Policy Shop

Policy as if people mattered

The Big Donors Behind the Shutdown

The big donors behind the crisis in Washington are finally being called out by the mainstream media. Yesterday, the New York Times had a major investigative piece about how the Koch brothers and other major conservative donors pushed the Republican Party toward its current extreme strategy of trying to stop Obamacare. I have been saying the same thing for some time, citing the key role played by the Club for Growth in threatening House Republicans with electoral retaliation at primary time if they don't go all out on Obamacare. But the Times story breaks new ground by spelling out exactly how deep pocketed donors are using their clout with Republicans in Congress. These donors have made defunding Obamacare a litmus test and have directed intense fire, in the form of TV and Internet ads against Republicans seen as not falling in line behind this push. This stands in contrast to the usual narrative about the government shutdown, along with debt ceiling brinksmanship—which is that it's...

McCutcheon Money: How Citizens United 2 Could Increase the Power of Elite Donors

Next Tuesday, October 8, the Supreme Court is scheduled (pending shutdown nonsense) to hear oral arguments on McCutcheon v. FEC , a challenge to the total cap on the amount of money one wealthy individual is permitted to contribute to all federal candidates, parties, and PACs. The current “aggregate contribution limit” is $123,200—twice the median household income in the U.S. As you might imagine, this cap affects very few people; just 1,219 people were at, over, or within 10 percent of the limit for the 2012 election cycle. I’m guessing you are not sitting on $150,000 you’d like put into politics next year—so, why should you care? Here’s why: This tiny group of people already has substantial sway in our election system, and a bad ruling in McCutcheon would give them even more. Demos and U.S. PIRG have worked together to project that striking aggregate contribution limits would bring more than $1 billion in additional campaign contributions from elite donors through the 2020 elections...

How the Left Sees Liberty

Generally, I like to talk about liberty the way that libertarians do. I primarily do that because liberty, as discussed by libertarians, actually makes private property ownership an injustice. Because few people ever bother to think about that, adopting libertarian notions of liberty in my interactions with people of that persuasion is a never-ending well of hilarity. “What do you mean unilaterally grabbing up pieces of the scarce world without the consent of others (whose previously-existing access you steal away) and then violently attacking people who don’t go along with your fiat claims of ownership is aggression?” they say, “that’s just homesteading followed by self-defense!” And on it goes. The problem with the libertarian and right-wing notions of liberty is not just that they implode; it’s that there is a more plausible notion of liberty offered up by the left-wing that is only really achievable through leftist political economy. Under this, liberty is achieved when...

Hey, Wall Street—The Club for Growth Is Not Your Friend

Here we go again: Financial markets are plummeting thanks to the threat of a government shutdown and, beyond that, another debt ceiling crisis. One of the great bull markets of recent years is being derailed by a bunch of extreme conservatives in Congress. But Wall Street shouldn't just blame the Tea Party for ruining a good thing. It should blame big donors from its own ranks who are bankrolling groups like the Club for Growth who are also responsible for the crisis. As I have noted here before, the Club has been fanning shutdown brinksmanship by urging members of Congress to toe the far right line on Obamacare. This is no passing suggestion, given that the Club has been a main funder of primary challenges to moderate Republicans. So the story here, in part, is the Club for Growth vs. stable financial markets and an ongoing economic recovery. That's pretty ironic given the group's name. But it also points to an important internecine conflict within America's wealth elite. In fact,...

Inequality Is a Function of Political Power

Scott Sumner has become famous in the internet world and elsewhere as monetarism’s most capable defender. Sumner has a lot of things to say, but one is illustrative for my purposes here. Sumner argues that advocates of fiscal stimulus often make the mistake in their arguments of assuming away monetary policy as static or accommodating. His point is that you can’t do that because the efficacy of fiscal policy always depends on what monetary policy is doing in the background. This same basic point also needs to be driven home for those who want to talk about how this or that thing will affect the distribution of income in society. Matt Yglesias’ review of Tyler Cowen’s new book gives us an excellent jumping off point for what I mean. In his book, Cowen apparently argues that coming technological changes will have certain negative effects on median incomes. Yglesias rightly points out (as does Cowen) that this outcome will only come if we fail to implement certain policies that will...

