“Destructive In The Long Run”: The Red State Economic Miracle That Wasn’t
For years progressives in blue states have had to put up with listening to conservatives in red states bray about their supposed economic “miracles” of low-tax, low-investment paradises of low employment in places like Texas and North Dakota.
The fact that these economies were creating mostly minimum-wage jobs with terrible safety nets and awful infrastructure fell on deaf ears. So did the response that those jobs were temporary and fossil-fuel based, and would not last. Undiversified economies based on a single natural resource tend to fare poorly over time.
And indeed it looks like progressives are getting the last laugh due to low oil prices:
States dependent on oil and gas revenue are bracing for layoffs, slashing agency budgets and growing increasingly anxious about the ripple effect that falling oil prices may have on their local economies. The concerns are cutting across traditional oil states like Texas, Louisiana, Oklahoma and Alaska as well as those like North Dakota that are benefiting from the nation’s latest energy boom.
“The crunch is coming,” said Gunnar Knapp, a professor of economics and the director of the Institute of Social and Economic Research at the University of Alaska Anchorage.
Michael Hiltzik at the L.A. Times had more on the topic earlier this week:
A greater danger to the state’s boom-era reputation is that the receding tide may expose a lot of economic wreckage to public view. One consequence of the state’s low-tax, low-service credo is that infrastructure spending has been starved, just at the moment when it’s most needed. As the Texas Tribune reported last year, local roads have become so damaged by heavy oil-patch traffic that in some districts the only option has been to convert paved roads to gravel — there’s no money for repaving, despite the state’s burgeoning wealth.
That shows how little pressure has been placed on the oil industry to carry its fair share of the public cost of the boom or contribute adequately to public investment. When the boom becomes a bust, there will be even less money, and you can bet that the oil industry will be pleading poverty.
When it isn’t simply padding the bottom lines of the wealthiest Americans, most conservative economic policy tends to be about taking the easiest, most aggressive and short-sighted approach to any problem. Eliminating taxes so you can entice corporate grifters may net some immediate transitory gains, but it’s destructive in the long run. Similarly, putting your eggs into the fossil fuel basket doesn’t just destroy your local environment and add to the climate change already ravaging your state, it also puts you at severe risk of economic seizures if fossil fuel prices decline.
By: David Atkins, Political Animal Blog, The Washington Monthly, December 27, 2014
“Citigroup Becomes Its Own Self-Serving Lawmaker”: 21st Century Civics Lesson; How A Corporate Bill Becomes A Law
Congress, which has long been so tied up in a partisan knot by right-wing extremists that it has been unable to move, suddenly sprang loose at the end of the year and put on a phenomenal show of acrobatic lawmaking.
In one big, bipartisan spending bill, our legislative gymnasts pulled off a breathtaking, flat-footed backflip for Wall Street, and then set a dizzying new height record for the amount of money deep-pocketed donors can give to the two major political parties. It was the best scratch-my-back performance you never saw. You and I didn’t see it — because it happened in secret.
The favor was huge — allowing Wall Street’s most reckless speculators to have their losses on risky derivative deals insured by us taxpayers. Yes, such losses were a central cause of the 2008 financial crash and subsequent unholy bank bailout, which led to passage of the Dodd-Frank reform law, including a provision sparing taxpayers from covering future losses. But with one, compact, 85-line provision inserted deep inside the 1,600-page, trillion-dollar spending bill, Congress did a dazzling flip-flop on that regulation, putting us taxpayers back on the hook for the banksters’ high-risk speculation.
In this same spending bill, Congress also used its legislative athleticism to free rich donors (such as Wall Street bankers) from a limit of under $100,000 on the donation that any one of them can give to political parties. In a spectacular gravity-defying stunt, lawmakers flung the limit on these donations to a record-setting 15 times higher than before. So now bankers who are grateful to either party for being able to make a killing on taxpayer-backed deals can give $1.5 million each to the parties.
Perhaps you recall from your high school civics class that neat, one-page flow chart showing the perfectly logical, beautifully democratic process that Congress must go through to pass our laws.
