It's A Small Oligarchal World After All (How Do You Want Your Poison?): Why Bull Market for Stocks and Bear Market for Workers

Dressing Up Pretty To Cut Benefits for the Poor and Lame

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(Credit: AP/Carolyn Kaster)

Yes, Obama is engaging in a charm offensive, lunching with House Budget Committee Chairman Paul Ryan. Next Thursday, he’ll join the entire GOP Senate caucus at their weekly luncheon

But will this gastronomical diplomacy actually lead to a deal to turn off sequestration, or maybe even the elusive “grand bargain” that Obama has been lusting after for almost two years?

Sen. Lindsey Graham, who attended last night’s dinner and chose the other 11 senators on the guest list, thinks it’s possible. “What I see from the president is probably the most encouraging engagement on a big issue since the early days of his presidency,” Graham told reporters. “He wants to do the big deal.”

“The big deal” that Obama wants would be some version of the “grand bargain” that Obama and House Speaker John Boehner almost struck in the summer of 2011: some tax increases, some closing of tax loopholes and lowering of tax rates, along with huge cuts to spending, especially on social safety net programs.

The current White House plan, which includes switching the way inflation is calculated in Social Security to shave costs and reduce benefits (they euphemistically call it the “superlative CPI”) is very similar to the one Boehner proposed last autumn. It certainly entails surrendering on something many Democrats (and Americans) vehemently oppose. So, theoretically, Republicans might be interested, right?

Well, it turns out Graham may be in the minority, in thinking some wining and dining from the White House will actually accomplish much. Others suggest Obama’s outreach is essentially for show, to quiet the criticism of Washington insiders that the president is aloof and not sufficiently bipartisan.

“Smells to me like he is just trying to ‘check the box’ of a personal presidential push after the whole Jedi-mind-meld thing at the presser,” one Senate Democratic aide remarked, noting that there is a growing caucus of scribes and pundits, like National Journal editor Ron Fournier, preoccupied with questioning Obama’s commitment to the gauzy ideal of bipartisan leadership. “He’s not gonna [make a deal] without revenues and the GOP isn’t going to do it with them, so no matter how many times they hit Plume for the tasting menu, I don’t really see it happening, at least in the short term.”

Another agreed with TPM’s Brian Beutler’s hunch that the charm offensive may be about placating Beltway opinion makers. “Seems more like kabuki theater aimed to appease DC elites. Do you really think folks like Ron Johnson are going to go for $600 billion in new revenue? I don’t think so,” the aide said.

“We don’t think that there is a significant deal worth doing — one that creates jobs and protects Social Security, Medicare and Medicaid — that today’s Republican Party would agree to,” said Jeff Hauser of the AFL-CIO, a key ally of the White House.

But could this time be different? The New Republic’s Noam Scheiber laid out the best case for that alternative scenario this morning:

By reaching out to Republican senators who are sympathetic to the deal, Obama just may succeed at splitting some of them off from their leadership, giving him the 60 votes he needs to pass it in the Senate. [Minority Leader Mitch] McConnell can then curse his colleagues’ treachery in public while privately cheering the outcome. In fact, my guess is that once Obama has the magic 60 votes, he will get several more, since many senators will want to claim a share of the credit.

Even if that does work, Scheiber assumes Obama will needs only a few Senate Republicans on top of most of all of the chamber’s 53 Democrats. But that may be a tall order, considering how hostile liberal Democrats are to entitlement cuts.

“‘Chained CPI’ is just a fancy way to say ‘cut benefits for seniors, the permanently disabled, and orphans,’” Sen. Elizabeth Warren told Salon. “Our Social Security system is critical to protecting middle-class families, and we cannot allow it to be dismantled inch by inch.”

“Wall Street’s Favorite Democrat” Looks to Deregulate Derivatives Even More

March 7, 2013 by willyloman

by Scott Creighton

Former Goldman Sachs executive and current national finance chairman of the Democratic Congressional Campaign Committee, called “Wall Street’s Favorite Democrat” by Bloomberg, Rep. Jim Himes (D-Conn.), is pushing a new bit of legislation to make it easier for Wall Street and Goldman Sachs to make piles of money setting up the next financial catastrophe just like they did back when they got Clinton to repeal Glass-Steagall.

The bill would “allow banks to keep commodity and equity derivatives in federally insured units,” Politico reported on Wednesday, meaning that banks would no longer be forced to spin off their trading desks. It would weaken Dodd-Frank’s “push out” provision, otherwise known as the Prohibition Against Federal Government Bailouts of Swaps Entities, which bars federal assistance from being provided to any swaps entity.

