Heads-up: Deficit Reduction Won’t Create Jobs
It’s budget time, and that means that we can expect to hear the Washington elite wailing about the budget deficit for the next several weeks. When hearing the cries about out-of-control deficits, people would be best advised to turn off their television sets, put down their newspaper, and smash their computers. (Okay, don’t smash your computer.)
The economy has one major problem right now and that is a serious lack of jobs. We still have more than 25 million people unemployed, underemployed, or who have given up looking for work altogether because there are no jobs. This should be the issue that everyone in Washington is talking about.
Instead, many politicians and pundits want to distract people’s attention from unemployment by complaining about the deficit. They have deceived many people into thinking that the economy would somehow be stronger and there would be more jobs if the deficit was reduced, either due to spending cuts or increased taxes.
This view makes no sense. There are no businesses that are going to hire additional workers because the government laid off school teachers or firefighters and we cut back spending on food stamps. Businesses hire more workers when they see more demand for their product. All of these actions that reduce the deficit, either on the spending or tax side, translate into less demand and therefore less employment. In short, those who want to cut the deficit now are lobbying for fewer jobs and higher unemployment.
This is only part of the story that they got wrong. The other part is the cause of the deficit. There are thousands of people running around Washington blaming the deficit on out-of-control spending or irresponsible tax cuts. Both sides are way off the mark.
It is easy show from the data that the huge deficits of the last three years are the direct result of the economic plunge caused by the collapse of the housing bubble. The budget deficit was actually quite modest in 2007, and it was projected to remain low in 2008-2010, even before the Bush era tax cuts expired.
However, the deficits came in much higher than projected because the collapse of the economy sent unemployment soaring and tax revenues plummeting. There is an irony in this situation. Back in the years 2002-2007 some of us were warning about the housing bubble, but our voices were largely drowned out by the big deficit hawks.
Of course now that the bubble has collapsed and the deficit has exploded we are still hearing the same complaints from the deficit hawks. If the country had paid less attention to the deficit hawks back in the bubble years, and more attention to the bubble, then we would not have had such a horrible recession and the deficit hawks would not have a large budget deficit to complain about today.
By: Dean Baker, U. S.ews and World Report, February 10, 2012
“Money And Morals”: The GOP’s Attempt To Divert The Inequality Conversation
Lately inequality has re-entered the national conversation. Occupy Wall Street gave the issue visibility, while the Congressional Budget Office supplied hard data on the widening income gap. And the myth of a classless society has been exposed: Among rich countries, America stands out as the place where economic and social status is most likely to be inherited.
So you knew what was going to happen next. Suddenly, conservatives are telling us that it’s not really about money; it’s about morals. Never mind wage stagnation and all that, the real problem is the collapse of working-class family values, which is somehow the fault of liberals.
But is it really all about morals? No, it’s mainly about money.
To be fair, the new book at the heart of the conservative pushback, Charles Murray’s “Coming Apart: The State of White America, 1960-2010,” does highlight some striking trends. Among white Americans with a high school education or less, marriage rates and male labor force participation are down, while births out of wedlock are up. Clearly, white working-class society has changed in ways that don’t sound good.
But the first question one should ask is: Are things really that bad on the values front?
Mr. Murray and other conservatives often seem to assume that the decline of the traditional family has terrible implications for society as a whole. This is, of course, a longstanding position. Reading Mr. Murray, I found myself thinking about an earlier diatribe, Gertrude Himmelfarb’s 1996 book, “The De-Moralization of Society: From Victorian Virtues to Modern Values,” which covered much of the same ground, claimed that our society was unraveling and predicted further unraveling as the Victorian virtues continued to erode.
Yet the truth is that some indicators of social dysfunction have improved dramatically even as traditional families continue to lose ground. As far as I can tell, Mr. Murray never mentions either the plunge in teenage pregnancies among all racial groups since 1990 or the 60 percent decline in violent crime since the mid-90s. Could it be that traditional families aren’t as crucial to social cohesion as advertised?
Still, something is clearly happening to the traditional working-class family. The question is what. And it is, frankly, amazing how quickly and blithely conservatives dismiss the seemingly obvious answer: A drastic reduction in the work opportunities available to less-educated men.
Most of the numbers you see about income trends in America focus on households rather than individuals, which makes sense for some purposes. But when you see a modest rise in incomes for the lower tiers of the income distribution, you have to realize that all — yes, all — of this rise comes from the women, both because more women are in the paid labor force and because women’s wages aren’t as much below male wages as they used to be.
For lower-education working men, however, it has been all negative. Adjusted for inflation, entry-level wages of male high school graduates have fallen 23 percent since 1973. Meanwhile, employment benefits have collapsed. In 1980, 65 percent of recent high-school graduates working in the private sector had health benefits, but, by 2009, that was down to 29 percent.
So we have become a society in which less-educated men have great difficulty finding jobs with decent wages and good benefits. Yet somehow we’re supposed to be surprised that such men have become less likely to participate in the work force or get married, and conclude that there must have been some mysterious moral collapse caused by snooty liberals. And Mr. Murray also tells us that working-class marriages, when they do happen, have become less happy; strange to say, money problems will do that.
One more thought: The real winner in this controversy is the distinguished sociologist William Julius Wilson.
Back in 1996, the same year Ms. Himmelfarb was lamenting our moral collapse, Mr. Wilson published “When Work Disappears: The New World of the Urban Poor,” in which he argued that much of the social disruption among African-Americans popularly attributed to collapsing values was actually caused by a lack of blue-collar jobs in urban areas. If he was right, you would expect something similar to happen if another social group — say, working-class whites — experienced a comparable loss of economic opportunity. And so it has.
