On TAP: Kuttner + Meyerson

Meyerson
July 3, 2018

How Big Business and Big Banks Are Using Their Tax Windfalls. In the topsy-turvy world of the past few weeks, it’s comforting to know that some things haven’t changed. Economic inequality, for instance, continues to surge.

Recent data make clear what any sentient observer could have predicted a year ago: The benefits of the Trump tax cut have gone chiefly to major shareholders, with little to no impact on either corporate investment or workers’ wages. “For the remainder of 2018,” S&P Global’s Howard Silverblatt toldThe Washington Post’s Heather Long, “expectations are high for record corporate expenditures in both buybacks and dividends.”

Indeed, in the first quarter of 2018, stock buybacks were the highest ever recorded ($189 billion). By contrast, wage increases are just keeping pace with inflation, and Morgan Stanley reports that capital spending by American corporations is “past its peak.”

Of course, you can’t invest or give your employees raises if you dole out all your money to your shareholders. Last week, after the Federal Reserve announced that all six U.S. mega-banks had passed their stress tests, the banks announced how much they planned to funnel to their shareholders over the coming year. The New York Times compared those numbers to the banks’ forecasts of how much they’d earn in the coming year, and the results tell us a good deal about the absurd state of the American economy. Bank of America planned to direct 95 percent of its anticipated profits to its shareholders in buybacks and dividends; JP Morgan Chase came in at 98 percent; Citigroup raised the ante to 128 percent; and not to be outdone, Wells Fargo won the bidding at 141 percent. (Morgan Stanley and Goldman Sachs came in at 80 percent and 69 percent, respectively, but these lowball numbers may be due to the fact that, as investment banks, they not only have to pay their shareholders but their many partners as well.)

How much, exactly, that leaves for loans is a good question.

Kuttner
July 2, 2018

You Never Know What You’ve Got Till It’s Gone. Are the centrists in the Democratic Party actually missing the labor movement now that the Supreme Court has dealt public-employee unions what Republicans hope will be a knockout blow? Noam Scheiber of the Times has a really smart piece detailing all of the ways the unions help Democrats and grassroots advocacy groups, and how weaker public-sector unions will set back not just workers but progressive politics generally.

This belated discovery by centrist Democrats of the value of a strong labor movement is a little like Eisenhower’s famous farewell address criticizing the military-industrial complex. Where the hell were they when we needed them?

The Republicans sure figured out how important unions were to Democrats, even if many Democrats didn’t.

We would have a much stronger labor movement, whose voting strength would surely have spared America Donald Trump, if only the last three Democratic presidents had made trade unionism a higher priority. But neither Obama, nor Clinton, nor Carter (though they all had good cabinet and subcabinet appointees at the Department of Labor) put any political muscle behind reforms of the Wagner Act needed to stop union-busting and making it possible for workers to organize without risking their jobs.

Those damned pesky unions—opposing corporate designs for trade that organized labor resisted, resisting deregulation of Wall Street, and challenging the Obama administration’s embrace of a brand of education reform that scapegoated public schools and schoolteachers. The real power players like Robert Rubin under Clinton (or maybe Clinton under Rubin), and his clones in the Obama administration, were opposed to unions and did not lift a finger to help them.

So now, when we need a labor movement more than ever, unions have even less backing from the government or from the rules of the game—and will have to rebuild labor strength one worker at a time. That may yet succeed. But truth be told, the presidential Democratic Party and its allied centrist theorists and Wall Street masters has been a pretty feeble ally of organized labor. Now we all pay the price. 

Kuttner
June 29, 2018

A Big Thank You to Our Readers. Our spring solvency drive set a goal of $50,000, and our readers came through with a total of $57,960. 

Thanks so much to all. The week’s events make clear that the Prospect’s voice is needed more than ever.

The November election—and more fundamentally the survival of our republic—will come down to a contest of energy and mobilization. Whether people who believe in democracy and a decent society can out-organize and out-motivate the haters and the apologists for tyranny.

We believe that we can. That’s why we will keep on keeping on—with your support.

Please enjoy the July 4th break and let’s all remember the republic for which it stands.

Meyerson
June 28, 2018

How Democrats Should Fight the Battle for the Court. Mitch McConnell has said he’ll bring President Trump’s nominee to succeed Anthony Kennedy on the Supreme Court to the Senate floor before the midterm elections. There’s really nothing Democrats can do to prevent that, and they don’t have the votes to block confirmation. On a straight party-line vote, assuming John McCain is absent, Trump’s nominee would win confirmation by a 50-to-49 tally. Not exactly a resounding vote of confidence, but enough to enable the Court to plunge the nation into a morass of plutocratic rule and evangelical bigotry for decades to come.

