“A Virtual War On The Poor And Middle Class”: Give House Republicans Credit For Producing A Budget This Cruel
Everyone condemns politicians for being too quick to pander, too concerned with doing the popular thing, too willing to hide what they really believe in order to curry favor with an unmerciful electorate. So when a group of politicians throws caution to the wind and tells us what they really think despite the political risk, they deserve our praise. So it is with the House Republicans, who have just released their new budget.
That isn’t to say the budget is free of gimmickry or outlandish projections (we’ll get to that in a moment). But let’s look at some of the rather notable things it would do:
Turn Medicare into a voucher program. This is accompanied by a lot of rhetoric about how the magic of the market will hold down costs (just as it has with private insurance — oh, wait) and free seniors from the tyranny of their government insurance plan. Let’s see how that will go over.
Roll back the Affordable Care Act’s expansion of Medicaid and lay the groundwork for further cuts. All those millions of low-income Americans who got coverage through the expansion are suffering terribly, because “Medicaid’s promises are empty, its goals are unmet, and its dollars are wasted.” House Republicans would liberate them from this oppression by taking away their health insurance. The rest of the program would be block-granted so that states could have “flexibility,” which in practice means the flexibility to dump even more patients from their coverage.
Repeal the rest of the ACA. The subsidies that have allowed millions of people to afford insurance? Gone. Protection against denials for preexisting conditions? Not anymore. If you were expecting this to be accompanied by a few comically vague words about “patient-centered reforms” with which the ACA would be replaced while 16 million people are wondering what to do about the coverage they lost, then you’ve been paying attention.
Cut regulations on Wall Street. They’ve been having a real hard time over there, and they could use a helping hand.
Cut environmental regulations. Let’s face it, if the environment is ever going to learn to take care of itself, it needs a little tough love.
Cut Pell grants, which they describe as “targeting Pell Grants to students who need the most assistance.”
Block-grant food stamps, or turn them into a “State Flexibility Fund.” There’s that word again.
Most of these ideas are presented without any actual dollar figures attached to them, but there is “a magic asterisk” in a table located in an appendix, as Max Ehrenfreund points out. This is more than a trillion dollars of savings they claim they’ll get from “Other Mandatory” spending. Ehrenfreund explains:
Other than health care and Social Security, mandatory spending includes a range of programs such as food stamps, disability payments for veterans, the earned income tax credit, and Pell grants for college students. The budget document did not specify which would be cut. Even presuming very large cuts to these programs, though, it was still unclear how lawmakers expected to come up with $1.1 trillion, said Bob Greenstein, president of the Center on Budget and Policy Priorities.
By comparison, the Republican majority in the House voted in favor of reducing the budget for food stamps in 2013. The controversial measure passed only narrowly, with every Democrat and a few Republicans opposed. Many worried the cut was too severe, but it totaled $40 billion, just a sliver of the savings claimed in this week’s proposal.
At this stage, it isn’t so terrible for their proposals to lack specificity; this part of the budget process is meant to sketch a broad outline, while later legislation will set all the particulars. But let’s give the House Republicans credit. They aren’t shying away from talking about voucherizing Medicare (as their Senate colleagues did), and the rest of the document lays out a virtual war on the poor and middle class. They may toss the word “opportunity” in here and there, but the document is a bracing statement of Republican ideology.
Which is as it should be. Sure, the White House is going to criticize it, because the Democrats’ priorities are very different. Now we can have a debate. Should we turn Medicare into a voucher program? Should we toss millions of people off Medicaid and take away the subsidies that allow millions more to afford insurance? Should we cut food stamps and education grants? What are the alternatives? Those are the questions that debate should address, and then the two sides will have to arrive at a budget that incorporates the answers.
By: Paul Waldman, Senior Writer, The American Prospect; The Plum Line Blog, The Washington Post, March 18, 2015
“Hold Your Applause”: Walmart’s Wage Hike Still About Greed
With much fanfare and platitudes like “Our people make the difference,” WalMart has achieved a public relations coup by granting quite meager raises to its employees. The headlines make the $277 billion (market cap) company look quite generous as it has raised its starting hourly wage immediately to $9 an hour, which is 19 percent higher than the prevailing federal minimum wage.
