Robert Reich
President Barack Obama boards Air Force One Tuesday, in Andrews Air Force Base, Md., en route to Las Vegas to give a speech about immigration. Not even the very wealthy can continue to succeed without a broader-based prosperity, Reich writes, echoing sentiments expressed by the president in his second Inaugural address. (Carolyn Kaster/AP)
Society is not a zero-sum game
As President Obama said in his inaugural address last week, America “cannot succeed when a shrinking few do very well and a growing many barely make it.”
Yet that continues to be the direction we’re heading in.
A newly-released analysis by the Economic Policy Institute shows that the super-rich have done well in the economic recovery while almost everyone else has done badly. The top 1 percent of earners’ real wages grew 8.2 percent from 2009 to 2011, yet the real annual wages of Americans in the bottom 90 percent have continued to decline in the recovery, eroding by 1.2 percent between 2009 and 2011.
In other words, we’re back to the widening inequality we had before the debt bubble burst in 2008 and the economy crashed.
But the President is exactly right. Not even the very wealthy can continue to succeed without a broader-based prosperity. That’s because 70 percent of economic activity in America is consumer spending. If the bottom 90 percent of Americans are becoming poorer, they’re less able to spend. Without their spending, the economy can’t get out of first gear. ( Continue… )
President Barack Obama speaks during a press conference in the East Room of the White House in Washington, Friday. If Obama remains as clear and combative as he has been since Election Day, his second term may be noted for finally unraveling Reagan Republicanism. (Susan Walsh/AP)
How Obama is unraveling Reagan Republicanism
Soon after President Obama’s second inaugural address, John Boehner said the White House would try “to annihilate the Republican Party” and “shove us into the dustbin of history.”
Actually, the GOP is doing a pretty good job annihilating itself. As Louisiana Governor Bobby Jindal put it, Republicans need to “stop being the stupid party.”
The GOP crackup was probably inevitable. Inconsistencies and tensions within the GOP have been growing for years – ever since Ronald Reagan put together the coalition that became the modern Republican Party.
All President Obama has done is finally found ways to exploit these inconsistencies.
Republican libertarians have never got along with social conservatives, who want to impose their own morality on everyone else. ( Continue… )
Wheeling, W.V., is one of many towns hurt by a decline in manufacturing jobs. Most Americans have not been living beyond their means, Reich writes. The problem is their means haven’t been keeping up with the growth of the economy. (Ann Hermes/The Christian Science Monitor/File )
The rich, not the poor, must make sacrifices
Brace yourself. In coming weeks you’ll hear there’s no serious alternative to cutting Social Security and Medicare, raising taxes on middle class, and decimating what’s left of the federal government’s discretionary spending on everything from education and job training to highways and basic research.
“We” must make these sacrifices, it will be said, in order to deal with our mushrooming budget deficit and cumulative debt.
But most of the people who are making this argument are very wealthy or are sponsored by the very wealthy: Wall Street moguls like Pete Peterson and his “End the Debt” brigade, the Business Roundtable, well-appointed think tanks and policy centers along the Potomac, members of the Simpson-Bowles commission.
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These regressive sentiments are packaged in a mythology that Americans have been living beyond our means: We’ve been unwilling to pay for what we want government to do for us, and we are now reaching the day of reckoning. ( Continue… )
President Barack Obama's nominee for Secretary of Defense, former Senator Chuck Hagel (L), stands next to counterterrorism adviser John Brennan (R) at the White House in Washington in this January 2013 file photo. What Chuck Hagel believes about the appropriate use of American power should determine whether he is fit for the job, Reich writes. (Jason Reed/Reuters/File)
Chuck Hagel vs. the neocons
If the neocons in the GOP who brought us the Iraqi war and conjured up “weapons of mass destruction” to justify it are against Chuck Hagel for Defense Secretary, Hagel gets bonus points in my book.
They’re the hawkish, bellicose bunch in the Republican Party — William Kristol, Richard Perle, and Ellott Abrams — who shaped DIck Cheney’s and Don Rumsfeld’s disastrous foreign policy.
These are also the people who have supported Israel’s rightward lurch in recent years. They don’t want a two-state solution. They eschew any possibility of talks with Hamas or Iran. They favor building more settlements in the West Bank.
Yes, it was dumb for Hagel to use the term “Jewish lobby” instead of “Israel lobby,” but that alone shouldn’t disqualify him. Everyone in official Washington knows how much power is wielded in that city by the Sheldon Adelsons of American politics who think Israel can do no wrong. ( Continue… )
President Barack Obama gestures as he speaks during the last news conference of his first term in the East Room of the White House in Washington Monday. Obama's debt-ceiling strategy counts on public pressure, Reich writes, to force Republicans into submission. (Carolyn Kaster/AP)
Obama's debt-ceiling strategy needs GOP cooperation
A week before his inaugural, President Obama says he won’t negotiate with Republicans over raising the debt limit.
At an unexpected news conference on Monday he said he won’t trade cuts in government spending in exchange for raising the borrowing limit.
“If the goal is to make sure that we are being responsible about our debt and our deficit - if that’s the conversation we’re having, I’m happy to have that conversation,” Obama said. “What I will not do is to have that negotiation with a gun at the head of the American people.”
