“Corporations Are Very Rich People”: Record $824 Billion Last Year As Conservatives Claim Obama Anti-Business
A favorite conservative attack on President Obama is that his policies — and even his personality — amount to an assault on American businesses. “President Obama himself is the most anti-business presidentin my lifetime. With rhetoric not befitting a president he has attacked oil companies, banks, airplane users, Wall Street and anyone who makes money,” wrote Gary Shapiro, president and CEO of the Consumer Electronics Association.
However, according to the latest data, President Obama has been very good for America’s biggest businesses. Last year, in fact, the Fortune 500 made a record $824 billion, topping the previous record set before the Great Recession:
The Fortune 500 generated a total of $824.5 billion in earnings last year, up 16.4% over 2010. That beats the previous record of $785 billion, set in 2006 during a roaring economy. The 2011 profits are outsized based on two key historical metrics. They represent 7% of total sales, vs. an average of 5.14% over the 58-year history of the Fortune 500. Companies are also garnering exceptional returns on their capital. The 500 achieved a return-on-equity of 14.3%, far above the historical norm of 12%.
Of course, that return to pre-recession level earnings hasn’t translated into job or wage growth for America’s workers. In fact, inflation-adjusted wages fell last year. Big companies are also squeezing more productivity out of their workers, with annual revenue generated per worker increasing by more than $40,000 over the last five years. CEO pay, meanwhile, increased 15 percent last year.
This data also puts the lie to the Republican claim that corporate tax cuts will spur businesses to hire. If all it took were extra cash, businesses would be hiring like crazy. However, they are clearly not doing so — and the effective corporate tax rate is already at a forty year low.
By: Pat Garofalo, Think Progress, May 7, 2012
“Plutocracy, Paralysis, Perplexity”: The Distorting Effects Of Great Wealth On Our Society
Before the Great Recession, I would sometimes give public lectures in which I would talk about rising inequality, making the point that the concentration of income at the top had reached levels not seen since 1929. Often, someone in the audience would ask whether this meant that another depression was imminent.
Well, whaddya know?
Did the rise of the 1 percent (or, better yet, the 0.01 percent) cause the Lesser Depression we’re now living through? It probably contributed. But the more important point is that inequality is a major reason the economy is still so depressed and unemployment so high. For we have responded to this crisis with a mix of paralysis and confusion — both of which have a lot to do with the distorting effects of great wealth on our society.
Put it this way: If something like the financial crisis of 2008 had occurred in, say, 1971 — the year Richard Nixon declared that “I am now a Keynesian in economic policy” — Washington would probably have responded fairly effectively. There would have been a broad bipartisan consensus in favor of strong action, and there would also have been wide agreement about what kind of action was needed.
But that was then. Today, Washington is marked by a combination of bitter partisanship and intellectual confusion — and both are, I would argue, largely the result of extreme income inequality.
On partisanship: The Congressional scholars Thomas Mann and Norman Ornstein have been making waves with a new book acknowledging a truth that, until now, was unmentionable in polite circles. They say our political dysfunction is largely because of the transformation of the Republican Party into an extremist force that is “dismissive of the legitimacy of its political opposition.” You can’t get cooperation to serve the national interest when one side of the divide sees no distinction between the national interest and its own partisan triumph.
So how did that happen? For the past century, political polarization has closely tracked income inequality, and there’s every reason to believe that the relationship is causal. Specifically, money buys power, and the increasing wealth of a tiny minority has effectively bought the allegiance of one of our two major political parties, in the process destroying any prospect for cooperation.
And the takeover of half our political spectrum by the 0.01 percent is, I’d argue, also responsible for the degradation of our economic discourse, which has made any sensible discussion of what we should be doing impossible.
Disputes in economics used to be bounded by a shared understanding of the evidence, creating a broad range of agreement about economic policy. To take the most prominent example, Milton Friedman may have opposed fiscal activism, but he very much supported monetary activism to fight deep economic slumps, to an extent that would have put him well to the left of center in many current debates.
Now, however, the Republican Party is dominated by doctrines formerly on the political fringe. Friedman called for monetary flexibility; today, much of the G.O.P. is fanatically devoted to the gold standard. N. Gregory Mankiw of Harvard University, a Romney economic adviser, once dismissed those claiming that tax cuts pay for themselves as “charlatans and cranks”; today, that notion is very close to being official Republican doctrine.
As it happens, these doctrines have overwhelmingly failed in practice. For example, conservative goldbugs have been predicting vast inflation and soaring interest rates for three years, and have been wrong every step of the way. But this failure has done nothing to dent their influence on a party that, as Mr. Mann and Mr. Ornstein note, is “unpersuaded by conventional understanding of facts, evidence, and science.”
