I was trying to come up with a way to describe Raghuram Rajan’s latest argument on why interest rates should go up despite high unemployment and quiescent inflation — but Mike Konczal, a fellow with the Roosevelt Institute, saved me the trouble.
As Mr. Konczal writes in his blog, Rortybomb, it’s Calvinball — making up new rules on the fly to justify whatever you want.
Putting an end to one of the biggest lobbying fights of the year, the Federal Reserve yesterday finalized rules capping the transaction fees that merchants pay to banks whenever a customer makes a purchase with a debit card. As it turns out, neither the banking industry nor the retail sector are too happy about the final result.
The finalized rule caps debit card fees at 21 to 24 cents per transaction for banks with more than $10 billion in assets. Yes, that’s about half of what current fees are, but it’s double the 12-cent cap that the Fed had originally proposed in December.
A scholar at the Claude Pepper Foundation argues that despite the talk in Washington, Social Security remains a bulwark of society and the evidence is clear that it needs to be built up, not watered down.
By Larry Polivka
lpolivka2@fsu.edu
While Washington rushes to reduce benefits in the name of a nonexistent crisis, the overwhelming reality is that Social Security is becoming more, not less, essential for most Americans. Any changes should be with the goal of strengthening it, not reducing benefits.
Journalists covering the debate seem to have forgotten the essential context. Social Security, after all, is an extraordinary public policy achievement that provides economic security for millions of older Americans. Social Security is the major reason that poverty among those 65 and older has been reduced from 30% to under 10% since 1960. Without Social Security benefits, the percentage of older Americans below the poverty level would now exceed 40%. Over 70% of all retirees depend on Social Security for most of their income. Social Security is the essential pillar of the U.S. system of retirement security.
Republicans are perpetrating a fraud. They say they're concerned about reducing government deficits. But you don't need to look at how they treat all of the country's biggest corporations (which is extremely well) or even how they kowtow to its richest 400 families, who now have 6900 times as much income as the average household, [1] to know that's a lie.
You only need to look at the way they treat a handful of billionaires. They're holding the entire country's budget hostage because they don't want to raise taxes on the wealthy, and they don't want to eliminate a tax loophole that could be bringing in more than $4 billion each year ... from only 25 people.
The top 25 hedge fund managers in the United States collectively earned $22 billion last year, and yet they have their own cushy set of tax rules. If they operated under the same rules that apply to other people - police officers, for example, or teachers - the country could reduce its national debt by as much as $44 billion in the next ten years.
— By David Corn
Wed Jun. 29, 2011 12:06 PM PDT
Can President Barack Obama triumph by being the grown-up-in-chief?
During a White House press conference on Wednesday, the president declined to get into a food fight with Republicans playing chicken with the debt ceiling negotiations. Repeatedly, he noted that he expected GOP leaders to act responsibly. He did not lambast House Majority Leader Eric Cantor (R-Va.) and Sen. Jon Kyl (R-Ariz.), the GOP representatives to the in-limbo talks led by Vice President Joe Biden, for storming out of the negotiations because the White House insists that any deficit reduction plan include revenue boosters, not just spending cuts. "Call me naive," he said, "but my expectation is that leaders are going to lead."
So is Obama naive or crafty?
Climate Progress and the Wonk Room have long detailed the role of the billionaire brothers of Koch Industries, Charles and David Koch, in destroying American prosperity. Their pollution-based fortunes have fueled a network of right-wing ideologues, from McCain mouthpiece Nancy Pfotenhauer to loony conspiracy theorist Christopher Monckton. In public, the Kochs like to burnish their reputations by buying museum and opera halls.
Are you enraged about JPM Chase’s puny $156.3 million fine? The fine was part of an SEC settlement in which the firm "neither admits nor denies" any wrong-doing. Translation: Stuffing assets with carefully selected crap is not wrong. Creating the crap loans to begin with: Also, not wrong.
Of course you’re pissed off. I know I am.
There aren’t enough synonyms for the word "tiny" to adequately describe the size and impact of this settlement. It's a fleabite on the hand of the nation's second largest bank in punitive pain terms, and meaningless in stopping the creation of toxic assets, or reducing the criminal complexity of our banking system.
President Obama cited the $1 trillion cost of the war in Afghanistan as a reason to bring some of the troops home, but that figure grossly underestimates the actual costs of war, which may already be as high 4 trillion dollars.
A new report just published by Brown University\'s Watson Institute for International Studies measures the categories of cost to make the point that the pay out is miniscule, if there\'s any at all. The report uses September 11 as a paradigm for cost and return: "Nineteen hijackers plus other al Qaeda plotters spent an estimated $400,000 to $500,000 on the plane attacks that killed 2,995 people and caused $50 billion to $100 billion in economic damages. What followed were three wars in which $50 billion amounts to a rounding error. For every person killed on September 11, another 73 have been killed since." Catherine Lutz, co-director of the study and head of the anthropology department at Brown said "We decided we needed to do this kind of rigorous assessment of what it cost to make those choices to go to war," she said. "Politicians, we assumed, were not going to do that kind of assessment."
June 28, 2011 | Back when he presided over the Senate's health care reform debate, Max Baucus, chairman of the all-powerful Senate Finance Committee, had said everything was on the table — except for single-payer universal health care. When doctors, nurses, and others rose in his hearing to insist that single payer be included in the debate, the Montana Democrat had them arrested. As more stood up, Baucus could be heard on his open microphone saying, "We need more police."
Yet when Baucus needed a solution to a catastrophic health disaster in Libby, Montana and surrounding Lincoln County, he turned to the nation's single-payer healthcare system, Medicare, to solve the problem.
