On American politics and policy.
President Barack Obama speaks about the economy, Tuesday, December 6, 2011, at Osawatomie High School in Osawatomie, Kansas. (AP Photo/Carolyn Kaster)
It’s become a cliché to say that Occupy Wall Street has changed our country’s political conversation. But if you want to know exactly how the Occupy movement has impacted the debate in Washington, read Barack Obama’s speech in Osawatomie, Kansas, today.
For much of 2011, Obama’s speeches were all about the deficit. Today the central theme of his speech was income inequality—and how this mounting problem weakens our economy and our democracy. At long last, the president sounded like he was channeling his inner Elizabeth Warren.
Obama’s pivot away from austerity orthodoxy and toward public investment began with his jobs speech in September, but he’s subsequently sharpened his language and focus in recent months in response to pressure from Occupy Wall Street. He’s now tackling issues of basic fairness and attacking the GOP’s brand of “your-on-your-own economics” in a much more direct way. His nod to Teddy Roosevelt, who delivered his “New Nationalism” speech in Osawatomie in 1910, could not have come at a more appropriate time. Here’s the relevant section:
Now, just as there was in Teddy Roosevelt’s time, there’s been a certain crowd in Washington for the last few decades who respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If only we cut more regulations and cut more taxes—especially for the wealthy—our economy will grow stronger. Sure, there will be winners and losers. But if the winners do really well, jobs and prosperity will eventually trickle down to everyone else. And even if prosperity doesn’t trickle down, they argue, that’s the price of liberty.
It’s a simple theory—one that speaks to our rugged individualism and healthy skepticism of too much government. It fits well on a bumper sticker. Here’s the problem: it doesn’t work. It’s never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible post-war boom of the ’50s and ’60s. And it didn’t work when we tried it during the last decade.
Remember that in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history, and what did they get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class—things like education and infrastructure; science and technology; Medicare and Social Security.
Remember that in those years, thanks to some of the same folks who are running Congress now, we had weak regulation and little oversight, and what did that get us? Insurance companies that jacked up people’s premiums with impunity, and denied care to the patients who were sick. Mortgage lenders that tricked families into buying homes they couldn’t afford. A financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy.
We simply cannot return to this brand of your-on-your-own economics if we’re serious about rebuilding the middle class in this country. We know that it doesn’t result in a strong economy. It results in an economy that invests too little in its people and its future. It doesn’t result in a prosperity that trickles down. It results in a prosperity that’s enjoyed by fewer and fewer of our citizens.
Look at the statistics. In the last few decades, the average income of the top one percent has gone up by more than 250 percent, to $1.2 million per year. For the top one hundredth of one percent, the average income is now $27 million per year. The typical CEO who used to earn about thirty times more than his or her workers now earns 110 times more. And yet, over the last decade, the incomes of most Americans have actually fallen by about 6 percent.
This kind of inequality—a level we haven’t seen since the Great Depression—hurts us all. When middle-class families can no longer afford to buy the goods and services that businesses are selling, it drags down the entire economy, from top to bottom. America was built on the idea of broad-based prosperity—that’s why a CEO like Henry Ford made it his mission to pay his workers enough so that they could buy the cars they made. It’s also why a recent study showed that countries with less inequality tend to have stronger and steadier economic growth over the long run.
Inequality also distorts our democracy. It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and runs the risk of selling out our democracy to the highest bidder. And it leaves everyone else rightly suspicious that the system in Washington is rigged against them—that our elected representatives aren’t looking out for the interests of most Americans.
More fundamentally, this kind of gaping inequality gives lie to the promise at the very heart of America: that this is the place where you can make it if you try. We tell people that in this country, even if you’re born with nothing, hard work can get you into the middle class; and that your children will have the chance to do even better than you. That’s why immigrants from around the world flocked to our shores.
And yet, over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk. A few years after World War II, a child who was born into poverty had a slightly better than 50-50 chance of becoming middle class as an adult. By 1980, that chance fell to around 40 percent. And if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a one-in-three chance of making it to the middle class.