Capitol Workers Strike to Protest Federally Subsidized Inequality

It’s their fifth strike in five months, but the workers of Good Jobs Nation didn’t seem the least bit tired this morning. Low-paid employees from the food courts of federal buildings, the gift shops of the Smithsonian, and others employed under federal contracts, concessions, and lease agreements donned matching t-shirts, picked up signs and marched to the White House. Congress might be locked in endless, dismal debates about defunding health care and cutting food stamps, but President Obama—the man who recently said reversing rising inequality was his highest priority ,—could sign an executive order with the potential to raise wages for 560,000 low-paid contract employees. The workers delivered a petition with 250,000 signatures calling on the President to take action. Fifteen U.S. Senators submitted their own letter , urging President Obama to use his executive authority to “require federal agencies to give major preference in awarding contracts to companies that… pay their workers...

How Much Money Would It Take to Eliminate Poverty In America?

Last week, the Census Bureau put out its annual income and poverty figures for 2012 . The big news on the poverty front is that the percentage of Americans living in poverty is unchanged at 15 percent, which amounts to 46.5 million Americans. More than one in five kids under the age of 18 are in poverty, and nearly one in four kids under the age of six are impoverished as well. These are numbers we’ve all become accustomed to, but they can still shock the conscience if you make an effort to let them soak in again. The sheer scale of poverty in the U.S. is so massive that it can seem as if eliminating or dramatically reducing it would be nearly impossible. After all, 46 million people is a lot of people. But in reality, if we stick to the official poverty line, the amount of money standing in the way of poverty eradication is much lower than people realize. In its annual poverty report, the Census Bureau includes a table that few take note of which actually details by how much families...

If New York Didn’t Have One of the Best Systems of Small-Donor Public Financing ...

(Flickr/Johannes Valkama)
Last week, we talked about the role that outside spending played in the New York City Council race and how of the 20 candidates Jobs for New York supported, 16 won. However, as Mark Schmitt at The New Republic pointed out , over half of the candidates Jobs for New York supported also had the support of the Working Families Party, who are often on the opposite side of the real estate debate. According to Common Cause’s scorecard , both groups supported the same 13 candidates, the vast majority of whom won their races. It’s unclear why Jobs for New York would support candidates that also have the backing of their opponents—perhaps they were just shrewdly banking on the winners—but it is clear that the group’s spending highlights the rise of outside spending and the importance of public financing. Jobs for New York’s spending raises two issues: One, as Schmitt points out, New York City at least has a public financing system allows small donors to offset some of the impact of outside...

Obama Just Changed the Most Racist Law in the Country

(flickr/uncgspecia)
You may have missed it, but yesterday President Obama dramatically altered one of the most racially damaging laws in America when the Department of Labor announced that it would extend minimum wage and overtime protections to home care workers. To say there's a backstory here would be a wild understatement. Seventy-five years ago, Franklin Roosevelt achieved a historic victory—but a morally compromised one—when he signed the Fair Labor Standards Act (FLSA) of 1938. The law created the modern labor regulations that we're all familiar with today, including the minimum wage, overtime pay, and much more. Yet getting the FLSA passed entailed a major concession to southern Democrats, who successfully fought to exclude agricultural and domestic workers. Why? Because, as legal scholar Juan Perea has shown in his illuminating history of the law, that exclusion was seen as crucial to preserving a southern way of life that hinged on exploiting cheap African-American labor—both in the fields...

Outside Money Wins in New York City Elections

Last week, we highlighted how the outside money group, Jobs for New York, was dominating the New York City Council races. So, how did they do? Not too shabby—of the 20 candidates they supported , 16 won , two are still too close to call, and two more were unsuccessful. Let’s look at the two races that are too close to call, Council District 19 and Council District 36. In Council District 19, the chart below shows the level of outside funding. Jobs for New York contributed over $324,000 to Paul Vallone’s campaign, it also spent over $21,000 in opposition spending against Shafran. Vallone won. In Council District 36, a similar spending pattern emerges. Currently Robert Cornegy is leading, but Kirsten Foy is less than 100 votes behind and the race has not been called either way. Let’s assume Cornegy wins and Foy loses. Jobs for New York would have supported 17 successful candidates, which is an 85 percent success rate. It’s hard to quantify the impact of outside spending, but...