Himes, who was recently named the national finance chairman of the Democratic Congressional Campaign Committee, is a former executive at Goldman Sachs, where he was a vice president.” Huffington Post

Jim, like President Obama, was born to do the “good work” of neoliberalizing America and Europe. His daddy worked for the Ford Foundation and UNICEF in Lima Peru. His father worked under the presidency of Fernando Belaúnde who was particularly favored by the U.S. at the time because he basically handed over the nationalized oil industry to Standard Oil. Belaunde was forced to resign under threat of military coup in late 1968 and the new government did horrendous things like started a land reform program giving land back to the people and nationalized the oil industry again. They were also setting up deals coming closer to Cuba and the Soviet Union. Eventually the Good old U.S. of A got their man back in the saddle again in 1980.

Bulls? Bears?

A fraudulent market some of us think.

And when did we become a country that wanted to hurt the most vulnerable?


Robert Reich explains quite a bit:

Why There’s a Bull Market for Stocks And Bear Market for Workers

Tuesday, March 5, 2013

Today the Dow Jones Industrial Average rose above 14,270 – completely erasing its 54 percent loss between 2007 and 2009.

The stock market is basically back to where it was in 2000, while corporate earnings have doubled since then.

Yet the real median wage is now 8 percent below what it was in 2000, and unemployment remains sky-high.

Why is the stock market doing so well, while most Americans are doing so poorly?

Four reasons:

First, productivity gains. Corporations have been investing in technology rather than their workers. They get tax credits and deductions for such investments; they get no such tax benefits for improving the skills of their employees. As a result, corporations can now do more with fewer people on their payrolls. That means higher profits.

Second, high unemployment itself. Joblessness all but eliminates the bargaining power of most workers – allowing corporations to keep wages low. Public policies that might otherwise reduce unemployment – a new WPA or CCC to hire the long-term unemployed, major investments in the nation’s crumbling infrastructure – have been rejected in favor of austerity economics. This also means higher profits, at least in the short run.

Third, globalization. Big American-based corporations have been expanding and hiring around the globe where markets are growing fastest – even while the U.S. market is lackluster. Tax policies and trade policies have encouraged them.

Finally, the Fed’s easy-money policies. They’ve pushed investors into the stock market because bond yields are so low. On Tuesday, the yield on the 10-year U.S. Treasury note was just 1.9%.

All of this spells widening inequality in America, because the people who invest the most in the stock market have high incomes. Those who rely most on wages have lower incomes.

Corporate profits are claiming a larger share of national income than at any time in 60 years, while the portion of total income going to employees is near its lowest since 1966.

As my colleague Immanuel Saez recently found, all the economic gains between 2009 and 2011 (the last year for which data were available) went to the richest 1 percent of Americans. The bottom 99 percent has continued to lose ground.

And yet the tax code continues to give preference to capital gains over ordinary income — a huge boon to investors.

The sequestration is likely to make all this worse, since it will slow the U.S. economy and keep unemployment higher than otherwise.

It will also hurt the most vulnerable. Some $1.9 billion in low-income rental subsidies are being eliminated, affecting 125,000 people. Cuts to the Department of Agriculture will eliminate rental assistance for another 10,000 low-income rural people. Meanwhile, 100,000 formerly homeless Americans are likely to be removed from their current emergency shelters.

More than 3.8 million Americans receiving long-term unemployment benefits will have their monthly payments reduced by as much as 9.4 percent, and lose an average of $400 in benefits over their period of joblessness.

The Department of Education’s Title I program, which helps schools serving more than a million disadvantaged students, will be cut $715 million, and $400 million will be cut from Head Start, the preschool program for poor children. And major cuts will be made in the Special Supplemental Nutrition Program for Women, Infants, and Children, which provides nutrition assistance and education.

The health of an economy is not measured by the profits of corporations headquartered within it or the value of its stock market. It depends, rather, on how many of people have jobs and whether those jobs pay decent wages.

By this measure, we are a long way from economic health. Rarely before in American history have public policies so blatantly helped the most fortunate among us, so cruelly harmed the least fortunate, and exposed so many average working Americans to such widespread insecurity.

How Do You Take Your Poison?

Posted on Sep 24, 2012

By Chris Hedges
We will all swallow our cup of corporate poison. We can take it from nurse Romney, who will tell us not to whine and play the victim, or we can take it from nurse Obama, who will assure us that this hurts him even more than it hurts us, but one way or another the corporate hemlock will be shoved down our throats. The choice before us is how it will be administered.

Corporate power, no matter who is running the ward after January 2013, is poised to carry out U.S. history’s most savage assault against the poor and the working class, not to mention the Earth’s ecosystem. And no one in power, no matter what the bedside manner, has any intention or ability to stop it.