It’s heartbreaking enough that there are millions of working families in this country who are now forced to take their children to food banks for a decent meal. But the idea that those children might not have a chance to climb out of that situation and back into the middle class, no matter how hard they work? That’s inexcusable. It’s wrong. It flies in the face of everything we stand for.
You’re likely to hear elements of this speech over and over as the campaign heats up, as the Obama campaign attempts to stand with the 99 percent and paint Gingrich or Romney as core defenders of the 1 percent. None other than Chuck Schumer, one of the senators who represents Wall Street, told Washington Post blogger Greg Sargent that Democrats would focus on income inequality “like a laser” in 2012.
That will entail, however, a shift not only in rhetoric, but also in policy for a party and president that has too often been seen as prioritizing Wall Street over Main Street. Nor is it realistic to think that the Obama campaign will suddenly win over disaffected former supporters with a series of speeches. Indeed, Occupy Wall Street is aimed as much at the president and the rigged political system in Washington as it is at the nation’s largest banks. As one OWS leader told New York magazine: “These [protesters] aren’t out here because they’re offended that they haven’t been spoken to nicely. They’re out here because they owe shitloads of money in student-loan debt and can’t find a job. Or they can’t afford their mortgage. And if Obama thinks that they’re gonna be able to divert this energy by talking about doing something, he’s got another think coming.”
To paraphrase Hillary Clinton, Obama now needs to prove to the movement that he has more to offer them, and the country, than just words. Still, the populist moment captured by Occupy Wall Street provides an opening for the president as well. It’s still an open question whether he’ll end up on the right or the wrong side of this movement. But today Obama took an important step in Occupy’s direction.
Tonight in Washington Representative Paul Ryan will receive Politico’s “Health Care Policymaker of the Year” award. Washington Monthly blogger Steve Benen deftly summarizes the many reasons why Ryan is so undeserving of said award.
It’s been several months since the political world debated Paul Ryan’s approach to health care in detail, so perhaps Politico has forgotten some of the more important realizations from the debate. Let’s remind the publication of the relevant details.
First, Ryan’s health care agenda repealed the entirety of the Affordable Care Act—in the process, taking coverage away from millions of Americans—and replaced it with nothing. What’s more, by scrapping the ACA altogether, Ryan would add billions to the deficit, and his plan simply asserted the opposite without evidence.
Second, Ryan’s plan claimed to control health care costs. A closer look reveals that Ryan’s claims were wrong. Indeed, Ryan pushed to shift Medicare cost burdens from the government to families, and apply the savings to more tax cuts.
Third, accusations that the Ryan plan would “end Medicare” were accurate. The right-wing lawmaker intended to scrap the existing program, replacing it with a privatized voucher scheme—and the vouchers wouldn’t cover escalating costs.
Fourth, though it often went overlooked, Ryan’s proposed changes to Medicaid were a tragic mess.
And perhaps best of all, independent scrutiny found that the numbers in Paul Ryan’s plan simply didn’t add up.
To know all of this, and give this guy an award “Health Care Policymaker of the Year” anyway, is madness.
Blogger Digby jokes that “To honor [Ryan] for his work on healthcare policy is akin to honoring Governor Scott Walker as Public Employee of the year.” The Politico award is reminiscent of a similarly ridiculous “fiscal responsibility” honor bestowed upon Ryan earlier this year by three leading deficit hawk groups, which I described in my recent Nation piece on the austerity class.
In 2008, when Ryan introduced his radical budget road map—which called for turning Medicare into a voucher system, privatizing Social Security and redistributing income upward by drastically cutting taxes for the wealthiest Americans and largest corporations—[Maya] MacGuineas praised his “tremendous courage and leadership.” When Ryan reintroduced his plan in 2010, the CRFB [Committee for a Responsible Federal Budget] lauded his “thoughtfulness and courage.” The CRFB failed to mention that Ryan’s plan would increase the deficit, from a debt-to-GDP ratio of 60 percent in 2010 to 175 percent by 2050. “Paul Ryan added a huge amount to the deficit,” says John Irons, policy director at the Economic Policy Institute (EPI). “To call that even remotely fiscally responsible was not a correct analysis. It’s almost as if they said, We don’t care what your plan does—as long as you talk tough on deficits we’re going to support you.”
