Harold Meyerson

News From the Real Economy

Both in general and on Friday, the entirely manufactured crisis of whether the U.S. will raise its debt ceiling is obscuring a very real crisis -- the ongoing collapse of the American economy. Friday's news on the real crisis was the government's report on gross domestic product growth for the second quarter of this year, which, at an anemic 1.3 percent, was about half a percent under what most economists had been predicting and clearly not enough to create very many jobs. But the real shockers in Friday's report from the Commerce Department's Bureau of Economic Analysis were the downward revisions in GDP from previous quarters. The previous estimation of GDP growth in the first quarter, 1.9 percent, was revised downward -- actually, almost zeroed out -- to just 0.4 percent. The growth rate for the first half of 2011, then, is clearly under 1 percent. As a general rule, the U.S. economy has to grow at a rate of about 2.5 percent just to keep up with population growth, and more than...

Losing the Big Game

Are congressional Democrats and President Obama looking better than congressional Republicans in the current debt standoff? You bet they are. And how are they doing in the larger battle of ideas? They're getting clobbered. A new Pew Poll released Tuesday shows that by a 50 percent to 35 percent margin, the public believes the Republicans are more extreme in their positions. Among 18- to 29-year-olds, the margin expands to 60 percent to 27 percent. And while Obama's approval rating has declined to a mere 44 percent, the approval rating of Republican leaders has descended to an abysmal 25 percent. That's it for the good news, if good it be. On the other side of the ledger, the continual stream of crap coming from both Republicans and, of late, Obama on the theme that cutting government spending will actually create jobs seems to be taking hold. As my Washington Post colleague and buddy E. J. Dionne noted yesterday, when Pew asked respondents in March how major spending cuts would affect...

Cantor's Quandary

The trickiest two-step in Washington as the debt-ceiling deadline looms is the one that House Republican Leader Eric Cantor has been called on to perform. Even more than his boss, John Boehner, Cantor answers to two masters whose interests have diverged: Wall Street and the Tea Party. Until the past few days, Cantor has tilted toward the Teasters, at least when in public. Walking out on Joe Biden's negotiations with congressional leaders, challenging President Obama during his meetings with those leaders, and taking a harder line than Boehner on any proposed compromises, Cantor had consistently positioned himself as the leader of the new, more radical generation of GOP legislators, the Gingrich to Boehner's Bob Michael. Now, however, Cantor has become Boehner's enforcer, telling the Teasters to stand down and accept Boehner's debt-ceiling plan. In Boehner's meeting with the House GOP caucus on Wednesday morning, Cantor, according to The Wall Street Journal , not only defended Boehner'...

Frankensteins and Their Monsters

One of the few pleasures, perverse though it be, of watching the debt-ceiling idiocy unfold has been the spectacle of the very powers who helped create the American far right -- helped elect it, and contributed mightily to its ideology -- pleading with the congressional Tea Party acolytes to support legislation (John Boehner's latest effort in particular) to raise the debt ceiling. From Grover Norquist to the U.S. Chamber of Commerce to the guys who write those deranged Wall Street Journal editorials, the right wing's powers-that-be have spent the past few days imploring the Tea Party congressmen, as one might a slow-witted and recalcitrant child, to realize that refusing to raise the debt ceiling, particularly now that all tax increases have been taken off the table, is a really, really bad idea. "Boehner's plan is the only way to bring spending down by the same amount the debt ceiling increases -- without raising taxes," Norquist, author and enforcer of the no-tax pledge, told...

The Uncertainty Scam

Of all the reasons that business and the right adduce for the failure of the American economy to rebound, "uncertainty" is surely the most bogus. Their definition of "uncertainty," for starters, is entirely political. They are not referring to the uncertainty that comes with the weather or to the uncertainty we experienced during the meltdown of 2008, when the banks weren't certain how many worthless credit-default swaps were held by the other banks and companies they dealt with -- an uncertainty that caused inter-bank transactions to shudder to a halt. They are not even referring to the uncertainty that attends the question of when the American consumer will start consuming again. No, the uncertainty in question is entirely political in nature. It refers only to acts undertaken by Democrats in general and the president in particular that will have economic consequences. Thus Dodd-Frank and the health-care reform act engender uncertainty. But why do they engender uncertainty? Many...

