Robert Reich

Remember Your Salary Doubling? Oh Wait...

Flickr/Rich Johnson
Brace yourself. In coming weeks you’ll hear there’s no serious alternative to cutting Social Security and Medicare, raising taxes on the middle class, and decimating what’s left of the federal government’s discretionary spending on everything from education and job training to highways and basic research. “We” must make these sacrifices, it will be said, in order to deal with our mushrooming budget deficit and cumulative debt. But most of the people who are making this argument are very wealthy or are sponsored by the very wealthy: Wall Street moguls like Pete Peterson and his “Fix the Debt” brigade, the Business Roundtable, well-appointed think tanks and policy centers along the Potomac, members of the Simpson-Bowles commission. These regressive sentiments are packaged in a mythology that Americans have been living beyond our means: We’ve been unwilling to pay for what we want government to do for us, and we are now reaching the day of reckoning. The truth is most Americans have not...

Don't Count on a Sane GOP

AP Photo
A week before his inaugural, President Obama says he won’t negotiate with Republicans over raising the debt limit. At an unexpected news conference on Monday he said he won’t trade cuts in government spending in exchange for raising the borrowing limit. “If the goal is to make sure that we are being responsible about our debt and our deficit - if that’s the conversation we’re having, I’m happy to have that conversation,” Obama said. “What I will not do is to have that negotiation with a gun at the head of the American people.” Well and good. But what, exactly, is the President’s strategy when the debt ceiling has to be raised, if the GOP hasn’t relented? He’s ruled out an end-run around the GOP. The White House said over the weekend that the President won’t rely on the Fourteenth Amendment, which arguably gives him authority to raise the debt ceiling on his own. And his Treasury Department has nixed the idea of issuing a $1 trillion platinum coin that could be deposited with the Fed,...

Obama's Options on 2013's Big Issues

AP Photo/Carolyn Kaster
Anyone who thinks congressional Republicans will roll over on the debt ceiling or gun control or other pending hot-button issues hasn’t been paying attention. But the President can use certain tools that come with his office—responsibilities enshrined in the Constitution and in his capacity as the nation’s chief law-enforcer—to achieve some of his objectives. On the debt ceiling, for example, he might pay the nation’s creditors regardless of any vote on the debt ceiling—based on the the Fourteenth Amendment’s explicit directive (in Section 4) that “the validity of the public debt of the United States … shall not be questioned.” Or, rather than issue more debt, the President might use a loophole in a law (31 USC, Section 5112) allowing the Treasury to issue commemorative coins—minting a $1 trillion coin and then depositing it with the Fed. Both gambits would almost certainly end up in the Supreme Court, but not before they’ve been used to pay the nation’s bills. (It’s doubtful any...

It's Not about the Deficit

Flickr/401(K) 2012
“It’s not all I would have liked,” says Republican Senator Lindsey Graham of South Carolina, speaking of the deal on the fiscal cliff, “so on to the debt ceiling.” The battle over the fiscal cliff was only a prelude to the coming battle over raising the debt ceiling—a battle that will likely continue through early March, when the Treasury runs out of tricks to avoid a default on the nation’s debt. The White House’s and Democrats’ single biggest failure in the cliff negotiations was not getting Republicans’ agreement to raise the debt ceiling. The last time the debt ceiling had to be raised, in 2011, Republicans demanded major cuts in programs for the poor as well as Medicare and Social Security. They got some concessions from the White House but didn’t get what they wanted—which led us to the fiscal cliff. So we’ve come full circle. On it goes, battle after battle in what seems an unending war that began with the election of Tea Party Republicans in November, 2010. Don’t be fooled...

A Lousy Deal on the Edge of the Fiscal Cliff

AP Photo/Charles Dharapak
AP Photo/Charles Dharapak President Barack Obama speaks about the fiscal cliff in the South Court Auditorium of the White House earlier today. The deal emerging from the Senate on the fiscal cliff is a lousy one. Let me count the ways: 1. Republicans haven’t conceded anything on the debt ceiling, so over the next two months—as the Treasury runs out of tricks to avoid a default—Republicans are likely to do exactly what they did before, which is to hold their votes on raising the debt ceiling hostage to major cuts in programs for the poor and in Medicare and Social Security. 2. The deal makes tax cuts for the rich permanent (extending the Bush tax cuts for incomes up to $400,000 if filing singly and $450,000 if jointly) while extending refundable tax credits for the poor (child tax credit, enlarged EITC, and tuition tax credit) for only five years. There’s absolutely no justification for this asymmetry. 3. It doesn’t get nearly enough revenue from the wealthiest 2 percent—only $600...