Indeed, in January the CRFB, the Concord Coalition and the Comeback America Initiative (all funded by the Peterson Foundation) gave Ryan a cherished fiscal responsibility award, despite his deficit-exploding budget, hostility to tax increases and votes in favor of the Bush administration’s deficit spending. Bob Bixby, executive director of the Concord Coalition, introduced Ryan by quoting Time magazine: “The irony of Ryan’s rise is that he has vaulted to popularity by embracing historically unpopular ideas.” Said Bixby, “And I thought to myself, now there is a deficit hawk…. If we limit ourselves to popular ideas, we’re never going to solve the problem.”
MacGuineas said the award honored Ryan for being the first politician to put forth a budget plan in 2011, which she called “the most fiscally responsible of any of the plans.” Technically, that’s true. Ryan’s budget, a modified version of his road map, achieves a modest $155 billion in savings over ten years by proposing what the CBPP calls “the most severe and wrenching budget cuts in US history—two-thirds of which would come from programs for people of low or moderate incomes” (i.e., Medicaid, Pell grants, food stamps and low-income housing).
The award to Ryan illustrates just how dangerously obtuse the austerity class’s definition of fiscal responsibility is. The deficit hawks succeed by making the debate over the deficit a pure accounting game, with no acknowledgment of the adverse impact a plan like Ryan’s would have on the broader economy and on so many Americans if it became law. “If [you’re] willing to slash spending so that long-run deficits are brought under control, then it’s fiscally responsible,” Jim Horney, vice president for federal fiscal policy at CBPP, says of the Ryan plan. “But if by fiscally responsible you mean putting the budget on a sustainable path but making sure that government is able to meet the needs of the people of the United States, then I think it’s a terribly irresponsible plan.”
Ryan is so influential in DC precisely because of the endless street cred he receives from the Washington policy establishment. It would be nice if they stopped giving him awards that he doesn’t deserve.
This week President Obama is launching a media blitz in support of Richard Cordray, his nominee to head the Consumer Financial Protection Bureau (CFPB). The Senate Banking Committee has confirmed Cordray, but the full Senate is likely to block his nomination this week, since Republicans have vowed to torpedo the CFPB director unless the Obama administration institutes changes that would cripple the agency. And without a director in place, the CFPB cannot assume many of its important new powers.
How will this prolonged standoff end? Unless the Obama administration changes its strategy, Cordray will likely suffer the same fate as other well-qualified nominees killed off by GOP filibusters, such as Donald Berwick, Peter Diamond and Goodwin Liu.
Since the beginning of the Obama administration, Republicans have escalated the use of the filibuster to historic levels and have blocked nearly 20 percent of Obama nominees. Half of the oversight positions mandated by financial reform legislation are vacant or occupied by temporary caretakers. So are two crucial seats on the Federal Reserve Board of Governors. One in seven federal district and circuit court judgeships are currently or soon to be vacant. The list goes on and on.
Yet although he’s faced unprecedented obstruction from Senate Republicans, the president has filled only twenty-eight vacant positions through recess appointments. Contrast that with George W. Bush, who made 171 recess appointments during his presidency. Despite Obama’s scant use of his executive authority when it comes to staffing the government, Republicans are now doing everything they can to block the administration from making future recess appointments. When they leave town, the House and Senate are staying in “pro forma” session, which Republicans claim prevents the president from making any recess appointments during that time.
But the the historical precedent for a pro-forma filibuster is murky at best, notes political scientist Jonathan Bernstein. The Justice Department under Bill Clinton said a president must wait for the Congress to be officially out of session for three days, but there’s no specification in the Constitution about that window, according to a 2004 Appeals Court for the 11th Circuit decision. So Obama could, in theory, make the recess appointments and then fight the GOP in court if/once they contest his authority.