And why is the G.O.P. so devoted to these doctrines regardless of facts and evidence? It surely has a lot to do with the fact that billionaires have always loved the doctrines in question, which offer a rationale for policies that serve their interests. Indeed, support from billionaires has always been the main thing keeping those charlatans and cranks in business. And now the same people effectively own a whole political party.
Which brings us to the question of what it will take to end this depression we’re in.
Many pundits assert that the U.S. economy has big structural problems that will prevent any quick recovery. All the evidence, however, points to a simple lack of demand, which could and should be cured very quickly through a combination of fiscal and monetary stimulus.
No, the real structural problem is in our political system, which has been warped and paralyzed by the power of a small, wealthy minority. And the key to economic recovery lies in finding a way to get past that minority’s malign influence.
By: Paul Krugman, Op-Ed Columnist, The New York Times, May 3, 2012
“In The Interest Of The Rich”: Romney’s Radical Theory Of Fairness
So, to recap Mitt Romney’s new stump speech, he thinks Americans should vote on whether they’re financially better off than they were in 2008 — which is to say, they should blame President Obama for the effects of the Great Recession. He accuses Obama of attempting to run the campaign instead on “diversions, distractions, and distortions.”
What does Romney mean by that? He means that Obama wants Americans to base their vote on who has their interest at heart. Obama argues, and I would agree, that Romney’s agenda advances the narrow interests of the richest Americans at the expense of the broader interest. And of course, this is a fundamental ideological divide between the two candidates and their parties. Democrats want to maintain (and slightly expand) the government’s role in redistributing income from the best-off Americans to the most vulnerable. Republicans consider that sort of redistribution essentially illegitimate. What Romney calls a distraction is actually the most important issue of the election.
That isn’t to say he ignores it completely. Romney’s speech does contain one somewhat oblique passage in which he attempts to turn the fairness issue back against Obama. His argument is revealing. Here’s how Romney puts it:
I have a very different vision for America, and of our future. It is an America driven by freedom, where free people, pursuing happiness in their own unique ways, create free enterprises that employ more and more Americans. …
This America is fundamentally fair. We will stop the unfairness of urban children being denied access to the good schools of their choice; we will stop the unfairness of politicians giving taxpayer money to their friends’ businesses; we will stop the unfairness of requiring union workers to contribute to politicians not of their choosing; we will stop the unfairness of government workers getting better pay and benefits than the taxpayers they serve; and we will stop the unfairness of one generation passing larger and larger debts on to the next.
In the America I see, character and choices matter. And education, hard work, and living within our means are valued and rewarded. And poverty will be defeated, not with a government check, but with respect and achievement that is taught by parents, learned in school, and practiced in the workplace.
Romney has to couch the implications of his argument carefully, but the underlying logic is perfectly clear. He believes that fairness is defined by market outcomes. If Romney earns a thousand times as much as a nurse in Topeka, it is solely because his character, education, or hard work entitle him to that. To the extent that unfairness exists, it is solely the doing of government: clean energy, laws permitting union dues, overpaid government employees, and so on. Aside from unfairness imposed by government, poverty is attributable to the bad choices or deficient character or upbringing of poor people.
Now I doubt that Romney actually believes the full implications of this, even though many Republicans certainly do. But it is striking that Romney’s formulation makes no allowance for the role of government in alleviating unfairness created by the marketplace. To be sure, he is just making a campaign speech, but every speech by Obama invariably has passages lauding the marketplace and wealth. Here’s Obama yesterday:
In America, we admire success. We aspire to it. I want everybody here to do great, be rich, go out and start a business. That’s wonderful.
Now, campaign rhetoric is campaign rhetoric, but in this case it reflects an underlying reality. Obama wants the government to do a bit more to reduce inequality, but he is not proposing to change the United States’ place as the most unequal advanced economy on Earth. His opponent has adopted the position that any interference with the natural level of inequality created by the market is illegitimate. He may not want to take that philosophy to its absolute limit, but he is running on a program that would go very far toward implementing it.
The desire by Democrats to center the campaign on this basic philosophical choice is not a distraction, nor is it an attack on wealth. It’s an attempt to highlight what the election is actually about.
By: Jonathan Chait, The Daily Beast, April 25, 2012
“No Excuse For Inaction”: The Awful Race Disparities That Still Haunt Us
Even though a black family lives in the White House, hardly anyone seriously argues that we live in a postracial society. That aspirational description of 21st century America came into vogue about four years ago, as President Barack Obama raced to victory in the 2008 presidential election, and a great number of black and white Americans wanted to believe the nation was finally closing the books on its discriminatory history.
