TW: Reich hits some key points. The movement of folks into their respective echo chambers is creating a political environment fed by anger, resentment and bias. Reasoning and exploration of alternatives suffers. Most folks I know are either so hardened in their opinions or so weary of discussing things that dialogue barely exists and when it does it is hardly enlightening. Anger has always been a big political driver, unfortunately tumult usually results.
The Dems are getting their collective asses kicked by those who are far more willing to ride the anger wave. That Bayh has folded like a wimp frames the challenge well. If he was strong in his beliefs he would not have gone running off like a whiny brat.
That so many Americans think Hooverian economics and/or failed supply side economics and a foreign policy brought by the same fools who created the torture soaked war on terror that led to the Iraq mess is just depressing.
From Robert Reich:
"Not long ago I was debating someone on television. I thought the discussion was going well until the commercial break when a producer said into my earpiece “be angrier.”
“Why should I be angrier?” I asked him, irritated that he hadn’t appreciated the thoughtfulness of debate.
“That’s how we get channel surfers to stop and watch the program,” the producer explained. “Eyeballs are attracted to anger.”
At this point I lost my temper.
The incident came back to me when I heard about Evan Bayh’s decision to leave Congress because he felt it was becoming too partisan. The real problem isn’t partisanship. Bold views and strong positions are fine. Democratic debate and deliberation can be enhanced by them.
The problem is the intransigence and belligerence that has taken over Congress and much of the rest of the public — a profound distrust of people “on the other side,” an unwillingness to compromise, a bitterness and anger disproportionate to issues being discussed.
Anger makes good television, but it’s fake and it teaches Americans the wrong lessons. Anger also can win elections (Senate Republicans haven’t given Obama any votes because they’ve been eyeing the 2010 midterms since he took office, hoping for a rerun of 1994), but partisan anger is just as fake, and it undermines the capacity of our democracy to do the public’s business.
By the way, I was on CNBC this morning, and the subject of discussion was Bayh’s decision. No producer prodded me to be angrier but Larry Kudlow introduced the segment by saying that I’d be “duking it out” with Steve Moore, who writes editorials for the Wall Street Journal. And when it came for us to discuss the gridlock in Congress, Larry continuously interrupted, saying the reason for the gridlock was Obama’s lefti-leaning agenda.
When this is almost all the public sees and hears about public issues, it’s no wonder Americans begin to think everything is an angry shouting match. Americans stop listening to each other. We retreat into small ideological bubbles and talk only with people who agree with us. We forget how much we have in common, and how important it is to get on with the task of making the nation better."
http://robertreich.org/post/393078060/a-thought-on-evan-bayh-and-partisan-america
Showing posts with label Robert Reich. Show all posts
Showing posts with label Robert Reich. Show all posts
Tuesday, February 16, 2010
Thursday, August 20, 2009
The Real Cost Of End Of Life Disinformation
TW: Bad policy. What was proposed briefly to be included in health care reform and shot down as "death panels" would have helped many folks. Instead it was demagogued to death. Where were the moderates as our political leaders either cowered like frightened children or joined the disinformation campaign with glee?
From Robert Reich:
"Three years ago, my mother died after a long and painful illness. During her last months she was only partially conscious, and in her brief intervals of awareness was often distraught. At several points my father, sister, and I met with doctors to figure out how to ease her obvious suffering with pain medications, and how we could get her into a hospice facility. We could afford the counseling, but millions of other families cannot -- which is why one of the useful heathcare reforms now moving through Congress authorizes Medicare to reimburse doctors for such voluntary end-of-life consultations. The American Medical Association and the National Hospice and Palliative Care Organization support the provision...
Health care is already rationed, of course. Those who can't afford health insurance don't get much of it, except in emergency rooms. For those who have insurance, the rationing is done by prepaid medical groups, the legacies of HMOs, that decide what drugs and procedures their members will get. Or it's done by insurance company personnel who decide what will be covered. But for the scaremongers to say that under the healthcare reform proposals now being considered, government will do the rationing -- and that government bureaucrats will decide whether people live or die -- is odious. It's a deliberate lie that preys upon the fears of many people who already scared as hell about loss of their jobs, healthcare, homes, and savings.The "town meetings" that are now spewing such anger reflect deepseated fears that are welling up across America during this economic crisis. Healthcare reform may ease some of these fears. But the demagogues that are manipulating those fears for political gain don't give a hoot. Have they no shame?
http://robertreich.blogspot.com/2009/08/sarah-palins-death-panels.html
From Robert Reich:
"Three years ago, my mother died after a long and painful illness. During her last months she was only partially conscious, and in her brief intervals of awareness was often distraught. At several points my father, sister, and I met with doctors to figure out how to ease her obvious suffering with pain medications, and how we could get her into a hospice facility. We could afford the counseling, but millions of other families cannot -- which is why one of the useful heathcare reforms now moving through Congress authorizes Medicare to reimburse doctors for such voluntary end-of-life consultations. The American Medical Association and the National Hospice and Palliative Care Organization support the provision...
Health care is already rationed, of course. Those who can't afford health insurance don't get much of it, except in emergency rooms. For those who have insurance, the rationing is done by prepaid medical groups, the legacies of HMOs, that decide what drugs and procedures their members will get. Or it's done by insurance company personnel who decide what will be covered. But for the scaremongers to say that under the healthcare reform proposals now being considered, government will do the rationing -- and that government bureaucrats will decide whether people live or die -- is odious. It's a deliberate lie that preys upon the fears of many people who already scared as hell about loss of their jobs, healthcare, homes, and savings.The "town meetings" that are now spewing such anger reflect deepseated fears that are welling up across America during this economic crisis. Healthcare reform may ease some of these fears. But the demagogues that are manipulating those fears for political gain don't give a hoot. Have they no shame?
http://robertreich.blogspot.com/2009/08/sarah-palins-death-panels.html
Wednesday, August 19, 2009
Barack Obama Is No RFK At Least Not Yet
From Robert Reich:
"The President's centeredness, calm, and dignity inspire trust but also suggest a certain lack of combativeness, a reluctance to express indignation, and an unwillingness to identify enemies -- resulting in a tendency toward compromise even at the early stages of controversy."
TW: I finished recently Thurston Clarke's "Last Campaign" about RFK's brief and ultimately tragic '68 primary campaign. RFK was an odd mix by 1968. One part passionate defender of the poor and minorities and fervent opponent of the Vietnam War. On the other he was able to make a strong connection with the blue-collar working class that many in the Democratic party at the time were starting to lose and ultimately lost in droves in the form of the Reagan Democrats of the 1980's and beyond. Many George Wallace voters were RFK supporters.
RFK did not have the "Volvo driving, latte sipping" Dems, they were firmly with Eugene McCarthy. He did not start out with the support of the old Dem party bosses (i.e. Daley Sr. etc.) but with his primary victories he was perhaps on the verge of getting their support over Humphrey (the party bosses had one primary interest- winning the general election, policy be damned).
How did RFK bridge two seemingly different groups? Foremost, his personality. He was regarded as tough, very tough. He had accumulated his bonafides going back to his days on the staff of Joseph McCarthy, continuing through is anti-mafia work in the late '50's, through his attorney general days in JFK's administration. The Wallace voters perceived RFK as someone who substantively leaned left but in form was sufficiently tough that the Wallace crowd perceived that he would not sellout their interests in pursuit of more liberal goals. They also believed RFK would be tough internationally whilst working the U.S.'s way out of Vietnam for instance.
Obama does not yet have these tough bonafides. Obama won on the backing of the "Volvo driving, latte sipping" Dem elites, minorities and those pissed off about W. Bush. How can Obama build some "tough" bonafides?
There is a reason POTUSes like foreign policy, it is the area of governance where the POTUS has the most discretion. One of Obama's most heralded moments as POTUS was when a couple of Navy Seals put a circle into a Somali pirate's forehead. Obama did not have much to do with it, but it was under his watch and indirect order. Folks for better or worse like that stuff.
Obama's presidency though is not currently and will not likely be anytime soon (barring unforeseen events) about foreign policy. It is about domestic policy where the negotiation and triangulation rule. Obama's opportunities will be relatively rare but not extinct. Reagan made his big symbolic play with the PATCO air controllers strike. Where can Obama make a move?
The financial industry is a potential area. Regardless of Wall Street machinations I believe most Americans sense something is rotten there. What specifically Obama can do is not immediately apparent to me. But should he make a move I believe it would pay off broadly to assist his leverage in all areas of legislation. Obama needs a notch for his holster.
Another area would be the public service unions or trial lawyers. Both are ripe for reform. But sequencing is important, taking on his own party's core constituencies should not be his first move.
Obama will never be progressive enough for some on the left but he must gain more traction with the middle in order to build his street or more specifically his "main street" cred.