Republicans counter that Harry Reid kept the Senate in pro forma session from 2007 onward to prevent President Bush from exercising his recess authority. But by that point Bush had already made six times as many recess appointments as Obama. So the president has a much stronger case to make. The public vastly prefers Obama to the Congress. If the president takes this fight to Congressional Republicans, he should have the upper hand.
CORRECTION: I should have mentioned that Berwick did in fact receive a recess appointment in July 2010 to lead the Centers for Medicare and Medicaid Services. He was formally renominated by the Obama Administration in January 2011 but blocked by Senate Republicans. Berwick could've received a second recess appointment to remain in the post, but may have had to forgo his salary as a result, according to a Congressional Research Service report.
Like their counterparts across the pond, British conservatives entered office in 2010 as firm believers in fiscal austerity, slashing spending, curbing public investmentand raising food, electricity and tuition costs. Echoing the views of many Republicans, Britain’s Chancellor of the Exchequer, George Osborne, predicted that “expansionary austerity” was just the cure for the country’s economic crisis.
It turns out that austerity in Britain, like in the rest of the world, has been anything but expansionary. “The empirical case against expansionary austerity is that it doesn't seem to be working in Britain (or in any of the struggling eurozone countries),” notes Larry Elliott, economics editor of the Guardian. Since the Tory-Liberal Democrats coalition took over, economic growth has slowed, unemployment has increased and investor confidence has plummeted.
As in the United States, public sector employees have bore the brunt of the recession. Their pay has already been frozen for two years and now the government has proposed capping wage increases at 1 percent beginning in 2013 (a cut in real terms), while demanding that public sector workers increase their pension contributions by 3 percent and retire two years later. Britain’s independent Office of Budget Responsibility predicted yesterday that more than 700,000 public sector workers would lose their jobs by 2017.
It’s against this backdrop that public sector workers staged the largest strike in three decades today, with 2 million workers protesting the government’s cuts. The Guardian called it “the biggest bout of industrial action since the 1979 winter of discontent.” (Check out the paper's live coverage.)
“Public sector workers are justified in striking since they're being asked simultaneously to work longer, get a smaller pension, and put in a higher contribution,” says Will Straw, an economic policy expert at Britain’s Institute for Public Policy Research. “The Government has left the Unions with no choice.… The Unions need to ensure now that they build public support for their argument but also explain why the Government's policies will detrimentally affect those working in other sectors by consigning the UK to meager pensions, second rate public services, and further austerity.”
The strikes are designed to put pressure on the government to negotiate a fairer deal, draw public attention to the perils of austerity and push the opposition Labour Party to take a stronger stance against the government’s cuts and in favor of public investments. There are signs the Labour Party, under new leader Ed Milliband, is heading in that direction. Milliband criticized an earlier bout of strikes in June, angering the unions who supported his bid for party leader, but defended the striking workers today. “Why do you think so many decent, hard-working public sector workers, many of whom have never been on strike before, feel the government simply isn't listening?" he asked Prime Minister David Cameron today.
Today’s strikes mark the largest protest against the government’s austerity regime, but they certainly won’t be the last. The policies of the coalition government are likely to grow only more unpopular if the economy continues to head south. Austerity usually leads to a vicious, self-defeating circle, Paul Krugman notes:
What’s happening in Britain now is that depressed estimates of long-run potential are being used to justify more austerity, which will depress the economy even further in the short run, leading to further depression of long-run potential, leading to…
It really is just like a medieval doctor bleeding his patient, observing that the patient is getting sicker, not better, and deciding that this calls for even more bleeding.
And the truly awful thing is that Cameron and Osborne are so deeply identified with the austerity doctrine that they can’t change course without effectively destroying themselves politically.
As the Brits would say, brilliant. Just brilliant.
US politicians, take note. Don’t say you haven’t been warned.
The Karl Rove–backed super PAC, Crossroads GPS, has made the first major ad buy in the Massachusetts Senate contest between Scott Brown and Elizabeth Warren, attacking Warren for her support of Occupy Wall Street.