I think you can imagine how a major bank/investment firm like Goldman Sachs can gain access to power. They obviously can make or withhold campaign contributions. They can throw money into political action committees that go after politicians who want to mess with them. They also can offer politicians lucrative six or seven figure jobs should they ever fail to win reelection or want to retire from public service. They can use their pull to get their employees hired by the government. They can hire their regulators. There are many ways that rich Wall Street bankers can assure that Washington DC will let them do pretty much anything they want to do, even if it's harmful to the country. But, sometimes, they don't need to do anything.
In 2010, the FISA court approved all 1,506 requests by the FBI to electronically monitor suspects. They were also generous with granting “national security letters," which allow the FBI to force credit card companies, financial institutions, and internet service providers to give confidential records about customers’ subscriber information, phone number, email addresses and the websites they’ve visited. The FBI got permission to spy on 14,000 people in this way.
Do they really think there are 14,000 terrorists living in the US?
That's just the beginning.The technology would trigger an infrared sensor, like the kind that is often installed at concert venues, which would instruct the iPhone to shut off its camera. Apple filed the patent application 18 months ago in California, but only became public knowledge after the Daily Mail uncovered the documents.
Our guest blogger is CAP Visiting Fellow Pratap Chatterjee.
The number of contractors in Afghanistan is likely to increase significantly in the next year as the Obama administration pulls back some of the extra 68,000 troops that it has dispatched there since January 2009.
Typically, the U.S. pays one contractor to support every soldier that has deployed to Afghanistan and Iraq. The ratio of contractors to troops increases dramatically during a military surge as well as during a drawdown, and often stays higher than troop levels when military numbers are low, i.e. down to 30,000-50,000.
They say that winners get to write history. Three years after the meltdown of our financial markets, it’s clear who is winning and who is losing. Wall Street — arms outstretched in triumph — is racing toward the finish-line tape while millions of American families are struggling to stay on their feet. With victory seemingly in hand, the historical rewrite is in full swing.
The contrast in fortunes between those on top of the economic heap and those buried in the rubble couldn’t be starker. The 10 biggest banks now control more than three-quarters of the country’s banking assets. Profits have bounced back, while compensation at publicly traded Wall Street firms hit a record $135 billion in 2010.
Washington’s rigged system of special interests ensures that brave politicians and staffers don’t stick around long.
Political analysts tend to gloss over what I would call hedging behavior on the part of political elites. While elections are somewhat random, the fact that you will be on the losing side of an election at some point is guaranteed. So politicos don’t ask: What’s the best way to win an election? Rather, they ask: What’s the best way to preserve my risk-adjusted position in the political ecosystem of influence and money? This means setting yourself up to win an election if possible, but not in an especially populist manner that could increase the downside of losing or falling into the minority.
Taxpayers just won an important round against the monopolists in California, defeating a scheme to impose a fake tax on captive customers.
A lot of hard work by lawyers brought forth the real issues in this scheme, but in the end it was readers of Tax Analysts journalism who made the difference, just by asking to speak at a public hearing.
A start-up in Northern California is working on creating "solar windows" that could act as solar panels at the same time as blocking sunlight from entering office buildings to reduce their energy needs, according to a Sunday story in the San Francisco Chronicle.
The company Pythagoras Solar is based in San Mateo, California, and it won an award from the "GE ecomagination Challenge," award of $100,000 last week for its idea.
June 27, 2011 | If there is one name some residents of Amarillo, Texas wish they could forget, it’s Repent Amarillo. Based in that North Texas city, Repent Amarillo is a militant Christian fundamentalist group whose antics have ranged from staging a mock execution of Santa Claus by firing squad to posting a “spiritual warfare” map on its Web site that cited a Buddhist temple, an Islamic center, gay bars, strip clubs and sex shops as places of demonic activity.
Repent Amarillo is also infamous for mercilessly harassing a local swingers club called Route 66. Throughout 2009, members of Repent Amarillo made a point of showing up at Route 66’s events, where they would typically wear military fatigues, shout at Route 66 members through bullhorns and write down the license plate numbers of people attending the events. After finding out who the swingers were, Repent Amarillo’s members would find out where they worked and try to get them fired from their jobs (according to Route 66 coordinator Mac Mead, at least two members of the club lost their jobs because of Repent Amarillo).
But one of the nastiest moves has been the institution, by Michigan governor Rick Snyder, of an “emergency manager” over several cities in his state, as well as the Detroit public school system. This manager has the unilateral authority to fire officials, close schools, void union contracts, and assume total control over areas declared to be in a financial state of emergency by the state.
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From 1618 to 1648, Europe was engulfed in a series of intensely brutal conflicts known collectively as the Thirty Years’ War. It was, in part, a struggle between an imperial system of governance and the emerging nation-state. Indeed, many historians believe that the modern international system of nation-states was crystallized in the Treaty of Westphalia of 1648, which finally ended the fighting.
Think of us today as embarking on a new Thirty Years’ War. It may not result in as much bloodshed as that of the 1600s, though bloodshed there will be, but it will prove no less momentous for the future of the planet. Over the coming decades, we will be embroiled at a global level in a succeed-or-perish contest among the major forms of energy, the corporations which supply them, and the countries that run on them. The question will be: Which will dominate the world’s energy supply in the second half of the twenty-first century? The winners will determine how -- and how badly -- we live, work, and play in those not-so-distant decades, and will profit enormously as a result. The losers will be cast aside and dismembered.
STOCKHOLM — Almost every developed nation in the world was walloped by the financial crisis, their economies paralyzed, their prospects for the future muddied.
And then there’s Sweden, the rock star of the recovery.
This Scandinavian nation of 9 million people has accomplished what the United States, Britain and Japan can only dream of: Growing rapidly, creating jobs and gaining a competitive edge. The banks are lending, the housing market booming. The budget is balanced.
Few institutions touch more Americans than the U.S. Postal Service, which six days a week delivers mail to 150 million homes and businesses in big cities and remote areas. And we do more than link the country; we become part of local communities, getting to know our customers and occasionally saving elderly residents who are ill, finding missing children, putting out fires and more. In our spare time, we conduct the nation's largest single-day food drive, replenishing food pantries in your community in tough economic times.
