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“Hey, Middle Class; Hillary Gets It”: Linking The Concepts Of Fairness And Growth

Here’s one thing I’m sure of about the economic speech Hillary Clinton gave Monday morning at the New School: If a relatively unknown Democratic governor of Illinois or Michigan were running for president, and he gave the speech Hillary Clinton gave Monday morning at the New School, rank-and-file liberals would be turning rapturous cartwheels. She correctly identified the central economic problem of our time; she talked very clearly about the kinds of solutions she’d pursue to address it; she even tossed a few threats in Wall Street’s direction.

The problem is the wages of middle-class workers. The solutions are varied but boil down to a range of policies that would do two things: one, give corporations incentives to share profits and think less about short-term profit-maximization; two, help middle-class families meet the life expenses (college tuition, day care, etc.) that have increased greatly over the last 20 years while wages have remained stagnant. And as to Wall Streeters who gamble with middle-class people’s money, she said, “We will prosecute individuals and firms” who do so. She used the word “criminal” in this context more than once.

My hypothetical governor giving exactly this speech would be showered with liberal praise. But Clinton says it, and it’s like so what. She faces too much distrust from liberals over her past centrism; and for the moment everybody’s all Bernie Bernie Bernie. And that’s all fine. Sanders is fun and sometimes exhilarating, and a primary contest needs a candidate who can speak the unvarnished truth.

But it’s the speakers of varnished truth who usually win presidential nominations, and Clinton is at least 90 percent likely to win this one. And as varnished truths go in Democratic presidential politics, Clinton’s are about as liberal as any liberal could reasonably hope for. There’s an art to taking it right up to line, but not an inch past, and she’s doing that.

One way of testing whether proposals have any ideological bite to them is to imagine whether anyone from the other party could put them forward. Everyone can and will say they want to help the middle class. But how? Jeb Bush says with 4 percent growth into infinity. First of all this is a big fat lie of a promise, and he’s surely smart enough to know he’s lying. From 1975 to 2014 (for 40 years), annual GDP growth in the United States averaged 2.79 percent, according to World Bank data (the stuff I used came in the form of an Excel spreadsheet, so there’s no URL, but Google something like “Real Historical Gross Domestic Product” and you’ll find it). So it doesn’t happen. The best years of sustained GDP growth we’ve ever had were under—yep—Bill Clinton, but even in the late 1990s, we had only four straight years of plus-4-percent growth, and that’s a modern record (there was a three-year run under Ronald Reagan from 1983-1985).

So it’s a lie, number one, but more importantly, it means nothing as a measure. No, actually, it means something, and what it means is toxic: It means that if we actually do experience growth at 4 percent but without taking any of the ameliorative measures Clinton is talking about, the main impact of that growth will be to give us more inequality, more wage stagnation, more corporate profit-hoarding, more stock buybacks, and more roulette-wheel banking. Bush’s is a flawed way of looking at the economy, and this is a very old point of contention between right and left; As Robert Kennedy once said, GDP “measures everything, in short, except that which makes life worthwhile.”

Clinton is talking about growth too, but she’s emphasizing equitable growth. And she puts forward numerous proposals that no Republican would touch, from raising the minimum wage—remember, Bush wants no federal minimum wage—to strengthening unions to offering paid family leave to cracking down on employers who misclassify workers as contractors to expanding on Dodd-Frank to endorsing the Buffett Rule, which applies a minimum effective tax rate of 30 percent on earners north of $1 million.

She left a lot of the details for later, and she was fuzzy here and there—she was noncommittal on trade, and it will be interesting to hear what “defending and enhancing” Social Security actually means.

But for now, it’s enough that she’s linking the concepts of fairness and growth and that she’s making that link the centerpiece of her economic agenda. This is important because until very recently, the economics profession hasn’t regarded fairness as anything it should care about. But that has begun to change. This was the big question in my mind last year as I contemplated Clinton’s candidacy last year. Believe me, I had no small amount of doubt about how aggressively she’d embrace the equitable growth proposition. I’d say she’s answered my questions. Last year, on her book tour, she pooh-poohed paid family leave. Now it’s a centerpiece of her platform.

It’s still going to take time for liberals to believe this, and of course some never will. This is where Clinton still has some work to do. When it comes to economics, liberals don’t really want to hear policy proposals. They want to hear FDR-style attacks on the economic royalists. This is not something Clinton is known for, to put it mildly. I don’t think anyone expects her to be Elizabeth Warren, but in her own way, she has to go there, especially when you consider that she might become the wealthiest president in modern times.