But no. President Obama’s election didn’t suddenly sweep away all the accumulated consequences of past racism in our society. The preexisting racial disparities, so engrained in the fabric of our economy and culture, didn’t erase themselves in the wake of his victory.
As my Progress 2050 colleagues Christian E. Weller, Julie Ajinkya, and Jane Farrell make regrettably clear in their recently released report, “The State of Communities of Color in the U.S. Economy: Still Feeling the Pain Three Years Into Recovery,” racial and ethnic minority groups aren’t living in a paradise free of racial disadvantage. Quite the contrary, their research demonstrates that people of color aren’t benefiting apace with white Americans as our nation gradually rebounds from the financial collapse and economic recession that gripped us all when President Obama took office:
[T]he data we summarize in this report shows that communities of color are substantially less likely than their white fellow citizens to enjoy the opportunities that come from having a good job, owning a home, and having a financial safety cushion in the form of health insurance, retirement benefits, and private savings. This difference exists because economic opportunities eroded faster for communities of color than for whites during the Great Recession—and those opportunities have been coming back much more slowly for communities of color than for whites during the economic recovery.
The disparities Weller, Ajinkya, and Farrell write about aren’t new. Anyone who’s paid scant attention to the drumbeat of sour economic news knows that white unemployment, while at near-record heights, never drew within spitting distance of the chronically high rates suffered by African Americans and Latinos. As a result of this one fact, my colleagues write, a host of other calamities followed for people of color during the economic downturn like toppling dominoes, including:
— Black Americans enjoying fewer job opportunities than all other racial and ethnic groups.
— Poverty rates, already higher for communities of color, rising faster in the recession and declining slower during recovery than for white Americans
— Homeownership, a major source of financial security, disappearing faster for black Americans during the recession and recovery than for white Americans
Those are old, bitter, and racially disparate facts. But what is especially galling is the yawning silence and indifference that seems to accompany the periodic recitation of them. Worse, there exists in some conservative quarters a refusal to acknowledge the truth and an eagerness to embrace discredited notions about postracialism. Acting as if racial disparities don’t exist or believing we’re now living in some fantasy world free of racial divisions is nothing more than an excuse to preserve the status quo. It serves to protect the advantages of those who are already employed and comfortable, while keeping racial and ethnic minorities locked out of the improving economy.
But despite the cloudy pessimism disclosed in the report, there also exists the opportunity for hopeful change. More than a catalogue of racial disparities, the report provides a roadmap for policies that, if implemented, would help equalize the burdens faced by people of color. Specifically, it suggests federal policies that would accelerate job creation, shore up unemployment insurance, raise the minimum wage, increase access to health insurance, and implement comprehensive immigration reform to protect workers’ rights.
Armed with the facts of disparity and a prescription for change, policymakers have no excuse for inaction. Reporting the bad news, as Weller, Ajinkya, and Farrell have done, removes the blinders from their eyes. Policymakers’ indifference to the pain of their fellow citizens can only be interpreted as willing refusal to ensure that all Americans—including communities of color—share equitably in the rebuilding and recovery of the nation’s economy.
By: Sam Fulwood III, Center for American Progress, Published in AlterNet, April 17, 2012
“Warrior Against Women”: Romney Plays With Fire In Effort To Recapture Women
Last week, Romney campaign press secretary, Andrea Saul, set off a firestorm when she tweeted, “FACT: Women account for 92.3 percent of jobs loss under @BarackObama.”
Before you knew it, the Romney campaign had locked onto the statistic and made it the centerpiece of their effort to turn the corner on the mass defection of female voters to Obama—a stampede that, should it hold up, will make it very difficult for the Governor to defeat the President in November.
The strategy is a tricky one—although it certainly doesn’t hurt the Romney meme that Ms. Saul’s statement is factually true.
However, there is a great deal more to the story and—should women become acquainted with the facts rather than the bumper sticker—Governor Romney may find that he has dug the hole deeper by trying to pull a fast one on female voters. Unlike we male troglodytes, women tend to pay closer attention to the facts because…well…because they are smarter then men.
To get to the truth behind the numbers, we begin with Gary Burtless, a labor market expert with the non-partisan Brookings Institute, who highlights what took place during the recessionary period that began in December 2007.
I think males were disproportionately hurt by employment losses in manufacturing and especially construction, which is particularly male-dominated. A lot of job losses in those two industries had already occurred before Obama took office. Industries where women are more likely to be employed – education, health, the government – fared better in terms of job loss. In fact, health and education employment continued to grow in the recession and in the subsequent recovery. Government employment only began to fall after the private economy (and private employment) began growing again.