That degree of familiarity and personal interaction is why the amount of misinformation floating around about the Postal Service is so counter-intuitive. There's plenty of room for differing ideas about public policy, but we should all start from a factual basis - something too many columnists and commentators with an ideological ax to grind fail to do.
I visited the Hartford Courant as a high school student. It was the first time I was in a newsroom. The Connecticut paper’s newsroom, the size of a city block, was packed with rows of metal desks, most piled high with newspapers and notebooks. Reporters banged furiously on heavy typewriters set amid tangled phone cords, overflowing ashtrays, dirty coffee mugs and stacks of paper, many of which were in sloping piles on the floor. The din and clamor, the incessantly ringing phones, the haze of cigarette and cigar smoke that lay over the feverish hive, the hoarse shouts, the bustle and movement of reporters, most in disheveled coats and ties, made it seem an exotic, living organism. I was infatuated. I dreamed of entering this fraternity, which I eventually did, for more than two decades writing for The Dallas Morning News, The Washington Post, The Christian Science Monitor and, finally, The New York Times, where I spent most of my career as a foreign correspondent.
First Hormel gutted the union. Then it sped up the line. And when the pig-brain machine made workers sick, they got canned.
America’s largest global corporations are holding $1.5 trillion dollars in profits overseas in order to avoid US taxes. “Apple has $12 billion waiting offshore, Google has $17 billion and Microsoft, $29 billion,” reports the New York Times.
These corporations claim that if we reduce their tax rate on that cash from 35 percent to 5.25 percent (which is less than the rest of us pay in sales taxes), they will bring the money home and invest it in creating badly needed jobs. They claim that for every billion invested, 15,000 to 20,000 jobs will be created directly and indirectly, which means such a tax holiday could create up to 30 million jobs – more than enough to bring us back to full employment and then some!
Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present
by Jeff Madrick
Knopf, 464 pp., $30.00
Suppose we describe the following situation: major US financial institutions have badly overreached. They created and sold new financial instruments without understanding the risk. They poured money into dubious loans in pursuit of short-term profits, dismissing clear warnings that the borrowers might not be able to repay those loans. When things went bad, they turned to the government for help, relying on emergency aid and federal guarantees—thereby putting large amounts of taxpayer money at risk—in order to get by. And then, once the crisis was past, they went right back to denouncing big government, and resumed the very practices that created the crisis.
What year are we talking about?
We could, of course, be talking about 2008–2009, when Citigroup, Bank of America, and other institutions teetered on the brink of collapse, and were saved only by huge infusions of taxpayer cash. The bankers have repaid that support by declaring piously that it’s time to stop “banker-bashing,” and complaining that President Obama’s (very) occasional mentions of Wall Street’s role in the crisis are hurting their feelings.
WASHINGTON — When Jody Richards saw a homeless man begging outside a downtown McDonald's recently, he bought the man a cheeseburger. There's nothing unusual about that, except that Richards is homeless, too, and the 99-cent cheeseburger was an outsized chunk of the $9.50 he'd earned that day from panhandling.
The generosity of poor people isn't so much rare as rarely noticed, however. In fact, America's poor donate more, in percentage terms, than higher-income groups do, surveys of charitable giving show. What's more, their generosity declines less in hard times than the generosity of richer givers does.
“Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”
James Baldwin penned that line more than 50 years ago, but it seems particularly prescient today, if in a different manner than its original intent.
Baldwin was referring to the poor being consistently overcharged for inferior goods. But I’ve always considered that sentence in the context of the extreme psychological toll of poverty, for it is in that way that I, too, know well how expensive it is to be poor.
I know the feel of thick calluses on the bottom of shoeless feet. I know the bite of the cold breeze that slithers through a drafty house. I know the weight of constant worry over not having enough to fill a belly or fight an illness.By Jacqueline S. Homan, author: Classism For Dimwits and Divine Right: The Truth is a Lie
Pseudo-progressive group MoveOn.org posted on its site a 2 minute video featuring Robert Reich, the former Labor Secretary under the Clinton presidency. The video, titled “The Truth About the Economy”, gave a very abbreviated half-of-the-story illustration of the cause for the middle class’s current plight. But it completely whitewashed and ignored the role that the middle class played in its own demise by deliberately hurting the poor during the “better times” of the Reagan Revolution followed by the Clinton-era of prosperity.
The middle class suburban-dwelling voters — most of them white males with “soccer mom” wives — literally drove the Welfare Reform engine which eliminated what miserly inadequate safety net there was for the poorest of the poor on the very bottom economic rung (most whom are women).
By Brian Merchant
Updated Saturday, June 25, 2011, at 7:11 AM ET
On Wednesday, the Congressional Budget Office released its updated long-term budget forecast, which looked surprisingly like the previous version of its long-term budget forecast.
It showed, as one might expect, that if the Bush tax-cuts remain in effect and Medicare and Medicaid spending isn't constrained in some way, the country will topple into a genuine fiscal crisis -- not the fake one the Congress is pretending the country's in right now.
Republicans, of course, seized on that particular projection, and claimed (a bit ridiculously) that it proved the government must adopt their precise policy views: major spending cuts, particularly to entitlement programs.
Artificial, lab-grown meat requires about 96 percent less greenhouse gas emissions than raising cattle, a recently published study shows.
If produced on a large scale, scientists say it could ease deforestation and pressure on food and water supplies, ensure more people are eating well and abate the concerns of animal rights activists everywhere.
This is my presentation from last week's Netroots Nation panel session: Revitalizing Manufacturing: The Road to Renewed Job Growth [1]. Click through [1] for panel details and other panelists, here [2] for a pdf of slides, including Jared Bernstein's. See below for video -- and be sure to watch Beri Fox!!!
