By: Eugene Robinson, Opinion Writer, The Washington Post, September 19, 2011
“The Forgotten Millions”: Spending More To Create Jobs Now Would Actually Improve Our Long-Run Fiscal Position
Let’s get one thing straight: America is not facing a fiscal crisis. It is, however, still very much experiencing a job crisis.
It’s easy to get confused about the fiscal thing, since everyone’s talking about the “fiscal cliff.” Indeed, one recent poll suggests that a large plurality of the public believes that the budget deficit will go up if we go off that cliff.
In fact, of course, it’s just the opposite: The danger is that the deficit will come down too much, too fast. And the reasons that might happen are purely political; we may be about to slash spending and raise taxes not because markets demand it, but because Republicans have been using blackmail as a bargaining strategy, and the president seems ready to call their bluff.
Moreover, despite years of warnings from the usual suspects about the dangers of deficits and debt, our government can borrow at incredibly low interest rates — interest rates on inflation-protected U.S. bonds are actually negative, so investors are paying our government to make use of their money. And don’t tell me that markets may suddenly turn on us. Remember, the U.S. government can’t run out of cash (it prints the stuff), so the worst that could happen would be a fall in the dollar, which wouldn’t be a terrible thing and might actually help the economy.
Yet there is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now — except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused.
Meanwhile, there is almost no organized pressure to deal with the terrible thing that is actually happening right now — namely, mass unemployment. Yes, we’ve made progress over the past year. But long-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year.
When you see numbers like those, bear in mind that we’re looking at millions of human tragedies: at individuals and families whose lives are falling apart because they can’t find work, at savings consumed, homes lost and dreams destroyed. And the longer this goes on, the bigger the tragedy.
There are also huge dollars-and-cents costs to our unmet jobs crisis. When willing workers endure forced idleness society as a whole suffers from the waste of their efforts and talents. The Congressional Budget Office estimates that what we are actually producing falls short of what we could and should be producing by around 6 percent of G.D.P., or $900 billion a year.
Worse yet, there are good reasons to believe that high unemployment is undermining our future growth as well, as the long-term unemployed come to be considered unemployable, as investment falters in the face of inadequate sales.
So what can be done? The panic over the fiscal cliff has been revelatory. It shows that even the deficit scolds are closet Keynesians. That is, they believe that right now spending cuts and tax hikes would destroy jobs; it’s impossible to make that claim while denying that temporary spending increases and tax cuts would create jobs. Yes, our still-depressed economy needs more fiscal stimulus.
And, to his credit, President Obama did include a modest amount of stimulus in his initial budget offer; the White House, at least, hasn’t completely forgotten about the unemployed. Unfortunately, almost nobody expects those stimulus plans to be included in whatever deal is eventually reached.
So why aren’t we helping the unemployed? It’s not because we can’t afford it. Given those ultralow borrowing costs, plus the damage unemployment is doing to our economy and hence to the tax base, you can make a pretty good case that spending more to create jobs now would actually improve our long-run fiscal position.
Nor, I think, is it really ideology. Even Republicans, when opposing cuts in defense spending, immediately start talking about how such cuts would destroy jobs — and I’m sorry, but weaponized Keynesianism, the assertion that government spending creates jobs, but only if it goes to the military, doesn’t make sense.
No, in the end it’s hard to avoid concluding that it’s about class. Influential people in Washington aren’t worried about losing their jobs; by and large they don’t even know anyone who’s unemployed. The plight of the unemployed simply doesn’t loom large in their minds — and, of course, the unemployed don’t hire lobbyists or make big campaign contributions.
So the unemployment crisis goes on and on, even though we have both the knowledge and the means to solve it. It’s a vast tragedy — and it’s also an outrage.
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 6, 2012
Memo to Alabama: George W. Bush was right.
The former president, making a too-late push for what could have been a game-changing, bipartisan immigration reform law, noted that immigrants now here illegally make an important contribution to the economy. They do the jobs Americans can’t or won’t do.
Opponents disagreed, arguing that the undocumented workers were stealing jobs that should go to Americans—jobs like picking fruit for low wages in the hot sun. That was a questionable claim when the economy was better, but as Alabama farmers are now learning, Bush’s statement is correct even now, when Americans are working for far less pay in jobs for which they are way over-qualified, just to have a job.