It sounds like great news from the world’s largest private employer, but the news is nowhere near as good as headlines suggest.
The New York Times estimates that there are only about 6,000 retail workers among WalMart’s 1.4 million employees that are paid the federal minimum wage. This shouldn’t be too surprising, since 28 states already mandate higher minimum wages than the federal standard and, says the law, the highest required wage wins. Only seven states have minimum wages set at $9 or higher. So WalMart workers in 43 states are getting some sort of raise.
But in the vast majority of cases, it’s nothing like the 19 percent number you’re seeing thrown around.
For those getting the largest bump from the federal minimum wage to $9, it’s important to put this all in perspective. The federal minimum wage has not been raised since 2009. It would take a wage of $8.55 an hour to equal the purchasing power of $7.25 six years ago.
So, in a real sense, WalMart’s lowest paid employees are getting a 45-cent-per-hour raise—a 6.2 percent increase. Meanwhile, workers in California, Massachusetts and Rhode Island will see no increase (the state hourly minimum is already $9) while minimum wage workers in Washington, Oregon, Connecticut and Washington, D.C., already make more than $9 an hour.
In its release to workers and the public, WalMart says that the wage increase scheduled to go into effect in April will raise the average part-time worker’s wage to $10 an hour across the company. Back in 2010, IBISWorld, a market research firm, estimated that WalMart cashiers made about $8.81 an hour. That 2010 wage inflations adjusts to a $9.56 wage in today’s dollars. According to WalMart’s release, part-time workers will see their wages rise from $9.48.
That means, until now, WalMart’s part-time workers were losing ground against inflation. While nice, this isn’t the saintly endeavor WalMart is making it out to be. The current bumps gets those employees just a few coins ahead of the rise in the cost of living since the end of the Financial Crisis.
For its full-time workers, WalMart says that the average wage is rising from $12.85 an hour to $13. In 2013, WalMart said that its average full-time wage was $12.83. So WalMart’s full-time associates got a 2-cent raise between 2013 and 2014 and now get a 17-cent bump. Adjusted for inflation, you’d need $13.04 cents today to buy what you could with $12.83 in 2013. WalMart’s full-time employees are coming out of this 4 cents short of inflation.
WalMart’s workforce is split about evenly between full- and part-timers. Part-timers will make $17,500 a year if they work 35 hours a week for 50 weeks a year. Full-timers will make $26,000 working 40 hours a week for 50 weeks.
For a two-person household, the federal poverty line is $15,930. For a four-person household it is $24,250.
Even after the raises, WalMart will continue to employ people who will be living below, at or barely above our various, imperfect measures of poverty.
These workers will continue to depend on public subsidies to get by, whether they need help with health care, buying food, or lunches for their school-aged children. It’s hard to see, even, how these wage increases will do enough so that WalMart employees don’t have to hold holiday food drives for each other.
WalMart has wanted to open a store in New York City for years and has been rebuffed at every turn by coalitions of labor and local retailers. The chain most recently failed to infiltrate East Brooklyn. It faces community opposition in cities and towns around the country.
The retailer is clearly tired of being seen as an unwelcome neighbor—and that’s likely a big consideration for why they’re upping their wages just enough.
The company would also like to buy itself a new labor history. For years, WalMart used contractors to clean and maintain its stores, putting a buffer between the companies and the often abused workers—especially when those workers were very often not authorized to work in the U.S. Since the middle of the last decade the company has also been hit with scores of class action lawsuits, some relating to the treatment of women workers and some alleging wage theft through various means.
In 1914, Henry Ford paid his workers $5 a day. It was a move that truly helped create the middle class. Five dollars in 1914 is $118 today, although that would only add up to a $35,000-a-year salary for a six-day workweek, which is well below our current medium income.
What some forget about Ford is that he had ulterior motives: He wanted to mold his workers into what he considered model Americans. WalMart has ulterior motives as well: It wants to mold your perception of it until you see a model American corporation.
If WalMart is a model corporation, the model is broken.