So we should reject the attempt to divert the national conversation away from soaring inequality toward the alleged moral failings of those Americans being left behind. Traditional values aren’t as crucial as social conservatives would have you believe — and, in any case, the social changes taking place in America’s working class are overwhelmingly the consequence of sharply rising inequality, not its cause.
By: Paul Krugman, Op-Ed Columnist, The New York Times, February 9, 2012
Staples Co-Founder: Allowing Women To Breastfeed At Work Will Cost Jobs
Staples co-founder Tom Stemberg is speaking out against a serious threat to economic recovery and job creation: breastfeeding moms.
Stemberg, a longtime supporter of Republican policies and candidates like Mitt Romney, complained recently that President Obama’s health care reform law hurts businesses by requiring them to provide what he dubbed “lactation chambers” for new moms who need to breastfeed at work:
Tom Stemberg, co-founder of mega-office supply chain Staples is questioning an Obamacare provision that discourages job creation by dictating employers funnel their capital into lactation chambers.
“Do you want [farming retailer] Tractor Supply to open stores or would you rather they take their capital and do what Obamacare and its 2,700 pages dictates – which is to open a lactation chamber at every single store that they have?” he asked.
“I’m big on breastfeeding; my wife breastfed,” Stenberg added. “I’m all for that. I don’t think every retail store in America should have to go to lactation chambers, which is what Obamacare foresees.
Stemberg was presumably referring to provisions in the Affordable Care Act that require employers to give lactating mothers “reasonable break time” to nurse their child, as well as “a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public…” The place they provide for new moms does not have to be a dedicated room as long as it’s private and can be called into use when female employees need it.
Stemberg, who has contributed tens of thousands of dollars to Romney’s campaign and SuperPAC, added that repealing the health care law should be at the top of the next president’s “to-do” list.
As of early January, the Labor Department had already cited 23 companies, including Starbucks and McDonald’s stores, for violating the new protections for breastfeeding employees.
By: Marie Diamond, Think Progress, February 7, 2012
“Half-Time In America”: It Isn’t Political, It’s American
Many Republicans want President Obama to fail. That’s completely understandable and defensible, if one is talking about success or failure in his re-election campaign. It’s stunning when that’s extended to the performance of the economy as a whole or any of the nation’s job-supplying industries.
Thus we have uber-political operative Karl Rove complaining about how offended he was by a Super Bowl TV ad, sponsored by Chrysler, which extolled the recent resurrection of the nation’s auto industry. The ad featured tough-guy actor Clint Eastwood talking about the remarkable comeback of the auto industry, and underscoring the qualities which truly characterize the best of America—resilience, optimism, sacrifice, and hard work. The script of the commercial, “Halftime in America,” is as inspiring as any speech made by an actor in a movie or a political candidate in a campaign:
It’s halftime in America, too. People are out of work and they’re hurting. And they’re all wondering what they’re going to do to make a comeback. And we’re all scared, because this isn’t a game.
The people of Detroit know a little something about this. They almost lost everything. But we all pulled together, now Motor City is fighting again.
I’ve seen a lot of tough eras, a lot of downturns in my life. And, times when we didn’t understand each other. It seems like we’ve lost our heart at times. When the fog of division, discord, and blame made it hard to see what lies ahead.
But after those trials, we all rallied around what was right, and acted as one. Because that’s what we do. We find a way through tough times, and if we can’t find a way, then we’ll make one.
All that matters now is what’s ahead. How do we come from behind? How do we come together? And, how do we win?
Detroit’s showing us it can be done. And, what’s true about them is true about all of us.
This country can’t be knocked out with one punch. We get right back up again and when we do the world is going to hear the roar of our engines.
Yeah, it’s halftime America. And, our second half is about to begin.
Really, could anyone have a problem with that ad? It featured scenes of Detroit, and of middle-class people, working hard in a struggling economy and trying to make their city and their lives better.
Yes, Rove had a problem with it. He said he was “offended” by the spot, adding on Fox News:
I’m a huge fan of Clint Eastwood, I thought it was an extremely well-done ad, but it is a sign of what happens when you have Chicago-style politics, and the president of the United States and his political minions are, in essence, using our tax dollars to buy corporate advertising.
Rove seems to be referring to President Obama’s bailout of the auto industry, and suggesting that somehow that money was used to pay for a thinly-disguised campaign ad for the Obama re-election campaign. A lot of Republicans were opposed to the bailout, saying the companies should be subject to the rules of capitalism. GOP presidential contender Mitt Romney famously penned a New York Times op-ed entitled “Let Detroit Go Bankrupt.”
What is it about Detroit that so many conservatives despise? That it’s a still-breathing example of the “old economy?” Is it Motown music they hate, or the fact that it’s full of labor union members? Is the distaste for struggling Detroit so pronounced that people actually want the city to fail?
Had the auto companies indeed failed despite the bailout, Rove and Romney would have looked brilliant. But the companies are recovering nicely, paying back their loans (with interest), and making profits, in part because of concessions made by the labor unions so despised by conservatives.
There is surely a legitimate philosophical argument to be made that the government should not bailout out big businesses (an argument not often extended to include huge tax breaks for profitable industries). Pure capitalism indeed stipulates that businesses should succeed or fail on their own. Critics can legitimately argue that government should not prop up any industry, no matter what the implications for employment. They can be angry that the auto bailouts happened, but it’s unconscionable to be angry that the bailouts worked. Comebacks—as the New York Giants proved, winning the Super Bowl after an uneven season—are about as American as it gets.
By: Susan Milligan, U. S. News and World Report, February 7, 2012
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