What a bunch of kidders those chart makers were! To see how the sausage is really made, let’s take a look at that trillion-dollar budget bill that Congress squeezed out just before Christmas. It was crammed with special corporate favors, such as: reinstating a Bush rule allowing mining giants to explode the tops off ancient Appalachian mountains and then bulldoze the rubble down into the valley below, destroying pristine mountain streams; another letting long-haul trucking outfits require their drivers to be on the road more than 11 hours a day and up to 82 hours per week, filling our highways with highballing, sleep-deprived truckers; and cutting $60 billion from the Environmental Protection Agency, freeing up polluters to go unpunished for polluting.
None of these favors had anything to do with that “how a bill becomes law” flow chart in our civics textbook. No bill was filed, no public hearings, no debate, no vote. Just — BAM! — there they were, a thicket of benefits secretly slipped into the 1,600-page budget bill by … well, by whom? Largely by corporate lobbyists, though they get one of their for-hire congresscritters to do the actual dirty deed.
The taxpayer subsidy for Wall Street, for example, was written by Citigroup. The bank’s lobbyists then handed the provision to Kansas Republican Kevin Yoder, who slipped it into the bill. Thus, the Wall Street conglomerate that took a $50 billion bailout from us taxpayers just seven years ago to save itself from its own bad deals essentially was allowed to become an unelected, self-serving, do-it-yourself, backroom “lawmaker” to make sure that your and my tax dollars will be there to cover its next mess-up.
And that, boys and girls, is the real flow chart for making our laws. It’s always an amazing sight when Wall Street and Congress get together — especially when they get together out of sight.
By: Jim Hightower, The National Memo, December 24, 2014
“Where Is The Outrage”: How States Are Redistributing The Wealth
In 2008, then-candidate Barack Obama was lambasted for supposedly endorsing policies of wealth redistribution. The right feared that under an Obama presidency, Washington would use federal power to take money from some Americans and give it to others. Yet, only a few years later, the most explicit examples of such redistribution are happening in the states, and often at the urging of Republicans.
The most illustrative example began in 2012, when Kansas’ Republican Gov. Sam Brownback signed a landmark bill that delivered big tax cuts to high-income earners and businesses. Less than two years after that tax cut, the state’s income tax revenues plummeted by a quarter-billion dollars — and now Brownback is pushing to use money for public employees’ pensions to instead cover the state’s ensuing budget shortfalls.
Brownback’s proposal: Slash the state’s required pension contribution by $40 million to balance the state budget, even though Kansas already has one of the worst-funded pension systems in the nation.
Brownback defended his proposal to take money from middle-class state workers and use it to effectively finance his tax cuts for the wealthy. He told the Wichita Eagle: “It’s kind of, uh, well where are you going to go for the funds? And I don’t like it, but it’s kind of what’s your other option if you don’t hit K-12 and higher ed with allotments?”
Brownback is not alone. He joins fellow Republican Gov. Chris Christie in coupling large tax breaks with cuts to actuarially required pension payments. In New Jersey, Christie slashed required pension payments while signing legislation expanding tax credits to corporations, and doling out a record amount of taxpayer subsidies to businesses. Many of those subsidies have flowed to firms whose executives have made campaign contributions to Republican political organizations. Earlier this month, New Jersey pension trustees filed a lawsuit against Christie for not making legally required contributions to the state’s pension system.
Both Brownback and Christie promoted their tax cuts as instruments to boost economic growth. Yet, a recent review of federal data by the Kansas City Star found Kansas “trails most other states when it comes to job growth.” Likewise, an investigative series by Gannett newspapers recently found “New Jersey’s job growth rate [is] the second worst in the nation. … New Jersey’s middle class has lost billions in income through layoffs, salary cuts and wage freezes [and] more than 100,000 job seekers have been unemployed for months on end.”
Illinois followed a somewhat similar path. For years, lawmakers did not make the full actuarially required pension payments, causing severe funding shortages in the state’s pension system. While lawmakers said there was little money to meet pension obligations, Democratic Gov. Pat Quinn signed a corporate tax cut in 2011 that is projected to cost the state more than $370 million a year in lost revenue. Two years after signing that bill, as pension funding gaps swelled, Quinn signed legislation slashing public employees’ retirement benefits. An Illinois judge last month ruled that the legislation violated the state’s constitution, though the ruling is being appealed.