By: Michael Maiello, The Daily Beast, February 20, 2015
“Back To The Future In 2016”: Nothing Would Make Policy Debates More Obvious Than Bill Clinton’s Wife And George W. Bush’s Brother
It’s never long in a presidential race before one candidate or another says, “This election isn’t about the past—it’s about the future.” But the 2016 election is probably going to be even more about the past than most, particularly given that there will be no incumbent running.
I thought of that late last week when I heard that Rick Perry—who promises to once again provide more than his share of unintentional comic relief over the next year or so until he drops out—told attendees at an event in New Hampshire that Abraham Lincoln was a great advocate of states’ rights. “Abraham Lincoln read the Constitution, and he also read the Bill of Rights, and he got down to the Tenth Amendment, and he liked it,” Perry said. “That Tenth Amendment that talks about these states, these laboratories of democracy.”
That’s certainly a novel perspective, to characterize Lincoln as a Tenth-Amendment fetishist like today’s tea partiers. But I suppose one can forgive the impulse, given how far the GOP has traveled from what it was in the time of the first Republican president. Pop quiz: If they had been alive in the 1860s, how many of today’s Republicans would have been on the side of the North? Not too many. Rick Perry sure as hell wouldn’t have.
But the history we’re going to argue much more about in 2016 isn’t so distant, and its protagonists—and their family members—are still around. Last week, a prominent Republican economist came up with what may be the most biting message any Democrat could hope for:
“When Hillary Clinton runs, she’s going to say, ‘The Republicans gave us a crappy economy twice, and we fixed it twice. Why would you ever trust them again?’ ” said Kevin Hassett, a former economic adviser to GOP nominees Sen. John McCain (R-Ariz.) and former Massachusetts governor Mitt Romney. “The objective for the people in the Republican Party who want to defeat her is to come up with a story about what’s not great” in this recovery, especially wage growth, he said.
Now imagine that Jeb Bush is the Republican nominee, and replace “The Republicans gave us a crappy economy twice” with “The Bushes gave us a crappy economy twice.” It hits even harder.
Is that unfair? In the sense that Jeb Bush can’t be held directly responsible for what his father and brother did in office, sure. Or at least, he’s no more responsible for it than any other Republican. It isn’t as though there’s a distinct Bushian strand of economic policy within the GOP, one that differs in some meaningful way from what other Republicans advocate. Although nobody has released detailed campaign policy papers yet, it’s all but guaranteed that the things Jeb Bush would do as president don’t differ too much from what the other candidates would do. They’d all like to cut taxes, particularly on investments; they’d reduce regulations on corporations; and they’d do what they could to roll back the policies of the Obama years in areas like labor and environmental enforcement. It’s possible that one candidate or another has some spectacularly creative new idea that will completely transform the American economy in ways no one has imagined. But probably not.
If the debate around the economy truly has changed, from a focus on what will produce growth to a focus on how to make the economy’s fruits more widely and equitably distributed, then it’s even less clear what Republicans will have to offer. Hillary Clinton can say that the years of her husband’s administration were the only period in recent decades that saw real (if not overwhelming) growth in wages for people in the middle and the bottom. If Jeb Bush were her opponent, it would offer an opportunity to have a historically grounded discussion about everything that has happened since his father was president.
Because I’ve yet to hear Republicans explain that history. If they tried to, they’d have to confront the fact that at every key point, their predictions about what effect policy changes would have turned out completely wrong. When Bill Clinton passed his 1993 budget with an increase in the top income tax rate, they all said that a “job-killing recession” was sure to result (I assume the phrase came from Newt Gingrich, because its use was so ubiquitous during that time). What actually ensued was not a recession but a rather remarkable boom; there were nearly 23 million more Americans working when Clinton handed off the White House to George W. Bush than when Clinton took office eight years before. Bush then committed himself to cutting taxes, particularly those affecting the wealthy—not just income taxes but taxes on investments and large inheritances as well. Republicans predicted that these policy changes would produce an economy practically bursting with wonderful new jobs for all.
That, of course, didn’t happen. Total job growth during the Bush years was a meager 1.3 million. Even if we’re unusually kind to Bush and go back to the high point of jobs in his administration (the end of 2007, before the Great Recession), he would only score a 5.6 million increase, or around one quarter of what Clinton managed.