In June Alabama passed a draconian immigration law—most of which is still in place, even while courts decide its constitutionality—that has driven many immigrants from the state. The result has not been a wave of grateful unemployed teachers and skilled workers, eager to be underpaid for difficult manual labor. Instead, at the San Francisco Chronicle reports:
The agriculture industry suffered the most immediate impact. Farmers said they will have to downsize or let crops die in the fields. As the season’s harvest winds down, many are worried about next year.
In south Georgia, Connie Horner has heard just about every reason unemployed Americans don’t want to work on her blueberry farm. It’s hot, the hours are long, the pay isn’t enough, and it’s just plain hard.
“You can’t find legal workers,” Horner said. “Basically, they last a day or two, literally.”
There are a number of lessons here. One is that there are surely elected officials and people in the business community who are using the recession to roll back all kinds of hard-fought rights for workers, cutting pay, eliminating job security, and drastically reducing or zeroing out benefits. Another is that while Americans don’t want to do farm work for low wages, they also don’t want to pay higher prices for food harvested by workers paid a decent salary. That’s not an argument for abusing undocumented workers, but it’s also not an argument for scaring foreigners out of the state so locals can have their bad jobs.
What’s remarkable is that some of the same people who scream about illegal immigrants taking American jobs here in the United States are quieter when it comes to foreigners abroad taking what could be American jobs here. Outsourcing of manufacturing jobs increases corporate profits, but adds to the unemployment rate domestically. Those are jobs American will do. If that anti-immigrant worker crowd is genuinely concerned about retaining U.S. jobs, they should focus on bringing back the outsourced jobs—not evacuating the foreign workers.
By: Susan Milligan, U. S. News and World Report, October 24, 2011
All eyes in Washington these days are on the new congressional super committee. The 12 members from both parties in both chambers of Congress have been assigned the task of developing a plan to reduce the federal deficit by $1.5 trillion over the next decade or risk setting off deficit-cutting triggers that will force sharp cuts to both defense and domestic spending.
There are many ways the members of this committee can reach the $1.5 trillion target between now and their Thanksgiving week deadline. We at the Center for American Progress understand that comprehensive immigration reform is not among the deficit reduction options on the table but want to urge the super committee to consider it. Comprehensive immigration reform is one key to boosting economic growth and thus helping to solve our nation’s fiscal problems.
Here are the top 10 reasons why immigration reform, or the lack thereof, affects our economy.
Additions to the U.S. economy
1. $1.5 trillion—The amount of money that would be added to America’s cumulative gross domestic product—the largest measure of economic growth—over 10 years with a comprehensive immigration reform plan that includes legalization for all undocumented immigrants currently living in the United States.
2. 3.4 percent—The potential GDP growth rate over the past two years if comprehensive immigration reform had gone into effect two years ago, in mid-2009. (see Figure 1)
3. 309,000—The number of jobs that would have been gained if comprehensive immigration reform had gone into effect two years ago, in mid-2009. A GDP growth rate of 0.2 percent above the actual growth rate translates into, based on the relationship between economic growth and unemployment, a decrease in unemployment by 0.1 percent, or 154,400 jobs, per year.
4. $4.5 billion to $5.4 billion—The amount of additional net tax revenue that would accrue to the federal government over three years if all undocumented immigrants currently living in the United States were legalized.
Revenue generated by immigrants
5. $4.2 trillion—The amount of revenue generated by Fortune 500 companies founded by immigrants and their children, representing 40 percent of all Fortune 500 companies.
6. $67 billion—The amount of money that immigrant business owners generated in the 2000 census, 12 percent of all business income. In addition, engineering and technology companies with at least one key immigrant founder generated $52 billion between 1995 and 2005 and created roughly 450,000 jobs.
Taxes generated by immigrants
7. $11.2 billion—The amount of tax revenue that states alone collected from undocumented immigrants in 2010.
Negative consequences of mass deportation
8. $2.6 trillion—The amount of money that would evaporate from cumulative U.S. GDP over 10 years if all undocumented immigrants in the country were deported.
9. 618,000—The number of jobs that would have been lost had a program of mass deportation gone into effect two years ago, in mid-2009. A mass deportation program would have caused GDP to decrease by 0.5 percent per year, which, based on the relationship between economic growth and unemployment, translates to an increase in unemployment by 0.2 percent, or 309,000 jobs, per year.