The obvious question raised by these episodes is: Where is the outrage? To date, these attempts to use workers’ money to finance massive giveaways to the rich have generated little media coverage or political opposition — and certainly less than the full-fledged frenzy that took place when Obama made his “spread the wealth” comment a few years ago.
The tepid response to this kind of wealth transfer suggests that for all the angry rhetoric about redistribution you might hear on talk radio, cable TV and in the halls of Congress, the political and media class is perfectly fine with redistribution — as long as the cash flows from the 99 percent to the 1 percent, and not the other way around.
By: David Sirota, Senior Writer, the International Business Times; The National Memo, December 26, 2014
“Why We Can’t Educate Racism Away”: At Its Root, Racism Is A Structural Problem
How prejudiced are Americans? The internet knows. Whether it’s racism, sexism, cissexism, transphobia, classism, sizeism, or ableism, online residents are watching out for it and pointing it out at tremendous volume. Whole tumblrs are dedicated to meticulously cataloging the prejudiced histories of famous people.
While often useful and necessary, this strategy comes up short. The idea is that by “calling out” individual acts of oppression, we can raise awareness about the myriad subtle ways that prejudice manifests itself. The citizenry, better educated, will adjust its behaviors.
The problem is that white people, our dominant and most privileged socioeconomic group, tend to resist these critiques. In the case of racism, they are the ones who benefit from prejudice, and they squirm out of this stigma in increasingly interesting ways. How? These days, by loudly agreeing with those critiques, thereby signaling that they are meant for other, bad white people.
Think of the guy in critical theory class who embraces radical feminist authors extra-fervently in a bid to escape his own implication in the patriarchy. This bit of political jujitsu is rather “like buying an indulgence,” as Reihan Salam put it at Slate.
One might respond that the answer is improved self-knowledge, greater humility, and more self-flagellation on the part of the privileged (see: #CrimingWhileWhite). Sure. But the problem is that there is no possible demonstration of prejudice and privilege that cannot also be appropriated by white people in the service of demonstrating the purity of their own views, resulting in an endless vortex of uncomfortable, obnoxious earnestness. Being a Not-Racist these days is getting very subtle indeed.
But there’s another approach that is both simpler and far more difficult. Instead of focusing on individual guilt and innocence, the socioeconomic structure that undergirds racism can get equal or greater billing. If educating the privileged has reached a point of diminishing returns, then attacking racist outcomes with structural policy can make that education unnecessary.
Now, it should be noted that any individual instance of calling out prejudice is surely harmless and heartfelt. It should further be noted that many if not most anti-prejudice activists share these structural goals. The problem is a question of emphasis. Prejudiced words tend to get 10 times more attention than racist acts and structures. For example, Donald Sterling was hounded mercilessly for his racist comments, but largely ignored for his concretely racist actions as a landlord.
And the problems America faces go far beyond one rotten rich person. There’s the prison-industrial complex. The stupendous wealth and income gap between black and white. The fact that the police randomly gun down unarmed black men and boys on a regular basis. That’s just for starters — and it’s getting worse, not better.
Working on those problems is going to take a massive nationwide policy effort. Prison and sentencing reform, ending the drug war, overhauling American policing, and implementing quota-based affirmative action would be a good start. In particular, there is a good case for class to take center stage in any anti-prejudice effort. Nearly all racist oppression is heavily mediated through economic structures and worsened by endemic poverty.
More importantly, income differences and poverty are easy problems to fix policy-wise. (Fixing American police is a hellish problem and I have no idea where to start.) But a lack of money can be bridged with simple income transfers, from the rich to the poor.
All of this is very hard lift politically, of course. But substantive politics is the best way to get past people’s nearly infinite capacity for self-exculpation. If the root of racism is in our structures, then structural policy should be the solution.
By: Ryan Cooper, The Week, December 25, 2014
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