In Tuesday’s State of the Union speech, President Obama called on members of Congress to raise the federal minimum wage from $7.25 to $9.00 an hour, something Governor Mitt Romney (R-MA) supported during the 2012 election. The president said, “This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead.”
Who could argue with that?
Two Republican leaders have voiced their opposition to the president’s proposal. House Speaker John Boehner (R-OH) and Senator Marco Rubio (R-FL) agree that raising the minimum wage hurts businesses, claiming that increasing the cost of employment makes it difficult for businesses to sustain themselves and deters them from hiring employees.
A study released yesterday by the Center for Economic and Policy Research suggests otherwise. John Schmitt, who authored Why Does The Minimum Wage Have No Discernible Effect on Employment?, argues that raising wages actually has little to no effect on employment. Schmitt offers 11 “channels of adjustment,” ways in which businesses could respond to a raise in minimum wage. These include raising prices on goods and services (offset by higher demand), increase in worker efficiency and effort, and less difficulty in recruiting and retaining employees which “may compensate some or all of the increased wage costs, allowing employers to maintain employment levels.”
Based on the results of this study, small businesses have everything to gain in paying their employees a wage they can live on. Economist and New York Times columnist Paul Krugman addressed the myth behind cutting minimum wage during a time of recession back in 2009. “In reality, reducing wages would at best do nothing for employment; more likely it would actually be contractionary,” Krugman said. “Proposing wage cuts as a solution to unemployment is a totally counterproductive idea.”
Larger corporations such as Walmart and McDonald’s that employ 66% of low-wage workers are rewarding their top executives in profitable years with raises, while their low-wage employees are still making minimum wage — a pay level that is not sustainable for many American families. In fact, if minimum wage matched inflation, it would be $10.58 per hour.
As stated in a Huffington Post article, “This would guarantee that workers on the lowest rung of the economic ladder don’t lose purchasing power, but it would also mean fast-food companies and other low-wage employers would have to pay higher wages just about every year, except in rare cases of deflation.”
This type of proposal was already favored in 2010, when the Public Religion Research Institute conducted a poll and found that 67 percent of respondents were in favor of increasing the minimum wage to $10.00 an hour—that includes a majority of respondents who identified as Republicans.
In 2007, President Bush signed the Fair Minimum Wage Act, which easily passed in the House 315-116, including bipartisan support from 82 Republicans. It passed the Senate — with the help of Mitch McConnell (R-KY) — by a 94-3 vote before making it to the president’s desk.
Studies clearly point to the profitable effects on individuals and businesses if earnings per hour are raised to a level where low-wage workers are actually able to support themselves and their families. If Republicans like Boehner and Rubio are truly advocating for their middle-class constituents, then supporting the president in ensuring that workers earn what they deserve — and can live on — ought to be a nonpartisan no-brainer.
By: Allison Brito, The National Memo, February 14, 2013
What may finally consume the House Republicans is their boundless contempt for the American public – a contempt bluntly demonstrated in their refusal to consider any reasonable compromise with President Obama to avoid the so-called “fiscal cliff” on December 31. They know from the election results (and every poll) that the public believes taxes should be raised on the wealthy. They know that the public wants bipartisan compromise. And they know that the approval rating of the House Republicans, in contrast to the president’s upwardly trending numbers, are veering toward historic lows.
Moreover, they claim to believe that the major tax hikes and spending cuts that will occur on January 1, if negotiations, fail, will be ruinous for the American and perhaps the world economy. (And never mind that this concern validates Keynesian economics, flatly contradicting their professed ideology.) Failure to achieve a deal may result in a renewed recession or worse.
Yet the majority of Republican members adhere so blindly to their far-right ideology that on Thursday evening, they humiliated their own leadership by refusing to support Speaker John Boehner’s “Plan B” — and effectively scuttled negotiations between the House leadership and the White House. Boehner thought a bill to increase taxes only on households earning more than $1 million annually would pass the House, as Majority Leader Eric Cantor confidently announced. “We’re going to have the votes,” he said on Thursday afternoon. Several hours later the House leaders cancelled the roll call on the tax bill, admitting that they didn’t have the votes.
This embarrassing episode – the “Mayan Apocalypse” of the Republicans Party – demonstrates again why they are unfit for the responsibilities of national office.
They proved their unfitness the first time in the summer of 2011, when they held the national debt ceiling hostage, supposedly to reduce spending, and succeeded only in damaging both the nation’s credit rating and the economic recovery. Now they have declared their unwillingness to negotiate with a newly re-elected president, who won easily on the taxation issue. Although they held the majority, they actually lost seats and received fewer total votes than the House Democrats. But still they see no reason to deal with the president or acknowledge the national consensus.