Four Stories
I want to share four quick stories:
1. Democracy
The story of America
We fought a wealthy powerful few who had all the say and didn’t let us have a say, and made a country where We, the People made the decisions and share the benefits.
So because we had a say we built up a country with good schools, good infrastructure, good courts, and we made rules that said workers had to be safe, get a minimum wage… we protect the environment, we give out social security. We take care of each other.
My experience in policy making has led me to try to strictly obey a couple of basic precepts. First, keep it simple. Unintended consequences abound, and the more tweaks you have to build in to get the policy to do what you really want it to do, the more likely something will go wrong.
Second, it’s better not to pass a bad policy than to try to make it a good one. Why not? See rule #1 above.
These caveats come to mind in thinking about the tax repatriation holiday that’s getting some buzz these days. This is where you let multinational corporations who’ve been “deferring” taxes they owe to the Treasury—holding them overseas—get a time-limited break to bring them back (to “repatriate” them) at a much reduced rate (5%!!). See here and here.
The core of the critique is that while the corporations who take advantage of this tax break claim that they’ll invest the tax windfall and create more jobs, the evidence shows otherwise (we tried this before, back in 2004).A recent post by Ezra Klein, “What ‘Inside Job’ got wrong,” manages the impressive feat of being spectacularly off base, rhetorically dishonest, and embarrassingly revealing of the lack of a moral compass all at once.
Since being off base is a major part of Klein’s brand, I suppose one should not be surprised; those who’ve had the good fortune to have limited contact with his output can read Jon Walker’s “Ezra Klein: Insurance Exchanges Don’t Work and Must be Expanded Dramatically,” or Physicians for a National Health Care Program’s “Does Ezra Klein really think ‘managed care didn’t kill anyone’?” for two of many examples.
The United States has to cut back spending on the Commerce Department or it will bankrupt the country. Okay, I have no evidence for this and it really doesn't make any sense. The Commerce Department's budget is about $10 billion a year, less than 0.3 percent of total spending, but this note is written in the spirit of Thomas Friedman.
Just as Thomas Friedman can tell readers [1] that Social Security and Medicare are bankrupting the country with no evidence, in my blognote I get to blame the Commerce Department. The reality of course is that Social Security is fully funded by its own dedicated tax revenue through the year 2036, meaning the program on net imposes no burden on the government.
Thursday’s surprise release of 60 million barrels of crude reserves is not about keeping oil consumers well supplied. It’s about chasing oil speculators out of the market.
And it seems to be working.
A former Rwandan women's minister has been sentenced to life in prison for her role in the genocide and the rape of Tutsi women and girls.
Pauline Nyiramasuhuko, 65, is the first woman to be convicted of genocide by an international court.
She was found guilty, along with her son and four other former officials, after a 10-year trial.
June 23, 2011 | Time was when, at any right-wing gathering, chances were that you'd hear the justices of the Supreme Court derided as black-robed usurpers of democracy. Today, not so much. Ever since the seating of the Roberts court, the right has been pretty happy with high court's decisions, especially the outcome of Citizens United v. FEC, the case through which the court, in a decision handed down last year, opened the floodgates of corporate money into the electoral system.
No single justice has been more stalwart for the causes of the right -- indeed, even the far right -- than Justice Clarence Thomas, who, notes ThinkProgress, may just be the most ethically challenged justice since Abe Fortas was forced to step down from the court in 1969 for accepting tens of thousands of dollars from wealthy benefactors.
The NLRB proposes streamlining union elections. Companies that were for secret ballots last year are now against it. Conservatives say removing barriers to elections "rams elections through" and " foist unions on workers" and that We, the People (government) shouldn't be allowed to tell companies what to do -- instead companies ("job-creators") should be telling us what to do.
Yesterday the National Labor Relations Board (NLRB) issued a "Notice of Proposed Rulemaking" proposing modest rule changes for union certification elections. These rules would strengthen a basic right for workers to vote. The new rules eliminate voting delays and modernize an outdated system, removing unfair obstacles so workers can vote on whether to form a union if they want to. These new rules would be a step in the right direction toward giving more workers a voice on the job, rebalancing our economy and rebuilding the middle class.
Cross-posted from Credit Writedowns
In the end, I hearken back to revered economist Hyman Minsky – a modern-day economic godfather who predicted the subprime crisis. “Big Government,” he wrote, should become the “employer of last resort” in a crisis, offering a job to anyone who wants one – for health care, street cleaning, or slum renovation. FDR had a program for it – the CCC, Civilian Conservation Corps, and Barack Obama can do the same. Economist David Rosenberg of Gluskin Sheff sums up my feelings rather well. “I’d have a shovel in the hands of the long-term unemployed from 8am to noon, and from 1pm to 5pm I’d have them studying algebra, physics, and geometry.” Deficits are important, but their immediate reduction can wait for a stronger economy and lower unemployment. Jobs are today’s and tomorrow’s immediate problem.
The State of Florida made $62,968,946 from the sale of Floridians driver's license information in the last fiscal year, a practice that has been occurring almost unknown for years.
I-Team investigator Michael George reported that the state's Department of Highway Safety and Motor Vehicles sells drivers' license information, including Floridians full name, date of birth, address, and driver’s license number, to ten different companies.
RALEIGH, N.C. — For more than 40 years, Charles Holt swallowed the shame and anger of being sterilized by the state of North Carolina.
He thought he was the only one.
On Wednesday, Holt, 61, heard story after story of people who also know the pain of being denied the ability to bear children.
High-tech training may trump tax breaks for creating more jobs and improving a state's economy, according to a team of economists.
"We found that lower state taxes were not statistically associated with a state's economic performance," said Stephan Goetz, professor of agricultural economics and regional economics, Penn State. "The tax climate was not linked to either growth or income distribution."