It’s no surprise that Rove and his ilk are attacking Warren. She’s a major threat to the Republican Party and its allied corporate backers for two reasons.
Number one: she’s running even with Brown in a race that may very well decide control of the Senate.
Number two: her reformist background and brand of progressive populism is deeply resonant right now. Unlike so many in Washington, she’s taken on the banks and their allies, is not beholden to them, and is not afraid of them. That makes her dangerous to the political establishment in both parties. No wonder Tim Geithner didn’t want her running the Consumer Financial Protection Bureau and Karl Rove doesn’t want her in the Senate.
Republicans are particularly afraid of her—she’s the best spokesperson the Democratic Party has on economic policy and has the potential to become one of the most popular politicians in America precisely because of her tenacity in confronting the very corporate interests who caused the economic crisis. That’s why Republicans have tried so hard to demonize her—both when she was setting up the CFPB and now that she’s running for Senate.
It’s particularly noteworthy that Crossroads is invoking Occupy Wall Street as a means to taint both the Warren campaign and the broader Occupy movement, as part of a concerted GOP backlash strategy. The ad claims that protesters at Occupy Wall Street “attack police, do drugs and trash public parks. They support radical redistribution of wealth and violence.” It distorts a quote from Warren where she said that, “I created much of the intellectual foundation for what they do,” making it seem as if Warren was responsible for lawlessness, violence and socialist-inspired chaos.
Here’s what Warren actually said in an interview with the Daily Beast:
EW: Look, everybody has to follow the law. That’s the starting point. I’ve been fighting this fight for years and years now. As I see it, this is about two central points: one, this is about the lack of accountability. That Wall Street has not been held accountable for how they broke the economy. The second is a values question, a fundamental fairness around the way that markets have been distorted and families have been hurt. I’m still fighting that fight. I’m just fighting it from this angle…I want to fight it from the floor of the United States Senate. I think that is a place to make this difference.
TDB: Is showing solidarity with them going to get in the way of that?
EW: It’s not a question of solidarity. I just don’t think that’s the right way to say it. I support what they do. I want to say this in a way that doesn’t sound puffy. I created much of the intellectual foundation for what they do. That’s the right thing. There has to be multiple ways for people to get involved and take back our country. The fight that I’m fighting now is one that is directed towards the United State Senate. That’s just how I see it.
Crossroads has pledged to spend $150 million on their campaign to take back the Senate for Republicans, so this is likely the first of many attacks on Warren. But the Rove-directed campaign against her could actually boost the Warren campaign. If the Massachusetts Senate race becomes a debate between the ideology of Rove versus the ideology of Warren, Elizabeth’s got to like her chances.
Last night marked the first time that voters themselves could weigh in on the GOP’s war on voting. The results were mixed, as Maine voted to reinstate election-day voter registration, while Mississippi voted to mandate government-issued IDs in order to cast a ballot.
First, Maine. By an overwhelming twenty-point margin, Mainers overruled the GOP governor and legislature and voted to restore election-day registration, which had been on the books since 1973 before Republicans scrapped it this year. The Protect Maine Votes coalition gathered 70,000 signatures in less than a month, according to the Bangor Daily News, in order to place the issue on the ballot. Sixty thousand Mainers registered on election day in 2008, and the convenience of same-day registration helped explain why Maine consistently had one of the highest voter turnouts in the nation.
As they always do, Republicans pointed to voter fraud as the reason for restricting access to the ballot. But a two-month investigation by Maine Secretary of State Charlie Summers following the 2010 election didn’t find a single instance of voter fraud. When that argument didn’t stick, opponents of same day registration bizarrely argued that voters should oppose reinstating the reform because gay rights groups supported it. That argument backfired as well, turning what was expected to be a close vote into a blowout. “The Republicans once again overplayed their hand,” Maine Representative Chellie Pingree, the former president of Common Cause, told Rachel Maddow last night.