"The President's centeredness, calm, and dignity inspire trust but also suggest a certain lack of combativeness, a reluctance to express indignation, and an unwillingness to identify enemies -- resulting in a tendency toward compromise even at the early stages of controversy."
TW: I finished recently Thurston Clarke's "Last Campaign" about RFK's brief and ultimately tragic '68 primary campaign. RFK was an odd mix by 1968. One part passionate defender of the poor and minorities and fervent opponent of the Vietnam War. On the other he was able to make a strong connection with the blue-collar working class that many in the Democratic party at the time were starting to lose and ultimately lost in droves in the form of the Reagan Democrats of the 1980's and beyond. Many George Wallace voters were RFK supporters.
RFK did not have the "Volvo driving, latte sipping" Dems, they were firmly with Eugene McCarthy. He did not start out with the support of the old Dem party bosses (i.e. Daley Sr. etc.) but with his primary victories he was perhaps on the verge of getting their support over Humphrey (the party bosses had one primary interest- winning the general election, policy be damned).
How did RFK bridge two seemingly different groups? Foremost, his personality. He was regarded as tough, very tough. He had accumulated his bonafides going back to his days on the staff of Joseph McCarthy, continuing through is anti-mafia work in the late '50's, through his attorney general days in JFK's administration. The Wallace voters perceived RFK as someone who substantively leaned left but in form was sufficiently tough that the Wallace crowd perceived that he would not sellout their interests in pursuit of more liberal goals. They also believed RFK would be tough internationally whilst working the U.S.'s way out of Vietnam for instance.
Obama does not yet have these tough bonafides. Obama won on the backing of the "Volvo driving, latte sipping" Dem elites, minorities and those pissed off about W. Bush. How can Obama build some "tough" bonafides?
There is a reason POTUSes like foreign policy, it is the area of governance where the POTUS has the most discretion. One of Obama's most heralded moments as POTUS was when a couple of Navy Seals put a circle into a Somali pirate's forehead. Obama did not have much to do with it, but it was under his watch and indirect order. Folks for better or worse like that stuff.
Obama's presidency though is not currently and will not likely be anytime soon (barring unforeseen events) about foreign policy. It is about domestic policy where the negotiation and triangulation rule. Obama's opportunities will be relatively rare but not extinct. Reagan made his big symbolic play with the PATCO air controllers strike. Where can Obama make a move?
The financial industry is a potential area. Regardless of Wall Street machinations I believe most Americans sense something is rotten there. What specifically Obama can do is not immediately apparent to me. But should he make a move I believe it would pay off broadly to assist his leverage in all areas of legislation. Obama needs a notch for his holster.
Another area would be the public service unions or trial lawyers. Both are ripe for reform. But sequencing is important, taking on his own party's core constituencies should not be his first move.
Obama will never be progressive enough for some on the left but he must gain more traction with the middle in order to build his street or more specifically his "main street" cred.
Obama Taking Fire From the Left...A Good Thing
TW: Obama is taking fire from the left. Not surprising and it is about time. Fire from the left is far better than fire from the right. It helps re-frame the debate towards the interests of progressives rather than interests of the loud neo-con, Hooverite, insecure Limbovian, Fox loving Palin adherents. That said some help for those on the left is needed as they are somewhat confused about life in power.
From Robert Reich's latest fretful blogpost:
"...Universal health care is President Obama's biggest issue..."
TW: NO NO NO!!! Universal health care is not even in Obama's top five maybe not top ten of issues. Hard-core liberals have wanted universal health care since Truman, it is their issue not the rest of America's. It is the right thing to do. But the vast majority of Americans have coverage to ask them to pay higher taxes just to create universal coverage is not and has never been realistic.
Universal care is a morally relevant and useful component of overall health care reform. Health care reform is needed to reduce the growth in health care spending which threatens to overwhelm the American economy, this IS the Obama and America's high priority. What the health care reform bill must do is create the basis by which health care costs can be more effectively managed in the future. Universal care is one component of this effort not THE issue.
Again from Reich:
"Sally [Reich's Dem friend] also doesn't see why Obama is so bent on bipartisanship."Republicans haven't helped him a bit so far, won't help him, and he doesn't need their votes, so why compromise with them?"
TW: Obama does not necessarily need a bunch of Republican votes but he most definitely needs "Blue Dog" or moderate/conservative Dem votes. The negotiations are not about satisfying grumpy old farts like Chuck Grassley, it is very much about retaining the Blue Dogs.
Liberal Dems forget that not all Dems are elected from majority Dem districts. Folks forget the Blue Dogs are not merely some recalcitrant bloc from deep blue districts and states. They are Dems elected in purple and red districts and states who wish to retain their seats (the rest of the Dems better hope they retain their seats as well). The Democratic party and Obama must respect their positions or the Dems will neither pass significant bills (health care, energy policy etc.) nor retain their strong majorities. There is a delicate line to be tread integrating the Blue Dog needs with progressive agendas but this is the reality of democracy.
From Peter Suderman at Reason via Sullivan's blog:
"...No, I don't think this is a failure of leadership so much as a feature of democratic politics -- and a reminder of how unpleasant and unsatisfying to nearly everyone the business of politics can be.
Democratic politics is a messy business. It's disorganized and frantic and unpredictable and frustrating. Politics is a matter of shouting, and dissent, and deal-making, and strategy, and slippery rhetoric, and compromise. It is not a matter of deciding on the "right" policy and then making it so -- even when your party controls the White House, the House, and the Senate. "
From Robert Reich's latest fretful blogpost:
"...Universal health care is President Obama's biggest issue..."
TW: NO NO NO!!! Universal health care is not even in Obama's top five maybe not top ten of issues. Hard-core liberals have wanted universal health care since Truman, it is their issue not the rest of America's. It is the right thing to do. But the vast majority of Americans have coverage to ask them to pay higher taxes just to create universal coverage is not and has never been realistic.
Universal care is a morally relevant and useful component of overall health care reform. Health care reform is needed to reduce the growth in health care spending which threatens to overwhelm the American economy, this IS the Obama and America's high priority. What the health care reform bill must do is create the basis by which health care costs can be more effectively managed in the future. Universal care is one component of this effort not THE issue.
Again from Reich:
"Sally [Reich's Dem friend] also doesn't see why Obama is so bent on bipartisanship."Republicans haven't helped him a bit so far, won't help him, and he doesn't need their votes, so why compromise with them?"
TW: Obama does not necessarily need a bunch of Republican votes but he most definitely needs "Blue Dog" or moderate/conservative Dem votes. The negotiations are not about satisfying grumpy old farts like Chuck Grassley, it is very much about retaining the Blue Dogs.
Liberal Dems forget that not all Dems are elected from majority Dem districts. Folks forget the Blue Dogs are not merely some recalcitrant bloc from deep blue districts and states. They are Dems elected in purple and red districts and states who wish to retain their seats (the rest of the Dems better hope they retain their seats as well). The Democratic party and Obama must respect their positions or the Dems will neither pass significant bills (health care, energy policy etc.) nor retain their strong majorities. There is a delicate line to be tread integrating the Blue Dog needs with progressive agendas but this is the reality of democracy.
From Peter Suderman at Reason via Sullivan's blog:
"...No, I don't think this is a failure of leadership so much as a feature of democratic politics -- and a reminder of how unpleasant and unsatisfying to nearly everyone the business of politics can be.
Democratic politics is a messy business. It's disorganized and frantic and unpredictable and frustrating. Politics is a matter of shouting, and dissent, and deal-making, and strategy, and slippery rhetoric, and compromise. It is not a matter of deciding on the "right" policy and then making it so -- even when your party controls the White House, the House, and the Senate. "
Friday, June 26, 2009
What You Can Do...
From Robert Reich's blog:
"Someone recently approached me at the cheese counter of a local supermarket, asking "what can I do?" At first I thought the person was seeking advice about a choice of cheese. But I soon realized the question was larger than that. It was: what can I do about the way things are going in Washington?
People who voted for Barack Obama tend to fall into one of two camps: Trusters, who believe he's a good man with the right values and he's doing everything he can; and cynics, who have become disillusioned with his bailouts of Wall Street, flimsy proposals for taming the Street, willingness to give away 85 percent of cap-and-trade pollution permits, seeming reversals on eavesdropping and torture, and squishiness on a public option for health care.
In my view, both positions are wrong. A new president -- even one as talented and well-motivated as Obama -- can't get a thing done in Washington unless the public is actively behind him. As FDR said in the reelection campaign of 1936 when a lady insisted that if she were to vote for him he must commit to a long list of objectives, "Maam, I want to do those things, but you must make me."We must make Obama do the right things. Email, write, and phone the White House. Do the same with your members of Congress. Round up others to do so. Also: Find friends and family members in red states who agree with you, and get them fired up to do the same. For example, if you happen to have a good friend or family member in Montana, you might ask him or her to write Max Baucus and tell him they want a public option included in any healthcare bill."