This, from the speech, started moving in that direction, and it’s the first time I recall her talking like this: “And while institutions have paid large fines and in some cases admitted guilt, too often it has seemed that the human beings responsible get off with limited consequences—or none at all, even when they’ve already pocketed the gains. This is wrong and, on my watch, it will change.”

Maybe if she keeps this up and the royalists start attacking her, and she stands her ground, the Warrenites will finally come around. In the meantime, liberals ought at least to recognize that the old cautious Hillary they have in their minds would never have gone this far this fast.

 

By: Michael Tomasky, The Daily Beast, July 14, 2015

July 15, 2015 Posted by | Economic Inequality, Hillary Clinton, Middle Class | , , , , , , , | 2 Comments

“The ‘Depends’ Defense”: Republicans Will Hate Obama’s New Overtime Rule, But They Can’t Do Anything About It

Last night President Obama announced — in an article on the Huffington Post — that he will raise the threshold for overtime pay in American workplaces. The new regulations are substantively important for the millions of workers who will be affected, and they’re politically important as well. Republicans are going to squawk, saying that this change will cost jobs and is another example of Obama’s tyrannical rule. But they can’t stop it, and they’re going to lose the argument as well.

Under the Fair Labor Standards Act, employers have to provide overtime pay (usually time and a half) to employees who work more than 40 hours a week, but executives and managers are exempt from the requirement, as are those who make higher salaries. The trouble is that the rules don’t account for inflation, and so over time, what constituted a higher salary became absurdly low. The threshold has been raised only once since 1975, when it covered nearly half of U.S. workers; today it stands at less than $24,000, or lower than the poverty level for a family of four. (This document from the Economic Policy Institute offers some background on the regulation if you’re interested.) Here’s how Obama described the change he will be making:

We’ve got to keep making sure hard work is rewarded. Right now, too many Americans are working long days for less pay than they deserve. That’s partly because we’ve failed to update overtime regulations for years — and an exemption meant for highly paid, white collar employees now leaves out workers making as little as $23,660 a year — no matter how many hours they work.

This week, I’ll head to Wisconsin to discuss my plan to extend overtime protections to nearly 5 million workers in 2016, covering all salaried workers making up to about $50,400 next year. That’s good for workers who want fair pay, and it’s good for business owners who are already paying their employees what they deserve — since those who are doing right by their employees are undercut by competitors who aren’t.

That’s how America should do business. In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America.

We should note that Obama could have gone higher than $50,400. Earlier this year, some Democrats on Capitol Hill worried that the administration was going to propose a lower overtime threshold, something like $42,000 a year. A group of liberal senators urged Obama to set the threshold at $54,000. They also argued that it should be pegged to increase with inflation going forward, an absolutely critical provision that would give the measure lasting effect. So Obama didn’t raise the threshold as far as they wanted, but he is accounting for future inflation, by pegging the overtime threshold to the 40th percentile of incomes.

As much as Republicans will object, they can’t expect that their next president will undo this action. There are some regulations that we can expect to change whenever the White House changes hands. For instance, the Mexico City Policy, also known as the “global gag rule,” prohibits the funding of any organization anywhere in the world that even discusses abortion with a woman; when a Republican president takes office, he institutes it, and when a Democratic president takes office, he revokes it. But rules such as this one almost certainly won’t fall into that category. Try to imagine a President Rubio or Walker announcing that he was taking overtime pay away from millions of lower-middle-class U.S. workers. It won’t happen. They may argue against the rule when it is proposed, but once it’s in place, undoing it becomes politically impossible.

The more immediate political impact of this rule change lies in its place among a constellation of proposals Democrats will be offering on things such as the minimum wage and paid sick leave, proposals that are aimed at arresting the growing cruelty of the American workplace. As I’ve argued before, one way to think about the contrast between what Republicans and Democrats offer on the economy is that Republicans say they’ll get you as far as your employer’s door, while Democrats want to walk inside with you. Republicans argue that their preferred policies, mostly tax cuts and light regulation on businesses, will accelerate growth so that new jobs will be created. But once you’ve got the job, you’re on your own. The Democratic argument is that government has to come inside the workplace, to make sure people are being treated fairly. So they want to increase pay, provide family and sick leave, allow workers to bargain collectively, make sure no one is discriminated against and generally establish a structure that guarantees that people are treated well and can maintain some measure of dignity.

The Republican counter, of course, is that all those things increase costs to employers and therefore cost jobs. But their argument presumes that there’s nothing fundamentally wrong with the American workplace, which most of us know just isn’t true. Yes, many employers already treat their employers well. But millions of others don’t and would treat their workers even worse if they could get away with it.

