Robert Reich
House Budget Committee Chairman Rep. Paul Ryan, R-Wis. leaves a Republican caucus on Capitol Hill in Washington. (Jacquelyn Martin/AP/File)
Paul Ryan's budget and austerity economics
Republicans lost the election but they still shape what’s debated in Washington — the federal budget deficit and so-called “fiscal responsibility.”
The White House’s and the Democrat’s continuing failure to reshape that debate has lead directly and logically to Paul Ryan’s budget plan this week, which is a more regressive version of the same plan American voters resoundingly rejected last November.
Sadly, the President is playing into the GOP’s hands with a new round of negotiations over a “grand bargain.”
Despite February’s encouraging job numbers, the major challenge is still jobs, wages, growth, and widening inequality — not deficit reduction and fiscal responsibility. ( Continue… )
A sign for Wall Street is displayed on the side of building near the New York Stock Exchange Monday. The health of an economy is not measured by the profits of corporations, Reich writes, it instead depends on how many people have jobs and whether those jobs pay decent wages. (Mark Lennihan/AP)
Why stocks are up while wages are down
Today the Dow Jones Industrial Average rose above 14,270 – completely erasing its 54 percent loss between 2007 and 2009.
The stock market is basically back to where it was in 2000, while corporate earnings have doubled since then.
Yet the real median wage is now 8 percent below what it was in 2000, and unemployment remains sky-high.
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Why is the stock market doing so well, while most Americans are doing so poorly? Four reasons: ( Continue… )
President Barack Obama speaks about the sequester after a meeting with congressional leaders at the White House in Washington. The president should now focus on good jobs and broad-based prosperity rather than prosperity for a few and declining wages and insecurity for the many, Reich writes. (Kevin Lamarque/Reuters/File)
With sequester underway, what should Obama do next?
What should the President do now?
Push to repeal the sequester (a reconciliation bill in the Senate would allow repeal with 51 votes, thereby putting pressure on House Republicans), and replace it with a “Build America’s Future” Act that would close tax loopholes used by the wealthy, end corporate welfare, impose a small (1/10 of 1%) tax on financial transactions, and reduce the size of the military.
Half the revenues would be used for deficit reduction, the other half for investments in our future through education (from early-childhood through affordable higher ed), infrastructure, and basic R&D.
Also included in that bill — in order to make sure our future isn’t jeopardized by another meltdown of Wall Street — would be a resurrection of Glass-Steagall and a limit on the size of the biggest banks. ( Continue… )
A visitor takes a photo of the US Capitol in Washington. The trickle-down-economics, on which Republicans base their refusal even discuss closing tax loopholes for the wealthy, is a proven failure, Reich writes. (Kevin Lamarque/Reuters)
The sequestration nation
With the sequester now beginning, I find myself thinking about Robert F. Kennedy — and 46 years ago when I was an intern in his Senate office.
1967 was a difficult time for the nation. America was deeply split over civil rights and the Vietnam War. Many of our cities were burning. The war was escalating.
But RFK was upbeat. He was also busy and intense — drafting legislation, lining up votes, speaking to the poor, inspiring the young. I was awed by his energy and optimism, and his overriding passion for social justice and the public good. (Within a few months he’d declare his intention to run for president. Within a year he’d be dead.)
The nation is once again polarized, but I don’t hear our politicians talking about social justice or the public good. They’re talking instead about the budget deficit and sequestration.
At bottom, though, the issue is still social justice. ( Continue… )
President Barack Obama addresses the National Governors Association in the State Dining Room of the White House in Washington, Monday. President Obama has the bully pulpit, Reich writes, and Americans trust him more than they do congressional Republicans. (Charles Dharapak/AP)
President Obama vs. GOP in a sequester showdown
The White House apparently believes the best way to strengthen its hand in the upcoming “sequester” showdown with Republicans is to tell Americans how awful the spending cuts will be, and blame Republicans for them.
It won’t work. These tactical messages are getting in the way of the larger truth, which the President must hammer home: The Republicans’ austerity economics and trickle-down economics are dangerous, bald-faced lies.
Yes, the pending spending cuts will hurt. But even if some Americans begin to feel the pain when the cuts go into effect Friday, most won’t feel it for weeks or months, if ever.
Half are cuts in the military, which will have a huge impact on jobs (the military is America’s only major jobs program), but the cuts will be felt mainly in states with large numbers of military contractors, and then only as those contractors shed employees. ( Continue… )
A pedestrian walks past an empty store front which use to be a Starbucks in Eagle, Colo. With consumers and government both spending less, businesses won’t hire more workers, Reich writes, they’ll fire more workers. (Tony Avelar/The Christian Science Monitor/File)
Where have all the customers gone?