Things turned out differently for voting rights advocates in Mississippi, which became the seventh GOP-controlled state to adopt voter ID legislation this year, and the first to do so through a ballot initiative. The initiative passed by twenty-four points. Eleven percent of eligible voters do not possess government-issued photo IDs, according to the Brennan Center for Justice, which equals 234,000 voters in Mississippi. “There is reason to believe that Mississippi will have a higher than average rate of people with no ID, since it is the poorest state in the nation, since it has among the highest rates of people with disabilities and because it has a high African-American population,” Wendy Weiser, director of the democracy program at the Brennan Center, told me. “Each of these characteristics correlates with lower rates of ID possession.”
The NAACP and ACLU are considering challenging the new law, which must also receive approval from the Justice Department as specified by the Voting Rights Act before going into effect. “This Department of Justice will be aggressive at looking at those jurisdictions that have attempted for whatever reason to restrict the ability of people to get to the polls,” Attorney General Eric Holder said at a Senate Judiciary Committee hearing yesterday.
Today residents of Mississippi will decide whether voters must produce a government-issued ID in order to cast a ballot and voters in Maine will choose whether to keep or overturn a new law banning election day voter registration, which had previously been on the books since 1973.
These votes occur amidst the backdrop of an unprecedented, Republican-led war on voting. Since the 2010 election, at least a dozen states controlled by Republicans have approved new obstacles to voting—mandating government-issued IDs, curtailing early voting, restricting voter registration, disenfranchising ex-felons. Five million voters could be negatively impacted by the new laws, according to the Brennan Center for Justice, which found that “these new restrictions fall most heavily on young, minority and low-income voters, as well as on voters with disabilities”—in other words, those most likely to vote for Democrats.
A key component of the GOP’s campaign has been orchestrated by the American Legislative Exchange Council (ALEC), which receives substantial funding from the Koch brothers. ALEC drafted mock photo ID legislation after the 2008 election and in five states that passed ID laws in the past year—Kansas, South Carolina, Tennessee, Texas and Wisconsin—the measures were sponsored by legislators who are members of ALEC.
A new investigation from Brave New Foundation, in conjunction with the Advancement Project and amplified by a host of progressive groups, outlines ALEC’s influence in the war on voting and spotlights the $245,550 in campaign contributions the Koch brothers have given to politicians supporting new voter ID laws, such as Scott Walker and Rick Perry. “Folks like the Koch brothers are attempting to ensure that as few people of color and as few young people show up as possible,” says NAACP President Ben Jealous.
The video also features interviews with eligible voters who may be unable to cast a ballot because of the new restrictions. “Voter suppression is obviously a critically important issue,” says Robert Greenwald of Brave New Films. “Our job is to put a face on this—take it from abstract policy to real people losing the right to vote because of right-wing attacks on our democracy." Brave New Foundation also launched a petition on their website asking Attorney General Eric Holder to enforce the Voting Rights Act.
On a related note, civil rights groups such as the NAACP and National Urban League today announced the formation of a new group, Stand 4 Freedom, to protest the new voting laws. Representative Keith Ellison also recently introduced two bills, the Same Day Registration Act and the Voter Access Protection Act, which would, respectively, “require states to provide for same day voter registration for a federal election,” and “make sure election officials cannot require photo identification in order to cast a vote or register to vote.”
The sleeper issue of the 2012 election is starting to get a lot more attention.
When Paul Ryan introduced his radical budget plan this year—which would turn Medicare into a voucher system, privatize Social Security and massively redistribute income upward by drastically cutting taxes for the wealthiest one percent while severely slashing programs for low-income Americans—Mitt Romney heartily applauded.
“I applaud Rep. Paul Ryan for recognizing the looming financial crisis that faces our nation and for the creative and bold thinking that he brings to the debate,” Romney said in April 2011. “He is setting the right tone for finally getting spending and entitlements under control. Anyone who has read my book knows that we are on the same page.”
Now Romney has gone a step further, actively incorporating Ryan’s ideas into his own plan to reduce the social safety net, which he outlined at the Koch Brothers–funded Americans for Prosperity convention on Friday. Romney would raise the eligibility age for Social Security and Medicare, cut $100 billion from Medicaid and allow seniors to pay for health coverage through vouchers for private insurance (a shrewd way to undermine the immensely popular government-run Medicare program).
