Economy

The Six Constituencies the State of the Union Actually Mattered To

AP Images/Charles Dharapak
AP Images/Charles Dharapak I t was a strange State of the Union Address—mixing emotional tugs on the heartstrings with anodyne rhetoric that made it seem like everyone from Barack Obama to the angriest Tea Party Republican was bored with the annual exercise. The speech had no over-arching theme save (yawn) America’s enduring greatness. There were hard-hitting sentences and paragraphs, but no dramatic policy proposals nor even bold, if unattainable, dreams. The State of the Union address was unlikely to anger anyone whether it was financial titans fearing economic Kristallnacht or Bashar al-Assad. For all of Obama’s rhetorical gifts, it was another speech that was mangled beyond recognition by the State of the Union sausage grinder. Before the speech, the agony of White House wordsmiths struggling with the State of the Union was memorably captured by Jeff Shesol, a Bill Clinton alum, who described the standard text as “written by a flash mob—a sudden aggregation, inside and around the...

Investing in Stock Buybacks, Not People

AP Images/Richard Drew
One fundamental reason why the American economy continues to limp along is that no one—at least, no one with major bucks—is investing in it. The Obama Administration countered the collapse of private sector investment in 2009 with its stimulus program, which, alas, was partially offset by all the cutbacks in state and local government spending. It’s not been able, however, to get any subsequent investment projects through the Republican House. The private sector—the corporate sector more particularly—returned not just to profitability but record profitability by the middle of 2010, but its profits have neither resulted from nor led to increased investment. To the contrary, American corporations have never sat on so much unexpended cash. Right now, their cash piles total more than $1.5 trillion, and that’s not counting the assets of the banks. The cash is concentrated in the coffers of our largest corporations, many of them tech companies. Apple leads the list with $150 billion...

Now It’s Time to Talk About Chicago’s Tale of Two Cities

AP Images/Charles Rex Arbogast
R ahm Emanuel has a favorite four-letter word for members of the labor movement. When Emanuel was White House chief of staff, he was told that tens of thousands of autoworkers could lose their jobs if General Motors and Chrysler didn’t receive a federal bailout. His response: “Fuck the UAW.” As mayor of Chicago, Emanuel became so enraged during negotiations with Karen Lewis, president of the Chicago Teachers’ Union, that he shouted “Fuck you, Lewis.” (The teachers went on strike for seven days, claiming Emanuel had “disrespected” them, as well as tried to force them to work longer hours after reneging on a promised pay raise.) Few political figures contributed more to the Democrats’ realignment from a party of working people to a party of Wall Street than Emanuel. The New Democrats of the 1990s responded to the weakness of the labor movement by shifting their donor base from unions to socially liberal financiers. Emanuel was Bill Clinton’s point man on shepherding the North American...

The Republican Problem With Independent Voters

Still a problem.
As I've discussed before, there are moral judgments liberals and conservatives make about things like economics that not only underlie the positions they take on policy, but also make most of the empirical conversation we have about those issues kind of superfluous. We spend a lot of time marshalling facts to support positions that have a moral basis, when those facts have virtually no chance of persuading large segments of the population. For example, you can tell many conservatives that income mobility in the United States is lower than that in many countries, and it won't dent their belief that in this land of opportunity, everyone gets what they deserve and your wealth is a clear indicator of your virtue. The good folks at the Pew Research Center have a new poll that includes some interesting questions probing how people think about poverty and economic fairness, and it shows how on this increasingly salient question, Republicans have a real political problem. Let's take a look at...

The State of Our Union? Economically Unjust

AP Images
To honor Martin Luther King, Jr., the White House declared a “day of service” in Dr. King’s memory, and President Obama spent a few minutes on Monday helping to serve meals in a soup kitchen near the White House. Talk about a tin ear, or a timid one. For starters, Martin Luther King’s life was not about soup kitchens. It was about radical, disruptive struggle to win civil rights; and then in his last five years it was about connecting racial justice to economic justice. Dr. King took pains to define the 1963 March on Washington as about jobs as well as justice. He was murdered while helping striking sanitation workers in Memphis fight for decent wages. If we had more good jobs, and less Republican assault on what’s left of our social safety net, we’d need fewer soup kitchens. The president might have honored Dr. King’s legacy by giving a speech about that. One can sympathize—to a point—with President Obama’s wish to downplay both the radicalism and the racial aspect of Dr. King. As...