Well and good. But what, exactly, is the President’s strategy when the debt ceiling has to be raised, if the GOP hasn’t relented? ( Continue… )
President Barack Obama stands with Vice President Joe Biden as he makes a statement in this Deember 2012 file photo at the White House in Washington. President Obama can use certain tools that come with his office to achieve some of his objectives on the debt ceiling and gun control, Reich writes. (Charles Dharapak/AP/File)
On guns and debt, Obama should use authority
Anyone who thinks congressional Republicans will roll over on the debt ceiling or gun control or other pending hot-button issues hasn’t been paying attention.
But the President can use certain tools that come with his office – responsibilities enshrined in the Constitution and in his capacity as the nation’s chief law-enforcer — to achieve some of his objectives.
On the debt ceiling, for example, he might pay the nation’s creditors regardless of any vote on the debt ceiling – based on the the Fourteenth Amendment’s explicit directive (in Section 4) that “the validity of the public debt of the United States … shall not be questioned.”
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Or, rather than issue more debt, the President might use a loophole in a law (31 USC, Section 5112) allowing the Treasury to issue commemorative coins – minting a $1 trillion coin and then depositing it with the Fed. ( Continue… )
A flag is seen outside the New York Stock Exchange in New York in this January 2013 file photo. Big banks can borrow more cheaply than smaller banks, Reich writes, because investors believe the government will bail them out if they get into trouble. (Eric Thayer/Reuters/File)
Want to avoid bailouts? Break up the big banks.
TARP – the infamous Troubled Assets Relief Program that bailed out Wall Street in 2008 – is over. The Treasury Department announced it will be completing the sale of the remaining shares it owns of the banks and of General Motors.
But in reality it’s not over. The biggest Wall Street banks are now far bigger than they were four years ago when they were considered too big to fail. The five largest have almost 44 percent of all US bank deposits.
That’s up from 37 percent in 2007, just before the crash. A decade ago they had just 28 percent.
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The biggest banks keep getting bigger because they can borrow more cheaply than smaller banks. That’s because investors believe the government will bail them out if they get into trouble, rather than force them into a form of bankruptcy (as the new Dodd-Frank law makes possible). ( Continue… )
In this December 2012 photo a job seeker leaves his contact information with a potential employer during a job fair in New York. We’re a very long way from the job growth we need to get out of the gravitational pull of the Great Recession, Reich writes. (Mary Altaffer/AP/File)
Jobs: the key to a recovery
The news today from the Bureau of Labor Statistics is that the U.S. job market is treading water.
The number of new jobs created in December (155,000), and percent unemployment (7.8), were the same as the revised numbers for November.
Also, about the same number of people are looking for work (12.2 million), with additional millions too discouraged even to look.
Put simply, we’re a very long way from the job growth we need to get out of the gravitational pull of the Great Recession. That would be at least 300,000 new jobs per month.
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All of which means job growth and wage growth should be the central focus of economic policy, not deficit reduction. ( Continue… )
The lights of the US Capitol remained lit into the night as the House continued to work on the "fiscal cliff" legislation proposed by the Senate, in Washington Tuesday. The battle over the fiscal cliff is over, Reich writes, but the debate over the size of government will continue. (Jacquelyn Martin/AP/File)
After the fiscal cliff comes the debt ceiling
“It’s not all I would have liked,” says Republican Senator Lindsey Graham of South Carolina, speaking of the deal on the fiscal cliff, “so on to the debt ceiling.”
The battle over the fiscal cliff was only a prelude to the coming battle over raising the debt ceiling – a battle that will likely continue through early March, when the Treasury runs out of tricks to avoid a default on the nation’s debt.
The White House’s and Democrats’ single biggest failure in the cliff negotiations was not getting Republicans’ agreement to raise the debt ceiling.
The last time the debt ceiling had to be raised, in 2011, Republicans demanded major cuts in programs for the poor as well as Medicare and Social Security.
They got some concessions from the White House but didn’t get what they wanted – which led us to the fiscal cliff.
So we’ve come full circle. ( Continue… )
House Speaker John Boehner of Ohio arrives on Capitol Hill in Washington, Monday, before the Senate passed a deal early Jan. 1, 2013, to head off the automatic tax hikes and spending cuts set to take effect. The House still must approve the deal, which includes tax increases for couples earning more than $450,000 a year. (J. Scott Applewhite/AP)
Senate 'fiscal cliff' deal is lousy
The deal emerging from the Senate is a lousy one. Let me count the ways:
1. Republicans haven’t conceded anything on the debt ceiling, so over the next two months – as the Treasury runs out of tricks to avoid a default – Republicans are likely to do exactly what they did before, which is to hold their votes on raising the ceiling hostage to major cuts in programs for the poor and in Medicare and Social Security.
2. The deal makes tax cuts for the rich permanent (extending the Bush tax cuts for incomes up to $400,000 if filing singly and $450,000 if jointly) while extending refundable tax credits for the poor (child tax credit, enlarged EITC, and tuition tax credit) for only five years. There’s absolutely no justification for this asymmetry.
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3. It doesn’t get nearly enough revenue from the wealthiest 2 percent — only $600 billion over the next decade, which is half of what the President called for, and a small fraction of the White House’s goal of more than $4 trillion in deficit reduction. That means more of the burden of tax hikes and spending cuts in future years will fall on the middle class and the poor. ( Continue… )
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