“The Forgotten Millions”: Spending More To Create Jobs Now Would Actually Improve Our Long-Run Fiscal Position
Let’s get one thing straight: America is not facing a fiscal crisis. It is, however, still very much experiencing a job crisis.
It’s easy to get confused about the fiscal thing, since everyone’s talking about the “fiscal cliff.” Indeed, one recent poll suggests that a large plurality of the public believes that the budget deficit will go up if we go off that cliff.
In fact, of course, it’s just the opposite: The danger is that the deficit will come down too much, too fast. And the reasons that might happen are purely political; we may be about to slash spending and raise taxes not because markets demand it, but because Republicans have been using blackmail as a bargaining strategy, and the president seems ready to call their bluff.
Moreover, despite years of warnings from the usual suspects about the dangers of deficits and debt, our government can borrow at incredibly low interest rates — interest rates on inflation-protected U.S. bonds are actually negative, so investors are paying our government to make use of their money. And don’t tell me that markets may suddenly turn on us. Remember, the U.S. government can’t run out of cash (it prints the stuff), so the worst that could happen would be a fall in the dollar, which wouldn’t be a terrible thing and might actually help the economy.
Yet there is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now — except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused.
Meanwhile, there is almost no organized pressure to deal with the terrible thing that is actually happening right now — namely, mass unemployment. Yes, we’ve made progress over the past year. But long-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year.
When you see numbers like those, bear in mind that we’re looking at millions of human tragedies: at individuals and families whose lives are falling apart because they can’t find work, at savings consumed, homes lost and dreams destroyed. And the longer this goes on, the bigger the tragedy.
There are also huge dollars-and-cents costs to our unmet jobs crisis. When willing workers endure forced idleness society as a whole suffers from the waste of their efforts and talents. The Congressional Budget Office estimates that what we are actually producing falls short of what we could and should be producing by around 6 percent of G.D.P., or $900 billion a year.
Worse yet, there are good reasons to believe that high unemployment is undermining our future growth as well, as the long-term unemployed come to be considered unemployable, as investment falters in the face of inadequate sales.
So what can be done? The panic over the fiscal cliff has been revelatory. It shows that even the deficit scolds are closet Keynesians. That is, they believe that right now spending cuts and tax hikes would destroy jobs; it’s impossible to make that claim while denying that temporary spending increases and tax cuts would create jobs. Yes, our still-depressed economy needs more fiscal stimulus.
And, to his credit, President Obama did include a modest amount of stimulus in his initial budget offer; the White House, at least, hasn’t completely forgotten about the unemployed. Unfortunately, almost nobody expects those stimulus plans to be included in whatever deal is eventually reached.
So why aren’t we helping the unemployed? It’s not because we can’t afford it. Given those ultralow borrowing costs, plus the damage unemployment is doing to our economy and hence to the tax base, you can make a pretty good case that spending more to create jobs now would actually improve our long-run fiscal position.
Nor, I think, is it really ideology. Even Republicans, when opposing cuts in defense spending, immediately start talking about how such cuts would destroy jobs — and I’m sorry, but weaponized Keynesianism, the assertion that government spending creates jobs, but only if it goes to the military, doesn’t make sense.
No, in the end it’s hard to avoid concluding that it’s about class. Influential people in Washington aren’t worried about losing their jobs; by and large they don’t even know anyone who’s unemployed. The plight of the unemployed simply doesn’t loom large in their minds — and, of course, the unemployed don’t hire lobbyists or make big campaign contributions.
So the unemployment crisis goes on and on, even though we have both the knowledge and the means to solve it. It’s a vast tragedy — and it’s also an outrage.
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 6, 2012
“A Very Dysfunctional Party”: GOP Needs To Choose Between The Business Community And The Tea Party
How long will the major GOP-aligned interest groups, particularly business groups, stick with the Republican Party, if Republican tax monomania, and intransigence on the debt ceiling, threaten to tank the economy?
Barack Obama, in his interview today with Bloomberg, tried to exploit the business community’s apparent discomfort with Republicans when it comes to the debt limit. He noted that Republican efforts to crash the economy every time it is reached is hardly good for business:
Another thing that CEOs have mentioned is making sure that if we do get a deal done now, that we don’t have another crisis two or three months from now because of the debt ceiling, what we went through back in 2011. You know, the U.S. Chamber of Commerce, which is hardly an arm of my administration or the Democratic Party, I think said the other day, we can’t be going through another debt ceiling crisis like we did in 2011. That has to be dealt with.