As for this measure, we know exactly what employers will say: This will cost us money, which means fewer jobs. We know that’s what they will say, because that’s what they say about every marginal improvement in working conditions, benefits or pay. And in the short term, they’re right: It will cost them some money.

But let’s turn it around. What if employers said, “We could save money by removing the employee bathrooms and just telling our workers to wear Depends to the job. And that would mean we’d be able to hire more people.” Would we respond, “Well, if it would save you money and produce a few more jobs, then that sounds great”? Of course not. The short-term cost to employers of a regulation is certainly something to consider, but it’s not the only thing to consider.

The change to overtime regulations isn’t some kind of dramatic transformation. Like increasing the minimum wage, it’s nothing more than taking an existing rule and updating it for inflation. But it’s built on the assumption that the government should come into the workplace and make sure that what happens there is fair. Republicans don’t believe that’s government’s job. But it isn’t going to be easy for them to make that case to a population that feels increasingly insecure at work. And even if they could win the argument, they won’t be able to change the policy.

 

By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, June 30, 2015

July 2, 2015 Posted by | Fair Labor Standards Act, Middle Class, Salaried Workers | , , , , , , , | Leave a comment

“Scott Walker Would Be A Very Dangerous President”: Vicious And Vindictive, With An Attack Dog’s Contempt

Joe Nocera has a piece today in the New York Times confirming what many of us have been saying for a while now, including here at the Washington Monthly and at the Political Animal: Scott Walker isn’t a terribly attractive presidential candidate for the GOP, but he would make a vicious and vindictive President.

Walker’s shtick has been to make up for personal lack of charm and charisma with a bluntly cynical eye to maximizing his appeal to the right-wing base not improving their lives, but rather by aggressively making punching bags of traditional liberal targets. These include labor unions, teachers, universities in general, people who work for a living, women who need abortions, and so on.

And why? Not even because it helps him with big donors, although that certainly doesn’t hurt. It’s mostly just a matter of spite, political gamesmanship and riling up his base as a warrior against anything and anyone Rush Limbaugh and Fox News have ever hated. As Nocera notes:

To put it another way, Walker busted the public employee unions not because he had to but because he could.

Similarly, there was no deep desire on the part of the business community to have Wisconsin become a right-to-work state, even though it would most likely bring about lower labor costs. Kaufman quotes a leader of the Wisconsin Contractors Coalition, who told him that “right-to-work is going to compromise my quality, my competitiveness.” That’s because the unions have long served to screen workers and keep them up to date on new technologies.

No, what motivated Walker, clearly, was politics. Unions, which have long been traditional Democratic allies, have been in steep decline — except for public employee unions, which now make up just under half of all union workers. By crippling them, Kettl told me, “Walker is trying to put a stake in the heart of a strong piece of Democratic support that has long been a thorn in the side of the Republicans.”

Once they reach the Oval Office, presidential candidates tend to keep doing what got them there in the first place. In Walker’s case, that would constitute an all-out assault on both the economic and social fronts, including and especially wage and worker protections. While the entire Republican Party has gone off a radical cliff over the last few decades and its current crop of candidates is no exception, most of the current aspirants to the nomination are simple demagogues, plutocrats and also-ran Congressional pretenders. Walker, on the other hand, isn’t just an egotistical bluffer seeking to capture billionaire donor dollars for his friends. He’s a committed soldier with an attack dog’s contempt and commitment to destroy his political opponents.

A Walker presidency would be a very dangerous thing indeed–not just for the left, but for the entire country. As demographic changes shrink the GOP base further and further, a man who gains his power by stoking the angers of a shrinking minority of angry conservatives by sticking the maximum possible pain on the majority of the country and the few remaining pillars of the middle class could be a serious threat to democracy.

 

By: David Atkins, Political Animal Blog, The Washington Monthly, June 13, 2015

June 14, 2015 Posted by | GOP Presidential Candidates, Middle Class, Scott Walker | , , , , , , , | 1 Comment

“A Contest Of Anti-Tax Purity”: The Fight For The Soul Of The Republican Party Is Over: The Rich Won Again

It was just eight months ago that a New York Times Magazine profile giddily described the rise of “a small band of reform conservatives, sometimes called reformicons, who believe the health of the G.O.P. hinges on jettisoning its age-old doctrine — orgiastic tax-cutting, the slashing of government programs, the championing of Wall Street — and using an altogether different vocabulary, backed by specific proposals, that will reconnect the party to middle-class and low-income voters.”