American traders aren't likely to take kindly to the suggestion that big government might be good for the stock market. But data from a paper on the job- and income-growth of top earners shows that stock prices in some socialized countries, relative to themselves and adjusted for inflation, have done considerably better than those in the U.S over the last two and a half decades.
Specifically, during the twenty five years after Ronald Reagan took office -- a pro-market honeymoon that Ryan Chittum of the Columbia Journalism Review this week termed "the ascent of laissez-faire economic policies" -- French stock prices have performed significantly better than Americans ones, according to the report by Jon Bakija, Adam Cole, and Bradley Heim.
With a number of Republicans musing that failing to pass a debt increase might not be so bad after all, TPM floated the idea by someone who knows a thing or two about countries facing default: former IMF chief economist Simon Johnson.
"It would be very damaging, there's no question about that," Johnson said of a debt ceiling default. "It would really destabilize financial markets and lead to all sorts of unpleasant repercussions in the United States and around the world."
One of the most influential investors in the world of finance has a message for lawmakers -- particularly conservative lawmakers -- on Capitol Hill: rejoin the real world.
In a prospectus for clients, Bill Gross, a co-founder of investment management giant PIMCO, says members' of Congress incessant focus on deficit -- and in particular, the manner in which they obsess about deficits -- is foolhardy, and a recipe for disaster. What the country needs, Gross said, is real stimulus now, and a measured return toward fiscal balance in the years ahead.
I though readers might welcome an antidote from the nonsense that bank industry touts like the Office of the Comptroller of the Currency’s John Walsh routinely puts forth.
I’ve known Amar Bhidé, who is now a professor at Tufts, for thirty years; we both worked on the Citibank account at McKinsey (although never on the same study). He’s long had a reputation for being incredibly smart and iconoclastic.
I’ve been keeping an eye on the Elizabeth Warren beat, although my expectation is that the skirmishes now will pale in significance compared to whatever does or does not happen on what the Republican hope will be her ritual execution at the full committee hearing of the House Oversight committee on July 14.
This situation has become an intriguing bit of political theater. The Republican have increasing become one-trick ponies. Their strategy has been to take an extreme position, scream like bloody murder, act like they have no intention of negotiating, and watch the Dems capitulate. But particularly with Obama, capitulation is tantamount to throwing Br’er Rabbit in the briar patch: it’s exactly where the Democrats like to go, but they need political cover for selling out their badly abused “base”.
Does Bill Clinton still not grasp that the current economic crisis is in large measure his legacy? Obviously that’s the case, or he wouldn’t have had the temerity to write a 14-point memo for Newsweek on how to fix the economy that never once refers to the home mortgage collapse and other manifestations of Wall Street greed that he enabled as president.
Endorsing the Republican agenda of financial industry deregulation, reversing New Deal safeguards, President Clinton pursued policies that in the long run created more damage to the American economy than any other president since Herbert Hoover, whose tenure is linked to the Great Depression. Now, in his Newsweek piece, Clinton has the effrontery to once again revive his 1992 campaign mantra, “It’s the economy, stupid,” as the article’s title without any sense of irony, let alone accountability. But that has always been the man’s special gift—to rise above, and indeed benefit from, the messes he created.
Laura Flanders
guardian.co.uk, Tuesday 21 June 2011 17.00 BST
Let's get this right: the world's biggest boss, supported by companies as diverse as Altria, Bank of America, Microsoft and General Electric and backed up by the godfather of big business (the US Chamber of Commerce) has persuaded the US supreme court that thousands of women workers can't possibly share enough of an interest to constitute a class?
It's hard to know which part of the court's decision in Dukes v Walmart hurts equity most: the assault on class-action jurisprudence generally, at a time of shrinking tools for workers seeking redress, or the defeat of history's biggest gender-based claim before a court that, for the first time, includes two women, one of whom (Ruth Bader Ginsburg) made her reputation in sex discrimination law.
June 21, 2011 | One of the most significant scourges paralyzing our democracy is the merger of corporate power with elected and appointed government officials at the highest levels of office. Influence has a steep price-tag in American politics where politicians are bought and paid for with ever increasing campaign contributions from big business, essentially drowning out any and all voices advocating on behalf of the public interest.
Millions of dollars in campaign funding flooding Washington's halls of power combined with tens of thousands of high-paid corporate lobbyists and a never-ending revolving door that allows corporate executives to shuffle between the public and private sectors has blurred the line between government agencies and private corporations.
CORVALLIS, Ore. – A study of the reaction by the United States stock market to international financial crises shows that small companies are often hit hardest, and the impact is above and beyond what would be expected given their exposure to global market factors.
This unexpected result suggests the significant impact that investors’ actions can have during emerging market crises. During these crises, investors flee to the perceived safety of big companies and shed stocks of smaller companies, despite comparable levels of international exposure during normal periods.
June 19, 2011 | On Wednesday, Sen. Patrick Leahy asked departing Defense Secretary Robert Gates about future U.S. relations with Pakistan and other "governments that lie to us." Gates responded, in his flat Kansas twang, that "most governments lie to each other. That's the way business gets done."
Gates' Realpolitik answer before the Senate Appropriations Committee drew appreciative laughter from the audience and the usual press kudos for his "refreshing candor," but Gates's response could also be a reminder about his own dubious honesty regarding his role in major government scandals.
First they came for ACORN, then it was Planned Parenthood and NPR. Now, the right-wing smear machine is at it again, targeting a local group that has had a strong impact in advancing important progressive causes. The group is LAANE or the Los Angeles Alliance for a New Economy, and the provenance of persecutor is unknown, and mysterious.
