Robert Reich
Participants in Run/Walk for Remembrance take part in a moment of silence Tuesday in Silverdale, Wash. Our thoughts turn to Boston – as they should, Reich writes, but economic inequality across America remains ignored. (Meegan M. Reid/Kitsap Sun/AP)
Boston bombings: A moment of unity amid economic division
We come together as Americans when confronting common disasters and common threats, such as occurred in Boston on Monday, but we continue to split apart economically.
Anyone who wants to understand the dis-uniting of America needs to see how dramatically we’re segregating geographically by income and wealth. Today I’m giving a Town Hall talk in Fresno, in the center of California’s Central Valley, where the official unemployment rate is 15.4 percent and median family earns under $40,000. The so-called “recovery” is barely in evidence.
As the crow flies Fresno is not that far from California’s high-tech enclaves of Google, Intel, Facebook, and Apple, or from the entertainment capital of Hollywood, but they might as well be different worlds.
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Being wealthy in modern America means you don’t come across anyone who isn’t, and being poor and lower-middle class means you’re surrounded by others who are just as hard up. Upward mobility — the old notion that anyone can make it with enough guts and gumption — is less of a reality. ( Continue… )
A man looks over employment opportunities at a jobs center in San Francisco, Calif. Businesses won’t hire and expand unless they have more customers, Reich writes, but most Americans can’t spend more. (Robert Galbraith/Reuters/File)
Why this is the worst economic recovery on record
The biggest economic debate is between Keynesians (who want more government spending and lower interest rates in order to fuel demand) and supply-side “austerics” (who want lower taxes on the wealthy and on corporations to boost incentives to hire and invest, and who see government deficits crowding out private investment).
But both approaches have problems.
George W. Bush tried supply-side tax cuts but nothing trickled down. Jobs and wages declined. And austerity economics has been a disaster for Europe.
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Unfortunately the U.S. is now adopting supply-side austerics by making the Bush tax cuts permanent for 98 percent of taxpayers, hiking Social Security taxes back up, and implementing the sequester. ( Continue… )
President Barack Obama, accompanied by acting Budget Director Jeffrey Zients, speaks in the Rose Garden of the White House in Washington, Wednesday. The president desperately wants a “grand bargain” on the deficit, Reich writes. (J. David Ake/AP)
Obama budget: Why entitlement cuts are a 'grand bargain' we don't need
John Boehner, Speaker of the House, revealed why it’s politically naive for the President to offer up cuts in Social Security in the hope of getting Republicans to close some tax loopholes for the rich. “If the President believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Boehner said in a statement released Friday.
House Majority Leader Eric Cantor agreed. He said on CNBC he didn’t understand “why we just don’t see the White House come forward and do the things that we agree on” such as cutting Social Security, without additional tax increases.
Get it? The Republican leadership is already salivating over the President’s proposed Social Security cut. They’ve been wanting to cut Social Security for years.
But they won’t agree to close tax loopholes for the rich. ( Continue… )
The US Capitol Building is pictured in Washington. Cuts from the sequester are so particular and localized they don’t feel as if they’re the result of a change in national policy, Reich writes. (Jason Reed/Reuters/File)
The invisible sequester
So far, the much-dreaded “sequester” – some $85 billion in federal spending cuts between March and September 30 – hasn’t been evident to most Americans.
The dire warnings that had issued from the White beforehand – threatening that Social Security checks would be delayed, airport security checks would be clogged, and other federal facilities closed – seem to have been overblown.
Sure, March’s employment report was a big disappointment. But it’s hard to see any direct connection between those poor job numbers and the sequester. The government has been shedding jobs for years. Most of the losses in March were from the Postal Service.
Take a closer look, though, and Americans are starting to feel the pain. They just don’t know it yet. ( Continue… )
A help wanted sign hangs in front of a restaurant in Richmond, Va. Weak March job numbers demonstrate that we’re experiencing the burden of austerity economics and the continued scourge of widening inequality, Reich writes. (Steve Helber/AP/File)
What's behind the bad March job numbers?
Bad news on the economy. It added only 88,000 jobs in March – the slowest pace of job growth in nine months.
While the jobless rate fell to 7.6 percent, much of the drop was due to the labor force shrinking by almost a half million people. If you’re not looking for work, you’re not counted as unemployed.
That means the percentage of working-age Americans either with a job or looking for one dropped to 63.3 percent — its lowest level since 1979.
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The direction isn’t encouraging. The pace of job growth this year is slower than its pace last year. ( Continue… )
Chained CPI for Social Security would hurt seniors
The White House and prominent Democrats are talking about reducing future Social Security payments by using a formula for adjusting for inflation that’s stingier than the current one. It’s called the “Chained CPI.” I did this video so you can understand it — and understand why it’s so wrongheaded.