TW: As you can imagine, I fall into the truster camp. But the FDR quote is the point. Politicians are executing the views, biases, ignorance and hopes of their constituents. They are the means not the end. If folks want change and reform they must burn through the roadblocks (i.e. entrenched interest groups, professional lobbyists, general societal apathy and ignorance) via their own initiatives. This tiny micro-blog is one attempt to do so. What are you doing?
http://robertreich.blogspot.com/2009/06/what-can-i-do.html
"Someone recently approached me at the cheese counter of a local supermarket, asking "what can I do?" At first I thought the person was seeking advice about a choice of cheese. But I soon realized the question was larger than that. It was: what can I do about the way things are going in Washington?
People who voted for Barack Obama tend to fall into one of two camps: Trusters, who believe he's a good man with the right values and he's doing everything he can; and cynics, who have become disillusioned with his bailouts of Wall Street, flimsy proposals for taming the Street, willingness to give away 85 percent of cap-and-trade pollution permits, seeming reversals on eavesdropping and torture, and squishiness on a public option for health care.
In my view, both positions are wrong. A new president -- even one as talented and well-motivated as Obama -- can't get a thing done in Washington unless the public is actively behind him. As FDR said in the reelection campaign of 1936 when a lady insisted that if she were to vote for him he must commit to a long list of objectives, "Maam, I want to do those things, but you must make me."We must make Obama do the right things. Email, write, and phone the White House. Do the same with your members of Congress. Round up others to do so. Also: Find friends and family members in red states who agree with you, and get them fired up to do the same. For example, if you happen to have a good friend or family member in Montana, you might ask him or her to write Max Baucus and tell him they want a public option included in any healthcare bill."
TW: As you can imagine, I fall into the truster camp. But the FDR quote is the point. Politicians are executing the views, biases, ignorance and hopes of their constituents. They are the means not the end. If folks want change and reform they must burn through the roadblocks (i.e. entrenched interest groups, professional lobbyists, general societal apathy and ignorance) via their own initiatives. This tiny micro-blog is one attempt to do so. What are you doing?
http://robertreich.blogspot.com/2009/06/what-can-i-do.html
Thursday, May 14, 2009
Social Security Is NOT Okay
TW: Headlines earlier this week spoke of trustees for Medicare and Social Security warning their respective funds were depleting faster than anticipated. Such headlines imply something that is not real. Then Reich does something several progressive economists and pundits try to do something else which really aggravates me.
First re the headlines, when one speaks of a "fund" one generally perceives an actual pool of money sitting somewhere. But in the case of the Social Security and Medicare "funds" this is just not true, those "funds" are merely paper numbers. There are no pools of money sitting around earning interest or even just sitting around. When you payroll taxes for Social Security and Medicare are deducted from your check that money goes right into the federal budget where it funds the Iraq War, the EPA, and yes current Social Security benefits. Those "trust funds" are merely paper trails keeping track of what one agency of the government is spending versus another but the money all flows through one bucket. When the trustees warn about the funds, they are saying what we all know, our long-term fiscal deficits are very challenging.
Two and related to the above, Reich and others claim Social Security is basically solvent and could continue to be so with relatively minor tweaks. This is true if one only considers Social Security in complete isolation. But the current Social Security "surpluses" of payroll taxes over benefits being paid out to current beneficiaries is what is funding the rest of the budget (which even then is in deficit). Remove the Social Security "surplus" and the net deficit skyrockets even higher.
The reason Reich seeks to frame the discussion this way is because he is afraid, rightly, that Social Security benefits will be traded away during negotiations to address the overall fiscal challenges facing the country. But Reich is wrong that these benefits should be walled off. Social Security benefits should absolutely be part of the discussions on our future fiscal solvency. To make them sacrosanct would be to memorialize yet another sacred cow and continue the shift of our nation's resources from younger generations to older generations.
From Robert Reich's blog:
"What are we to make of yesterday's report from the trustees of the Social Security and Medicare trust funds that Social Security trust will run out of assets in 2037, four years sooner than previously forecast, and Medicare’s hospital fund will be exhausted by 2017, two years earlier than predicted a year ago?
...Even if you assume Social Security is a problem, it's not a big problem. Raise the ceiling slightly on yearly wages subject to Social Security payroll taxes (now a bit over $100,000), and the problem vanishes even under harsher assumptions than I'd use about the future. President Obama suggested this in the campaign and stirred up a hornet's nest because this solution apparently dips too deeply into the middle class, which made him backtrack and begin talking about raising additional Social Security payroll taxes on people earning over $250,000. But Social Security would be in safe shape if it were slightly more means tested, or if the retirement age was raised just a bit. The main point is that Social Security is a tiny problem, as these things go.
...Social Security is a tiny problem..."
http://robertreich.blogspot.com/2009/05/truth-behind-social-security-and.html
First re the headlines, when one speaks of a "fund" one generally perceives an actual pool of money sitting somewhere. But in the case of the Social Security and Medicare "funds" this is just not true, those "funds" are merely paper numbers. There are no pools of money sitting around earning interest or even just sitting around. When you payroll taxes for Social Security and Medicare are deducted from your check that money goes right into the federal budget where it funds the Iraq War, the EPA, and yes current Social Security benefits. Those "trust funds" are merely paper trails keeping track of what one agency of the government is spending versus another but the money all flows through one bucket. When the trustees warn about the funds, they are saying what we all know, our long-term fiscal deficits are very challenging.
Two and related to the above, Reich and others claim Social Security is basically solvent and could continue to be so with relatively minor tweaks. This is true if one only considers Social Security in complete isolation. But the current Social Security "surpluses" of payroll taxes over benefits being paid out to current beneficiaries is what is funding the rest of the budget (which even then is in deficit). Remove the Social Security "surplus" and the net deficit skyrockets even higher.
The reason Reich seeks to frame the discussion this way is because he is afraid, rightly, that Social Security benefits will be traded away during negotiations to address the overall fiscal challenges facing the country. But Reich is wrong that these benefits should be walled off. Social Security benefits should absolutely be part of the discussions on our future fiscal solvency. To make them sacrosanct would be to memorialize yet another sacred cow and continue the shift of our nation's resources from younger generations to older generations.
From Robert Reich's blog:
"What are we to make of yesterday's report from the trustees of the Social Security and Medicare trust funds that Social Security trust will run out of assets in 2037, four years sooner than previously forecast, and Medicare’s hospital fund will be exhausted by 2017, two years earlier than predicted a year ago?
...Even if you assume Social Security is a problem, it's not a big problem. Raise the ceiling slightly on yearly wages subject to Social Security payroll taxes (now a bit over $100,000), and the problem vanishes even under harsher assumptions than I'd use about the future. President Obama suggested this in the campaign and stirred up a hornet's nest because this solution apparently dips too deeply into the middle class, which made him backtrack and begin talking about raising additional Social Security payroll taxes on people earning over $250,000. But Social Security would be in safe shape if it were slightly more means tested, or if the retirement age was raised just a bit. The main point is that Social Security is a tiny problem, as these things go.
...Social Security is a tiny problem..."
http://robertreich.blogspot.com/2009/05/truth-behind-social-security-and.html
Wednesday, April 22, 2009
Where Reich (And the Left) Is Wrong
TW: Reich makes three points: 1) social security is not broken therefore leave it alone, 2) reforming Medicare will solve all problems without cutting much if anything, 3) screw the Republicans
Re #1: Reich and others on the left state a truism- the social security program in isolation is in fact more or less solvent if relatively minor tweaks are made to the future cash flows (either raise the taxes or cut the benefits). The challenge with that approach is that while the social security program may exist in a vacuum outside of the rest of the federal budget in theory it most definitely does not in practice. The social security surpluses have subsidized the rest of the budget for decades as the social security program moves from surplus to deficit the balance of the budget will come under tremendous stress. The social security program will need to take cuts in order to help support the rest of the program unless folks are comfortable with even more drastic reductions in health care and defense expenditures than will be needed otherwise. Seeking to treat the SS program in isolation is knowingly placing blinders on one's head.
Re #2: yes reform is needed but reform without acknowledging Americans consume much more service than they can afford is to deny reality. Those on the left seem to think that "reform" will magically solve the problem without pain, those on the right seem to believe if everything is privatized a similar if different magic world will result. Americans consume much more health care than almost any other nation whilst achieving results barely better than most. We are inefficient that means fewer services and lower pricing is needed. There are no magic wands, we have a complex, confusing, inefficient public/private hybrid that feeds on more and more services and reduced risks to the patients and providers. We need fewer services and for consumers to assume and get comfortable with more risks.
