Robert Reich

Elon Musk, Chief Executive of Tesla Motors and SpaceX, attends the Reuters Global Technology Summit in San Francisco, Calif. on June 18, 2013. In 2012, Musk received $96,160,696 in compensation. Reich says it's time for taxpayers to stop having to subsidize compensation exceeding $1 million. (Stephen Lam/Reuters)

Stop subsidizing sky-high CEO salaries.

By Robert Reich, Guest blogger / 07.18.13

Almost everyone knows CEO pay is out of control. It surged 16 percent at big companies last year, and the typical CEO raked in $15.1 million, according to the New York Times. 

Meanwhile, the median wage continued to drop, adjusted for inflation. 

What’s less well-known is that you and I and other taxpayers are subsidizing this sky-high executive compensation. That’s because corporations deduct it from their income taxes, causing the rest of us to pay more in taxes to make up the difference.  

This tax subsidy to corporate executives from the rest of us ought to be one of the first tax expenditures to go, when and if congress turns to reforming the tax code.

We almost got there twenty years ago. When he was campaigning for the presidency, Bill Clinton promised that if elected he’d end the deductibility of executive pay in excess of $1 million. ( Continue… )

Indiana University senior Randall Burns holds a sign he said represents the average debt a college student has after graduating during a protest on IU's campus earlier this year. The GOP should put aside economic incentives and tax polluters, not students, Reich says. (Jeremy Hogan/Bloomington Herald-Times/AP/File)

Tax polluters, not students.

By Robert Reich, Guest blogger / 07.08.13

A basic economic principle is government ought to tax what we want to discourage, and not tax what we want to encourage.

For example, if we want less carbon dioxide in the atmosphere, we should tax carbon polluters. On the other hand, if we want more students from lower-income families to be able to afford college, we shouldn’t put a tax on student loans.

Sounds pretty simple, doesn’t it? Unfortunately, congressional Republicans are intent on doing exactly the opposite.

Earlier this year the Republican-led House passed a bill pegging student-loan interest rates to the yield on the 10-year Treasury note, plus 2.5 percentage points. “I have very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt because there’s no reason for that,” Rep. Virginia Foxx (R-NC), the co-sponsor of the GOP bill, said.
 
 Republicans estimate this will bring in around $3.7 billion of extra revenue, which will help pay down the federal debt.  ( Continue… )

On Tuesday, President Barack Obama unexpectedly announced a one-year delay, until after the 2014 elections, for a central requirement of the Affordable Care Act that medium and large companies provide coverage for their workers or face fines. The postponement is a bad omen, Reich says. (Luke Sharrett/AP/File)

The Affordable Care Act delay is a bad omen.

By Robert Reich, Guest blogger / 07.05.13

The official reason given by the Administration for delaying, by one year, the Affordable Care Act’s mandate that employers with more than 50 full-time workers provide insurance coverage or face fines, is that employers need more time to implement it. The unofficial reason has more to do with the Republicans’ incessant efforts to bulldoze the law.

Soon after the GOP lost its fight against Obamacare in Congress, it began warring against the new legislation in the courts, rounding up and backstopping litigants all the way up to the Supreme Court. Meanwhile, House Republicans have refused to appropriate enough funds to implement the Act, and have held a continuing series of votes to repeal it. Republican-led states have also done what they can to undermine Obamacare, refusing to set up their own health exchanges, and turning down federal money to expand Medicaid.

The GOP’s gleeful reaction to the announced delay confirms Republicans will make repeal a campaign issue in the 2014 midterm elections, which probably contributed to the White House decision to postpone the employer mandate until after the midterms. “The fact remains that Obamacare needs to be repealed,” said Senate Republican leader Mitch McConnell, on hearing news of the delay.

Technically, postponement won’t affect other major provisions of the law — although it may be difficult to subsidize workers who don’t get employer-based insurance if employers don’t report on the coverage they provide. But it’s a bad omen.

The longer the Affordable Care Act is delayed, the more time Republicans have to demonize it before average Americans receive its benefits and understand its importance. The GOP raged against Social Security in 1935 and made war on Medicare in 1965. But in each case Americans soon realized how critical they were to their economic security, and refused to listen. 