Can we just put aside ideology for one minute and agree that businesses hire more workers if they have more customers, and fire workers if they have fewer customers?
There are two big categories of customer: One is comprised of individual consumers. The other is government.
We tend to think of the government as a direct employer — of teachers, fire fighters, civil servants.
But government is also a major customer of the private sector. It buys school supplies, pharmaceuticals, military equipment, computers. It hires private companies to build roads and bridges, dredge ports, manage data.
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One out of every five Americans works for a company whose customer is the government. ( Continue… )
With Ellis Island behind them, a group of immigrant rights advocates march in Liberty State Park, Jersey City, N.J. Immigration reform and entitlement reform have a lot to do with one another, Reich writes. (Mel Evans/AP/File)
Entitlement reform and immigration reform: How are they connected?
I was born in 1946, just when the boomer wave began. Bill Clinton was born that year, too. So was George W. Bush, as was Laura Bush. And Ken Starr (remember him?) And then, the next year, Hillary Rodham was born. And soon Newt Gingrich (known as “Newty” as a boy). And Cher (Every time I begin feeling old I remind myself she’s not that much younger.)
Why did so many of us begin coming into the world in 1946? Demographers have given this question a great deal of attention.
My father, for example, was in World War II — as were the fathers of many other early boomers. Ed Reich came home from the war, as did they. My mother was waiting for him, as were their mothers.
When it comes down to it, demographics is not all that complicated.
Fast-forward. Most of us early boomers had planned to retire around now. Those born a few years later had planned to retire in a few years. ( Continue… )
Gun dealer Mel Bernstein takes down an AK-47 assault rifle from a sales rack at a shooting range and gun store, east of Colorado Springs, Colo. Every society must necessarily decide for itself what decency requires, Reich writes. (Brennan Linsley/AP/File)
Guns, healthcare, and the meaning of a decent society
Raising the minimum wage from $7.25 to $9 should be a no-brainer. Republicans say it will cause employers to shed jobs, but that’s baloney. Employers won’t outsource the jobs abroad or substitute machines for them because jobs at this low level of pay are all in the local personal service sector (retail, restaurant, hotel, and so on), where employers pass on any small wage hikes to customers as pennies more on their bills. States that have a minimum wage closer to $9 than the current federal minimum don’t have higher rates of unemployment than do states still at the federal minimum.
A mere $9 an hour translates into about $18,000 a year — still under the poverty line. When you add in the Earned Income Tax Credit and food stamps it’s possible to barely rise above poverty at this wage, but even the poverty line of about $23,000 understates the true cost of living in most areas of the country.
Besides, the proposed increase would put more money into the hands of families that desperately need it, allowing them to buy a bit more and thereby keep others working.
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A decent society should do no less. ( Continue… )
Senate Republican Leader Sen. Mitch McConnell speaks to reporters on Capitol Hill in Washington, Tuesday. Reich argues that the budget deficit and cumulative debt are not, in McConnell's words, the “transcendent issue of our time.” (Manuel Balce Ceneta/AP)
Why the budget deficit is not 'the transcendent issue of our time'
Senate minority leader Mitch McConnell (R., Ky.) says Senate Republicans will unanimously support a balanced-budget amendment, to be unveiled Wednesday as the core of the GOP’s fiscal agenda.
There’s no chance of passage so why are Republicans pushing it now? “Just because something may not pass doesn’t mean that the American people don’t expect us to stand up and be counted for the things that we believe in,” says McConnnell.
The more honest explanation is that a fight over a balanced-budget amendment could get the GOP back on the same page — reuniting Republican government-haters with the Party’s fiscal conservatives. And it could change the subject away from social issues — women’s reproductive rights, immigration, gay marriage – that have split the Party and cost it many votes.
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It also gives the Party something to be for, in contrast to the upcoming fights in which its members will be voting againstcompromises to avoid the next fiscal cliff, continue funding the government, and raising the debt ceiling. ( Continue… )
A pothole in the middle of the road remains unfilled in Mt. Sterling, Ohio. Studies show a public return on infrastructure investment to average $1.92 for every public dollar invested, Reich writes. (Melanie Stetson Freeman/The Christian Science Monitor/File)
Why we need an investment budget
Part of the President’s State of the Union message and of his second term agenda apparently will focus on public investments in education, infrastructure, and basic R&D.
That’s good news. But how do we fund these investments when discretionary spending is being cut to the bone in order to reduce the budget deficit?
Answer: By treating public investments differently from current spending.
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No rational family would borrow to pay for a vacation but not borrow to send a kid to college. No rational business would borrow to finance current salaries but not to pay for critical new machinery. ( Continue… )
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