Burtless’ perspective is borne out by data that reveals that men lost 5,355,000 jobs during the recessionary period that began in December 2007 and ended in June 2009 when things began turning around, albeit unconvincingly. During that same period, women lost 2,124,000 jobs. Thus, during the recession, roughly 72 percent of all the jobs lost were taken from the men.
Oddly, it was not until things started moving in a better direction that women began experiencing the lion’s share of the pain.
There is a reason for this. What followed the recession were the deep cuts in state and local government jobs—jobs that tend to be filled by women in far greater numbers then men.
According to Joan Entmacher, vice president and director of family economic security at the National Women’s Law Center in Washington, D.C., while the private sector has added more than 2.5 million jobs since March 2010, state and local government jobs have been cut by 500,000—the majority of these jobs once belonging to women.
What’s more, it turns out that this pattern of men getting fired first followed by women losing their gigs just when men are beginning to return to work is a pattern that has held in previous recessions.
So, can you rationally blame this female job loss problem on President Obama?
Some could argue that had the President’s policies brought about a more emphatic recovery, states and localities would be racking up greater tax receipts, giving them more money to spend and, as a result, would not have found it necessary to cut so many of the jobs that have put women out of work disproportionately.
But to make that argument, you would necessarily have to support keeping or returning women to their state and local government jobs.
This is a problem when one acknowledges that it is the Romney side of the political ledger that makes ‘small government’ a hallmark of their reason for being. Thus, even if there were more dollars available to fund government at all levels, it seems fair to point out that conservatives would strenuously argue that the money should remain in the pockets of the taxpayers and not be shuttled off to government coffers to be spent on more public workers.
This is where it gets a bit sticky for the Romney camp.
It’s awfully hard to pursue a position that conflicts with your central reason for being—let alone making it a major campaign plank. If you support smaller government, you necessarily support fewer government employees. If those employees happen to be women— because women make up the majority of people who hold these jobs—you can’t really grouse about their job loss when the very act of their losing the job is a fulfillment of a critically important piece in your political platform.
And if you do decide to grouse, you run the risk of being exposed for a measure of hypocrisy.
It is no secret that a great many of the government job losses have come in education where states have cut back spending dramatically in response to budgetary problems. It is also no secret,as the following chart reveals, that the teaching profession—overwhelmingly dominated by women—has taken a major hit during the recent, post-recession years.
So, do we blame Obama for the firing of so many teachers?
Education budgets are controlled by the states. Of the top ten states that have made the deepest cuts into education, eight of them are under the firm control of Republicans.
Oops.
Meanwhile, reviewing the only three states that have increased funding for education during the past year—Maryland, South Carolina and Massachusetts—we find that two are led by Democrats. Governor Nikki Haley of South Carolina is the only Republican governor in the nation to increase spending on education.
Now, one can again suggest that a more robust recovery would have allowed these GOP governors and legislators to hold onto more of the teaching workforce. However, when it comes to cutting state and local jobs, blaming the President is somewhat akin to blaming him for the state proposals we’ve seen over the past few months attempting to subject women to vaginal ultrasound testing before an abortion is permitted.
At the end of the day, there is simply no rational basis to pin the loss of women’s jobs following the recession on the President. When taking in all the information, the argument just does not hold up.
In some respects, I have sympathy for Governor Romney in having to wear the mantle of a ‘warrior against women’. He didn’t start this. Indeed, there is ample evidence that he has not discriminated against women throughout his career and campaign.While right to life supporters might take issue with my cutting the governor such a break, given Romney’s flip-flop on the subject of abortion, I remain convinced that Romney is, in reality, no more opposed to abortion rights than he was when he was the Governor of Massachusetts.
Of course, the governor didn’t help himself with his milquetoast response to Rush Limbaugh’s attack on Sandra Fluke just as his campaign did him no favors yesterday when it appeared they had never heard of or, at the least, yet to form an opinion when asked about the Lilly Ledbetter Act—the first piece of legislation signed into law by President Obama and one aimed at improving women’s access to the courts to redress pay discrimination.
Fair or not, as the party standard bearer, Governor Romney takes on the troubles caused by Limbaugh and the many GOP state and federal legislators who have come up with some pretty bizarre, old century ideas that are the stuff of the “war against women.” If he’s going to overcome the handicap, I suspect he’s going to have to do much better than attempting a little misdirection in the effort to fool female voters.
Why?
Because if the women of America are anything like my own wife—and I strongly suspect that they are—the Governor’s ploy is a non-starter that will easily be found out.
If Romney wants the women to come back, he’s going to have to do much better.
By: Rick Ungar, The Policy Page, Forbes, April 12, 2012
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