Immigrant students join a coalition of immigrant rights supporters on a 24-hour vigil calling on the U.S. Congress to pass immigration reform outside the Federal Building in Los Angeles, Calif. in June 2013. Immigration reform will not hurt Americans or take jobs away from them, Reich argues. (Damian Dovarganes/AP/File)

Debunking the myths: 3 false claims about immigration reform

By Robert Reich, Guest blogger / 07.02.13

The battle over immigration reform is often about economic fear — fear that immigrants are hurting the economy for native born Americans.  But that fear is based on several economic myths:

MYTH ONE: Immigration reform will strain already overburdened government safety net programs like Social Security and Medicare.

Wrong.  

The nonpartisan Congressional Budget Office finds that immigration reform will actually reduce the budget deficit by hundreds of billions of dollars.

Why is that? Because while they seek citizenship, undocumented workers will be required to pay into Social Security and Medicare even though they won’t be eligible for them.

They’re also younger on average than the typical worker, so even when they’re citizens they’ll be paying into Social Security and Medicare far longer. ( Continue… )

There are two centers of unaccountable power in the US: the National Security Agency, the epicenter of the intelligence community, and Wall Street banks, the center of New York's financial district (pictured here). (Melanie Stetson Freeman/The Christian Science Monitor/File)

Powerful and unaccountable: NSA – and Wall Street

By Robert Reich, Guest blogger / 06.14.13

There are two great centers of unaccountable power in the American political-economic system today — places where decisions that significantly affect large numbers of Americans are made in secret, and are unchecked either by effective democratic oversight or by market competition.

One goes by the name of the “intelligence community” and its epicenter is the National Security Agency within the Defense Department. If we trusted that it reasonably balanced its snooping on Americans with our nation’s security needs, and that our elected representatives effectively oversaw that balance, there would be little cause for concern. We would not worry that the information so gathered might be misused to harass individuals, thereby chilling free speech or democratic debate, or that some future government might use it to intimidate critics and opponents. We would feel confident, in other words, that despite the scale and secrecy of the operation, our privacy, civil liberties, and democracy were nonetheless adequately protected.

But the NSA has so much power, and oversight of it is so thin, that we have every reason to be concerned. The fact that its technological reach is vast, its resources almost limitless, and its operations are shrouded in secrecy, make it difficult for a handful of elected representatives to effectively monitor even a tiny fraction of what it does. And every new revelation of its clandestine “requests” for companies to hand over information about our personal lives and communications further undermines our trust. To the contrary, the NSA seems to be literally out of control.

The second center of unaccountable power goes by the name of Wall Street and is centered in the largest banks there. If we trusted that market forces kept them in check and that they did not exercise inordinate influence over Congress and the executive branch, we would have no basis for concern. We wouldn’t worry that the Street’s financial power would be misused to fix markets, profit from insider information, or make irresponsible bets that imperiled the rest of us. We could be confident that despite the size and scope of the giant banks, our economy and everyone who depends on it were nonetheless adequately protected.  ( Continue… )

Job seeker Anu Vatal of Chicago, Ill., speaks with Patrice Tosi of BluePay, seated, during a career fair last month. Although jobs are slowly coming back, Reich argues that the US needs to implement a national economic strategy to create better jobs with better pay. (M. Spencer Green/AP/File)

Wanted: A national economic strategy for better jobs

By Robert Reich, Guest blogger / 06.12.13

Jobs are returning with depressing slowness, and most of the new jobs pay less than the jobs that were lost in the Great Recession.

Economic determinists — fatalists, really — assume that globalization and technological change must now condemn a large portion of the American workforce to under-unemployment and stagnant wages, while rewarding those with the best eductions and connections with ever higher wages and wealth. And therefore that the only way to get good jobs back and avoid widening inequality is to withdraw from the global economy and become neo-Luddites, destroying the new labor-saving technologies.

That’s dead wrong. Economic isolationism and neo-Ludditism would reduce everyone’s living standards. Most importantly, there are many ways to create good jobs and reduce inequality.