If you insist on participating in the cash-drenched charade of a two-party democratic election at least be clear about what you are doing. You are, by playing your assigned role as the Democratic or Republican voter in this political theater, giving legitimacy to a corporate agenda that means your own impoverishment and disempowerment. All the things that stand between us and utter destitution—Medicaid, food stamps, Pell grants, Head Start, Social Security, public education, federal grants-in-aid to America’s states and cities, the Women, Infants, and Children nutrition program (WIC), Temporary Assistance for Needy Families and home-delivered meals for seniors—are about to be shredded by the corporate state. Our corporate oligarchs are harvesting the nation, grabbing as much as they can, as fast as they can, in the inevitable descent. 

We will be assaulted this January when automatic spending reductions, referred to as “the fiscal cliff,” begin to dismantle and defund some of our most important government programs. Mitt Romney will not stop it. Barack Obama will not stop it.

And while Romney has been, courtesy of the magazine Mother Jones, exposed as a shallow hypocrite, Obama is in a class by himself. There is hardly a campaign promise from 2008 that Obama has not broken.

This list includes his pledges to support the public option in health care, close Guantanamo, raise the minimum wage, regulate Wall Street, support labor unions in their struggles with employers, reform the Patriot Act, negotiate an equitable peace between the Israelis and the Palestinians, curb our imperial expansion in the Middle East, stop torture, protect reproductive rights, carry out a comprehensive immigration reform, cut the deficit by half, create 5 million new energy jobs and halt home foreclosures.

Obama, campaigning in South Carolina in 2007, said that as president he would fight for the right of collective bargaining. “I’d put on a comfortable pair of shoes myself, I’ll … walk on that picket line with you as president of the United States of America,” he said. But when he got his chance to put on those “comfortable pair of shoes” during labor disputes in Madison, Wis., and Chicago he turned his back on working men and women.

Obama, while promising to defend Social Security, also says he stands behind the planned cuts outlined by his deficit commission, headed by Morgan Stanley board member Erskine Bowles and former Sen. Alan Simpson, a Wyoming Republican.

The Bowles-Simpson plan calls for cutting 0.3 percentage points from the annual cost-of-living adjustment in the Social Security program. The annual reduction would slowly accumulate. After a decade it would mean a 3 percent cut. After two decades it would mean a 6 percent cut. The retirement age would be raised to 69.

And those on Social Security who continued to work and made more than $40,000 a year would be penalized with further reductions. Obama’s payroll tax cuts have, at the same time, served to undermine the solvency of Social Security, making it an easier target for the finance corporations that seek to destroy the program and privatize the funds.

But that is just the start. Cities and states are frantically staving off collapse. They cannot pay for most pension plans and are borrowing at higher and higher interest rates to keep themselves afloat. The country’s 19,000 municipalities face steadily declining or stagnant property tax revenues, along with spiraling costs.

Annual pension payments for state and local plans more than doubled to 15.7 percent of payrolls in 2011 from 6.4 percent a decade ago, according to a study by the Center for Retirement Research at Boston College. And local governments, which made some $50 billion in pension contributions in 2010, face unfunded pension liabilities of $3 trillion and unfunded health benefit liabilities of more than $1 trillion, according to The Nelson A. Rockefeller Institute of Government. State and local government spending fell at a rate of 2.1 percent in the second quarter of this year, according to the Commerce Department. It was the 11th consecutive quarterly reduction in expenditures. And in the past year alone local governments cut 66,000 jobs, mostly those of teachers and other school employees, reported The Wall Street Journal, which accumulated this list of grim statistics.

The costs of our most basic needs, from food to education to health care, are at the same time being pushed upward with no control or regulation. Tuition and fees at four-year colleges climbed 300 percent between 1990 and 2011, fueling the college loan crisis that has left graduates, most of them underemployed or unemployed, with more than $1 trillion in debt. Health care costs over the same period have risen 150 percent. Food prices have climbed 10 percent since June, according to the World Bank. There are now 46.7 million U.S. citizens, and one in three children, who depend on food stamps. The U.S. Immigration and Customs Enforcement agency under Obama has, meanwhile, expelled 1.5 million immigrants, a number that dwarfs deportations carried out by his Republican predecessor.

And while we are being fleeced, the Treasury Department and Federal Reserve Bank has since 2008 doled out $16 trillion to national and global financial institutions and corporations.

Fiscal implosion is only a matter of time. And the corporate state is preparing.

Obama’s assault on civil liberties has outpaced that of George W. Bush. The refusal to restore habeas corpus, the use of the Authorization to Use Military Force Act to justify the assassination of U.S. citizens, the passing of the FISA Amendments Act to monitor and eavesdrop on tens of millions of citizens without a warrant, the employment of the Espionage Act six times to threaten whistle-blowers inside the government with prison time, and the administration’s recent emergency appeal of U.S. District Judge Katherine Forrest’s permanent injunction of Section 1021(b)(2) of the National Defense Authorization Act give you a hint of the shackles the Democrats, as well as the Republicans, intend to place on all those who contemplate dissent.