From an extensive Jim Newton column in the the LA Times, here's a description of the kind of work LANE does:
LAANE, as it's known, is an 18-year-old advocacy organization that seeks to fashion and influence public policy relating to jobs, the environment and community development. The group, widely perceived as having a strong liberal slant, has a staff of 45 people and an annual budget of $4 million, and it is headed by a shrewd executive director, Madeline Janis. Housed in a tiny suite of offices just west of downtown (LAANE rents the space from the union UNITE-HERE), its modest quarters give little evidence of its impact, which is profound. In project after project -- from winning passage of the city's Living Wage Ordinance to revamping the way the Los Angeles port handles truck traffic to reimagining the region's approach to recycling -- LAANE has shown itself to be one of Southern California's most potent political organizations.
Yet when he was laid off from Coca Cola three years ago, Verone was desperate to find work. He eventually found employment as a convenience clerk, yet he began to notice a protrusion in his chest. He developed arthritis and carpal tunnel syndrome, and soon the pain became too much for him to bear. He filed for disability, but he was denied any sort of coverage by the federal government.
Two men approached me in the hotel hallway at a Florida convention the other day, eager to talk tax policy. The difference in their approaches to the issues highlights a crucial aspect of our national tax policy debate. So, too, do a conversation that a former IRS auditor had the same day with a former boss and a series of e-mail exchanges I had with a British journalist who writes about Formula One economics.
The two men had just sat through an hourlong panel I moderated on whether tax incentives actually create jobs and how to measure the costs and benefits of economic development. The panel drew nearly a hundred journalists attending the annual conference of Investigative Reporters and Editors, the nonprofit training organization for which I serve as a board member and treasurer.
Since we so seldom have positive news to report on NC, we thought it was important to highlight a promising development. Senator Richard Durbin has introduced legislation that would considerably complicate the effort of Wall Street players to pillage privatize state and government assets for fun and profit.
It is key to understand what a bad deal these transactions are for ordinary citizens. In addition to having sizeable up front fees, the return requirements are well in excess of the government entities’ borrowing rates, typically just under 20%. That means after you allow for the up front charges, the effective cost of funding is likely to be 20% or even higher. How does it make the remotest iota of sense for governments to fund at rates comparable to that of credit card borrowers? (Note this 20% figure applies only to a large portion of the funding, the equity slice, but given that these deals, involve aggressive rate hikes, and deals like the Chicago parking meter deal have NPVs for the deal of roughly 2x, if not more, than the sellers received, the extraction via user charge increases is extremely aggressive, and calls the attractiveness of the funding into question).
Telecom analyst Bruce Kushnick says Verizon, AT&T, and Comcast are dragging down the nation’s economy and bilking millions of Americans. The chief firms in the communications oligopoly got $340 billion to upgrade telephone and broadband systems but have almost totally reneged. Instead, they manipulate data and buy support from experts and citizens groups. In response, regulators on the federal and state levels…well, there is just about no response.
By Bruce Kushnick
bruce@newnetworks.com
In 1992, I stood at the podium of the National Press Club and suggested ”Divestiture II”. Simply put, in 1984 AT&T, a company that once controlled almost all telecommunications in the U.S., was broken up, its monopoly over local, long distance and even telecom equipment ended. A federal judge ordered the first divestiture, separating the local phone companies, which became seven new “Baby Bells,” from the long distance part of the business, which went to AT&T.
One of the claims we’ve heard throughout the mortgage crisis is that all the systems and records are fine, that the banks have just made a few “mistakes” and when they find out about them, they correct them promptly and cheerfully.
If you believe that, I have a bridge I’d like to sell you. Not only is evidence of widespread, and very likely systematic abuses piling up in courtrooms all over the US, but even at this late date, new types of misconduct are coming to light.
Lisa Epstein and April Charney pointed out the latest version, that of “zombie notes”.Chris Wallace rejected the premise, arguing that Fox News viewers “aren’t the least bit disappointed” with what their preferred network does. Stewart’s response was an important one.
As we know, President Obama and his team do not appear to be very effective negotiators when it comes to dealing with the Republicans in Congress. Last December, the Republicans forced the president to renew the Bush tax cuts for the rich. More recently, they got him to make $38 billion in cuts to the 2011 budget even though all his economists know that the economy actually needs more stimulus, which more means spending.
Since the president is having so much trouble dealing with the Republicans, the rest of us should lend him a hand. One way we can do this is by etching out what the end game looks like in the battle over raising the debt ceiling.
As it stands now, we are being told that the Republicans are insisting that there will be no increase in the debt ceiling without large cuts to the budget. Since the Republicans won't go along with any major cuts to the military budget, this means big cuts to the rest of the budget.
Why Washington is Talking about Deficits While the Rest of the Country is Talking About Jobs and the Shrinking Middle Class
Today's Republican Party has three wings: the psychiatric wing, the corporate wing, and the Democrats.
The first wing, the psychiatric wing, is defined by severe psychological and intellectual impairments, exemplified by the inability to read a birth certificate. Sarah Palin's recent foray into American history, replete with her description of Paul Revere as the man who rang alarms, bells, and buzzers to signal his support for the Second Amendment years before there was either a United States or a Bill of Rights, provides an example of the kind of "gaffe" that is, in fact, psychologically meaningful. This level of intellectual dysfunction, equally common in the pronouncements of Michelle Bachmann, once disqualified a candidate for high office. That was until the "lamestream media" decided to turn elections into reality shows, where the only real criterion is celebrity (defined as the state of being or becoming famous), and where commentators may poke occasional fun but no longer communicate to the public the seriousness of intellectual deficits in someone running for high office who would actually have to make decisions in which "facts" occasionally matter. (The dangerousness of that level of media indifference to reality should have been a lesson of George W. Bush's tenure in office, but things have sadly only gotten worse since then.)
Chicago
AS a labor lawyer I cringe when Democrats talk of “saving” Social Security. We should not “save” it but raise it. Right now Social Security pays out 39 percent of the average worker’s preretirement earnings. While jaws may drop inside the Beltway, we could raise that to 50 percent. We’d still be near the bottom of the league of the world’s richest countries — but at least it would be a basement with some food and air. We have elderly people living on less than $10,000 a year. Is that what Democrats want to “save”?
