Jeff Faux

Jeff Faux was the founder, and is now Distinguished Fellow, of the Economic Policy Institute.

Recent Articles

Reclaiming the Party

T he Democratic party -- like Enron, the FBI and the Catholic Church -- is a dysfunctional institution that cannot reform itself from the inside. If the party were a well-run corporation whose products weren't selling, its board of directors or its CEO would bring in outsiders to give an honest assessment of what was going wrong and engage stakeholders -- workers, customers, suppliers -- in planning a new strategy. But the Democrats have neither a competent board of directors nor a responsible CEO. The Democratic National Committee is a worn-down fundraising machine with a chairman, Terry McAuliffe, tainted by the huge windfall he made on an investment in Global Crossing. U.S. Rep. Nancy Pelosi (D-Calif.), the new minority leader in the House, will bring some much-needed energy and media excitement, but she will have a difficult time rising above lowest-common-denominator politics in order to keep unity among her troops. Sen. Tom Daschle (D-S.D.) will have an even harder time taming...

Falling Dollar, Rising Debt

T he value of the U.S. dollar has dropped more than 15 percent against the euro since February. That may not sound like a big deal -- a bit of bad news for American tourists this summer, a bit of good news for American manufacturers selling things abroad. But, in fact, it could be a sign that America's mounting foreign debt is about to deal a major blow to an economy already reeling from the shock of the dot-com meltdown and the crisis of U.S. corporate credibility. In the last two months, warnings have come from Alan Greenspan, the world business press and the International Monetary Fund. Two Nobel Prize–winning economists have called America's growing foreign debt "the greatest potential danger facing the economy in the years to come." Neither the administration nor the Congress, however, has heard a thing. The fundamental problem is that for the past quarter-century, we Americans have been spending more on imports than we have been earning from exports. And given our shop-till-we-...

Who Gets to Retire?

O n the day television beamed around the world images of tearful Enron employees stunned at the looting of their 401(k)s by the company's top brass, pension reform became a top congressional priority. As the scandal rippled across corporate America, even George W. Bush could sense the smoldering class resentment. "What's fair on the top floor should be fair on the shop floor," he proclaimed, distancing himself from his old pals at Enron's Houston headquarters. But W. has always identified with the boys in the executive suite. So it's no surprise that the pension-reform bill passed by the Republican-controlled House in April is more conservative than compassionate. Liberals had expected that the Enron scandal would lead to more worker protections, but the better-prepared House conservatives seized the opportunity to make it even easier for CEOs to use their employees' pension funds to line their own pockets. Still, if the Democrats in the Senate are willing to push back, we could soon...

Securing Pensions I

T he Enron scandal seems like a heaven-sent opportunity to reform the business excesses of our recent Gilded Age. But the fetish of markets retains a powerful grip on the American political psyche. Already, corporate lobbyists, elevating stock-market gambling to the level of a fundamental human right, are undercutting modest efforts to prevent future abuses of 401(k) pension plans--which for most Americans is the heart of the Enron matter. These tax-subsidized "defined contribution plans," virtually the only jobrelated retirement programs now being offered to workers, shift the risk from employer to employee--a shift made possible by the weakened bargaining position of labor in our new economy. Unlike traditional "defined benefit plans," 401(k) accounts can be loaded up with a company's own stock. Among other things, this gives management control over the supply of shares and, thus, influence over their price. In Enron's case, it also allowed the top brass to cash out before their...

Bait and Switch:

T here is a moment in every successful con game when the victim thinks that he or she has gotten the better of the deal. Thus, going into the 2000 elections, Democrats congratulated themselves on having become the party of fiscal responsibility. Urged on by Federal Reserve Chairman Alan Greenspan, Bill Clinton had made eliminating the national debt more important than expanding investment in health, education, and other social programs. It was a sharp contrast to the preceding Reagan-Bush years of irresponsible tax cuts and profligate military spending. With the surplus predicted to rise for a decade, the Clinton White House had become, as Washington Post columnist David Ignatius recently observed, "one of the most ardently pro-Wall Street administrations in the nation's history." The delusion continued throughout the 2000 presidential campaign. George W. Bush promised to balance the budget except during a time of war or recession. Al Gore, however, happily positioned himself to the...

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