Indeed, there really is a question here about the extent to which businesses will follow the GOP down the rabbit hole of another debt limit crisis.
Recall that in the health care debate, Republicans wound up losing several GOP-aligned special interests, including the doctors, because Republicans were far more interested in ideological extremism than in cutting deals to help Republican-aligned interest groups.
Will that happen again in the fiscal cliff negotiations? Note that many business interests are not nearly as interested in the tax-rates-above-all Republican negotiating position as they are in, well, avoiding a recession. It’s not as if the business community is going to suddenly turn into loyal Democrats. It’s just that the more the Republican Party’s positions are dictated by fear of being labeled “RINOs,” forcing them to adopt Tea Party positions, the less Republicans leaders will find themselves responsive to other normally GOP-aligned groups.
That’s a key question to look at not only in the continuing fiscal cliff talks, but really in every issue, from taxes to immigration, that will show up in Congress this year. Republicans simply can’t be a functional party if their politicians only care about possible primary challenges. Before this is all over, the Republican Party may finally have to make a critical choice between the pragmatic concerns of the business community and the fundamentalism of the Tea Party.
By: Jonathan Bernstein, The Washington Post Plum Line, December 4, 2012
“So Many Hard Decisions”: House Republicans Eye Violence Against Women Act Changes
Among Congress’ many other looming deadlines, the Violence Against Women Act is still waiting for reauthorization. It easily passed the Senate with bipartisan support in April, but House Republicans insist the current version is too supportive of immigrants, the LGBT community, and Native Americans.
Is there any chance policymakers can work something out? One of the original VAWA authors from 1994 is now the nation’s vice president, and he’s working behind the scenes to work out a deal.
Vice President Joe Biden is quietly working with House Majority Leader Eric Cantor (R-Va.) to try to pass an inclusive version of the Violence Against Women Act in the lame-duck Congress. And so far, sources tell HuffPost, Cantor is on board as long as one thing is stripped from the bill: a key protection for Native American women.
Staffers for Biden and Cantor have been trying to reach a deal on the bill for at least a week. Neither camp publicly let on it was talking to the other until Wednesday, when Cantor said the two are in negotiations and he’s feeling hopeful about a deal.
For nearly two decades, VAWA reauthorization was effortless — even the most far-right members didn’t want to be seen opposing resources for state and local governments to combat domestic violence. But as Republicans move further and further to the right, congressional support for the law has grown difficult in ways few could have imagined.
In this case, Cantor is willing to bend on LGBT and immigrant provisions, but he wants Democrats to scrap protections for Native American women. According to the Huffington Post, the Democratic provision gives tribal courts limited jurisdiction to oversee domestic violence offenses committed against Native American women by non-Native American men on tribal lands, and the House Republican leader wants this expansion curtailed.
We’ll know soon enough whether an agreement is possible in the limited time remaining, but in the meantime, GOP officials should probably hope Dana Perino isn’t the leading conservative voice when it comes to domestic violence.
Indeed, it’s astonishing that a Republican media figure would say this out loud on national television.
Appearing on Fox News Wednesday evening, Dana Perino suggested female victims of violence should “make better decisions” in order to escape harm.
Media Matters has the video.
By: Steve Benen, The Maddow Blog, December 7, 2012
“Racing To the Bottom In Michigan”: And A Fine “Happy Holidays” To Michigan Workers Too
It won’t be formal until next Tuesday (thanks to a five-day delay requirement for bills passed by both Houses), but the Michigan legislature has indeed approved “right-to-work” legislation in a lame-duck session blitzkrieg of enormous audacity. There were no hearings, no public debate, and virtually no warning before the famously pro-labor state joined the Greater South in declaring itself union-unfriendly territory, as Gov. Rick Snyder abruptly reversed his prior opposition to consideration of such legislation. That very day the hammer came down in a series of votes.
One of the right-to-work bills (the one affecting public-sector workers) passed the Michigan House by a 58-52 margin, just one vote below the number of Republicans who will serve in the next session. This reinforces the impression that GOpers feared they wouldn’t have to votes to enact right-to-work had they utilized the normal legislative process and waited until representatives elected on November 6 were in place.