“But we can’t afford it!” Oh, come on: We have a federal tax rate equal to nearly 15 percent of our G.D.P. — far below the take in most wealthy countries. Let’s wake up: the biggest crisis we face is that most of us have nothing meaningful saved for retirement. I know. I started my career wanting to be a pension lawyer. In the 1970s, lawyers like me expected there to be big pots of private pensions for hourly workers. By the 1980s, as factories closed, I was filing hopeless lawsuits to claw back bits and pieces of benefits. Now there are even fewer bits and pieces to get.The oceans are in a worse state than previously suspected, according to an expert panel of scientists.
In a new report, they warn that ocean life is "at high risk of entering a phase of extinction of marine species unprecedented in human history".
They conclude that issues such as over-fishing, pollution and climate change are acting together in ways that have not previously been recognised.
On May 11, the U.S. Senate Judiciary Committee held a hearing astutely titled, "The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?"
At the hearing, Chairman Patrick Leahy, D-Vermont, raised a fundamental challenge: “At present, four companies control nearly 90 percent of the national wireless market. The proposed acquisition would further consolidate an already concentrated market for wireless communication.”
Washington, DC — A vaunted effort by the Obama White House to outlaw political manipulation of science has become mired in official resistance and inertia, according to Public Employees for Environmental Responsibility (PEER). After more than two years, most federal science-based agencies have yet to even draft policies. Now the White House is urging them to adopt boilerplate language on key provisions, such as whistleblower protections for scientists, which provide no additional safeguards.
Piece by piece, the country’s public assets are being sold to big banks and other bidders. Is our government next?
In Chicago, it’s the sale of parking meters to the sovereign wealth fund of Abu Dhabi. In Indiana, it’s the sale of the northern toll road to a Spanish and Australian joint venture. In Wisconsin it’s public health and food programs, in California it’s libraries. It’s water treatment plants, schools, toll roads, airports, and power plants. It’s Amtrak. There are revolving doors of corrupt politicians, big banks, and rating agencies. There are conflicts of interest. It’s bipartisan.
New Information Reveals Thomas Invested In Lobbying Firm Tied To Tea Party and Engaged In "Judicial Insider Trading" To Enrich His Wife
WASHINGTON, June 1, 2011 /PRNewswire-USNewswire/ -- ProtectOurElections.org, a campaign finance watchdog, has asked the FBI and Department of Justice to investigate Justice Clarence Thomas and his wife, Virginia (Ginni) Thomas for financial and judicial corruption partly based on the Justice's newest financial disclosures.
First, the organization alleges, Justice Thomas falsified 20 years of judicial financial disclosure forms by denying that his wife had income sources; second, he engaged in judicial corruption by receiving $100,000 in support from Citizens United during his nomination and then ruling in favor of Citizens United in 2010 without disclosing that fact or disqualifying himself; and third, he apparently conspired with his wife in a form of "judicial insider trading" by providing her with information about the result of the Court's decision in Citizens United prior to its issuance, which she then used to launch a new company to take financial advantage of that decision to benefit her and her husband.
By Eliot Spitzer
Posted Thursday, June 16, 2011, at 3:54 PM ET
The reaction to the first Republican presidential debate baffles me. Here you have the entire roster of candidates endorsing the new Republican orthodoxy—a Hooverism for the 21st century—and yet commentators are acting as though there is somehow a new moderation among the candidates. Even my own esteemed Slate colleague Jacob Weisberg penned a column headlined "Going Sane," arguing that we are seeing a shift toward the middle among the Republican candidates.
June 16, 2011 | As kids we learn that sticks and stones can break our bones, but words will never hurt us. Some time later, sophomore year in college for example, we learn that Friedrich Nietzsche wrote “names have the power to slay.” As an aside, Nietzsche also said “Arrogance on the part of the meritorious is even more offensive to us than the arrogance of those without merit: for merit itself is offensive,” which is a good observation, even though Oscar Wilde would have found a better way to say it. Conservatives, the modern version anyway, aren’t good for much, but they retain a marvelous talent for manipulating language. How else do you explain the fact that a bunch of people who managed to effectively destroy the world economy and are in a rush to eviscerate the social programs, Medicare, Medicaid and Social Security, that millions of Americans depend on for basic survival, are unashamed to call themselves “conservatives” while liberals, who were on the right side of both history and economics, try to hide behind “progressive”?
Retiring U.S. Senator Kay Bailey Hutchison (R-No Shame, TX) today unveiled a plan to steal Social Security from Americans by cutting their benefits and lying to them about it. In a release and fact sheet with more holes than a piece of swiss cheese in front of Dick Cheney on a hunting trip, Hutchison claims not to cut any “core benefits” in Social Security, but cutting those benefits is exactly what she does, and she cuts them by at least 13% or more. She gave her bill the great, blatantly full of rodeo bull manure title of the Defend and Save Social Security Act. This bill wouldn’t save and defend Social Security in the least. Even the most casual observer can tell the bill would more aptly be named the Attempted Murder of Social Security Act.
"Night is day," "slavery is freedom," okay David Brooks edited those lines out of his column on Fannie Mae today, but this is pretty much how the rest of it reads. He tells us that the economic crisis was the result of Fannie Mae pushing bad mortgages and buying off everyone who tried to stand in their way.
There's a small problem in this story. The worst junk mortgages that inflated the housing bubble to extraordinary levels were not bought and securitized by Fannie and Freddie, they were securitized by Citigroup, Merrill Lynch, Goldman Sachs, Lehman and the other private investment banks. These investment banks gobbled up the worst subprime and Alt-A garbage that sleaze operations like Ameriquest and Countrywide pushed on homebuyers.