When Public Opinions Collide

The progressive challenge of adjusting to a new climate of public opinion on deficits, entitlements, and jobs.

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The Penultimate Watergate Baby

georgemiller.house.gov
The 1974 midterm elections, held in the wake of Watergate, were a Democratic landslide. The party increased its strength in the House of Representatives by more than 50 new members, many from suburban districts that had previously elected Republicans. The Watergate Babies, as the new members were called, were a different breed of Democrat than the veterans who represented more urban districts. They were not only more liberal on cultural issues and more committed to environmental causes than many more senior Democrats, but many of them were also less committed to the kind of bread-and-butter New Deal economic policies with which the party had been identified. In 1974, Jerry Brown was first elected governor of California preaching that the nation had entered an “era of limits,” by which he meant, limits to social spending. Gary Hart was first elected senator from Colorado, disparaging the politics of old labor Democrats. Today, just two Watergate babies remain in Congress, both from...

Class War: The View From the Board Room

T he Vice-President for Governmental Affairs has just finished his report to the corporate board of directors. “Thanks, Ted,” says the Chairman. “You and your Washington staff have done a great job. Getting that little amendment inserted in the budget bill will save us at least $25 million next year. …. Questions or comments? Paul?” Paul, the hedge fund CEO: “I’m worried about the big picture down there in Washington, Ted. It’s a mess. Deficit out of control. The anti-business attitude. Not to mention incompetence. Can’t even run a website for their own health care program. Pathetic.” “Amen,” says Hank, who used to run a tobacco company. “What bugs me is Obama’s complaining about inequality. Just whips people up. Saw them last night on the TV news, in front of a McDonald’s somewhere, screaming for more money. Makes you sick. Want money? Get a job!” “Actually Hank, those people already have a job,” says Cliff from Silicon Valley. “And lucky to have it. Plenty more out there ready to...

Economic Outlook Remains Depressing

Every month at this time when the jobs report comes out, we get reminders not to put too much stock in any one month's numbers. This is wise counsel, first because there's some inherent volatility in month-to-month movements—for instance, December numbers may have been affected by bad weather—and second because these figures often get revised later as more data come in. So the pretty bleak numbers from December don't, in and of themselves, tell us much about how the recovery is going. But those numbers are indeed pretty bleak. Only 74,000 new jobs were created in December, compared to a monthly average of 182,000 for the year. The unemployment rate fell to 6.7 percent, but that's because so many people dropped out of the labor force. The labor force participation rate is now 62.8 percent, its lowest rate since 1978. Some of that is a long-term decline due to an aging population, but most of it comes from people deciding there's no point in looking for work. So let's look at the big...

Europe Limps on in the Year Ahead

T he last meeting of the European Council in December 2013 was absent of much concern for economics. Instead the Council, a body made up of heads of EU states, who come together twice a year to discuss big picture policy issues, decided to focus on security and foreign policy instead. It was a sign that the region was no longer in an acute economic crisis and that other issues like the protests in Ukraine and the NSA’s spying program were of graver concern. In 2014 don’t expect the troubled waters of the eurocrisis to recede completely, but do look forward to a year full of small scares and pseudo-crises that might seem big but will amount to little. While the political calendar is sparse and there are no major elections in any important EU states, one of the core EU countries, Italy, remains a political mess. And with the Italians taking over the rotating EU presidency in June, some analysts are worried the current Italian government might fall before then, which would create an...