How The Richest Americans Are Doing Better Than Ever, In Two Charts

The top 1 percent captured 95 percent of the income growth during the economic recovery. That’s just one depressing lowlight in Thomas Piketty and Emmanuel Saez's 2012 update on the fortunes of the nation's top earners. Piketty and Saez's dataset, drawn from exclusive access to the IRS filings of the top 1 percent of wage earners since 1913 , paints a clear picture of the increasingly potent ability of the richest Americans to extract rents from the rest of the society. Taking into account capital gains, Piketty and Saez find that the current recovery has been a windfall for the richest Americans. After a momentary decline during the Great Recession, the incomes of the top 1 percent of earners surged again during the 2011-2012 period. The addition of 2012 data helps paint of a more complete picture of the missing recovery for most Americans. During the recession, the incomes of the richest fell, but not nearly at the rate of everyone else , despite their role in precipitating the...

Conservative Tropes About Low-Income Excess Are Wrong

Are people better off than they were before the recession? By most headline figures they’re not: Poverty and inequality have risen to record levels, median incomes declined. Unemployment has improved marginally, but 37 states have yet to regain their pre-recession job levels . Conservatives like to push back on claims of rising inequality or worsening poverty by pointing out that their measure of poverty or inequality insufficiently captures the increasing well-being of even the poor. They're better off, they say, because low and middle-income Americans are living better than they did in the past. These arguments manifest themselves in concern over “Obamaphones” or access to liquor or drugs, and generally recommend policy solutions as odious as drug-testing as a prerequisite for welfare or stricter control over food stamps. As Matt Bruenig aptly pointed out on this blog , even taking these conservative policy solutions at their face value, fraud complaints are spurious. We want poor...

Libertarianism's Battle With History

(Flickr/Iazaro)
Economic libertarianism’s most amusing failing is philosophical. In particular, the non-aggression form of libertarianism so popular among the Paul clan and their followers quite straightforwardly generates the conclusion that all private property is unjust theft . Internal contradictions abound in libertarianism, but that is surely the most problematic one. As much as I enjoy the philosophical arguments, experience tells me others prefer an approach that seem less like game-playing. If you are that kind of person, then you are in luck. Karl Polanyi wrote The Great Transformation in 1944 to provide a more meaty historical and sociological takedown of the libertarian approach to the market economy. The first thing to note is that free market capitalism hasn’t always been around. If you listen to libertarians long enough, you may get the sense that laissez-faire capitalism is the natural and default way of the world. But in fact, it's a newcomer in the historical scene. All of known...

Middle-Class Blacks and Whites Have Vastly Different Fortunes

With the passing of the 50th anniversary of the March on Washington, commentators have been assessing the status of blacks in society. Matt Yglesias has a post about the black-white income gap, and how it has not budged in 40 years. Brad Plumer has a post at Wonkblog that features ten charts showing the persistence of the black-white economic gap, including rates of unemployment, poverty, and so on. The statistics provided in these posts—and indeed most statistics provided on this question—compare all blacks against all whites. This kind of comparison is worth making for certain purposes, but it also has its limitations. By itself, such group-level comparisons lend themselves to the hasty conclusion that the difference between the economic situations of blacks and whites is mainly that blacks are more concentrated on the low end of the economic ladder. When you've concluded that the black-white disparity is primarily an issue of black over-representation on the bottom and white over-...

Ten Reasons Fast Food Workers Deserve A Raise

(Flickr/mtume_soul)
There is a growing, industry-wide movement to push the fast food economy to work for all involved. Today, workers have called for a national strike that is expected to cross company lines and reach dozens of cities. The fast food labor force has never been protected by collective bargaining power or labor scarcity, making their demands for higher wages and the right to organize a unique historical event. It is also a bold stance from workers made vulnerable by a frail economy, asking for benefits that reach well beyond their own household budgets to the economy as a whole. Right now, fast food companies keep employees at poverty-level wages while reaping billions of dollars in profits for their shareholders every year. Across the economy this practice drives increasing inequality, slow growth, and declining living standards. It is holding back our economic recovery and contributing to our high poverty rates and rates of working poor. Americans deserve better. The fast food workers’...

Pages