One aspect that defines our current economy is that things are happening that shouldn’t be happening. I don’t mean that things are happening that are illegal or immoral. (Well, some of them are immoral, but that’s not what I mean.) Rather, things are happening that defy economic logic—a slippery term that really means, the economic patterns of roughly the past half-century.
The first such logic-defying thing is that corporate profits are soaring even as corporate revenues limp along. The quarterly reports of S&P 500 corporations for the first three months of 2013 are almost entirely in now, and they show profits rising by more than 5 percent even while revenues have risen by less than 1 percent. Seventy percent of these companies—the largest publicly traded U.S. firms—exceeded the analysts’ profit projections. On the other hand, 60 percent came in under the projections for their sales.
At some point this year, Congress will have to raise the debt ceiling, as well as deal with a host of out-standing budget issues. But rather then try to discuss them in good faith—free of a manufactured crisis—Republicans have all but announced their decision to take some kind of legislative hostage, as soon as they can find one. Here’s Lori Montogomery, reporting for The Washington Post:
New York Attorney General Eric Schneiderman, who headed a group of state attorneys general that won homeowners and former homeowners a $26 billion settlement from five mega-banks over their foreclosure abuses, announced yesterday that he’d sue two of the banks—Wells Fargo and Bank of America—for allegedly violating the terms of the settlement.
In the election of 1952 my father voted for Dwight Eisenhower. When I asked him why he explained that “FDR’s debt” was still burdening the economy—and that I and my children and my grandchildren would be paying it down for as long as we lived.
I was only six years old and had no idea what a “debt” was, let alone FDR’s. But I had nightmares about it for weeks.
Yet as the years went by my father stopped talking about “FDR’s debt,” and since I was old enough to know something about economics I never worried about it. My children have never once mentioned FDR’s debt. My four-year-old grandchild hasn’t uttered a single word about it.
Yesterday—April 24th—was a red-letter day in the annals of worker mobilization in post-collective-bargaining America. In Chicago, hundreds of fast-food and retail employees who work in the Loop and along the Magnificent Mile called a one-day strike and demonstrated for a raise to $15-an-hour and the right to form a union. At more than 150 Wal-Mart stores across the nation, workers and community activists called on the chain to regularize employees’ work schedules. And under pressure from an AFL-CIO-backed campaign of working-class voters who primarily aren’t union members, the county supervisors of New Mexico’s Bernalillo County voted to raise the local minimum wage.
David Koch, possible future newspaper mogul. (AP photo/Carlo Allegri)
If you ask ten conservatives what they think of the New York Times, seven or eight of them would probably tell you that it's an organization whose primary purpose is advancing a sinister liberal agenda, and journalism just happens to be the tool it uses to accomplish that goal, though they'd be more likely to call it propaganda than journalism. The rest of us think that's nuts, but those conservatives sincerely believe it. So it's not surprising that some of them would dream of creating a conservative version of what they imagine the liberal media to be. Sure, they've got Fox News, and they control most of talk radio, and they have their magazines and web sites. But wouldn't it be something to have some real old-fashioned newspapers to advance the cause? And not just ones that are ridiculed like the Washington Times, but papers that already have respected names and large audiences?
Sounds like an interesting idea, which is why Charles and David Koch—who, depending on your perspective, are admirable and civic-minded businessmen committed to economic freedom, or dangerous plutocrats committed to bespoiling the Earth and enhancing their own wealth and that of their class at the expense of the rest of us—are considering buying a group of newspapers from the troubled Tribune company, including the Los Angeles Times, the Chicago Tribune, the Baltimore Sun, the Orlando Sentinel, and the Hartford Courant. So what are the implications of the Kochs getting so heavily into the newspaper business?
On any given day, go to the Shenzhen Wal-Mart in the city's Yuanling neighborhood, and you may find a stocky man in his early fifties in front of its doors, draped in a banner that reads, in Chinese characters, “Support the just demands of workers.”
Their agreement is very preliminary and hasn’t yet even been blessed by the so-called Gang of Eight Senators working on immigration reform, but the mere fact that AFL-CIO President Richard Trumka and Chamber of Commerce President Thomas J. Donohue agreed on anything is remarkable.
Many liberals, myself included, are frustrated by the mainstream conversation on entitlement spending, which holds as gospel that we need cuts to our two major retirement programs, Social Security and Medicare. But only one of them–Medicare–faces the prospect of high long-term costs. Social Security, by contrast, is a stable and well-funded program, and needs slight adjustments–at most–to ensure its long-term stability.
For the next year, at least, Republicans will have one less talking point to turn to when they want to hit Democrats on the budget. Over the weekend, Senate Democrats came together to pass their first budget since 2009, a comprehensive package that calls for additional stimulus and modest deficit reduction, stretched over the next ten years. Under Senate rules, lawmakers can’t filibuster a budget resolution, allowing Democrats to pass it by a vote of 50 to 49, with four Democrats—Mark Pryor of Arkansas, Kay Hagan of North Carolina, Mark Begich of Alaska, and Max Baucus of Montana—voting against the bill.
Prominent Democrats—including the president and House Minority Leader Nancy Pelosi—are openly suggesting that Medicare be means-tested and Social Security payments be reduced by applying a lower adjustment for inflation.
This is even before they’ve started budget negotiations with Republicans—who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers’ “carried interest”), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions.
It’s not the first time Democrats have led with a compromise, but these particular pre-concessions are especially unwise.
Members of the Federal Reserve don’t usually make the rounds at partisan gatherings. But amid the tri-cornered hats and “#StandWithRand” buttons of last week’s Conservative Political Action Conference (CPAC)—the largest annual gathering of conservatives in the country—was Richard Fisher, President of the Dallas Federal Reserve Bank. In a Saturday morning speech, Fisher quoted Revolutionary War hero Patrick Henry, who once said that while “Different men often see the same subject in different lights,” such quibbling had to be set aside in a time of “awful moment to this country.”
“Our biggest problems over the next ten years are not deficits,” the president told House Republicans Wednesday, according to those who attended the meeting. The president needs to deliver the same message to the public, loudly and clearly. The biggest problems we face are unemployment, stagnant wages, slow growth, and widening inequality—not deficits. The major goal must be to get jobs and wages back, not balance the budget. Paul Ryan’s budget plan—essentially, the House Republican plan—is designed to lure the White House and Democrats, and the American public, into a debate over how to balance the federal budget in ten years, not over whether it’s worth doing.
As he has in years past, Wisconsin Representative Paul Ryan presented his latest budget as a necessary step—the only thing we have to avert a destructive debt crisis. It may be painful to turn Medicare into a voucher program, cut spending on social services, and devolve Medicaid into a block grant for the states, but it's the only choice we have to avoid catastrophe. Here's Ryan in his own words:
Senate Democrats are set to release a budget this week, the first time they've done so since 2009. As always, it will be a collection of the party's goals and priorities—more a political statement than a plan for governing. Democrats, according to National Journal, will propose new revenue beyond the fiscal-cliff deal as well as new spending on education, infrastructure, and job training.