Re #3: while I would love to tell many Republicans to go pound (and many deserve it), one does not govern effectively that way. Obama knows this, but he will continually face chirping from the left to do so, which is fine it makes him appear more moderate.
From Robert Reich:
"...Obama must be careful not to put entitlement programs on the chopping block as part of a "grand bargain" to elicit Republican support for health care and cap-and-trade. Social Security is not in dire straights; it can be made flush for the next 75 years by ever-so-slightly lifting the ceiling on the portion of income subject to Social Security payroll taxes (and if Democrats are reluctant to do that on incomes over $100,000, then they could do so on incomes over $250,000).
Medicaid and Medicare are in trouble because health care costs are rising so fast, which argues for health-care reform rather than cuts in these important programs. Yet if health-care reform has any prayer of controlling the rising tide of health care costs, the plan must allow beneficiaries to opt into a public insurance plan -- something Republicans and the health-care establishment are determined to fight. So it's critically important that the Senate wrap health care into a reconciliation bill that can be enacted by a majority vote in the Senate.Obama should fast-track health care and stop trying to court Republicans. Every House Republican and all but three Senate Republicans voted against the stimulus; all Republicans in both houses voted against the budget. During the recess they hosted "tea parties" claiming that Americans are over-taxed. Over the weekend, House minority leader John Boehner called the idea of carbon-induced climate change "almost comical." Republicans are already off and running toward the midterm elections of 2010, even starting to run ads against House Democrats in close districts. They seem hell bent on on becoming a tiny, whacky minority -- the party that denies evolution, denies global warming, denies Americans need a major overhaul of health care, and denies the economy needs anything more than a major tax cut to get it moving again. The less Obama caters to them the better."
http://robertreich.blogspot.com/2009/04/where-government-spending-should-be.html
Re #1: Reich and others on the left state a truism- the social security program in isolation is in fact more or less solvent if relatively minor tweaks are made to the future cash flows (either raise the taxes or cut the benefits). The challenge with that approach is that while the social security program may exist in a vacuum outside of the rest of the federal budget in theory it most definitely does not in practice. The social security surpluses have subsidized the rest of the budget for decades as the social security program moves from surplus to deficit the balance of the budget will come under tremendous stress. The social security program will need to take cuts in order to help support the rest of the program unless folks are comfortable with even more drastic reductions in health care and defense expenditures than will be needed otherwise. Seeking to treat the SS program in isolation is knowingly placing blinders on one's head.
Re #2: yes reform is needed but reform without acknowledging Americans consume much more service than they can afford is to deny reality. Those on the left seem to think that "reform" will magically solve the problem without pain, those on the right seem to believe if everything is privatized a similar if different magic world will result. Americans consume much more health care than almost any other nation whilst achieving results barely better than most. We are inefficient that means fewer services and lower pricing is needed. There are no magic wands, we have a complex, confusing, inefficient public/private hybrid that feeds on more and more services and reduced risks to the patients and providers. We need fewer services and for consumers to assume and get comfortable with more risks.
Re #3: while I would love to tell many Republicans to go pound (and many deserve it), one does not govern effectively that way. Obama knows this, but he will continually face chirping from the left to do so, which is fine it makes him appear more moderate.
From Robert Reich:
"...Obama must be careful not to put entitlement programs on the chopping block as part of a "grand bargain" to elicit Republican support for health care and cap-and-trade. Social Security is not in dire straights; it can be made flush for the next 75 years by ever-so-slightly lifting the ceiling on the portion of income subject to Social Security payroll taxes (and if Democrats are reluctant to do that on incomes over $100,000, then they could do so on incomes over $250,000).
Medicaid and Medicare are in trouble because health care costs are rising so fast, which argues for health-care reform rather than cuts in these important programs. Yet if health-care reform has any prayer of controlling the rising tide of health care costs, the plan must allow beneficiaries to opt into a public insurance plan -- something Republicans and the health-care establishment are determined to fight. So it's critically important that the Senate wrap health care into a reconciliation bill that can be enacted by a majority vote in the Senate.Obama should fast-track health care and stop trying to court Republicans. Every House Republican and all but three Senate Republicans voted against the stimulus; all Republicans in both houses voted against the budget. During the recess they hosted "tea parties" claiming that Americans are over-taxed. Over the weekend, House minority leader John Boehner called the idea of carbon-induced climate change "almost comical." Republicans are already off and running toward the midterm elections of 2010, even starting to run ads against House Democrats in close districts. They seem hell bent on on becoming a tiny, whacky minority -- the party that denies evolution, denies global warming, denies Americans need a major overhaul of health care, and denies the economy needs anything more than a major tax cut to get it moving again. The less Obama caters to them the better."
http://robertreich.blogspot.com/2009/04/where-government-spending-should-be.html
Thursday, April 16, 2009
Stop Whining And Pay Your Damn Taxes
TW: I refused to post on taxes on the 15th as the blogosphere was replete with tedious odes to the taxation (btw other off-limits topics include FDOTUS, tea-bagging [did make an exception for Shuster because well, it was worthy], Rick Perry's ridiculous seccession talk, and the Palin/Johnston feud). We are getting a refund this year and I assure you the last thing I want is a refund, when the going is really good refunds are not in the equation.Robert Reich puts together a nice rebuttal to the whiners:
"No one likes to pay taxes, so tax day typically attracts a range of right-wing Republicans, kooks, and demagogues, all of whom tell us how awful we have it. Herewith a short citizen's guide responding to the predictable charges:
1. "Americans pay too much in taxes." Wrong: The United States has the lowest taxes of all developed nations.
2. "The rich pay too much! The top ten percent of income earners pay over 72 percent of all income taxes!" Misleading: The main reason the rich pay such a large percent is they've become so much richer than the bottom 90 percent in recent years. If you look at what they pay as individuals -- the percent of their incomes over and above the highest rate below them -- you'll see a steady decline over the years. When Republican Dwight Eisenhower was president, the marginal rate on the highest earners was 91 percent (after deductions and tax credits, closer to 50 percent); by 1980 it was still up there, at 70 percent (an effective rate of closer to 45 percent); under Bill Clinton, it was 38 percent (an effective rate closer to 28 percent).
Look at the after-tax earnings of families and you'll see what's really going on. Between 1980 and 2000, the after-tax earnings of famlies at the top rose more than 150 percent, while the after-tax earnings of families in the middle rose about 10 percent. The Bush tax cuts of 2001 and 2003 raised the after-tax incomes of most Americans by a bit over 1 percent -- but raised the after-tax incomes of millionaires by 4.4 percent.
3. "The bottom 60 percent pay only 3.3 percent of the taxes!" Misleading again. Most Americans are paying more in sales taxes than they ever have. Property taxes have also been rising at a steady clip. And Social Security taxes have also risen (thanks to the Greenspan Commission), while earnings over about $100,000 aren't subject to Social Security taxes. So-called "sin" taxes (mostly beer and cigarettes) have also skyrocketed. All of these taxes take a bigger bite out of the paychecks of people with lower incomes than they do people with higher incomes.
4. "Obama is raising your taxes!" Wrong. Obama is cutting taxes for 95 percent of Americans, by about $400 per person a year -- not a whopping tax cut, to be sure, but not a tax increase by any stretch. Only the top 2 percent will have a tax increase, but even this tax increase is modest. Basically, they go back to the rates they were paying under Bill Clinton (their deductions will be limited to 28 percent, which is only fair). And they won't start paying this until 2011 anyway.
5. "The huge debts we're wracking up will cause your taxes to rise!" Wrong again. When it comes to the national debt, as I've said before, the relevant statistic is the ratio of debt to the gross domestic product. The only sure way to bring that debt down and make it manageable in future years is to get the economy growing again -- which requires that, in the short term, the government spend a lot of money (because consumers and businesses won't). In the long term, the biggest source of concern is rising health-care costs. And that's something Obama and Congress are aiming to tackle.
6. "We have a patriotic duty to stand up against Washington taxes!" Just the opposite. We have a patriotic duty to pay taxes. As multi-billionaire Warrent Buffett put it, "If you stick me down in the middle of Bangladesh or Peru or someplace, you'll find out how much this talent is going to product in the wrong kind of soil. I will be struggling thirty years later." President Teddy Roosevelt made the case in 1906 when he argued in favor of continuing the inheritance tax. "The man of great wealth owes a particular obligation to the state because he derives special advantages from the mere existence of government."
An acquaintance from law school, now a partner in one of Washington's biggest and wealthiest law firms, explained to me one day over lunch how he and his partners use tax rules to create offsetting taxable gains and losses, and then allocate the gains to the firm's foreign partners who don't pay taxes in the United States. That way, they keep the losses here and shelter their income abroad. I noticed he had an American flag lapel pin. "You're supporting our troops," I said, referring to his pin. "Yup," he replied, entirely missing my point."