Lenin, Mao, and Bachmann

One of the first things that Lenin's Bolsheviks and Mao's Communists did upon taking power was to repudiate the debts incurred by the regimes they'd overthrown. Debt, shmet, the commies said. These were payments to capitalist institutions and treasuries that took bread out of people's mouths. To hell with 'em. How the wheel has turned. Yesterday, the Chinese government -- specifically, its State Administration of Foreign Exchange -- declared it would be an act of irresponsibility for capitalist America to default on its debt. "We hope the U.S. government will earnestly adopt responsible policies to strengthen international market confidence, and to respect and protect the interests of investors," the agency wrote in response to questions on its website. According to The Financial Times , which reported on this statement of China's position in today's paper, roughly two-thirds of China's $3.197 trillion in currency reserves is invested in "dollar-denominated assets" -- that is, in...

Wal-Mart, Why?

Joe Hansen says he's "pissed," and it's no mystery why. Hansen, the president of the United Food and Commercial Workers, which represents the nation's unionized supermarket workers, is dismayed that when first lady Michelle Obama meets tomorrow at the White House with representatives of retailers who have markets in underserved areas, Wal-Mart will be in attendance. "We've been fighting Wal-Mart in New York, Chicago, and here in D.C.," Hansen told me this afternoon. "They take jobs away from workers in unionized chains -- jobs that pay decent wages and have decent benefits. No company has done more to reduce the wages and benefits of American workers than Wal-Mart." "I'm a supporter of the president and his efforts to create good jobs," Hansen continued, "but they've got to get their act together here. I give the first lady all the credit in the world for promoting nutritious food, but Wal-Mart employees often can't afford to buy that food." With its sales and share value stagnating,...

No Class Warfare Here!

Whenever liberals note that the rich are getting richer while everyone else is either treading water or sinking, or that profits are up while wages are down, or, worse yet, that profits are up because wages are down, those liberals are invariably accused by conservatives of fomenting class warfare. Well, goodness knows, we at the Prospect would never stoop so low. We would, however, refer our readers to the July 11 "Eye on the Market" report by J.P. Morgan Chase Chief Investment Officer Michael Cembalest, which demonstrates conclusively that, well, profits are up because wages are down. ("Eye on the Market" is a newsletter that Chase circulates to its large investors.) The subject of the July 11 report is corporate profits, in particular, the pre-tax profit margins of the S&P 500, the 500 largest publicly-traded companies based in the U.S. Those profit margins, you'll be glad to know, are close to record highs, nearing 13 percent of company revenues - their highest levels since...

Headlines We Pondered

From yesterday’s New York Times , a front-page headline and its sub-headline: Assassination in Afghanistan Creates a Void Karzai’s Half-Brother Was Divisive Force So now they have to come up with another divisive force?

The Unsurprising California Special

Democrat Janice Hahn's victory last night over Republican Craig Huey in a Los Angeles-area special congressional election should not have come as a surprise. For the past couple weeks, the political class was abuzz (well, mildly abuzz) with speculation that Huey, who spent $883,000 of his own money on his campaign, could pull an upset in this solidly Democratic district, where Democrats hold an 18 percentage point registration edge over Republicans. It was, after all, a low-turnout special election, and Hahn, a veteran Los Angeles City Council member, was, horror of horrors, a career pol. But the Huey tsunami that was supposed to sweep over this coastal (Venice to San Pedro) district never materialized. When the votes were counted last night, Hahn won by a decisive 54.6 percent to 45.4 percent margin - a 9 point victory, hardly overwhelming, but more than good enough for a special election in which just 23 percent of the district's registered voters actually turned out. There was...

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