10. $285 billion—The amount of money it would cost to deport all undocumented immigrants in the United States over five years.
Most Americans and their elected representatives in Congress would be pleasantly surprised to learn about the substantial benefits of comprehensive immigration reform to our nation’s broad-based economic growth and prosperity, and thus our ability to reduce our federal budget deficit over the next 10 years. Given how difficult a challenge the super committee faces, we cannot afford to ignore any viable options for strengthening our economy. We hope the super committee takes these top 10 economic reasons into account as they move forward with their deliberations.
By: Angela M. Kelley and Philip E. Wolgin, Center For American Progress, September 29, 2011
“Class warfare!” scream the Republicans, in a voice usually reserved for phrases such as “Run for your lives!”
Spare us the histrionics. The GOP and its upper-crust patrons have been waging an undeclared but devastating war against middle-class, working-class and poor Americans for decades. Now they scream bloody murder at the notion that long-suffering victims might finally hit back.
President Obama’s proposal to boost taxes for the wealthy by $1.5 trillion over the next decade is a good first step toward reforming a system in which billionaire hedge-fund executives are taxed at a lower rate than are their chauffeurs and private chefs.
Republicans whine that, since they oppose raising taxes on the rich — and control the House of Representatives, which can block such legislation — Obama’s proposal should be seen as political, not substantive. This is just a campaign initiative, they say, not a “serious” plan to address the nation’s financial and economic woes.
But that’s pure solipsism: Whatever does not fit the GOP’s worldview is, by definition, illegitimate. By this standard, Obama could propose only measures that are in the Republican Party’s platform — which obviously would defeat the purpose of being elected president as a progressive Democrat in the first place.
Outside of the Republican echo chamber, polls consistently show the American people consider unemployment to be the nation’s most urgent problem, not deficits and debt. Obama was on target with the American Jobs Act he proposed this month; the only question was what took him so long.
Americans do have long-term concerns about debt, however, and by large margins they see an obvious solution: a balanced combination of spending cuts and tax increases. In other words, they want precisely the kind of approach that House Speaker John A. Boehner (R-Ohio) rejected during the debt-ceiling fight — and that he vows to reject again.
Why did Republicans begin squawking about class warfare even before Obama had a chance to announce his proposals? Because by calling on the rich to pay “their fair share” of taxes, the president has hit upon a clear and simple way to illustrate how unequal and unfair our society has become.
Since the beginning of the Reagan years, the share of total income captured by the top 1 percent of earners has doubled while the share taken by the bottom 80 percent has fallen. The rich are getting richer at the expense not only of the poor but of the middle class as well.
Studies demonstrating this trend tend to be dry and, let’s face it, sleep-inducing. But the perverse disparity in tax rates between the super-rich and the rest of us is enough to grab anyone’s attention.
The very wealthy earn much of their income through dividends and capital gains, which are taxed at 15 percent. This low rate would apply specifically to a wildly successful hedge-fund manager who made, say, $50 million last year. By contrast, an insurance company executive who made $500,000 — just 1 percent of what the hedge-fund manager took home — would pay a top marginal income tax rate of 35 percent. Even a teacher who made just $50,000 — 0.1 percent of the hedge-fund haul — would pay a top marginal rate of 25 percent.
Obama proposes tax legislation that would erase this disparity. He also vows that, unless Congress enacts comprehensive — and fair — tax reform, he will allow the Bush tax cuts for households earning more than $250,000 a year to expire at the end of 2012.
The overall plan that Obama announced Monday would cut deficits by about $4 trillion over the next 10 years — without gutting programs that bolster the middle class and aid the poor. New tax revenue and money saved from ending the wars in Iraq and Afghanistan make up most of the total.
Obama’s proposed savings in Medicare and Medicaid are modest and tailored so that their impact is progressive. The president correctly decided that ensuring Social Security’s long-term solvency should proceed on a separate track. All this should be heartening to those who really want to preserve these vital programs.
The headline from Obama’s plan, though, is the call for wealthy Americans to pay taxes like everybody else. If Republicans believe the current system is fine, Obama said, “they should be called out. They should have to defend that unfairness. . . . They ought to have to answer for it.”
We’ve already heard their answer.
And we’ve heard Obama’s retort: “This is not class warfare. It’s math.”