After the speech, Washington Post blogger Jennifer Rubin wrote that Romney “has found his inner Paul Ryan.” Ryan, in turn, told Rubin that Romney’s plan was “a great development…. This tracks perfectly with the House budget.” The Wisconsin congressman gushed to National Review: “It shows we’re all singing from the same hymnal.”
Given the unpopularity of the Ryan budget, Romney may come to regret this endorsement. It may help him win the votes of Tea Party conservatives in the GOP primary, but it will almost certainly become a liability in a general election campaign against President Obama.
The US economy gained 104,000 private sector jobs last month, but lost 24,000 public sector jobs, resulting in a net total of 80,000 new jobs—fewer than expected and well below what the country needs to get out of the Great Recession.
This is by now a depressingly familiar story. In the past year, 1.6 million private sector jobs have been created. But since the recession began in December 2007, more than 500,000 public sector jobs have been lost. Half of those jobs have disappeared since January 2011, after Republicans (who ran on improving the economy in 2010) took control of the House of Representatives. States have cut 49,000 jobs and localities have cut 210,000 jobs since the beginning of the year. Contrary to what Republicans might tell you, these are “real” jobs lost by real people, who pay taxes, spend money, provide for their families and perform vital public services. When they suffer, the economy suffers too.
“This is the worst time to push government workers into the ranks of the unemployed,” notes blogger Mike Konczal of the Roosevelt Institute. “With slack capacity, a high number of unemployed people, and negative real interest rates, we can’t afford a war against government workers.”
Yet this war against government workers has been going on for quite some time. Conservatives have long tried to “starve the beast” of government and have actively demonized public employees for decades. Yet the real job losses for public sector employees accelerated in 2010, when President Obama, in a nod to conservative orthodoxy, declared a three-year freeze on nondefense discretionary spending and a freeze on federal pay, and did not renew badly needed aid for state and local governments after the stimulus ran its course.
After the 2010 election, the Bowles-Simpson commission recommended cutting an additional 10 percent of the federal workforce, which would have resulted in 200,000 more lost jobs, even though federal jobs are at their lowest per capital level since 1962. By that time, Republicans were actively rooting for public sector job losses. “If some of those jobs are lost, so be it,” John Boehner said in February 2011. “We’re broke.” Yet somehow Republicans found the money to propose massive tax cuts for the richest corporations and wealthiest Americans.
Just last month, Republicans in Congress blocked a section of Obama’s jobs plan that would have prevented 400,000 teachers, firefighters and cops from losing their jobs through aid to state and local governments, which is among the most effective forms of stimulus. “Federal aid to strapped state and local governments also is providing significant economic benefits, lessening their need to slash programs and jobs or to hike taxes and fees,” wrote Mark Zandi of Moody’s in July 2010. Had it not been for austerity policies, wrote David Leonhardt of the New York Times, state and local governments would have added half a million jobs, rather than cutting them. “In other words, the state and local austerity of the last two years has cost the economy about one million jobs,” Leonhardt writes.
Saving a million jobs isn’t enough to lift the economy out of the recession, but it would certainly improve the bleak economic situation. And any politician who professes to care about creating jobs but argues that government jobs aren’t “real,” and don’t count, is a heartless hypocrite.
The creation of the Congressional “supercommittee” last August was a major victory for Washington’s austerity class. It was shrouded in secrecy, exempted from regular Congressional rules and required to choose between two unpopular options in order to enact $1.2 trillion in savings: a so-called grand bargain that would significantly curtail the social safety net vs. deep, automatic across the board cuts at a time of economic peril.