So, is there any chance a stray Republican might cross over and vote “No”? If, as is likely, the nominee looks willing to join the four current Court right-wingers in repealing Roe or Obergefell, then perhaps Maine’s Susan Collins or Alaska’s Lisa Murkowski could be persuaded to vote against him or her. Which means that while Democrats highlight the threat to choice and gay marriage in a nationwide campaign—which could also benefit Democrats in the November election, most particularly in those affluent suburban districts that could swing Democratic—they should raise the issue to stratospheric heights in Maine and Alaska and any other state where a wavering Republican solon is to be found.

Assume, though, that Trump’s pick is confirmed, and we are thereby compelled to settle into decades of legal diktats rooted in the Benedictine religious biases and the Spencerian social Darwinism of the Court’s right-wingers. How should the Democrats respond to that?

First, if they retake the Senate this November, they should refuse to confirm any Trump judicial nominations. And if a few Democrats break ranks on this, the Senate leadership should do what Mitch McConnell did when President Obama nominated Merrick Garland for the Court: Refuse to hold hearings or to bring the nomination to a vote on the Senate floor. We can term this strategy the McConnell precedent.

Second, assuming the right-wing Gang of Five is firmly ensconced on the Court in 2020, and none has suddenly taken leave to meet his Maker, Democratic candidates for president should embrace what we can term the FDR precedent: Call for legislation to expand the number of justices from seven to nine. President Roosevelt advanced this strategy early in his second term, after the right-wing majority then on the Court had shot down most of the core elements of the early New Deal. Roosevelt’s fear was that they would continue on that course and strike down Social Security and the National Labor Relations Act, both newly enacted.

Roosevelt’s proposal drew a furious backlash, not only from Republicans but also from the Southern Dixiecrats in Congress, and he was compelled to withdraw it. But it had a real effect on the Court, which subsequently and surprisingly upheld the NLRA, Social Security, and other key New Deal legislation.

One of the problems with FDR’s proposal was that he didn’t introduce it—indeed, he may not have conceived it yet—when he ran for re-election one year earlier. If the Democratic presidential candidates in 2020 make it part of their platform, however, and should one of them oust Trump that year, the new president could claim that he or she had a mandate to expand the Court.

This is admittedly a controversial course of action—but even as it will mobilize Trump supporters, particularly evangelicals to turn out to vote in 2020 (which most of them will do, in any case), it could also mobilize the low-propensity voters in the Democratic base if the Democratic campaign makes clear just how much the Court’s troglodytes have it in for them. Besides, it’s not clear what else the Democrats could do to short-circuit decades of the Court diminishing freedoms and afflicting lives.

Kuttner
June 27, 2018

The Court: First Muslims, Now Public Employees. The Supreme Court has ruled, 5-4, in the Janus case that public-sector unions may not collect “fair-share” fees from workers who benefit from union contracts but choose not to join the union as dues-paying members.

This in effect extends “right to work” principles to the entire public sector, the largest source of union growth in recent years, for schoolteachers, nurses, cops, firefighters, and myriad other public workers, some 17 million in all.

The decision, in the short run, will weaken unions such as SEIU, AFSCME, and the teachers’ unions. However, as shown by recent successful actions by teachers in several red states, public-worker political consciousness is on the rise, and so is popular support for them.

Public appreciation of the value of collective bargaining is growing generally. More than three in five Americans have a favorable view of unions, with two-thirds of young people supporting unions.

After Janus, public-sector union members will have to redouble efforts to persuade their free-riding brothers and sisters of the value of strong unions. They will be helped in this enterprise by the worker-bashing of right-wing state governments, the Trump administration, and now the Supreme Court.

It would be an exaggeration to call Janus a blessing in disguise—it is one more outrage by a Supreme Court taking advantage of Neil Gorsuch’s stolen seat. But the organizing that occurs in the wake of Januswill bring out the best in trade unionism.

Meyerson
June 26, 2018

Barbarians in Robes: The Committee to Defend Rich, Bigoted Old White Men (Preferably Patriarchal in the Pope Benedict Mode, and Zealously Republican)—otherwise known as the five Republican justices on the Supreme Court—is on a roll. The Committee is closing out this session with a bang, delivering a satchel of decisions that harks back in its economics to the Lochner court of 1905 (which struck down New York’s law that said bakers couldn’t be made to work more than ten hours a day or 60 hours a week, because it violated the free speech of employers) and in its racial attitudes to the Dred Scott court of 1857 (slightly updated for appearances' sake).