But perhaps the most egregious assault will be carried out by the fossil fuel industry. Obama, who presided over the repudiation of the Kyoto Accords and has done nothing to halt the emission of greenhouse gases, reversed 20 years of federal policy when he permitted the expansion of fracking and offshore drilling. And this acquiescence to big oil and big coal, no doubt useful in bringing in campaign funds, spells disaster for the planet. He has authorized drilling in federally protected lands, along the East Coast, Alaska and four miles off Florida’s Atlantic beaches. Candidate Obama in 2008 stood on the Florida coastline and vowed never to permit drilling there.

You get the point. Obama is not in charge. Romney would not be in charge. Politicians are the public face of corporate power. They are corporate employees. Their personal narratives, their promises, their rhetoric and their idiosyncrasies are meaningless. And that, perhaps, is why the cost of the two presidential campaigns is estimated to reach an obscene $2.5 billion. The corporate state does not produce a product that is different. It produces brands that are different. And brands cost a lot of money to sell.

You can dismiss those of us who will in protest vote for a third-party candidate and invest our time and energy in acts of civil disobedience. You can pride yourself on being practical. You can swallow the false argument of the lesser of two evils. But ask yourself, once this nightmare starts kicking in, who the real sucker is.

Illustration by Mr. Fish

And to ensure that you realize it's an international fix:

March 7, 2013

Bushifying the. . . .

Busy day today, so no blogging until late. But a quick thought in passing: reading what the three tweeters of Brussels had to say, it struck me that they have a habit of mind that, to my mind, is more disturbing than a bit of incivility here and there. In fact, they sound remarkably like George W. Bush.

What do I mean? Well, one of the truly awful things about the Bush years was the deliberate conflation of the person sitting in the White House with the nation. If you criticized Bush, you were anti-American; if you denounced the Iraq war, you were attacking the troops.

And the reach of this kind of argument seemed limitless. Yes, there were Republicans arguing that you had to support Social Security privatization for national security reasons, because the president was advocating it, and the president’s credibility was essential to the War on Terror (TM).

Of course all that changed as soon as a Democrat was in the White House. But it was an object lesson in the wrongness of confusing respect for the institution with unthinking support of the people currently running the institution.

So, look at what the Brussels tweeters are saying — namely, that an attack on the wrongheaded economic doctrine of Olli Rehn is an attack on Europe, that anyone who criticizes the hash they are making of policy must be an American who hates Europe. Um, no.

As it happens, I’m very much pro-European; I consider the European project, the path of peace through prosperity and integration, one of the best things to have happened to humanity over the past century. I’ve seen the good work Europe has done in promoting democracy.

My problem isn’t with Europe, it’s with the bad policies that are ripping Europe apart, and with the officials who for whatever reason — intellectual inflexibility, ideological blinders, or, I suspect, sheer personal vanity, an unwillingness to admit that they were wrong — have refused to consider any modification of these policies despite years of disastrous results.

And the attempt of these officials to wrap themselves in the mantle of European unity is truly contemptible.

March 6, 2013  244 Comments

George Orwell and the Zombies

Adele Stan transcribes some remarks I made yesterday about communicating progressive economic ideas; as always, it’s distressing to see how disjointed my actual speech is, but I think I do get a point across.

I’d like to say a bit more about the use of vivid language in economic discourse. Partly I use striking and sarcastic metaphors to break through the complacency of officials. But I also, more broadly, have an Orwellian purpose — as in George Orwell’s Politics and the English Language, which everyone should read.

There are many fine things in that Orwell essay, but the section that has influenced me most is the one in which he takes a famous passage from the King James Bible and renders it in official-speak. The original:

I returned and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all.

The rewritten version is:

Objective considerations of contemporary phenomena compel the conclusion that success or failure in competitive activities exhibits no tendency to be commensurate with innate capacity, but that a considerable element of the unpredictable must invariably be taken into account.

As Orwell said, the original isn’t just pithier and punchier; it contains vivid metaphors that convey the sense far better than just laying out the argument. Similarly, in reverse, rather than refer to:

an economic view that has unfortunately retained considerable influence, possibly because it has a political appeal to some parties, despite extensive empirical evidence that appears to refute the proposition

why not just refer to it as a “zombie idea”? It’s not just shorter, it conveys the sense of what is happening much better — and it places the idea in question in the context of other zombie ideas.

Now, of course, some people get offended when you refer to their ideas as zombies. But if you’re worried about giving offense, you should be an official spokesperson, not an independent commentator.

How's that for pithy?

Suzan