Even Social Security’s current inflation adjustment understates the true impact of inflation on the elderly. That’s because they spend 20 to 40 percent of their incomes on health care, and health-care costs have been rising faster than inflation. So why adopt a new inflation adjustment that’s even stingier than the current one?
Social Security benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.
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Besides, Social Security isn’t in serious trouble. The Social Security trust fund is flush for at least two decades. If we want to ensure it’s there beyond that, there’s an easy fix — just lift the ceiling on income subject to Social Security taxes, which is now $113,700.
Why are Democrats even suggesting the inflation adjustment be reduced? Republicans aren’t asking for it. Not even Paul Ryan’s draconian budget includes it.
Democrats invented Social Security and have been protecting it for almos 80 years.They shouldn’t be leading the charge against it.
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People stand near the border fence between Mexico and the US in Tijuana, Mexico. The only way undocumented workers can ever become organized – and not undercut attempts to unionize legal workers – is if the undocumented workers also become legal, Reich writes. (Jorge Duenes/Reuters/File)
What immigration reform could mean for US workers
Their agreement on is very preliminary and hasn’t yet even been blessed by the so-called Gang of Eight Senators working on immigration reform, but the mere fact that AFL-CIO President Richard Trumka and Chamber of Commerce President Thomas J. Donohue agreed on anything is remarkable.
The question is whether it’s a good deal for American workers. It is, and I’ll explain why in a moment.
Under the agreement (arrived at last weekend) a limited number of temporary visas would be issued to foreign workers in low-skilled occupations, who could thereafter petition to become American citizens.
The agreement is an important step toward a comprehensive immigration reform package to be introduced in the Senate later this month. Disagreement over allowing in low-skilled workers helped derail immigration reform in 2007. ( Continue… )
The dome of the US Capitol Building is seen as the sun sets on Capitol Hill in Washington. American democracy has shown itself far less responsive to public opinion concerning economic issues that might affect the fates of large fortunes, Reich writes. (Charles Dharapak/AP/File)
Why don't politicians listen to public opinion on the economy?
Who says American politics is gridlocked? A tidal wave of politicians from both sides of the aisle who just a few years ago opposed same-sex marriage are now coming around to support it. Even if the Supreme Court were decide to do nothing about California’s Proposition 8 or DOMA, it would seem only matter of time before both were repealed.
A significant number of elected officials who had been against allowing undocumented immigrants to become American citizens is now talking about “charting a path” for them; a bipartisan group of senators is expected to present a draft bill April 8.
Even a few who were staunch gun advocates are now sounding more reasonable about background checks.
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It’s nice to think logic and reason are finally catching up with our elected representatives, but the real explanation for these changes of heart is more prosaic: public opinion. ( Continue… )
President Barack Obama and House Minority Leader Nancy Pelosi, left, leave a meeting with House Democrats at the Capitol, in Washington, Thursday. If there was ever a time for Democrats to champion working Americans and reverse troubling trends, it is now, Reich writes. (J. Scott Applewhite/AP)
Why Democrats should protect Social Security and Medicare
Prominent Democrats — including the President and House Minority Leader Nancy Pelosi — are openly suggesting that Medicare be means-tested and Social Security payments be reduced by applying a lower adjustment for inflation.
This is even before they’ve started budget negotiations with Republicans — who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers’ “carried interest”), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions.
It’s not the first time Democrats have led with a compromise, but these particular pre-concessions are especially unwise.
For over thirty years Republicans have pitted the middle class against the poor, preying on the frustrations and racial biases of average working people who can’t get ahead no matter how hard they try. In the Republican narrative, government takes from the hard-working middle and gives to the undeserving and dependent needy. ( Continue… )
Continuing his effort to end political gridlock with Congress, President Barack Obama comes to Capitol Hill to meet with the Senate Republican caucus, in Washington, Thursday. When American families can’t spend enough to keep the economy going, Reich writes, the government has to step in as spender of last resort. (J. Scott Applewhite/AP)
Deficits are not the real economic problem
“Our biggest problems over the next ten years are not deficits,” the President told House Republicans Wednesday, according to those who attended the meeting.
The President needs to deliver the same message to the public, loudly and clearly. The biggest problems we face are unemployment, stagnant wages, slow growth, and widening inequality — not deficits. The major goal must be to get jobs and wages back, not balance the budget.
Paul Ryan’s budget plan — essentially, the House Republican plan — is designed to lure the White House and Democrats, and the American public, into a debate over how to balance the federal budget in ten years, not over whether it’s worth doing.
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“This is an invitation,” Ryan explained when he unveiled the plan Tuesday. “Show us how to balance the budget. If you don’t like the way we’re proposing to balance our budget, how do you propose to balance the budget?” ( Continue… )
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