Sunday, March 22, 2009
The Cost Of Populism
TW: I am not posting much on AIG, as there is so much out there on the topic I have little to add. Net net, the entire affair is not helping anyone achieve solutions, it is mere venting. I strongly doubt (and certainly hope not) a 90% tax on any bonuses will be enacted. The House of Representatives is designed to be more populist (re-elections for everyone every two years), they had their spasm last week. The Senate is designed (staggered elections for the 6 yr terms) for a more calm assessment of matters, I assume they will slow things down.
That said this spasm of populism is counter-productive. Populism and elitism are frequently at odds, the sometimes ignorant, overly emotional populism clashing with the self-aggrandizing, arrogance of the elites makes for fun times. Their respective positives- common sense/egalitarianism versus professionalism/broad-mindedness- get lost amidst mutual recriminations.
We remain long on frustration and short on solutions. Some on the left are pounding on Obama for not being more punitive (see Frank Rich and M. Dowd at NYT this morning). The Republicans keep angling for electoral gain by pushing Hooverite fiscal policies while flailing in all directions on the issue of "Wall Street/AIG/bonuses". The climate is quickly degenerating into the dysfunctional. I ask the lefties, are pitchforks really the answer. I ask the righties, Hoover failed once do we really want to give him another go? And if you were to cut off Obama's knees then what?
My biggest concern remains my skepticism that our leaders (and leaders worldwide) will be able to balance the often conflicting pulls of the populace and the elites, while fashioning actually useful policy. Last week was not encouraging. As Reich points out misguided populism may merely opens the door for elites to perpetuate policies likely to create more populist backlash, a vicious circle indeed.
From Robert Reich:
"When the public isn't looking, Congress reverts to its old ways. The Obama-supported plan to allow distressed homeowners to renegotiate their mortgages under the protection of bankruptcy has run into a Wall Street wall. Although Citigroup temporarily broke ranks a few months ago when it was receiving one of the most generous bailouts, the rest of Wall Street has remained adamantly opposed, and apparently Democratic leaders have decided not to push back.
Meanwhile, Obama's plan to limit itemized deductions for the richest 1.2 percent of taxpayers (including the top 1.9 percent of small business owners) to 28 percent, starting in 2011, is also in trouble on the Hill. Wealthy contributors and friends of congressional leaders involved in setting tax policy have balked. So Congress is telling the White House to look elsewhere for the $320 billion it needs over ten years to finance half of the tab for health care reform.
Congressional leaders have also informed the White House that they don't have the votes to pass Obama's proposal for treating the earnings of hedge-fund and private-equity managers as income rather than capital gains.
Angry populism thrives on stories about the rich and privileged who use their influence to get cushy deals for themselves at the expense of the rest of us. AIG's bonuses provide a perfect example. It's too bad the same populist outrage doesn't extend to issues involving far more money, affecting many more people, and entailing far more insidious abuses of power.
Congress's potemkin populism over AIG's bonuses disguises business as usual when it comes to the really big stuff..."
http://robertreich.blogspot.com/2009/03/congresss-fair-weather-populism.html
That said this spasm of populism is counter-productive. Populism and elitism are frequently at odds, the sometimes ignorant, overly emotional populism clashing with the self-aggrandizing, arrogance of the elites makes for fun times. Their respective positives- common sense/egalitarianism versus professionalism/broad-mindedness- get lost amidst mutual recriminations.
We remain long on frustration and short on solutions. Some on the left are pounding on Obama for not being more punitive (see Frank Rich and M. Dowd at NYT this morning). The Republicans keep angling for electoral gain by pushing Hooverite fiscal policies while flailing in all directions on the issue of "Wall Street/AIG/bonuses". The climate is quickly degenerating into the dysfunctional. I ask the lefties, are pitchforks really the answer. I ask the righties, Hoover failed once do we really want to give him another go? And if you were to cut off Obama's knees then what?
My biggest concern remains my skepticism that our leaders (and leaders worldwide) will be able to balance the often conflicting pulls of the populace and the elites, while fashioning actually useful policy. Last week was not encouraging. As Reich points out misguided populism may merely opens the door for elites to perpetuate policies likely to create more populist backlash, a vicious circle indeed.
From Robert Reich:
"When the public isn't looking, Congress reverts to its old ways. The Obama-supported plan to allow distressed homeowners to renegotiate their mortgages under the protection of bankruptcy has run into a Wall Street wall. Although Citigroup temporarily broke ranks a few months ago when it was receiving one of the most generous bailouts, the rest of Wall Street has remained adamantly opposed, and apparently Democratic leaders have decided not to push back.
Meanwhile, Obama's plan to limit itemized deductions for the richest 1.2 percent of taxpayers (including the top 1.9 percent of small business owners) to 28 percent, starting in 2011, is also in trouble on the Hill. Wealthy contributors and friends of congressional leaders involved in setting tax policy have balked. So Congress is telling the White House to look elsewhere for the $320 billion it needs over ten years to finance half of the tab for health care reform.
Congressional leaders have also informed the White House that they don't have the votes to pass Obama's proposal for treating the earnings of hedge-fund and private-equity managers as income rather than capital gains.
Angry populism thrives on stories about the rich and privileged who use their influence to get cushy deals for themselves at the expense of the rest of us. AIG's bonuses provide a perfect example. It's too bad the same populist outrage doesn't extend to issues involving far more money, affecting many more people, and entailing far more insidious abuses of power.
Congress's potemkin populism over AIG's bonuses disguises business as usual when it comes to the really big stuff..."
http://robertreich.blogspot.com/2009/03/congresss-fair-weather-populism.html
Thursday, March 12, 2009
Obamanomics
TW: Certainly Obama's economic policies are receiving saturation coverage for obvious reasons. Of course, regardless of the coverage we will not whether they are effective for at least a couple of years and likely a decade or more. The hollowness of some of the Reagan policies are just now becoming apparent. Some continue to question FDR's policies 75 years later.
I believe one of the reasons the debate right now is so hot (the attacks from the right have not even completely revved up yet) is that Reaganism became the default dogma, Clinton attempted to soften its edges and tweak it but did not fundamentally challenge certain notions (i.e. "any government is bad", all regulation is bad, the capitalists are to be pampered). The dogma has lost coherence after the Bush years and the collapse of the American financial system.
The question is now what to do? Reich nicely frames the potential impact of Obama below.
From Robert Reich:
"...The basic idea of Reaganomics was that the economy grows from the top down. Lower taxes on the wealthy make them work harder and invest more, and the benefits trickle down to everyone else. Rarely in economic history has a theory been more tested in the real world and proven so wrong. In point of fact, nothing trickled down. After the Reagan tax cuts, increases in the median wage slowed, adjusted for inflation. After George W. Bush's tax cuts for the wealthy, the median wage actually dropped. Meanwhile, most of the income went to the top. In 1980, just before the Reagan revolution, the richest 1 percent took home 9 percent of total national income. But by 2007, the richest 1 percent was taking home 22 percent.
Obamanomics, by contrast, holds that an economy grows best from the bottom up. Obama's program increases taxes on the top, and uses the proceeds to raise the living standards of average Americans by giving them lower taxes, better schools, and more affordable health insurance. That may not seem very radical, but compared to the last quarter century it's revolutionary.
Reaganomics didn't believe in public investment, except perhaps when it came to the military. Everything else was considered government spending, which was assumed to be wasteful. Hence, the cuts (adjusted for inflation) during Reagan, Bush I and Bush II in education, job training, infrastructure, and basic research and development. And the reluctance to expand health insurance except when it came to corporate welfare for the pharmaceutical industry.
But Obamanomics is a commited to these forms of public investment. And there's good reason: In a global economy, capital moves to wherever it can get the best deal around the globe. That means capital and jobs go to nations that can promise high returns either because labor is cheap and taxes and regulations low, or because labor is highly productive -- well educated, healthy, and supported by modern infrastructure.
Which do we want? For the better part of the last quarter century our implicit economic strategy has tended toward the first. But that's a recipe for lower wages and lower living standards for most Americans, along with widening inequality. The only resource that's uniquely rooted in a national economy is its people -- their skills, insights, capacities to collaborate, and the transportation and communication systems that link them together. Everything else -- including capital, technology, designs, even plant and equipment -- can move around the globe with increasing ease.
Bill Clinton talked a lot about the importance of public investment but he failed to do much about it because he came to office during an economic expansion, and the major worry was excessive government spending leading to inflation. Obama comes to office during the biggest downturn since the Great Depression, and although he doesn't talk much about public investment his plan represents the largest commitment to it in forty years.