Obama's Unwise, Unnecessary Concessions

AP Photo/ Evan Vucci
AP Photo/ Evan Vucci President Barack Obama talks about the fiscal-cliff negotiations during a news conference yesterday. W hy is the president back to making premature and unnecessary concessions to Republicans? Two central issues in the 2012 presidential election were whether the Bush tax cuts should be ended for people earning over $250,000, and whether Social Security and Medicare should be protected from future budget cuts. The president said yes to both. Republicans said no. Obama won. But apparently Obama is now offering to continue to Bush tax cuts for people earning between $250,000 and $400,000, and to cut Social Security by reducing annual cost-of-living adjustments. These concessions aren’t necessary. If the nation goes over the so-called “fiscal cliff” and tax rates return to what they were under Bill Clinton, Democrats can then introduce a tax cut for everyone earning under $250,000 and make it retroactive to the start of the year. They can combine it with a spending...

Drinking the Deficit-Reduction Kool-Aid

It was the centerpiece of the president’s re-election campaign. Every time Republicans complained about trillion-dollar deficits, he and other Democrats would talk jobs. That’s what Americans care about—jobs with good wages. And that’s part of why Obama and the Democrats were victorious on Election Day. It seems forever ago, but it’s worth recalling that President Obama won re-election by more than 4 million votes, a million more than George W. Bush when he was re-elected—and an Electoral College majority of 332 to Romney’s 206, again larger than Bush’s electoral majority over Kerry in 2004 (286 to 251). The Democratic caucus in the Senate now has 55 members (up from 53), and Republicans have eight fewer seats in the House than before. So why, exactly, is Washington back to obsessing about budget deficits? Why is almost all the news coming out of our nation’s capital about whether the Democrats or Republicans have the best plan to reduce the budget deficit? Why are we back to...

The Billionaires' Long Game

AP Photo
From left to right, the largest Republican donors: Sheldon Adelson, owner of the Las Vegas Sands casino empire; Harold Simmons, owner of Contran Corp.; Bob J. Perry, head of a Houston real estate empire; Robert T. Rowling, head of Dallas-based TRT Holdings; and William Koch, an industrialist. I keep hearing that the billionaires and big corporations that poured all that money into the 2012 election learned their lesson. They lost their shirts and won’t do it again. Don’t believe that for an instant. It’s true their political investments didn’t exactly pay off this time around. “Right now there is stunned disbelief that Republicans fared so poorly after all the money they invested,” said Brent Bozell, president of For America, an Alexandria, Maryland-based nonprofit that advocates for Christian values in politics. “Congrats to @KarlRove on blowing $400 million this cycle,” Donald Trump tweeted. “Every race @CrossroadsGPS ran ads in, the Republicans lost. What a waste of money.” Rove’s...

The Fiscal Cliff Proxy War

Flickr/Talk Radio News Service
(AP Photo/Paul Sancya) President Barack Obama speaks to workers about the economy during a visit to Daimler Detroit Diesel in Redford, Michigan yesterday. W ashington has a way of focusing the nation’s attention on tactical games. We almost never get to debate or even discuss the big problems because the tactical games overwhelm everything else. The debate over the fiscal cliff, for example, is really about tactical maneuvers preceding a negotiation about how best to reduce the federal budget deficit. This, in turn, is a fragment of a bigger debate over whether we should be embracing austerity economics and reducing the budget deficit in the next few years or, alternatively, using public spending and investing to grow the economy and increase the number of jobs. Even this larger debate is just one part of what should be the central debate of our time—why median wages continue to drop and poverty to increase at the same time income and wealth are becoming ever more concentrated at the...

Forget the Fiscal Cliff—We've Got Other Problems

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The “fiscal cliff” is a metaphor for a government that no longer responds to the biggest challenges we face because it’s paralyzed by intransigent Republicans, obsessed by the federal budget deficit, and overwhelmed by big money from corporations, Wall Street, and billionaires. If we had a functional government America would address three “cliffs” posing far larger dangers to us than the fiscal one: The child poverty cliff. Between 2007 and 2011, the percentage of American school-age children living in poor households grew from 17 to 21%. Last year, according to the Agriculture Department , nearly 1 in 4 young children lived in a family that had difficulty affording sufficient food at some point in the year. Yet federal programs to help children and lower-income families—food stamps, aid for poor school districts, Pell grants, child health care, child nutrition, pre- and post-natal care, and Medicaid – are being targeted by the Republican right. Over 60 percent of the cuts in the GOP’...

