everyone in this associational paradise speaks for the top 1 percent or 2 percent of the income distribution. Tocqueville, in Democracy in America , famously identified “the art of association” as an essential complement to American constitutional democracy. The...

Earning Their Hatred

Thank God for elections and election years. An election gives our president, who must face the voters in November, permission to think and act like a partisan. It’s long overdue. President Obama has boldly made key recess appointments to the National Labor Relations Board (NLRB) and to the Consumer Financial Protection Bureau (CFPB). The Republican strategy has been to destroy these agencies by failing to confirm appointees. In the case of the new CFPB, that meant nobody in charge to make key decisions to make the new bureau operational. In the case of the NLRB, it meant the lack of a quorum would paralyze the agency altogether. In naming Richard Cordray to head the CFPB, the president has called the Republicans’ bluff. This was the agency that Elizabeth Warren invented and dearly hoped to lead. Republicans made clear they would block her appointment. When Obama passed her over in favor of the less-well-known Cordray, former Ohio Attorney General and also a strong consumer advocate,...

The SEC Does Wall Street's Bidding

The SEC Doing Wall Street’s Bidding Robert Kuttner In the right-wing revisionism of what caused the financial collapse, Fannie Mae and Freddie Mac are leading villains with the federal Community Reinvestment Act in a supporting role. Supposedly, Fannie and Freddie lowered their standards, purchased lots of subprime mortgages, and were major contributors to the housing bubble and crash. In this fable, government pressured banks to make unsound mortgage loans to meet the goals of CRA. Just about everything in this story is wrong. For starters, subprime was invented on Wall Street, by private investment bankers. Fannie and Freddie did buy some of the paper, but only very late in the game in 2005 and 2006, when the bubble was already about to burst. As for CRA, most of the lenders that originated sub-prime loans were unregulated mortgage companies, not subject to CRA. But the fable is very useful to the right, on three counts. It shifts the blame from Wall Street banks and the culture of...

House GOP's White House Stocking Stuffer: The Payroll Tax Cut

The cave-in by the House Republicans on the payroll tax is on terms that keeps this conflict going well into the election year--and on terms very favorable to Barack Obama and the Democrats. For the GOP, the two-month extension of the payroll tax cut is the worst possible politics. First, they look weak (because they are weak); and second, the same drama will be replayed next year with the same outcome. Raising taxes on millionaires rather than cutting Social Security or Medicare, or hiking payroll taxes, wins every time. As Republicans keep re-fighting this losing battle, the message will be reinforced over and over again that Democrats are for the working person while Republicans defend the richest. The fact that key Republicans in the Senate and House can't get their act together is frosting on the cake. Likewise, the sheer extremism of Tea Party caucus members who'd rather lose their seats than compromise. They are likely to get their wish. Barack Obama won his Senate seat after...

Double Standards Galore

I happened to be flying on American Airlines the morning after the company declared bankruptcy. Exactly nothing bad happened to my flight. Nobody passed the hat to buy aviation fuel. The flight attendants offered the same dismal snacks. It was business as usual. American will get to stiff its creditors, its employees, its pensioners, and sail happily onward, not even required to replace its managers. Chapter 11 filings are standard operating procedure when necessary in corporate America. In its full-page ads promising no disruption of service, American managed to avoid even the word "bankruptcy." Meanwhile, millions of underwater homeowners are denied the protections of bankruptcy laws. Like American Airlines, they would love to get out from under crushing debts and begin again. But the law is much tougher on them. If only homeowners were airlines. Welcome to the age of the double standard. After more than a decade of business lobbying, in 2005 bankruptcy laws were revised to tilt...

Elizabeth Warren: Bailout Queen

Karl Rove’s latest ad has to set an all-time record for hypocrisy and factual inversion. The ad actually manages to blame Elizabeth Warren for the bank bailouts. As anyone who hasn’t spent the past three years in a cave must know, Warren has been the nation’s single most effective, relentless, and brave critic of the bailouts. It was that service as chair of the Congressional Oversight Panel that made her one of America’s most admired public leaders. The ad slyly begins with Warren speaking, leading the viewer to imagine that this is a Warren ad. Warren says, “The first thing I’m going to promise is that I’m going to be a voice in the room on behalf of middle-class families.” Then a sneering female voiceover cuts in, and asks, “Really? Congress had Warren oversee how your tax dollars were spent bailing out the same banks that caused the financial meltdown, bailouts that helped pay big bonuses to bank executives while the middle class lost out.” The ad concludes, “Tell Professor Warren...

Europe's Deal: So Who Wins?

The grand bargain between Germany, France, and the European Central Bank (ECB) is being hailed as a diplomatic breakthrough that will save the euro and the European Union (EU). The essence of the deal is this: EU nations commit to an enforceable austerity program, which is ad hoc for now but will eventually become a formal part of the EU treaty. It will take the shape of tight limits on budget deficits, with penalties. That, in turn, gives the ECB the fig leaf it needs to heavily support purchases of bonds from countries like Italy, whose debt has come under speculative attack. All of this reassures markets, and the cost of borrowing comes down. In turn, bank holdings of sovereign bonds retain their value. To make this deal possible, Germany has backed off its absolute opposition to supporting weaker economies and using the ECB to tacitly support sovereign debt. And France has agreed to give up some of its cherished fiscal sovereignty to the EU. Isn’t this wonderful? No, it’s terrible...