Reaganomics' third principle was that deregulated markets function better. They do, in many respects, but not always. And when they don't, all hell can break loose. Energy markets were deregulated and we wound up with Enron. Carbon emissions weren't controlled, and now we face global warming. Financial markets were deregulated and we have a global meltdown. Obamanomics, by contrast, accepts that government has an important role in setting the rules of the capitalist game: Setting an overall cap on carbon emissions, ensuring that products and foods are safe, maintaining the solvency and security of financial companies.
Under Reaganomics, government was the problem. It can still be a problem. But Obamanomics recognizes there are even bigger problems out there that can't be solved without government. By building the economy from the bottom up, recognizing the central importance of public investment, and understanding that markets cannot function without regulation, Obamanomics finally reverses and repudiates the economic philosophy that has dominated America since 1981."
http://robertreich.blogspot.com/2009/03/is-obamanomics-conservative-or.html
I believe one of the reasons the debate right now is so hot (the attacks from the right have not even completely revved up yet) is that Reaganism became the default dogma, Clinton attempted to soften its edges and tweak it but did not fundamentally challenge certain notions (i.e. "any government is bad", all regulation is bad, the capitalists are to be pampered). The dogma has lost coherence after the Bush years and the collapse of the American financial system.
The question is now what to do? Reich nicely frames the potential impact of Obama below.
From Robert Reich:
"...The basic idea of Reaganomics was that the economy grows from the top down. Lower taxes on the wealthy make them work harder and invest more, and the benefits trickle down to everyone else. Rarely in economic history has a theory been more tested in the real world and proven so wrong. In point of fact, nothing trickled down. After the Reagan tax cuts, increases in the median wage slowed, adjusted for inflation. After George W. Bush's tax cuts for the wealthy, the median wage actually dropped. Meanwhile, most of the income went to the top. In 1980, just before the Reagan revolution, the richest 1 percent took home 9 percent of total national income. But by 2007, the richest 1 percent was taking home 22 percent.
Obamanomics, by contrast, holds that an economy grows best from the bottom up. Obama's program increases taxes on the top, and uses the proceeds to raise the living standards of average Americans by giving them lower taxes, better schools, and more affordable health insurance. That may not seem very radical, but compared to the last quarter century it's revolutionary.
Reaganomics didn't believe in public investment, except perhaps when it came to the military. Everything else was considered government spending, which was assumed to be wasteful. Hence, the cuts (adjusted for inflation) during Reagan, Bush I and Bush II in education, job training, infrastructure, and basic research and development. And the reluctance to expand health insurance except when it came to corporate welfare for the pharmaceutical industry.
But Obamanomics is a commited to these forms of public investment. And there's good reason: In a global economy, capital moves to wherever it can get the best deal around the globe. That means capital and jobs go to nations that can promise high returns either because labor is cheap and taxes and regulations low, or because labor is highly productive -- well educated, healthy, and supported by modern infrastructure.
Which do we want? For the better part of the last quarter century our implicit economic strategy has tended toward the first. But that's a recipe for lower wages and lower living standards for most Americans, along with widening inequality. The only resource that's uniquely rooted in a national economy is its people -- their skills, insights, capacities to collaborate, and the transportation and communication systems that link them together. Everything else -- including capital, technology, designs, even plant and equipment -- can move around the globe with increasing ease.
Bill Clinton talked a lot about the importance of public investment but he failed to do much about it because he came to office during an economic expansion, and the major worry was excessive government spending leading to inflation. Obama comes to office during the biggest downturn since the Great Depression, and although he doesn't talk much about public investment his plan represents the largest commitment to it in forty years.
Reaganomics' third principle was that deregulated markets function better. They do, in many respects, but not always. And when they don't, all hell can break loose. Energy markets were deregulated and we wound up with Enron. Carbon emissions weren't controlled, and now we face global warming. Financial markets were deregulated and we have a global meltdown. Obamanomics, by contrast, accepts that government has an important role in setting the rules of the capitalist game: Setting an overall cap on carbon emissions, ensuring that products and foods are safe, maintaining the solvency and security of financial companies.
Under Reaganomics, government was the problem. It can still be a problem. But Obamanomics recognizes there are even bigger problems out there that can't be solved without government. By building the economy from the bottom up, recognizing the central importance of public investment, and understanding that markets cannot function without regulation, Obamanomics finally reverses and repudiates the economic philosophy that has dominated America since 1981."
http://robertreich.blogspot.com/2009/03/is-obamanomics-conservative-or.html
Friday, February 6, 2009
Finally a Succinct Pro Case For the Stimulus
TW: I think progressives forget to outline the affirmative case sometimes. The stimulus plan has absorbed broadsides form the Right, Reich comes in with a pro case that hits most of the relevant points.From Reich's blog:
"...We're deep into the most vicious of economic cycles: Consumers are slashing their spending because they're perilously in debt and worried about keeping their jobs. But as a result, businesses are facing shrinking sales of goods and services, so they're slashing payrolls, which of course makes consumers even more anxious and further reduces their spending power. Meanwhile, businesses are cutting way back on new investments in equipment, which hurts upstream suppliers, who are now slashing their payrolls. And so it goes, downward.
The gap between what the economy could produce if it were running near full capacity and what it's now producing continues to widen. The shortfall is projected to be over a trillion dollars this year.How do we get out of this downward plunge?Regardless of your ideological stripe, you've got to see that when consumers and businesses stop spending and investing, there's only entity left to step into the breach. It's government. Major increases in government spending are necessary, and the spending must be on a very large scale.
In the last several weeks the President has put forward the outlines of a stimulus plan, and has left it to the House and Senate to fill in the details. A tiny portion of the details that made it into the House version should be stripped away because they seem like old-fashioned pork. But most spending in the bill is absolutely appropriate. My worry is there's not nearly enough of spending to fill the shortfall in overall demand.
Yet at this very moment, Senate Republicans are seeking to strip the President's stimulus package of many of its spending provisions and substitute tax cuts. Part of this is pure pander: They know tax cuts are more popular with the public than government spending, even though spending is a far more effective way to stimulate the economy (more on this in a moment). Another part is pure partisan politics: Republicans are emboldened by Obama's willingness to court Republicans (taking three Republicans into his cabinet, bringing Republican leaders into the White House for consultations, putting all those business tax cuts into the stimulus bill in order to gain Republican favor) without getting anything at all back from the GOP.
House Republicans snubbed the bill entirely. So, Senate Republicans say to themselves, what's to lose?
Take a look at this chart[above], which comes from calculations by Mark Zandi and his colleagues at economy.com. You see that each dollar of spending has much more impact than each dollar of tax cut.
There are three reasons for this. First, most people who receive a tax cut don't spend all of it. They use part of it to pay down their debts or they save it. Most of us did one or the other last spring with that tax rebate. From the standpoint of any particular individual, paying down debts or saving may be smart behavior -- even commendable. But what's intelligent for an individual does not necessarily translate into what's good for the economy as a whole. The only way to get businesses to create or preserve jobs is through additional spending. And unlike tax cuts used to pay down personal debt or add to savings, every dollar of government spending flows directly into the economy and adds to overall demand.
Second, even that portion of a tax cut we might actually spend doesn't necessarily go into the American economy. It goes all over the world. I have nothing against creating or preserving the jobs of Asians who assemble those flat-panel TVs you see at the mall, for example, but right now we're trying to create or preserve jobs here in America. Sure, the retail workers at the mall who sell the flat-panel TV's might benefit, but remember we're talking about how to get the biggest bang for every dollar. When government spends to repair a highway or build a school or help pay for medical services, the money and the jobs stay here in America.
Finally, those who say cutting taxes on businesses is the best way to create or preserve jobs forget about the demand side. Even with a tax cut, businesses won't hire workers unless there are customers to buy what those workers produce. A government stimulus that creates jobs is a necessary precondition.
Finally, those who say cutting taxes on businesses is the best way to create or preserve jobs forget about the demand side. Even with a tax cut, businesses won't hire workers unless there are customers to buy what those workers produce. A government stimulus that creates jobs is a necessary precondition.
This isn't a matter of more or less government, however much Republicans and conservatives would like to wedge it in that old ideological box. The issue is how to revive the economy. When consumers and businesses can't or won't spend enough to keep the economy going, government has to be the spender of last resort. Period"
Thursday, January 1, 2009
Robert Reich Gets Gushy
From Robert Reich's blog:
"The biggest thing to happen to me this year was the birth of my first grandchild, a little girl named Ella. I know this kind of thing happens all the time and frankly I get bored with people who go all gushy about the birth of kids or grandkids.I’m bringing Ella up not so much because she’s special -- of course she is -- but because she was born right in the middle of the worst economic downturn in my lifetime and probably yours, and maybe even hers. Ella came with a crash.
