Jeff Madrick, the author most recently of Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present (Knopf), exchanges questions and ideas with Thomas Byrne Edsall, whose book The Age of Austerity: How Scarcity Will Remake American Politics (Doubleday) is out this week.
Madrick: Your book places the current extreme partisanship in its critical economic context. There are cultural and religious conflicts in America, but it is economic scarcity that underlies much of our political paralysis. Is that so—scarcity lately more than culture? And scarcity has tended to favor conservatives?
Yesterday, the Pew Research Center released a report showing that the American public now perceives the conflict between the rich and poor as more prevalent and intense than conflicts between black and whites or conflicts between immigrants and the native-born. The number seeing those class conflicts has jumped 19 points since 2009, and amazingly, even 55 percent of Republicans think there are strong conflicts between rich and poor. For the GOP, about to nominate a guy who earned a couple of hundred million dollars as what one of his opponents calls a "vulture capitalist," this is disconcerting news. First, a graph:
As part of an effort to push "insourcing," President Obama is proposing tax incentives for companies that move manufacturing jobs back to the United States. “I don’t want America to be a nation that’s primarily known for financial speculation, and racking up debt and buying stuff from other nations,” Obama said during an announcement yesterday.
Cable-news pundits rejoiced a week ago when Rick Santorum drew Mitt Romney into an essential tie for first place in the Iowa caucuses. For all the ups and downs throughout the fall, this election has been inherently boring. Until Iowa, Romney had inched along unremarkably to the general election while a rotating group of talking heads ran nominal presidential campaigns in order to boost their fees on the lecture circuit.
Nashua, New Hampshire—Mitt Romney is the sort-of acceptable man in this year’s Republican field. His strong victory here yesterday was rooted in his support from all quadrants of the Republican Party. He carried 40 percent of the voters who told exit pollsters that they supported the Tea Party movement, a far higher percentage than anyone else in the field. (Ron Paul finished second with 22 percent of Tea Partiers.) Romney also led the field among voters who said they were neutral toward the Tea Party. Only among voters who said they opposed the Tea Party—and that was just 17 percent of yesterday’s Republican electorate—did he come in second, to Jon Huntsman.
Winning the Iowa caucus and the New Hampshire primary puts Mitt Romney in a good place for the remaining primaries in South Carolina and Florida this month. But a grimmer economic picture in these states has the potential to damage his momentum. New Hampshire, with an unemployment rate of 5.2 percent in November, had the fourth-lowest unemployment rate in the country, and Iowa's 5.7 percent was similarly below the national rate. South Carolina and Florida, with unemployment rates of 9.9 and 10 percent respectively, will be much more focused on the candidate's economic credentials, and perhaps be open to platforms offering more radical change—like those of Ron Paul or Rick Santorum—than Romney's comparably moderate economic plan.
The Internal Revenue Service recently updated its tax-gap estimate using 2006 tax year liabilities, and the numbers show that underreported income—largely from the one percent—remains a big obstruction to collecting taxes. Even though 83 percent of the country voluntarily pays its taxes, there are still $450 billion worth left unpaid. The IRS believes tougher enforcement could help it collect an additional $65 billion, but that still leaves $385 billion that will never be paid. That's a lot of money—enough to pay for more than 11 payroll-tax-cut bills like the one passed by Congress at the end of last year.
DERRY, NEW HAMPSHIRE—Newt Gingrich is a master of Stalinist history. In the New Hampshire campaign’s closing days, he made much of his own role in the job creation of the Reagan and Clinton years (though he never mentioned Clinton by name) and contrasted himself with his rivals by touting his ability to reach across the aisle during Clinton’s presidency. As Gingrich recounted it to a crowd of 300 gathered in a high-school auditorium in Derry late yesterday afternoon, he and Clinton both “concluded very early on that we really wanted to get together to do something for the country.” They would meet privately, he said, while bashing each other publicly.
Thanks to the array of options to watch TV online, I don't bother paying for cable at my home in DC. But I've been able to reacquaint myself with the hyperbole of cable news as I've been on the road reporting. This morning I learned of Mitt Romney's "breaking news" flub from MSNBC. At a morning stop in New Hampshire, Romney said, "I like being able to fire people who provide services to me." With increased attention being paid to Mitt Romney's time buying and selling companies, now might not be the best moment to revel in handing out pink slips.
Hours later, Jon Hunstman has already incorporated the line into his attacks on Romney and the DNC was quick to push out this video clip:
The Montana Supreme Court in Helena stands just off the main drag, dramatically called Last Chance Gulch Street. The picturesque setting is fitting for an institution that has just challenged the U.S. Supreme Court to a legal showdown on the enormously important question of whether corporations should have an unfettered right to dominate elections or whether citizens have the right to adopt commonsense protections to defend democratic government from corruption. Get the kids off the streets, because this could be an epic confrontation.
Sargeant Shamar Thomas protests against NDAA Tuesday at Grand Central Station.
Five hundred people returned to Zuccotti Park on New Year's Eve, with drums, chants of "Whose Year? Our Year!", and a tent, which they say they gave to police in exchange for entrance to the park. An hour before midnight, police and occupiers attempting to remove metal barricades around Zuccotti had a violent confrontation and, by 1:30 a.m., police had cleared activists from the park.
By now, you’ve probably heard that the December jobs report was pretty good; the economy grew by 200,000 jobs, and unemployment declined to 8.5 percent. Still high, but a positive trend given the circumstances. As you might imagine, this presents a problem for the Republican presidential candidates, who routinely accuse President Barack Obama of destroying jobs with his policies. Their solution has been to fudge the numbers. To wit, here’s Mitt Romney with a statement on today’s report:
Republicans are still huffing and puffing about President Barack Obama’s recess appointment of Richard Cordray to head the Consumer Financial Protection Bureau, but that hasn’t stopped the new director from getting right to work.
Cordray announced Thursday the launch of a nonbank supervision program to supplement the agency’s monitoring of banks. In layman’s terms, a "nonbank" is a business that doesn’t accept deposits but provides financial services that include pay day loans, credit ratings, debt collection and some mortgage lending.
Until now, most of these nonbanks have operated without federal regulation. The new supervision program will be equipped to investigate them and enforce rules.
One of the things to pay attention to in Mitt Romney’s latest South Carolina ad is his implicit defense of the state’s “right to work” law, which makes it more difficult for unions to organize. “The National Labor Relations Board, now stacked with union stooges selected by the president, says to a free enterprise like Boeing, ‘You can’t build a factory in South Carolina because South Carolina is a Right to Work state,’” Romney says in the ad. “That is simply un-American. It is political payback of the worst kind.” Combine this with his attack on President Obama as a “crony capitalist,” and I wouldn’t be surprised to see Romney tout right-to-work laws as part of his strategy for reviving the economy.