Naturally, public anger at the Republicans is growing. But how furious would people feel if they fully understood this latest absurd episode on Capitol Hill? Boehner’s proposal was exceptionally generous to the wealthiest taxpayers – and mean to the poor and working families.
His Plan B would have extended the Bush tax cuts for their first million dollars of income; repealed a limit on tax deductions by the highest-income households; established a dividend tax rate of only 20 percent; and maintained an estate tax break for those same highest-income families worth an average $1.1 million. At the same time, according to the authoritative Center on Budget and Policy Priorities, Boehner’s bill would have ended various tax credits for low-income and middle-income families, costing them roughly $25 billion a year and driving millions of American children into poverty.
But awful as that proposal was, it was deemed too liberal by the dominant faction in the Republican caucus. They found it so offensively decent, so treasonously moderate, that they made fools of their own leaders and themselves rather than let negotiations continue. (Their spending bill was even worse.)
The president is fortunate in his opposition, whose obstinacy and extremism may yet prevent him from making a terrible deal to damage Social Security or Medicare when neither is necessary. He wanted to make deal – very badly – but there is nobody with the competence or sanity with whom to make a deal, not even a raw deal.
Now Obama must explain clearly what has happened. Perhaps then voters will begin to draw the obvious conclusion – that this country’s problems cannot be addressed, let alone solved, until they remove these Republicans from power.
By: Joe Conason, The National Memo, December 21, 2012
The nation’s largest private employer, Walmart, has announced that beginning in 2013 it will begin drastically reducing the number of new hires who receive health insurance coverage, according to The Huffington Post.
However, its planned policy of not offering new employees health insurance if their hours dip below 30 a week indicates that they intend to take advantage of Obamacare’s new obligation to provide coverage for those who cannot afford it. And with several Republican governors promising to deny the funds for Medicaid expansion, the new policy could lead to a swift increase in the uninsured.
In several states, Walmart tops the list of employers whose employees seek government-funded health care and food assistance for their families, forcing taxpayers to subsidize its low prices and low wages.
Former Secretary of Labor Robert Reich points out that despite the incredible wealth of Walmart’s primary stockholders, the Walton family, its employees earn wages that may not even keep them out of poverty.
“The average Walmart employee earns $8.81 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t qualify for benefits,” Reich wrote in one of his recent columns encouraging the retail giant’s employees to organize. Across the country a small percentage of Walmart’s employees walked out on Black Friday, protesting the company’s alleged retaliation against workers who speak out for better working conditions.
“Organizing makes economic sense,” Reich wrote.
In 2006, Walmart responded to criticism by greatly expanding the number of employees to whom it offered health insurance. They reduced the number receiving coverage in 2011.
“This is another example of a tremendous government subsidy to Walmart via its workers,” Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara told The Huffington Post.
This change in policy will push the number of employees without benefits closer to one half.
Critics have said that Walmart provides a huge benefit to poor consumers by multiplying the value of food stamps with its low prices. But to Doug Henwood, that argument misses the central problem with the impact that Walmart has had on our economy:
And, yeah, it’s nice that Walmart has been able to provide a working class facing at best stagnant wages with lots of cheap stuff, but Walmart has itself had no small effect on dragging average wages down. It’s not just that they’ve been an inspiring business model for the rest for corporate sector, impressed by the chain’s growth and profitability. That’s led to endless rounds of outsourcing and speedup. But also by lowering the cost of reproduction of the working class, to use the old language, they’ve made it easier for employers to keep a lid on wages.
Add into the equation that taxpayers are subsidizing the costs of these wages and you have a formula for a permanent underclass underwritten by a government that can do little else than providing basic health care and sustenance.
By: Jason Sattler, The National Memo, December 3, 2012
Since August, when Mitt Romney chose Paul Ryan as his running mate, the two campaigns have fought a fierce battle over who is the most stalwart protector of Medicare. In the first presidential debate, Romney assailed President Obama for his $716 billion in Medicare cuts, and Ryan did the same in last week’s vice presidential face-off. Likewise, the Obama campaign has hit Team Romney for the Ryan plan and its Medicare “premium support”—which, if implemented, would gradually replace traditional Medicare with subsidized, regulated private insurance.
The irony is that—in the short term, at least—Medicare will stay unchanged, regardless of who wins the election. Seniors are among the most mobilized voters in the electorate, and there’s too much political risk involved in making big, immediate changes to Medicare. For that reason, Medicare reform plans on both sides are backloaded and will take time to unfold.
The same isn’t true of Medicaid, the other major federal health-care program. The primary constituency for Medicaid—poor and working-class families—lacks the clout and influence of seniors. And while the Obama administration expanded the program in the Affordable Care Act, it has also made Medicaid a ripe target for conservative cuts to social insurance.