Like almost everyone else, I’ve lost a big chunk of my savings this year. And the house I bought here in Berkeley at the very top of the housing boom is probably worth a lot less than I paid for it. I’m not too worried about my job because I have tenure here at the University of California, although maybe I should worry because the state is technically bankrupt. Still, I'm one of the lucky ones.Yet all of this seems somehow beside the point, relative to Ella.Having kids or grandkids expands your focus and also your time horizon. You pay a bit less attention to what the Dow is likely to do over the next quarter and more to the underlying wealth of the nation. By that I don't mean just its gross domestic product but also its gross domestic decency, if there were such a measure: The quality of our public schools and of our atmosphere, the extent of our openness and generosity toward one another, our national promise of opportunity to all. You find yourself less interested in the gossip surrounding Bernie Madoff or Rod Blagojevich than in the larger questions they raise about private greed and public morality.
Alright, maybe I am going all gushy. The point is, it's the Ellas of the world we're fighting for. This Mini-Depression is causing a lot of pain, to be sure, but it will be over in a year or three. Yet what kind of economy will we have on the other side? Will we have a more just society?Which brings me to the end of the year. I wish you not just a happy and prosperous new year. On that score, 2009 may be something of a bummer. I wish you and your kids and grandkids, and Ella, something more -- a decent, generous, and humane future."
"The biggest thing to happen to me this year was the birth of my first grandchild, a little girl named Ella. I know this kind of thing happens all the time and frankly I get bored with people who go all gushy about the birth of kids or grandkids.I’m bringing Ella up not so much because she’s special -- of course she is -- but because she was born right in the middle of the worst economic downturn in my lifetime and probably yours, and maybe even hers. Ella came with a crash.
Like almost everyone else, I’ve lost a big chunk of my savings this year. And the house I bought here in Berkeley at the very top of the housing boom is probably worth a lot less than I paid for it. I’m not too worried about my job because I have tenure here at the University of California, although maybe I should worry because the state is technically bankrupt. Still, I'm one of the lucky ones.Yet all of this seems somehow beside the point, relative to Ella.Having kids or grandkids expands your focus and also your time horizon. You pay a bit less attention to what the Dow is likely to do over the next quarter and more to the underlying wealth of the nation. By that I don't mean just its gross domestic product but also its gross domestic decency, if there were such a measure: The quality of our public schools and of our atmosphere, the extent of our openness and generosity toward one another, our national promise of opportunity to all. You find yourself less interested in the gossip surrounding Bernie Madoff or Rod Blagojevich than in the larger questions they raise about private greed and public morality.
Alright, maybe I am going all gushy. The point is, it's the Ellas of the world we're fighting for. This Mini-Depression is causing a lot of pain, to be sure, but it will be over in a year or three. Yet what kind of economy will we have on the other side? Will we have a more just society?Which brings me to the end of the year. I wish you not just a happy and prosperous new year. On that score, 2009 may be something of a bummer. I wish you and your kids and grandkids, and Ella, something more -- a decent, generous, and humane future."
Friday, December 19, 2008
Kicking the Can Down the Road...
From Robert Reich:
"George Bush's Final Christmas Present
The President's lifeline to the auto industry includes the provision Senate Republicans were insisting on last week, which scuttled the deal -- cuts in UAW wages and benefits to make them comparable with wages and benefits in non-union automakers' plants (all owned by foreign automakers, all mostly in the South). Last week, Bush lobbied against this provision. Now he's adopted it, without any legislation at all.
What's really going on? Bush doesn't want messy bankruptcies of GM and Chrysler, potentially threatening more than a million jobs, to tarnish his last weeks in office. So he's giving the automakers what they need to tide them over, and kicking the can to the Obama administration. But nor does he want to leave office slapping down Senate Republicans, so he's giving them what they demanded, too.How to square the circle?
Read the fine print: The automakers don't really have to bring wages and benefits down in order to get the money. That requirement can be "modified" in negotiations with the UAW. So everyone gets a Christmas present, and W. leaves town before the bill arrives."
"George Bush's Final Christmas Present
The President's lifeline to the auto industry includes the provision Senate Republicans were insisting on last week, which scuttled the deal -- cuts in UAW wages and benefits to make them comparable with wages and benefits in non-union automakers' plants (all owned by foreign automakers, all mostly in the South). Last week, Bush lobbied against this provision. Now he's adopted it, without any legislation at all.
What's really going on? Bush doesn't want messy bankruptcies of GM and Chrysler, potentially threatening more than a million jobs, to tarnish his last weeks in office. So he's giving the automakers what they need to tide them over, and kicking the can to the Obama administration. But nor does he want to leave office slapping down Senate Republicans, so he's giving them what they demanded, too.How to square the circle?
Read the fine print: The automakers don't really have to bring wages and benefits down in order to get the money. That requirement can be "modified" in negotiations with the UAW. So everyone gets a Christmas present, and W. leaves town before the bill arrives."
Thursday, December 11, 2008
Leno As Metaphor For the Demand Contraction
TW: Robert Reich comes up with a fun metaphor for how a demand contraction creates a vicious circle, whereby individual firms make the rational choice for themselves but contribute to the overall cycle of economic weakness.
From Reich:
"...NBC Universal CEO Zucker told...investors...that the network was determined to cut costs. His comments came as the company laid off 500 employees and annnounced it would move Jay Leno to its 10 pm weekday time slot. This makes sense for NBC: Every hour of scripted programming costs about $5 million -- for fleets of writers, directors, cinematographers, actors, editors, and everyone in between. Leno's compensation is hefty but not nearly $5 million an hour, and his live show costs a fraction of that. (Big-name stars come to hawk their latest films and books for free.) The Wall Street Journal estimates the move will save NBC as much as $25 million a week, minus Leno's larger takehome pay..It's done to improve profits and thereby calm anxious shareholders.
Somehow, though, it's not working. Shareholders are still anxious -- and becoming ever more so. Why? Because all the payroll cuts, multiplied across the economy, are reducing the capacity of consumers to buy goods and services. Which is why advertising budgets are being slashed. And with less advertising, NBC's profits will continue to plummet even as it cuts its costs.
What's rational for an individual company and wonderful for its star players turns out to be irrational for the economy as a whole. It's not Jeff Zucker's fault or any other executive armed with an axe. But this does suggest why smart government policies are critically important, especially now, and why a very large stimulus package is in the interest of everyone -- including Jeff Zucker and Jay Leno."
From Reich:
"...NBC Universal CEO Zucker told...investors...that the network was determined to cut costs. His comments came as the company laid off 500 employees and annnounced it would move Jay Leno to its 10 pm weekday time slot. This makes sense for NBC: Every hour of scripted programming costs about $5 million -- for fleets of writers, directors, cinematographers, actors, editors, and everyone in between. Leno's compensation is hefty but not nearly $5 million an hour, and his live show costs a fraction of that. (Big-name stars come to hawk their latest films and books for free.) The Wall Street Journal estimates the move will save NBC as much as $25 million a week, minus Leno's larger takehome pay..It's done to improve profits and thereby calm anxious shareholders.
Somehow, though, it's not working. Shareholders are still anxious -- and becoming ever more so. Why? Because all the payroll cuts, multiplied across the economy, are reducing the capacity of consumers to buy goods and services. Which is why advertising budgets are being slashed. And with less advertising, NBC's profits will continue to plummet even as it cuts its costs.
What's rational for an individual company and wonderful for its star players turns out to be irrational for the economy as a whole. It's not Jeff Zucker's fault or any other executive armed with an axe. But this does suggest why smart government policies are critically important, especially now, and why a very large stimulus package is in the interest of everyone -- including Jeff Zucker and Jay Leno."
Saturday, December 6, 2008
The Bailout Paradox
TW: Robert Reich has been coming up with some good stuff. Unfortunately I do not think he has answer for the paradox. I know I do not.
From Reich:
"As a condition of getting a federal bailout, the Big Three are promising, among other things, to cut costs. Among the costs to be cut will be jobs. This is paradoxical, since the reason Congress is considering bailing them out in the first place is to preserve jobs and avoid the social costs of large-scale job loss (unemployment insurance, lost tax revenues, pension payments that have to be picked up by the Pension Benefit Guarantee Corporation, and so forth) .
We should take a lesson from the Chrysler bailout of the early 1980s. The ostensible reason Congress voted for it was to preserve Chrysler jobs. Yet once the bailout was underway, in order to generate the money it needed to restructure itself, Chrysler laid off more than a third of its workforce. Most of these jobs never came back.
And it's much the same with the mammoth bailout of Wall Street. Absent an explicit understanding of why public money is needed and what it's to be used for, taxpayer dollars end up bolstering executives, creditors, and shareholders rather than the workers and communities that need the most help."