After the Republican Party had turned itself into a machine committed relentlessly to the singular goal of cutting taxes for the rich, the reformicons seemed to be poised to take control of the party’s intellectual apparatus.

The reformicons always assumed they could bypass Congress and focus all their attention on developing an innovative platform for a presidential candidate. (This was a shaky plan to begin with, as a prospective Republican president would need to sign something passed by Congress.) But as the Republican candidates have formulated their early platforms, the party’s center of gravity, rather than jettisoning its hoary policy of orgiastic tax-cutting, has instead continued and even deepened its fervor.

The Republican Party’s determination to cut taxes for the rich was never rooted in electoral calculation. (Indeed, this has always been a handicap for the party to overcome.) It arose from the fact that extremely powerful forces within the party, including but not limited to its funders, believed in it as a matter of ideology as well as self-interest. The plutocrats initially held back in the face of the reformicon movement, perhaps unaccustomed to facing any challenge within the party, which for decades has treated their doctrine as holy writ revealed to the world by Reagan himself.

They were never going to yield control of the party without a fight. The disintegration of campaign-finance restrictions has given the funding class greater leverage over the nomination, and as the presidential field has formed its domestic-policy platforms, its influence has been evident. Jeb Bush is wooing the fanatically anti-tax Club for Growth. Scott Walker has firmly allied himself with the party’s most unreconstructed supply-siders. Rand Paul is promising “the largest tax cut in American history.” Ted Cruz is, well, Ted Cruz. The Republican primary has turned into a contest of anti-tax purity. “We’ve got maybe an embarrassment of riches here in that we’ve never been able to support somebody before, and now we may get overwhelmed with people we think are worthy of support,” gloats recently departed Club for Growth president Chris Chocola.

Nowhere is the triumph of the supply-siders more evident than in the progress of Marco Rubio and Mike Lee. Rubio and Lee are the paradigmatic spokesmen for the reformicon platform — Lee as an ideas pitchman, Rubio as a candidate.

Last year, Rubio and Lee unveiled a tax-reform plan that their allies touted as a manifesto of reform conservatism, positioning the Republican Party on the side of hard-press working families rather than the rich. Lee’s plan “actually help[s] middle-class families rather than mostly cut taxes on the investor class,” gushed Ross Douthat, one of the most fervent and optimistic advocates of the reform-conservative faction.

Eventually, the Tax Policy Center crunched the numbers on Lee’s plan and found that it did nothing of the sort. Its provisions to benefit hard-pressed low-income workers turned out to be wildly oversold. Brookings economist Isabel Sawhill concluded, “very few if any low income families with children would benefit from the plan.” And, far from being the “tax reform” it claimed to be, Rubio and Lee had merely constructed a gigantic tax-cut plan that would reduce federal revenue by $2.4 trillion over a decade, a larger tax cut than George W. Bush passed in 2001. What’s more, the Lee-Rubio plan lavished far more benefits on the rich. The average earner in the lowest income quintile would save on average $79 a year, or 0.5 percent of her income, from the plan. An earner in the second-lowest quintile, the heart of the working class, would save $338 a year, or one percent of her income. The top one percent earner would see its income boosted by 2.8 percent on average, or more than $40,000 a year. The plan was simply a reprise of Bush-era debt-financed regressive tax cuts.

Reform conservatives took the setback in stride. Perhaps this was just an oversight or a mild computational error. Douthat hopefully suggested that Rubio and Lee would take a second pass at the issue and rectify the problem:

The liberal response to the Lee plan’s disappointing score, from Chait and others, has been to suggest that it illustrates the continuing unrealism of G.O.P. proposals. But notably, Lee himself didn’t respond by, say, denouncing TPC and insisting that some version of dynamic scoring would make the deficit numbers come out right; he responded by announcing that he was partnering with Marco Rubio (cough, 2016, cough) to develop a revised family-friendly proposal.

And, indeed, Rubio and Lee have come out with a revised version of their plan. But it didn’t get better. It got much, much, much worse. The new Rubio-Lee plan keeps most of its old structure, with its stingy treatment of low-income workers. It layers on top of that two changes: a far more generous treatment of business income, and a complete elimination of all taxes on capital gains and dividends. [Update: The plan would also, unbelievably, completely eliminate the tax on inherited estates, which for a married couple only begins to apply to inheritances above $10 million.] Both of these new features would lavish massive additional tax cuts on the rich, in addition to those already in the original version. The new Rubio-Lee plan would surpass anything George W. Bush or Mitt Romney ever proposed to do in its ambitions to relieve the richest Americans of their tax burdens.