Will Tim Geithner Lead Us over or around the Fiscal Cliff?

I’m trying to remain optimistic that the president and congressional Democrats will hold their ground over the next month as we approach the so-called “fiscal cliff.” But leading those negotiations for the White House is outgoing Secretary of Treasury Tim Geithner, whom Monday’s Wall Street Journal described as a “pragmatic deal maker” because of “his long relationship with former Treasury Secretary Robert Rubin, for whom balancing the budget was a priority over other Democratic touchstones.” Geithner is indeed a protégé of Bob Rubin, for whom he worked when Rubin was Treasury Secretary in the Clinton administration. Rubin then helped arranged for Geithner to become president of the New York Fed, and then pushed for him to become Obama’s Treasury Secretary. Both Rubin and Geithner are hardworking and decent. But both see the world through the eyes of Wall Street rather than Main Street. I battled Rubin for years in the Clinton administration because of his hawkishness on the budget...

Why You Shouldn't Shop at Wal-Mart on Friday

(Flickr/Laurie O'Findy)
A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly wage of around $50, in today’s dollars, including health and pension benefits. Today, America’s largest employer is Wal-Mart, whose average employee earns $8.81 an hour. A third of Wal-Mart’s employees work less than 28 hours per week and don’t qualify for benefits. There are many reasons for the difference—including globalization and technological changes that have shrunk employment in American manufacturing while enlarging it in sectors involving personal services, such as retail. But one reason, closely related to this seismic shift, is the decline of labor unions in the United States. In the 1950s, over a third of private-sector workers belonged to a union. Today fewer than 7 percent do. As a result, the typical American worker no longer has the bargaining clout to get a sizeable share of corporate profits. At the peak of its power and influence in the...

Note to Obama: Shoot First, Compromise Later

(AP Photo/Jae C. Hong, File)
(AP Photo/Pablo Martinez Monsivais) President Barack Obama with Republican House Speaker John Boehner I hope the president starts negotiations over a “grand bargain” for deficit reduction by aiming high. After all, he won the election. If the past four years have proved anything, it’s that the White House should not begin with a compromise. Assuming the goal is $4 trillion of deficit reduction over the next decade—that’s the consensus of the Simpson-Bowles Commission, the Congressional Budget Office, and most independent analysts—here’s what the president should propose: First, raise taxes on the rich—and by more than the highest marginal rate under Bill Clinton or even a 30 percent (so-called Buffett Rule) minimum rate on millionaires. Remember: America’s top earners are now wealthier than they’ve ever been, and they’re taking home a larger share of total income and wealth than top earners have received in more than 80 years. Why not go back 60 years when Americans earning more than...

Why Obama Needs to Restart the Conversation on the Economy Now

When the applause among Democrats and recriminations among Republicans begin to quiet down—probably within the next few days—the President will have to make some big decisions. The biggest is on the economy. His victory and the pending “fiscal cliff” give him an opportunity to recast the economic debate. Our central challenge, he should say, is not to reduce the budget deficit. It’s to create more good jobs, grow the economy, and widen the circle of prosperity. The deficit is a problem only in proportion to the overall size of the economy. If the economy grows faster than its current 2 percent annualized rate, the deficit shrinks in proportion. Tax receipts grow, and the deficit becomes more manageable. But if economic growth slows—as it will, if taxes are raised on the middle class and if government spending is reduced when unemployment is still high—the deficit becomes larger in proportion. That’s the austerity trap Europe finds itself in. We don’t want to go there. This is why...

Governors' Races: No Silver Lining for GOP

(Flickr/Joelk75)
Given how little Republicans have to celebrate today, it might be tempting for the more enthusiastic conservatives to sip at least a little champagne over gubernatorial dominance. While races for the top state job in Montana and Washington remain too close to call, Republicans successfully captured North Carolina’s governor’s mansion. That means of the 50 state governors, at least 30 will be Republicans next year; only 18 will be Democrats. It’s a remarkably high number—but it sure ain’t as high as the Grand Old Party was hoping. Of the 11 states with governor’s races this year, Democrats were playing defense in eight, and GOP operatives figured this was their chance to make huge gains. It seemed likely early on that North Carolina was going to go red—the state’s current Democratic governor, Bev Purdue has done wonders to hurt her party’s brand—but there were a ton of other seemingly close races. In West Virginia, the incumbent blue dog Earl Ray Tomblin had to do his best to distance...

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