This means that, as Mother Jones’ Kevin Drum pointed out last week, Medicaid, not Medicare, is the actual flashpoint in this election. Romney has promised to “block grant” the program, giving states more flexibility in dealing with eligibility and benefits. Some states would use this as an opportunity to innovate. But as Drum notes, just as many would use it as an excuse to drop health coverage for poor people:
Lots of states, especially poor states in the South, don’t have much interest in experimenting. They just want to slash eligibility for Medicaid. Given the freedom to do it, they’d adopt what Ed Kilgore calls the “Mississippi model,” cutting off coverage for a family of three earning anything over $8,200. For all the talk of fresh thinking and new solutions, what they really want to do is simple: They want to stop providing medical care for poor people.
Admittedly, this is a little speculative. It’s possible—albeit, unlikely—that a future governor of South Carolina or Alabama might want to use the new flexibility to improve services for lower-income people. With that in mind, it’s also worth noting the extent to which Romney’s block-grant plan involves a massive cut to overall Medicaid spending. The Center on Budget and Policy Priorities finds that with a Paul Ryan-style block grant in place, overall Medicaid spending would decline by one-third over the next decade. When you put this in the context of Romney’s budget proposals—which include new defense spending and a promise to protect Medicare—and his promise to repeal the Affordable Care Act, the result is a $1.5 trillion reduction in Medicaid spending by 2022. These cuts would add an additional 14 to 19 million people to the ranks of the uninsured, on top of the 30 million people who would lose coverage as a result of full Obamacare repeal.
It’s his approach to Medicaid, more than anything else, that reveals Mitt Romney’s priorities—aid for the rich, paid for by taking relief from the poor.
By: Jamelle Bouie, The American Prospect, October 15, 2012
So Obama, defending his plan to raise taxes on the rich, says this:
“If you are a wealthy C.E.O. or hedge-fund manager in America right now, your taxes are lower than they have ever been. They are lower than they have been since the nineteen-fifties,” the President said. “You can still ride on your corporate jet. You’re just going to have to pay a little more.”
And billionaire hedge-fund manager Leon Cooperman, a former Obama supporter, responds with this:
“You know, the largest and greatest country in the free world put a forty-seven-year-old guy that never worked a day in his life and made him in charge of the free world … Not totally different from taking Adolf Hitler in Germany and making him in charge of Germany because people were economically dissatisfied.”
Cooperman, like so many of his fellow super-rich, is upset at Obama’s class-warfare “tone.” But in response, as Chrystia Freeland documents in her definitive New Yorker treatment of billionaire Obama hate, Cooperman raises the level of divisive rhetoric light-years beyond Obama’s, straight into a galaxy of ludicrous imbecility. It is beyond irrational to compare Obama with Hitler, or to argue that in any meaningful way his administration has waged class warfare against the rich. If we’ve said it once, we’ve said it a million times, Obama has been great for the rich!
Freeland says it again:
The growing antagonism of the super-wealthy toward Obama can seem mystifying, since Obama has served the rich quite well. His Administration supported the seven-hundred-billion-dollar TARP rescue package for Wall Street, and resisted calls from the Nobel Prize winners Joseph Stiglitz and Paul Krugman, and others on the left, to nationalize the big banks in exchange for that largesse. At the end of September, the S. & P. 500, the benchmark U.S. stock index, had rebounded to just 6.9 per cent below its all-time pre-crisis high, on October 9, 2007. The economists Emmanuel Saez and Thomas Piketty have found that ninety-three per cent of the gains during the 2009-10 recovery went to the top one per cent of earners.
Vein-popping blood-pressure spikes are hard to avoid when one reads about the hurt feelings of America’s billionaires. Seriously, if you’re looking for ways to provoke real socialist revolution in the United States, the behavior investigated by Freeland is surely the best way to go about it, outside of mass-mailing invitations to a storm-the-barricades party to every American on food stamps. Flaunt your entitlement! Bemoan the hardship of your 14.1 percent tax rate! Complain that you are not getting enough credit for endowing the local symphony!
But the real wonder is that Obama doesn’t take more advantage of this obvious public relations bonanza. It is impossible to imagine anything that could play better for Obama with working-class voters than the fact that “hostility toward the President is particularly strident among the ultra-rich.” Franklin D. Roosevelt knew what to do with banker ire — just a few days before Election Day in 1936 he famously told a crowd at Madison Square Garden that “I welcome their hatred.”
Obama should be doing the same.
Or maybe he is. Because if we want to understand why polls show Obama up comfortably in Ohio, at least part of the reason has to be that Wall Street billionaires hate him — and like the other guy.
By: Andrew Leonard, Salon, October 1, 2012