Good News, Bad News for Europe

The good news? France and Germany seem to be in agreement. The bad news? They agree Europe needs more belt tightening so that bankers can get more relief. The leaders of France and Germany, reportedly, are discussing ways to compel European nations to have a common fiscal policy without resorting to the cumbersome process of amending the EU treaty. This was enough to reassure stock markets for the moment, which are nothing if not subject to herd instincts. But who are we kidding here? More austerity may appease the bankers’ need for their pound of flesh, but it will only make the Great Deflation worse. A common fiscal policy is a good idea, but one biased towards austerity is exactly the wrong medicine Before this crisis is over, the Europeans will need to find their way to a common invest-and-grow strategy, which includes debt relief for struggling countries; as well as Euro-bonds and a real crackdown on banker abuses. And the European Central Bank will have to function as a true...

A More Perfect Union

E mily Dopper and her boyfriend, Willem van Leeuwen, tourists from the Netherlands, were on their way to lunch at the Boathouse restaurant in New York’s Central Park when they encountered the picket line. Clay Skaggs, a striking waiter, intercepted them. “We’re asking you not to eat here,” he said in a tone of polite explanation. “They practice sexual harassment, and they stole $3 million in wages over two years. They also got a C-rating on their health inspection.” Dopper looked dejected and unconvinced. “We came here to Central Park all the way from Europe,” she said. “There are lots of other great places nearby,” Skaggs continued. He handed them a foldout flyer. One side featured a detailed map of the park and its myriad paths and attractions, displaying locations and write-ups of other restaurants and a big red circle with a slash around the Boathouse. On the other side was an explanation of the issues in the strike, with summaries in 19 languages. Adopting his best waiter’s...

Super-Duper Failure

As many of us have been hoping and praying, the Super Committee fell of its own weight, making room for a much better debate about where budget cutting fits into a recovery strategy (if at all), and how to raise taxes progressively in order to finance the investments and jobs that America needs. President Barack Obama was unwise to make this devil’s bargain in the first place; he has since moved on to emphasizing jobs and recovery. The Super Committee crack-up should be the last gasp of the “bipartisan” folly about deficit reduction as key to recovery—which the president himself gave a big boost with his appointment of the late Bowles-Simpson Commission. Now, mercifully, the Republicans stand exposed as the party that would ravage Social Security, Medicare, Medicaid, and other valued social outlays in order to spare the richest 1 percent any tax increases. Republicans have been in their own echo chamber for so long that they don’t quite grasp that most of the voters oppose this idea...

Post Hoc Fallacy

Wednesday’s Washington Post deserves some kind of perverse award for advocacy journalism—in this case, for advocating the proposition that dire economic consequences will ensue if the congressional Super Committee fails to cut a deal for drastic deficit reduction. This is, of course, one side of an argument. Those on the other side, including myself, have argued that austerity in a deep recession makes no economic sense and that as a matter of politics, the Obama administration would be far better advised to let the automatic sequester formula take effect, knowing that it would have to be reopened because of Republicans’ horror of deep defense cuts and the expiration of the Bush tax cuts. Moreover, Social Security does not belong in this conversation, and Democrats are better off, substantively and politically, defending it against Republican proposed cuts rather than lumping it in with budget talks. But I digress. The Post has been an editorial champion of the Super Committee and...

Don't Save Republicans from Themselves

With the Super Committee near collapse, will the Democrats snatch defeat out of the jaws of victory? Republicans, by locking themselves into no new taxes at a time when two-thirds of Americans prefer to tax millionaires instead of cutting Social Security and Medicare, are in a nice pickle. Over the weekend, Republicans on the Super Committee proposed to trade about $300 billion in net revenue increases for more than $2 trillion in permanent tax cuts. Democrats, mercifully, did not take the bait. Some Republicans on the panel, such as Representative Jeb Hensarling of Texas, proposed a “two step” process, whereby the committee would agree on a target figure for revenue increases and leave the details to the tax-writing House Ways and Means Committee and the Senate Finance Committee. But the Texas Two-Step is another trap. Cuts in Social Security and Medicare would be negotiated first, and the details of tax hikes would come later—after Democrats had given up their leverage. Senator Dick...

Blame Where It's Not Due

The Wall Street Journal editorial page keeps outdoing itself for sheer sophistry, but today’s op-ed on Joe Paterno sets a new record. How about blaming the Penn State scandal on … the media? In today’s Journal , the editorial writer, after the appropriate clucks, concludes: Given the relentlessness of modern public scrutiny, and the thousands of young men who have traveled through the Penn State football program, it's something of a miracle that Mr. Paterno could coach for 46 years without a previous notable blemish. We doubt it will happen again. It's also something of a relief that in a culture as libertine as ours at least some behavior—sexual exploitation of children—is still considered deviant. The events at Penn State are indeed a tragedy, and doubly so because they give new license to cynics who want Americans to believe that no one who achieves prominence in public life can be honorable. So let’s get this straight. “Given the relentless of modern public scrutiny,” it is “a...

Che Warren?

Just when you think the right can’t stoop any lower, they keep surprising you. Karl Rove is out with an ad linking Massachusetts Senate candidate Elizabeth Warren with … Che Guevara. Over footage of an out-of-control protest, including a Che T-shirt, an announcer intones that Warren sides with protesters who “attack police, do drugs, and trash public parks.” Warren is quoted—out of context, of course—as saying that she “created much of the intellectual foundation for what they do.” Poor Rove. He has gone from arguing that Warren is too much of a pointy-headed intellectual for Massachusetts to branding her as a dangerous radical. Thankfully, Warren has a whole year in which to introduce herself to voters personally. This theme is unlikely to work any better than the last one—but it will energize Warren’s own troops.

Pages