The panic-stricken nature of the GOP coup wasn’t much reflected in the bland and empty public rationales offered for it by Snyder:
In an interview with The Associated Press, Snyder said he had kept the issue at arm’s length while pursuing other programs to bolster the state economy. But he said circumstances had pushed the matter to the forefront.
“It is a divisive issue,” he acknowledged. “But it was already being divisive over the past few weeks, so let’s get this resolved. Let’s reach a conclusion that’s in the best interests of all.”
Also influencing his decision, he said, were reports that some 90 companies had decided to locate in Indiana since that state adopted right-to-work legislation. “That’s thousands of jobs, and we want to have that kind of success in Michigan,” he said.
OMG, Indiana’s screwing its workers, so Michigan has to do the same right now! This is very literally a “race to the bottom” if ever there has been one.
Because Republican legislators shrewdly attached an appropriation to the bill, it will not be subject to reversal by initiative. Looks like November 2014 will be the first opportunity for some accountability, when the entire legislature is up for re-election, along with Snyder.
The Michigan Senate’s Democratic Leader, Gretchen Whitmer, had a tart description of the entire manuever:
“These guys have lied to us all along the way,” she said. “They are pushing through the most divisive legislation they could come up with in the dark of night, at the end of a lame-duck session and then they’re going to hightail it out of town. It’s cowardly.”
And a fine “happy holidays” to Michigan workers, too.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, December 7, 2012
“Michigan, A Right-to-Work State?”: Purely Political, Motivated By A Desire To Punish Supporters Of The Democratic Party
Labor never ruled Michigan as such. It may have been home to the best and biggest American union, the United Auto Workers, but even at the height of their power, the UAW could seldom elect its candidates to Detroit city government. Still, the UAW dominated the state’s Democratic Party and much of state politics for decades—at least, until the auto industry radically downsized.
Just how downsized union power has become is apparent from the decision of the state’s Republican governor, Rick Snyder, to support a right-to-work bill that began speeding its way through the state’s lame-duck GOP-controlled legislature on Thursday. Should the bill become law—and given Republican control of state government, it’s hard to envision how it won’t—Michigan would join historically more conservative Indiana as the second state from the industrial Midwest to move to right-to-work status. Until last year, when Indiana enacted its statute, right-to-work states were confined to the South, the Plains states and the Mountain West—states devoid of a major union presence. That such laws are now coming to the industrial Midwest is just more evidence of the continual weakening of industrial unions—the unions that have taken the most direct hit from offshoring and mechanization.
But why enact such laws when most unions are no longer big enough to take any bite out of company profits? In fact, the pressure for such laws isn’t coming from companies like Ford or GM, which can how hire new union workers for half of what they pay their more veteran workers. It’s purely political. Weakened though they be in the economic arena, unions still punch well above their weight at election time. That’s one reason why President Obama carried every state in the industrial Midwest save (almost) perpetually Republican Indiana.
And if anyone doubts that politics lies behind the Michigan Republicans’ decision to enact a right-to-work bill, consider one of the bill’s particulars: the only unions it exempts from the bill’s coverage, the Wall Street Journal is reporting, are police and firefighter unions. Snyder said that the GOP had carved out that exception because their jobs needed protection from labor strife.
Think about that for a moment. The effect of the Republicans’ exemption would be to ensure police and firefighters have the strongest unions in the state, the ones most capable of taking job actions when they sought to better their pay and working conditions. Elsewhere across the U.S. today, states and cities are trying to scale back pensions and other benefits of their employees, and police and firefighters are often targeted because their pay and benefits exceed those of other public workers. Moreover, historically, governors and mayors have been wary of the power of such unions—Republican governors and mayors in particular. Massachusetts Gov. Calvin Coolidge first came to the nation’s attention by breaking a Boston police strike in 1919—“There is no right to strike against the public safety,” he proclaimed. It was his strikebreaking that won him a place on the 1920 Republican ticket.
Now, however, Snyder, like Wisconsin Gov. Scott Walker, has created a police-and-firefighter carve out. The reason is purely political—in Michigan, as in Wisconsin, the police and firefighter unions often support Republicans for state and local office, and Republicans want to make sure that they’ll continue to do so with undiminished clout. The carve-out, said Michigan House Democratic leader Tim Greimel, “makes it very clear that this is not about sound economic policy. It’s motivated by a desire to punish supporters of the Democratic Party.”
By: Harold Meyerson, Editor-at-Large, The American Prospect, December 7, 2012
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