Then Barack Obama allowed some of those top-tier tax cuts to expire, despite Republicans’ protestation that doing so would create a ball and chain dragging the economy down. Once again, disaster did not ensue; 2014 was the best year for job growth since 1999.
Like a number of liberals before me, I’ll take pains to note that this history doesn’t demonstrate that increasing taxes on the wealthy produces job growth. What it does show is that relatively small changes in the wealthy’s taxes have little effect on the economy one way or the other. Yet the idea that altering the tax burden on the wealthy produces enormous economy-wide effects is still central to conservative economic thinking. And it’s about as fanciful as the idea that Abraham Lincoln was a states’ rights advocate.
Unlike some of the policy debates we engage in, this history of the last couple of decades is pretty easy for voters to understand, since most of them lived through it. And nothing would make it more obvious than a general election between Bill Clinton’s wife and George W. Bush’s brother.
By: Paul Waldman, Senior Writer, The American Prospect; The Plum Line, The Washington Post, February 15, 2015
“Clinton Must Address Income Inequality In 2016”: Hillary Needs A Set Of Policies That Go Beyond Raising The Minimum Wage
Poor Hillary Clinton. She’s rich. And that’s a problem for her presidential campaign.
Even as the economy finally mounts an apparently sustained recovery, income inequality remains a primary worry for American voters. According to a poll by the Pew Research Center last November, 78 percent saw the gap between the haves and the have-nots as a big problem.
Since the 1970s, wages have been stagnating for average workers, who have been buffeted by the crosswinds of globalization and the technological revolution. Factories have fled to cheaper lands. Jobs that were once commonplace — such as those of bank tellers and grocery store clerks — have been lost to technological innovations: ATMs and digital scanners. Meanwhile, the economic gains have accumulated in the bank accounts of a wealthy few.
Clinton — who shares with her husband, former president Bill Clinton, an estimated net worth of more than $20 million — is definitely among those haves. That means the optics of her lifestyle are considerably different from those of Barack and Michelle Obama when he sought the White House: They had barely paid off their student debt.
But appearances aren’t the biggest problem for the former secretary of state. Plenty of rich folk have won the White House in the past; wealth is clearly no barrier.
The far bigger problem for her is that she is not easily associated with the battle to lift up the 99 percent, unlike, say, Sen. Elizabeth Warren (D-MA). If Warren runs for the presidency, as many observers assume she will, Clinton needs to quickly come up with a viable plan to restore America’s dwindling middle class. That ought to be the centerpiece of her campaign.
For that matter, her rivals, especially among the Republicans, need viable proposals to restore the middle class, too. (Warren has said she will not run, but Sen. Bernie Sanders of Vermont, a self-described socialist, is considering a run for the Democratic nomination. He is a longtime advocate for average workers.)
Mitt Romney’s greatest weakness during his 2012 presidential campaign wasn’t his wealth, which, at an estimated $250 million, dwarfs that of the Clintons. His Achilles’ heel was his clear disdain for those who struggle to make ends meet, evidenced in his infamous remarks about the “47 percent.”
He was also weakened by his association with Bain Capital, a private equity firm that, among other things, bought up companies and sometimes streamlined their workforces. In an age of widespread economic anxiety, Obama was able to paint Romney as a callous — and clueless — plutocrat.
Clinton can’t be so easily characterized as an out-of-touch member of the 1 percent; her political positions fit comfortably within the moderate-to-liberal wing of the Democratic Party. Still, she is associated with the centrist economic policies of her husband, who worked hard during his presidency to cozy up to Wall Street and change the image of the Democratic Party, which was believed to be hostile to the business elite. Indeed, President Clinton helped to loosen some of the regulations that had held Wall Street in check.
The results of that loosening are still wreaking havoc on households across the country. The big banks, reckless and greedy, used their new freedom to crash the economy. And, unfortunately, many of the moguls responsible for the mess were unscathed by the wreckage.