The Flying News

AP Images/Daniel Reinhardt
I t was a damned-if-you-do/damned-if-you-don’t contract that Boeing offered its workers last week, and its workers responded accordingly. Confronted with a contract that transformed their pensions into 401k’s, and with the company’s threat to relocate production of its new 777x to some other, lower-wage state unless its workers took the deal, the members of the International Association of Machinists Puget Sound/Boeing district approved the company’s offer by a suitably ambivalent 51-percent-to-49-percent margin. Two months earlier, the same members had rejected management’s offer by a two-to-one margin—whereupon Boeing invited other states to offer it relocation deals. Shortly before the second vote, the company announced that 22 states had responded with proposals—promising tax abatements, free land, anti-union public policies, and Lord only knows what else. If the company took one of those states up on its offer, as many as 10,000 of the 80,000 Boeing jobs in the Greater Seattle...

The Government Guide to Screwing Poor Homeowners

AP Images/Carlos Osorio
AP Images/Carlos Osorio T he December 28 th expiration of extended unemployment benefits, which cut off payments to 1.3 million recipients—and will cut off 3.6 million more over the next year—has dealt a painful body blow to the most vulnerable members of our society. Rolling back unemployment insurance to a maximum of 26 weeks when the average duration of unemployment is still 36 weeks puts millions of families’ lives in jeopardy. Another recently expired provision could cause comparable damage to the same population, but it has yet to trigger similarly urgent attention from lawmakers. The end of the Mortgage Forgiveness Debt Relief Act, which lapsed December 31, means that any type of debt forgiveness on a mortgage will result in a giant tax bill—one that a stressed homeowner cannot usually afford. Even homeowners entitled to compensation for past abuse by the mortgage-lending industry would be subject to unfavorable tax treatment. This will lead to more economically debilitating...

The Moral Calculus Underlying the Debate Over Unemployment Insurance

The FDR memorial's depiction of Depression-era moochers. (Wikimedia Commons/Stefan Fussan)
The Senate is working its way toward (possibly) overcoming a Republican filibuster of an extension of longterm unemployment insurance, after which the measure will die when John Boehner refuses to bring it up for a vote in the House. Or perhaps not; Boehner's current position is that he's "open" to allowing a vote if the cost of the benefits is offset, presumably by taking money from some other program that helps the less fortunate. Boehner might also allow a vote in exchange for a fun-filled afternoon in which a bunch of orphans and widows are brought to the Capitol building so Republicans can lecture them about their lack of initiative, then force them to watch while members of the Banking Committee and a carefully selected group of lobbyists eat mouth-watering steaks flown in from an exclusive ranch in Kobe, Japan. I kid. But there is a particular kind of moral clash at play in these negotiations, one that we don't think about very often. It has to do with the question of what...

Dan Cantor's Machine

Timothy Devine
Timothy Devine E lection night, New York City, November 5, 2013. Mayoral candidate Bill de Blasio, the candidate for both the Democratic and Working Families parties, is racking up a huge victory after running on a platform that calls for raising taxes on the rich and raising wages for workers. Shunning the usual Manhattan-hotel bash, de Blasio has decided to celebrate in a Brooklyn armory, where his supporters have gathered to mark the end of the Michael Bloomberg era and, they hope, the birth of a national movement for a more egalitarian economy. In one corner of the packed armory, Dan Cantor is talking with old friends and young activists who either work for him or used to—two groups that, combined, probably include about half the people in the hall. Cantor, who is 58 years old and of medium height, is wearing a black suit and tie but exhibits a touch of the willful schlumpiness that comes naturally to certain New York Jewish males. His most prominent features are a white streak...

The Fed Transformed

AP Images/Charles Dharapak
AP Images/Charles Dharapak I t is a small miracle that on February 1, Janet Yellen will become chair of the Federal Reserve. She is not just the first woman to head America’s central bank but the first labor economist. While the Fed is ordinarily obsessed with inflation, Yellen has given equal or greater emphasis to unemployment. Yellen represents a break with the Wall Street–friendly senior Obama economic officials who promoted their former colleague Larry Summers for chair. Had Summers gotten the post, the Fed and Treasury would both have been in the hands of the same old boys’ club that coddled the big banks before and after the financial collapse of 2008. That the job went instead to Yellen means the Fed will be an independent power center, and somewhat to the left of the administration. With a four-year term as chair, Yellen will serve at least two years into the next presidency as well. The transformation of the Fed since the economic collapse of 2008, however, is far broader...

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