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… )
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… )
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… )
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!”
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.
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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… )
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.
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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… )
A Senate report criticises Apple for shifting billions of dollars in profits into Irish affiliates where its tax rate is less than 2%, yet a growing chorus of senators and representatives call for lower corporate taxes in order to make the US more competitive. The American public wants to close tax loopholes and shelters used by the wealthy to avoid paying taxes, yet the loopholes and shelters remain in place.
The same disconnect is breaking out all over the world. The chairman of a British parliamentary committee investigating Google for tax avoidance calls the firm “devious, calculating, and unethical,” yet British officials court the firm’s CEO as if he were royalty.
Prime Minister David Cameron urges tax havens to mend their ways and vows to crack down on tax cheats, yet argues taxes must be low in the UK because “we’ve got to encourage investment, we’ve got to encourage jobs and I want Britain to be a winner in the global race”.
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These apparent contradictions are rooted in the same reality: global capital, in the form of multinational corporations as well as very wealthy individuals, is gaining enormous bargaining power over nation states. ( Continue… )
Who needs Republicans when Wall Street has the Democrats? With the help of congressional Democrats, the Street is rolling back financial reforms enacted after its near meltdown.
According to the New York Times, a bill that’s already moved through the House Financial Services Committee, allowing more of the very kind of derivatives trading (bets on bets) that got the Street into trouble, was drafted by Citigroup — whose recommended language was copied nearly word for word in 70 lines of the 85-line bill.
Where were House Democrats? Right behind it. Rep. Sean Patrick Maloney, Democrat of New York, a major recipient of the Street’s political largesse, co-sponsored it. Most of the Democrats on the Committee, also receiving generous donations from the big banks, voted for it. Rep. Jim Himes, another proponent of the bill and a former banker at Goldman Sachs, now leads the Democrat’s fund-raising effort in the House.
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Bob Rubin – co-chair of Goldman before he joined the Clinton White House, and chair of Citigroup’s management committee after he left it – is still influential in the Party, and his protégés are all over the Obama administration. I like Bob personally but I battled his Street-centric views the whole time I served, and soon after I left the administration he persuaded Clinton to support a repeal of the Glass-Steagall Act. ( Continue… )
As global capital becomes ever more powerful, giant corporations are holding governments and citizens up for ransom — eliciting subsidies and tax breaks from countries concerned about their nation’s “competitiveness” — while sheltering their profits in the lowest-tax jurisdictions they can find. Major advanced countries — and their citizens — need a comprehensive tax agreement that won’t allow global corporations to get away with this.
Google, Amazon, Starbucks, every other major corporation, and every big Wall Street bank, are sheltering as much of their U.S. profits abroad as they can, while telling Washington that lower corporate taxes are necessary in order to keep the U.S. “competitive.”
Baloney. The fact is, global corporations have no allegiance to any country; their only objective is to make as much money as possible — and play off one country against another to keep their taxes down and subsidies up, thereby shifting more of the tax burden to ordinary people whose wages are already shrinking because companies are playing workers off against each other.
I’m in London for a few days, and all the talk here is about how Goldman Sachs just negotiated a sweetheart deal to settle a tax dispute with the British government; Google is manipulating its British sales to pay almost no taxes here by using its low-tax Ireland subsidiary (the chair of the Parliamentary committee investigating this has just called the do-no-evil firm “devious, calculating, and unethical”); Amazon has been found to route its British sales through a subsidiary in low-tax Luxembourg, and now receives more in subsidies from the British government than it pays here in taxes; Starbucks’ tax-avoidance strategy was so blatant British consumers began boycotting the firm until it reversed course. ( Continue… )
“This systematic abuse cannot be fixed with just one resignation, or two,” said David Camp, the Republican chairman of the House tax-writing committee, at an oversight hearing Friday morning dealing with the IRS. “This is not a personnel problem. This is a problem of the IRS being too large, too intrusive, too abusive.”
David Camp has it wrong. There has been a “systematic” abuse of power, but it’s not what Camp has in mind. The real scandal is that:
The IRS has interpreted our tax laws to allow big corporations and wealthy individuals to make unlimited secret campaign donations through sham political fronts called “social welfare organizations,” like Karl Rove’s “Crossroads,” the U.S. Chamber of Commerce, and “Priorites USA.”
This campaign money has been used to bribe Congress to keep in place tax loopholes like the “carried interest” rule that allows the managers of hedge funds and private equity funds to treat their income as capital gains, subject only to low capital gains taxes rather than ordinary income taxes, and other loopholes that allow CEOs to get special tax treatment on giant compensation packages that now average $10 million a year. ( Continue… )
Six months into a second term and the Obama White House is on the defensive and floundering: Benghazi, the IRS’s investigations of right-wing groups, the Justice Department’s snooping into journalists’ phone records, Obamacare behind schedule, the Administration’s push for gun control ending in failure.
Should the blame fall mainly on congressional Republicans and their allies in the right-wing media, whose vitriolic attacks on Obama are unceasing?
After all, the only thing the GOP stands for – the sole mission that unites its warring factions — is an unwaivering determination to block anything the Administration seeks while distracting public attention from any larger issue.
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But surely some of the seeming disarray is due to the President, whose insularity and aloofness make him an easy target, and whose eagerness to compromise and lack of focus continuously blurs his core message. ( Continue… )