This spring, the Committee ruled that employers could force their workers to resolve disputes with their employer by going through an employer-dominated arbitration process, rather than go to court via class-action suits. The decision flatly ignored the National Labor Relations Act (NLRA), which gives all employees, union or not, the right to seek redress for grievances, doing so by a tortured reading of a 1920s arbitration decision that preceded the NLRA. And later this week, most likely Wednesday, the Committee is likely to rule in the Janus case that public-sector unions cannot collect fees from people it is legally required to represent in matters of bargaining and grievances, a decision that would deal a major blow to the largest unions in the land, and would diminish their capacity to help turn out minority voters and everything else that Republicans loathe.

Moving from the Committee’s class bias to its racial, religious, and gender biases, today’s decision upholding the Muslim Travel Ban is in the best tradition of the Oriental Exclusion Act and the immigration restrictions that from 1924 through 1965 effectively limited immigration to people coming from Northwestern Europe. How it squares with the First Amendment’s prohibition on laws dealing with religious establishments—well, I can’t see how it does square with that. No matter, apparently, to the Committee. In another of today’s decisions, this one to gladden the patriarchal, misogynistic hearts of our own evangelicals, the Committee ruled that pregnancy crisis centers need not be required to inform the women who come to them for guidance that legal abortion is one of their options, and how they might pursue it.

Wait—there’s more! On Monday, the Committee struck down a lower court’s order that overturned race-based gerrymandering in Texas, in a decision that cautioned potential litigants that they needed to assume the good faith of legislators in drawing district lines. In a sense, this decision was a two-fer, not only discouraging future challenges to race-based gerrymandering but also advantaging Republicans in future election contests. Fittingly, the decision came on the fifth anniversary of the Shelby decision, in which the Committee (then with Antonin Scalia rather than Neil Gorsuch) effectively struck down the government’s ability to enforce the Voting Rights Act in states where anyone with eyes could see how white racism still shaped the political and societal order.

And it’s only Tuesday! More judicial barbarism still to come!

Kuttner
June 25, 2018

Can Trump Pull This Off? Trump’s base loves his immigration stance of zero tolerance. His approval ratings are 90 percent among Republicans.

He keeps repeating that the separation of families at the border is the fault of Democrats, and that he saved the day with his executive order requiring detained families to be kept together. The situation is so muddled—and the courts are likely to make it more inconclusive—that Trump just might get away with it, right?

Wrong. The 2018 midterm elections are going to be based on two factors—turnout, and the behavior of swing districts. Turnout among Trump’s base was already peaking in 2016, while turnout among core Democratic constituencies was depressed.

We can expect Democratic turnout among Latinos to go through the roof in 2018, with turnout among blacks, women, and young people also rising dramatically. Meanwhile, in well-educated suburban swing districts, Trump’s behavior is disgusting Republican voters, especially women.

Yes, the generic Republican vote for Congress has risen slightly, but it tends to bounce around. In the districts that matter, Democrats are still headed for a big win in November.

Kuttner
June 22, 2018

Trump’s Full-Blown Trade War. It’s one thing for Trump to demonize Mexicans. Disgracefully, that’s popular with his base, and it also confuses some of the progressive community, because NAFTA really does need to be renegotiated. 

It’s quite something else to invite retaliation from China with a tit-for-tat tariff war that could be devastating for American farm exports (in mostly Republican states). The EU, likewise, has now decided to strike back with retaliatory tariffs, which will harm American exporters and of course workers, as well as splitting the Republican coalition.

The strong rate of GDP growth and low unemployment rate have done nothing for workers’ wages, which have actually declined slightly in the past 12 months. But at least the robust economy has given Trump some bragging rights. This success will be at serious risk in a full-blown trade war.

To be sure, the current trading system does not serve American workers. But neither do Trump’s bizarre, tweet-driven policy thunderbolts, raising tariffs and insulting allies helter-skelter.

In that respect, Trump has done a triple public service, however inadvertently. He has demonstrated that we need a different trade strategy for America—and that he is utterly incompetent to bring one about. And he has managed to divide his hard-core base from the Republican corporate and agricultural interests. 

Well done!

Meyerson
June 21, 2018

Will Another D.C. vs. Disdain Democratic Norms? When is a free and open election invalid? Apparently, when elected officials don’t like the result.

That’s the philosophy of Maine’s Trumpier-than-Trump Republican Governor Paul LePage, who has refused to expand Medicaid in his state despite the legally binding vote of Maine’s citizens, who passed a Medicaid-expansion initiative. LePage has been ordered by the courts to implement the expansion, but still refuses. Mercifully, LePage is termed out of office at year’s end.

Something like that could never happen in the nation’s most liberal jurisdiction, right? Well, maybe it could.