From Reich:
"As a condition of getting a federal bailout, the Big Three are promising, among other things, to cut costs. Among the costs to be cut will be jobs. This is paradoxical, since the reason Congress is considering bailing them out in the first place is to preserve jobs and avoid the social costs of large-scale job loss (unemployment insurance, lost tax revenues, pension payments that have to be picked up by the Pension Benefit Guarantee Corporation, and so forth) .
We should take a lesson from the Chrysler bailout of the early 1980s. The ostensible reason Congress voted for it was to preserve Chrysler jobs. Yet once the bailout was underway, in order to generate the money it needed to restructure itself, Chrysler laid off more than a third of its workforce. Most of these jobs never came back.
And it's much the same with the mammoth bailout of Wall Street. Absent an explicit understanding of why public money is needed and what it's to be used for, taxpayer dollars end up bolstering executives, creditors, and shareholders rather than the workers and communities that need the most help."
The D Word
TW: Lets get this on the table, a depression. We need to get comfortable with it. Depressions are not the end of the world just very big bumps in the road. Reich is one of the first to go there in direct terms. Most media including bloggers are tipping toeing around it. One can safely assume it will turn into a trend now. The reason Reich and many others are getting jumpy is that the underlying numbers are far worse than the headline 6.7% unemployment and 500K jobs lost in November. More accurate unemployment reflecting under-employeds and non-job seeking but likely interested unemployeds would be 11% or 12%. Furthermore, the downward revisions on the Sept/Oct jobless were very high.
I was wondering the other day what is classified as a depression. I was somewhat surprised to find little on the topic. It appears to be one of those things that has taken on the mantle of a proper noun, something so bad as to avoid its utterance in proper company.
Recession and depression are two terms to describe economic contraction with the latter being worse obviously. But how much? Per the source attached below, a depression represents an economic contraction (as measured by GDP) of greater than 10%. The good news is that we are definitely not in that territory (yet). I believe we are down a net of 1% or so through Q3. The problem is that the big drop has occurred from late September on. I have seen estimates of a 3%-5% annualized drop in Q4 with expected significant contraction to continue well into next year. But those estimates are evolving rapidly and recently in only one direction.
I was also interested to read that prior to the Great Depression of my grandparents' generation that what we call recessions today were historically referred to as depressions as well. Post the Great Depression the nomenclature evolved to create a softer term for less drastic contractions, but previously all contractions were called depressions. Another point to recall is that the Great Depression truly earned its moniker. The Great Depression was really two depressions, a 33% contraction in the late '29 to early '33 period and another bonus contraction of 18% from mid '37 to mid '38.
Just as all recessions are not created equally not all depressions are either. So this one should it evolve into a depression will be different as well, but depression economics are different than normal times so beware those proposing laissez-faire policies. Stay tuned for more policy discussion. My fundamental point is that in these times one should get one's terms straight in order to confront reality whilst averting hyperbole.
http://robertreich.blogspot.com/2008/12/shall-we-call-it-depression-now.html
http://economics.about.com/cs/businesscycles/a/depressions_2.htm
I was wondering the other day what is classified as a depression. I was somewhat surprised to find little on the topic. It appears to be one of those things that has taken on the mantle of a proper noun, something so bad as to avoid its utterance in proper company.
Recession and depression are two terms to describe economic contraction with the latter being worse obviously. But how much? Per the source attached below, a depression represents an economic contraction (as measured by GDP) of greater than 10%. The good news is that we are definitely not in that territory (yet). I believe we are down a net of 1% or so through Q3. The problem is that the big drop has occurred from late September on. I have seen estimates of a 3%-5% annualized drop in Q4 with expected significant contraction to continue well into next year. But those estimates are evolving rapidly and recently in only one direction.
I was also interested to read that prior to the Great Depression of my grandparents' generation that what we call recessions today were historically referred to as depressions as well. Post the Great Depression the nomenclature evolved to create a softer term for less drastic contractions, but previously all contractions were called depressions. Another point to recall is that the Great Depression truly earned its moniker. The Great Depression was really two depressions, a 33% contraction in the late '29 to early '33 period and another bonus contraction of 18% from mid '37 to mid '38.
Just as all recessions are not created equally not all depressions are either. So this one should it evolve into a depression will be different as well, but depression economics are different than normal times so beware those proposing laissez-faire policies. Stay tuned for more policy discussion. My fundamental point is that in these times one should get one's terms straight in order to confront reality whilst averting hyperbole.
http://robertreich.blogspot.com/2008/12/shall-we-call-it-depression-now.html
http://economics.about.com/cs/businesscycles/a/depressions_2.htm
Friday, December 5, 2008
Financial Capital v. Human Capital
TW: The automakers continue to be pilloried in the media. The automakers have basically been reduced to overt begging at this point. I suspect the automakers are suffering from being an easy outlet for many people to express their collective frustration with our current economic predicament. The automakers worst mistake was likely not figuring out how to get "bailout" money approved quickly before the backlash could build. The financial firms have been able to do so by basically blowing up over the course of several days (remember Bear Stearns on Wednesday was business as usual, publicly at least, by Saturday night it was burnt toast) as opposed to the relative prolonged agony experienced by the automakers.
Reich brings up another issue requiring reconciliation. One of the first public services to contract during a recession is education as local funding is derived partially from property taxes which are declining rapidly. Reich asks the simple question does it make sense to let public education spending, a good almost all regard as a crucial investment for our future, fall precipitously while billions are spent "bailing out" financial firms or even automakers.
From Robert Reich:
"Education is largely funded by state and local governments whose revenues are plummeting. As consumers cut back, state sales and income taxes are shrinking; three quarters of the states are already facing budget crises. On average, state revenues account for half of public school budgets, and most of the funding of public colleges and universities. On top of this, home values are dropping, which means local property taxes are also taking a hit. Local property taxes account for 40 percent of local school budgets.The result: Schools are being closed, teachers laid off, after-school programs cut, so-called “noncritical” subjects like history eliminated, and tuitions hiked at state colleges.It's absurd. We’re bailing out every major bank to get financial capital flowing again. But we’re squeezing the main sources of our nation's human capital. Yet America's future competitiveness and the standard of living of our people depend largely our peoples’ skills, and our capacities to communicate and solve problems and innovate – not on our ability to borrow money...
I’m not saying funding is everything when it comes to education. Obviously, accountability is important. But without adequate funding we can’t attract talented people into teaching, or keep class sizes small enough to give kids a real chance to learn, or provide them with a well-rounded curriculum, and ensure that every qualified young person can go to college.So why are we bailing out Wall Street and not our nation’s public schools and colleges? Partly because the crisis in financial capital is immediate while our human capital crisis is unfolding gradually. But maybe it's also because we don’t have a central banker for America’s human capital – someone who warns us as loudly as Ben Bernanke did a few months ago when he was talking about Wall Street's meltdown, of the dire consequences that will follow if we don’t come up with the dough."
http://robertreich.blogspot.com/2008/12/of-financial-capital-and-human-capital.html
Reich brings up another issue requiring reconciliation. One of the first public services to contract during a recession is education as local funding is derived partially from property taxes which are declining rapidly. Reich asks the simple question does it make sense to let public education spending, a good almost all regard as a crucial investment for our future, fall precipitously while billions are spent "bailing out" financial firms or even automakers.
From Robert Reich:
"Education is largely funded by state and local governments whose revenues are plummeting. As consumers cut back, state sales and income taxes are shrinking; three quarters of the states are already facing budget crises. On average, state revenues account for half of public school budgets, and most of the funding of public colleges and universities. On top of this, home values are dropping, which means local property taxes are also taking a hit. Local property taxes account for 40 percent of local school budgets.The result: Schools are being closed, teachers laid off, after-school programs cut, so-called “noncritical” subjects like history eliminated, and tuitions hiked at state colleges.It's absurd. We’re bailing out every major bank to get financial capital flowing again. But we’re squeezing the main sources of our nation's human capital. Yet America's future competitiveness and the standard of living of our people depend largely our peoples’ skills, and our capacities to communicate and solve problems and innovate – not on our ability to borrow money...
I’m not saying funding is everything when it comes to education. Obviously, accountability is important. But without adequate funding we can’t attract talented people into teaching, or keep class sizes small enough to give kids a real chance to learn, or provide them with a well-rounded curriculum, and ensure that every qualified young person can go to college.So why are we bailing out Wall Street and not our nation’s public schools and colleges? Partly because the crisis in financial capital is immediate while our human capital crisis is unfolding gradually. But maybe it's also because we don’t have a central banker for America’s human capital – someone who warns us as loudly as Ben Bernanke did a few months ago when he was talking about Wall Street's meltdown, of the dire consequences that will follow if we don’t come up with the dough."
http://robertreich.blogspot.com/2008/12/of-financial-capital-and-human-capital.html
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