Yet the $1.2 trillion in savings, which will come on top of the $2 trillion in deficit reduction already enacted during the Obama administration, is not enough for some members of the austerity class. For months groups like the Committee for a Responsible Federal Budget (CRFB) have been urging the supercommittee to “go big” and enact a $4 trillion deal. Eighty House members, lead by Representatives Mike Simpson (R-ID) and Heath Shuler (D-NC), echo that sentiment in a soon-to-be-released letter. The CRFB even argued that tripling the size of the supercommittee’s mandate “increase the chances of success.”
I find that very hard to believe. During the debt ceiling fiasco John Boehner rejected President Obama’s $4 trillion grand bargain offer and Republicans have only hardened their position since then, with every major Republican presidential candidate saying they would oppose a deficit plan that was even 10:1 spending cuts to tax increases. Believing that a $4 trillion deal can be reached given the current level of GOP intransigence is borderline insane.
Indeed, this week committee Republicans immediately rejected Senator Max Baucus’s $3 trillion debt rejection offer, which included $500 billion in proposed cuts to Medicare and Medicaid. (The triggered cuts—which exempt Medicaid, Medicare and Social Security and require that half the savings come from defense spending—will likely be far more palatable to progressives than any type of grand bargain).
By relentlessly pushing the $4 trillion number, which they claim is needed to stabilize the US debt-to-GDP ratio, the austerians are setting the supercommittee up for failure. That way the austerity class can continue to bang the drum for more and more deficit reduction, writes David Dayen of Firedoglake.
We’ll ALWAYS need $4 trillion. Without that big and urgent a need, you cannot cut things like Social Security or Medicare. You cannot acknowledge the deficit reduction that’s already taken place. You cannot acknowledge the fact that doing nothing would bring the medium-term deficit almost entirely into balance. You cannot acknowledge that the debt situation is trivial relative to the jobs crisis. You must only repeat $4 trillion, $4 trillion, $4 trillion over and over again like a mantra.
Indeed, the “go big” campaign is totally divorced from political and economic reality. Stan Collender, a longtime budget expert at Qorvis Communications, notes three reasons why:
“One, the supercommittee is going to have enough trouble coming up with $1.2 trillion,” says Collender. “Two, if they did come up with $1.2 trillion, it should be considered an extraordinary success, not what the Concord Coalition and CRFB would consider a failure. Three, it’s a supercommittee, not a super hero…. Take half a loaf and go home. $1.2 trillion, on top of the deficit reduction that’s already enacted, would be an extraordinary achievement.”
Aside from the utter unfeasibility of enacting such a plan, the austerity class never mentions the impact a $4 trillion deficit reduction accord would have on the economy in the midst of a recession, particularly if it were weighted heavily toward spending cuts (as is likely to be the case). The IMF recently reviewed 173 cases of austerity over thirty years and found that austerity “lowers incomes in the short term, with wage-earners taking more of a hit than others; it also raises unemployment, particularly long-term unemployment.”
The Washington Post’s Brad Plumer summarized the rest of the report:
An austerity program that curbs the deficit by 1 percent of GDP reduces real incomes by about 0.6 percent and raises unemployment by almost 0.5 percentage points. What’s more, the IMF notes, the losses are twice as big when the central bank can’t cut rates (a good description of the present.) Typically, income and employment don’t fully recover even five years after the austerity program is put in place.
In the wake of the Occupy Wall Street protests, media coverage of the country’s unemployment crisis has expanded drastically on cable news (from a mere 502 mentions of “unemployed” or “unemployment” on CNN/FOX/MSNBC in the last week of July to 2,378 mentions of “jobs” from October 10–16), while coverage of the debt has dropped dramatically (from 7,583 mentions in July to 398 mentions in October). But inside the supercommittee, it’s like the protests, or the economic crisis, never happened.
The fact that creating jobs is absent from the committee’s mandate illustrates just how isolated it is from the economic situation today. Last month, Senator Jeff Merkley proposed a very sensible idea: any proposal from the committee should be evaluated by the Congressional Budget Office to see what impact it would have on jobs and to make sure it would not increase the already high unemployment rate. You’d think leaders in Congress would have already thought of that. But to date, Merkley’s proposal has only eleven cosponsors. No wonder the disconnect between Congress and the public grows wider every day.