On Tuesday, voters in Washington, D.C., passed an initiative that would raise the minimum wage of tipped workers—currently, only $3.30—to the same level as the city’s non-tipped workers: $15, to be phased in over the next eight years. Unlike the Maine initiative, this one (Initiative 77 by name) was only advisory, but avowed liberals on the D.C. Council and the avowed liberal who’s the mayor wouldn’t thwart the decision of the city’ voters—or would they?

In fact, in the run-up to the election, both Mayor Muriel Bowser and ten of the 13 Council members came out against the initiative. I realize the dust is still settling from Tuesday’s vote, but so far, none of those ten has said that they’ll be bound by the voters’ decision or that they’ve reversed their position. One has even said that due to the relatively low voter turnout (17 percent of registered voters), the Council should feel free to ignorethe voters’ preferences.

The low turnout was chiefly the result of the fact that in the only race that people really focus on and that the media cover—that for mayor—Mayor Bowser drew no serous opponents whatever. Of course, by the logic that low turnouts invalidate results, Bowser’s re-election on Tuesday should also be tossed into the ashcan.

In opposing the initiative, council members aligned themselves with the local restaurant owners’ association and the National Restaurant Association, which in state after state is customarily the only organization that campaigns against minimum wage hikes not just for restaurant employees but for anyone. As the Prospect’sManuel Madrid has noted, the restaurants hired some dillies of right-wing consultants to run the No campaign.

The campaign the consultants ran was couched in the language of saving servers’ tips. Many servers in thriving restaurants opposed the measure, fearing that their tips would vanish in the wake of its passage. That hasn’t been the case in California, which enacted just such a measure—raising tipped workers’ hourly minimum to $15 over a long period of time—a number of years ago. In California, the amount servers make in tips remained essentially the same.

Nor were the tipped workers opposed to the measure a representative sample of the District’s tipped employees. Their ranks didn’t include the hair and nail salon workers, the valet parkers, the folks who deliver meals to your door, and the servers in less affluent neighborhoods. The net income of these workers—the $3.30 an hour plus generally modest tips tips—don’t add up to all that much, which is likely why they were strikingly absent from the servers’ rallies against the initiative.

But this merely addresses the manifest merits of the initiative. What’s now before the council and the mayor is a more fundamental question: Do they accede to the will of the electorate, or do they accept the premise that low turnouts negate election results—notwithstanding the fact that they themselves have often won and re-won offices in low-turnout elections. If that’s their argument for reversing the voters’ decision, the only way they could do that in good faith would be to simultaneously resign.

Their real reason for opposing the measure, of course, is that politicians frequent restaurants and hold events there, and restaurant owners routinely make contributions to their local elected officials. In the cosmic chain of campaign-finance abuses, the restaurant-owner-council-member link isn’t really one that should excite reformers all that much. And there’s no question that some restaurants that operate on the margins may have to make some changes if the ordinance is adopted—though they have fully eight years to adjust.          

But there are thousands of servers in restaurants that aren’t overflowing with affluent diners, or who work trimming hair and nails and delivering pizzas, who are the mayor and council’s constituents, too, even if they don’t make campaign contributions. For all their hard work, they are struggling to survive in this high-cost city. For reasons both moral and economic, the voters just decided to give them a raise. There’s already one government based in D.C. that pays scant attention to voters’ preferences and democratic norms, but that’s what we’ve come to expect from Trump-era Republicans. That’s no reason why the District’s elected (and Democratic) government should join them in disdaining democracy.

Kuttner
June 20, 2018

Trump’s Tax Fraud. For months, we’ve been warning that you would pay the cost of Trump’s $1.9 trillion tax cuts. Well, here it is, the six-month anniversary of passage of the Tax Act, and the Republicans on the House Budget Committee just unveiled their plan: finance their increased deficit and balance the budget by cutting Social Security, Medicare, and Medicaid! 

Here’s the good news. The Tax Act, which was going to be a big political winner for Republicans, is turning out to be a huge loser for them. Republican candidates are running from it. The more that voters learn about it, the less they like it.

Democrats, some of whom defected to support the Reagan and Bush tax cuts, were united in opposition to this one, and are united in their efforts to turn it into a political winner—and a teachable moment about the fraud of supply-side economics, besides.

For the first time in our nearly 30 years of publication, the Prospecthas decided to devote and entire issue to a single topic—the Tax Act, as emblem and substance of all that is corrupt, opportunistic, and fraudulent of this period of Republican rule.

The print issue will be out next week. In the meantime, you can view some of the key pieces at Prospect.org, including the lead pieces by public opinion analysts Stan Greenberg and Guy Molyneux on how to make the Tax Act a winning issue for progressives.

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