Other nations are doing it. Germany was generating higher real median wages until recently, before it was dragged down by austerity it imposed the European Union. Singapore and South Korea continue to do so. Chinese workers have been on a rapidly-rising tide of higher real wages for several decades. These nations are implementing national economic strategies to build good jobs and widespread prosperity. The United States is not.  ( Continue… )

President Barack Obama gestures while speaking in San Jose, Calif., on June 7, 2013. Conservative Republicans have all but shut down Congress, Reich argues — pointing to the lack of movement on tax reform, immigration reform, and other issues as proof of a political stalemate. (Evan Vucci/AP/File)

The quiet shutting down of Washington

By Robert Reich, Guest blogger / 06.10.13

Conservative Republicans in our nation’s capital have managed to accomplish something they only dreamed of when Tea Partiers streamed into Congress at the start of 2011: They’ve basically shut Congress down. Their refusal to compromise is working just as they hoped: No jobs agenda. No budget. No grand bargain on the deficit. No background checks on guns. Nothing on climate change. No tax reform. No hike in the minimum wage. Nothing so far on immigration reform.
 
 It’s as if an entire branch of the federal  government — the branch that’s supposed to deal directly with the nation’s problems, not just execute the law or interpret the law but make the law — has gone out of business, leaving behind only a so-called “sequester” that’s cutting deeper and deeper into education, infrastructure, programs for the nation’s poor, and national defense.

The window of opportunity for the President to get anything done is closing rapidly. Even in less partisan times, new initiatives rarely occur after the first year of a second term, when a president inexorably slides toward lame duck status.
 
 But the nation’s work doesn’t stop even if Washington does. By default, more and more of it is shifting to the states, which are far less gridlocked than Washington. Last November’s elections resulted in one-party control of both the legislatures and governor’s offices in all but 13 states — the most single-party dominance in decades. ( Continue… )

Traders work on the floor at the New York Stock Exchange, May 31, 2013.Reich warns that a spate of decent economic data doesn't necessarily mean things are getting better. (Brendan McDermid/Reuters/File)

Economists are optimistic. They're also wrong.

By Robert Reich, Guest blogger / 05.31.13

Economic forecasters exist to make astrologers look good. But the recent jubilance is enough to make even weather forecasters blush. “Just look at the bull market! Look at home prices! Look at consumer confidence!”

Please.

I can understand the jubilation in the narrow sense that we’ve been down so long everything looks up. Plus, professional economists tend to cheerlead because they believe that if consumers and businesses think the future will be great, they’ll buy and invest more – leading to a self-fulfilling prophesy.

But prophesies can’t be self-fulfilling if they’re based on wishful thinking.

The reality is we’re still in the doldrums, and the most recent data gives cause for serious worry.

Almost all the forward movement in the economy is now coming from consumers —  whose spending is 70 percent of economic activity. But wages are still going nowhere, which means consumer spending will slow because consumers just don’t have the money to spend.  ( Continue… )

Senate Majority Leader Harry Reid of Nev. pauses as he speaks with reporters as he leaves the weekly Democratic Caucus Lunch on Capitol Hill in Washington. Harry Reid punted on changing Senate filibuster rules, but he could propose changing them for judicial appointments, Reich writes, which he can accomplish with the votes of 51 senators. (Cliff Owen/AP/File)

Bachmann retirement eclipses bigger Congress showdown

By Robert Reich, Guest blogger / 05.29.13

Don’t be sidetracked today with the news of Michelle Bachmann’s decision not to run again. That’s small potatoes relative to the biggest political and economic issue — and showdown — emerging in Congress.

Some background: The Court of Appeals for the D.C. Circuit isn’t just the main feeder into the Supreme Court (four of the current nine justices served there before ascending to the Supremes) but, even more critically, is the court that reviews most major federal regulations — those emerging under Obamacare, Dodd-Frank, the Environmental Protection Agency, and hundreds of other laws and agencies.

Four of its current judges were appointed by Republican presidents; three by Democrats. It has three vacancies. Senate Republicans want to keep the current ratio of four to three, and have no interest in giving Obama a majority on this important court. They’ve held up almost all of Obama’s court appointments, sometimes for years, effectively preventing him from putting his picks in the federal court system as elsewhere. 

Now the President is nominating judges to fill all three of these crucial D.C. court of appeals vacancies at once. He’s also looking ahead at the strong probability that at least one Supreme Court justice, most likely Ruth Bader Ginsburg, will retire within the next two years, and he’ll need to get a replacement through the Senate.   ( Continue… )