As if that were not galling enough, the taxpayers bailed out Wall Street, even as millions of average folks lost their homes to foreclosure. The bailout may have been necessary, but it’s still infuriating. Clinton needs to demonstrate that she understands the anger still loose in the land — among liberal and conservative voters alike.
She needs to be able to answer questions about the high-dollar fees that she has collected from exclusive audiences and about the campaign contributions she has accepted from corporate interests, especially Wall Street types. But more than that, she needs a set of policies that go beyond raising the minimum wage.
She may have to risk alienating some of her big-money donors if she is to assist the shrinking middle class. If she has the courage to do that, Clinton will be hard to beat.
By: Cynthia Tucker, The National Memo, February 14, 2015
“Republican Ideas Haven’t Changed Since The 1970s”: John Boehner Should Try Listening To His Own Economic Advice For Obama
After President Obama released his 2016 budget on Monday, House Speaker John Boehner published a list of ten things that are “newer than Obama’s ideas.” Instagram, Angry Birds, Frozen, and the selfie stick all made the cut. Boehner’s office even created a clunky hashtag for the list—#NewerThanObamasIdeas. The irony is rich: Republican ideas have hardly changed since the 1970s.
It’s true that many proposals in Obama’s budget, like increased infrastructure spending, comprehensive immigration reform, and universal pre-kindergarten, were in his previous budget too. But there were many new ideas, as well. He proposed a new, 19 percent minimum tax on foreign corporate profits—a big move towards the GOP’s preferred territorial tax system. He also wants to expand a tax credit for child care while increasing the capital gains tax rate from 23.8 percent to 28 percent. He put forward a major overhaul of the unemployment insurance system.
None of these represent radical departures from Obama’s previous agendas. But Obama is a Democrat, not a Republican. He wasn’t suddenly going to abolish the Internal Revenue Service and repeal the Affordable Care Act, just as Republicans won’t suddenly wake up and support a single-payer system and higher taxes on the rich.
And Republican ideas on the economy have aged even worse than the Democrats’ stale agenda. Take monetary policy. Throughout Obama’s presidency, GOP lawmakers have frequently criticized the Federal Reserve for low interest rates and its recently-ended bond-buying program. Those policies, they have argued, would send inflation shooting upwards. That, of course, has not happened. Inflation has remained below the Fed’s 2 percent target for years. The greater risk is actually deflation—falling prices.
Of course, in the 1970s, inflation was a very real concern. Then-Fed chair Paul Volcker raised interest rates, causing a recession, but stamping out inflation. Republicans, fearing pre-Volcker inflation, are trying to apply those lessons during a very different time, when the far greater risk to the economy has been a weak labor market. If the Fed had implemented them, it would have led to a disastrous economic contraction.
Or consider taxes. Most of the Republican Party has a laser-like focus at lowering the top marginal tax rates. But some reform-minded conservatives also want to finance a huge expansion of the Child Tax Credit (CTC)—a tax credit available to parents. They believe that the Reagan tax cuts in the 1980s that lowered the top marginal tax rate from 70 percent to 50 percent was a smart move. But they see far fewer benefits in lowering marginal tax rates now. “Let’s say we cut the 15 percent federal income-tax rate faced by much of the middle class to 10 percent,” Robert Stein writes in the reformicon’s new conservative agenda, titled “Room to Grow.” “Instead of keeping 85 cents for a dollar of extra effort, a worker would get 90 cents—an improvement of only 5.9 percent.… For these workers, cutting the 15 percent rate to 10 percent would make absolutely no difference in work incentives.” A CTC expansion would put money directly into the pockets of parents who need it. While a few prominent members in the Republican Party have adopted Stein’s tax proposal, most notably Senator Marco Rubio, the vast majority of the party would rather lower marginal rates further instead of expanding the CTC. In other words, Republican tax ideas are still stuck in the 1970s as well.
At the end of Boehner’s listicle, his office writes, “The simple truth is this: The federal budget shouldn’t be cobwebbed by the policies of the past. It should be focused on the future—a future where our kids and grandkids can grow up free from the fear of never-ending debt and a bloated Washington bureaucracy.” His party should listen to that advice.
By: Danny Vinik, The New Republic, February 6, 2015
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