Perhaps the fullest measure of the supply-siders’ triumph can be seen in the acquiescence of many of the reformicons themselves. Ramesh Ponnuru and Yuval Levin, both reform conservatives featured prominently in the Times story, responded to the new Lee-Rubio plan with fawning praise. James Pethokoukis, a reformist conservative, calls the plan “a big step toward persuading middle-income America that Republicans care about more than just the richest 1 percent.” (If this is a big step toward persuading America that Republicans care about more than the rich, what would the next step be? Legalizing servant-flogging?)

Perhaps the reform conservatives have capitulated completely in the name of party unity. Or maybe they were misunderstood from the beginning and never proposed to deviate in any substantive way from the traditional platform of massively regressive, debt-financed tax-cutting. Either way, the movement has, for now, accomplished less than nothing.

 

By: Jonathan Chait, Daily Intelligencer, New York Magazine, March 5, 2015

March 9, 2015 Posted by | Middle Class, Plutocrats, Tax Cuts | , , , , , , | Leave a comment

“GOP Thinks The 47 Percent Aren’t Trying Hard Enough”: News Flash, Middle-Class Rowboats Are Taking On Water

Remember the “47 percent”?

During his 2012 campaign for the presidency, Mitt Romney was caught on tape describing nearly half the country in disparaging terms, labeling them moochers who want handouts. They are voters “who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it,” he said.

Romney’s remarks — and he stood by them immediately after his election defeat — didn’t just damage him; they also sullied the entire Republican Party, reinforcing its image as the lapdog of the very rich. Even now, as some of its strategists push hard for the GOP to reach out to ordinary working folks, its congressional leaders continue to protect the 1 percent.

If President Obama has no hope for passage of his ambitious program of “middle-class economics,” as he called it during last week’s State of the Union speech, at least he has a plan. His proposals for free community college, increasing the minimum wage and providing tax cuts to families in the middle of the economic spectrum have the advantage of recognizing the reality of income inequality.

So far, his GOP critics continue to resist that reality, sticking to the old Reagan-era bromide that a “rising tide lifts all boats.” Perhaps that’s true, but those middle-class rowboats are taking on water even as the rich float along comfortably in their yachts.

The growing gap between the haves and the have-nots is one of the most critical issues of our time, a dispiriting trend that has struck most Western economies. Because of complex forces, especially globalization and technology, the incomes of ordinary workers are falling further and further behind, even as the rich get, well, richer.

That’s not the fault of Democrats or Republicans, Libertarians or Socialists. Nor did this growing inequality start with the Great Recession. It started way back in the 1970s, as the factories that had powered the middle class started to shut down. American steel mills closed; textile mills went away; automotive plants moved out. The trends have simply accelerated since then, as robots power assembly lines and low-wage workers in places like Bangladesh sew garments once made in Maine and North Carolina.

Even now, in a resurgent economy, many families haven’t regained their footing. Their savings accounts have evaporated. They can’t replace the house they lost to foreclosure. They work two or three part-time jobs without benefits. And even those with full-time jobs aren’t living it up. According to The New York Times, the median weekly wage for full-time workers at the end of 2014 was $796, below the levels in 2009, when the expansion began.

Those workers are hardly moochers. They are struggling to find their way in a world where their skills have less value. They need help from a government that knows its role is to lend a hand, to steady the ladder, to help them find a toehold.

Even Romney, who is making noises about running again, has finally gotten the message. He has at least called for an increase in the minimum wage.

But most Republicans can’t get over the notion that those who haven’t made it simply aren’t trying hard enough, that if you’re stuck on the economic margins, it’s your own fault. Their allegiance to the very rich — people like the billionaire Koch brothers — overrides any concern for the vast middle.

Take their insistence on resisting tax increases for the 1 percent — a plan proposed by Obama to pay for tax cuts for the middle and working classes. Republicans claim any tax hikes would kill the recovery. But that’s not so. George W. Bush’s tax cuts led to no new job growth, while Bill Clinton, who raised taxes, presided over a period of widespread prosperity.

So what do Republicans propose? So far, they’ve pushed building the Keystone pipeline, which would create about 42,000 jobs over a period of two years, but only about 35 permanent jobs. And, of course, the GOP still wants to kill Obamacare, a strategy that would create zero jobs.

That’s not much better than dismissing the 47 percent.

 

By: Cynthia Tucker, The National Memo, January 24, 2015

January 25, 2015 Posted by | Economic Policy, GOP, Middle Class | , , , , , , , , | Leave a comment

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