The trillions of dollars that the geniuses at the private investment banks funneled into the housing market were the force that inflated the bubble to its 2006 peaks. Fannie and Freddie were followers in this story, jumping into the subprime and Alt-A market in 2005 to try to maintain market share. They were not the leaders.
The Center for Medicare Advocacy offers six measures to protect Medicare as we know it and reduce costs at the same time. They are so reasonable, and so obvious, that they probably won’t stand a chance with Congress. We thought we’d pass them along nevertheless.
By Judith Stein and Xenia Ruiz
As lawmakers debate the future of Medicare as part of broader efforts to address the federal deficit, proposals have emerged from Congress that would have severe repercussions for beneficiaries and their families. Sound and measured solutions that would protect Medicare coverage while reducing costs to taxpayers have not been seriously addressed.
The six solutions we propose would accomplish both of these goals. These solutions, unlike current proposals, do not shift costs to beneficiaries or completely restructure the Medicare program. They promote choice and competition while shoring up the solvency of Medicare. Adopting these solutions would be a responsible step in reducing our deficit the right way.
Martin Wolf, an economics commentator at The Financial Times wrote a very important column recently on the tough choices facing countries in the euro zone.
“The euro zone, as designed, has failed,” Mr. Wolf wrote on May 31. “It was based on a set of principles that have proved unworkable at the first contact with a financial and fiscal crisis.”
CLEVELAND — Everyone needs a home, but not every home, it seems, needs a furnace — even in Cleveland.
A house built for a new museum exhibit shows how walls more than a foot thick, big triple-pane windows, doors like bank vaults and clever engineering can cut heating and cooling costs — and pollution — by 90 percent. The house keeps a comfortable temperature year-round. No need for heavy sweaters, no drafts, no noise.
SEATTLE – While people in Japan, Canada, and other nations are enjoying significant gains in life expectancy every year, most counties within the United States are falling behind, according to a new study by the Institute for Health Metrics and Evaluation (IHME) at the University of Washington.
IHME researchers, in collaboration with researchers at Imperial College London, found that between 2000 and 2007, more than 80% of counties fell in standing against the average of the 10 nations with the best life expectancies in the world, known as the international frontier.
"We are finally able to answer the question of how the US fares in comparison to its peers globally," said Dr. Christopher Murray, IHME Director and one of the paper's co-authors. "Despite the fact that the US spends more per capita than any other nation on health, eight out of every 10 counties are not keeping pace in terms of health outcomes. That's a staggering statistic."
Michael Lerner (ML): You have made many excellent analyses of the power of global capital and its capacity to undermine ordinary citizens’ efforts to transform the global reality toward a more humane and generous world. If there were a serious movement in the U.S. ready to challenge global capital, what should such a movement do? Or is it, as many believe, hopeless, given the power of capital to control the media, undermine democratic movements, and use the police/military power and the co-optive power of mass entertainment, endless spectacle, and financial compensations for many of the smartest people coming up through working-class and middle-income routes? What path is rational for a movement seeking to build a world of environmental sanity, social justice, and peace, yet facing such a sophisticated, powerful, and well-organized social order?
Noam Chomsky (NC): There is no doubt that concentrated private capital closely linked to the state has substantial resources, but on the other hand we shouldn’t overlook the fact that quite a bit has been achieved through public struggles in the U.S. over the years. In many respects this remains an unusually free country. The state has limited power to coerce, compared with many other countries, which is a very good thing. Many rights have been won, even in the past generation, and that provides a legacy from which we can move on. Struggling for freedom and justice has never been easy, but it has achieved progress; I don’t think we should assume that there are any particular limits.
Tiny fibres used to strengthen items such as bike frames and hockey sticks could pose risks to workers who make them.
Certain types of carbon nanotubes - cylindrical molecules about one-thousandth of the width of a human hair - could cause cancer in the lining of the lung, University research shows.
The study in mice found short carbon nanotubes appear relatively harmless if they entered lung cavities.
However, longer nanotubes were more likely to get stuck there and ultimately cause a type of cancer known as mesothelioma.
AMY GOODMAN: Civil liberties advocates are raising alarm over news that the FBI is giving agents more leeway to conduct domestic surveillance. According to the New York Times, new guidelines will allow FBI agents to investigate people and organizations "proactively" without firm evidence for suspecting criminal activity. The new rules will free up agents to infiltrate organizations, search household trash, use surveillance teams, search databases, conduct lie detector tests, even without suspicion of any wrongdoing.
Negotiating with crazy people is always a bad idea and negotiating with hostage-takers is dangerous. But negotiating with crazy hostage-takers is worse than dangerously bad. The “debt-ceiling” deal being negotiated to keep the economy from being crashed could crash the economy anyway. Making draconian cuts could throw us into another recession -- one that would be much, much harder to get out of because we have used up many of our recession-fighting tools.
Withdrawing government spending literally “takes money out of the economy.” Democrats should instead offer the country a plan to invest in We, the People by modernizing our infrastructure, improving our schools, making us energy self-sufficient, improving our social safety net and restoring our manufacturing and key industries thereby making American businesses more competitive in the world economy. Propose this instead of painful cuts the benefit only the rich and take it to the country.
Financial strategists do not intend to let today’s debt crisis go to waste. Foreclosure time has arrived. That means revolution – or more accurately, a counter-revolution to roll back the 20th century’s gains made by social democracy: pensions and social security, public health care and other infrastructure providing essential services at subsidized prices or for free. The basic model follows the former Soviet Union’s post-1991 neoliberal reforms: privatization of public enterprises, a high flat tax on labor but only nominal taxes on real estate and finance, and deregulation of the economy’s prices, working conditions and credit terms.
What is to be reversed is the “modern” agenda. The aim a century ago was to mobilize the Industrial Revolution’s soaring productivity and technology to raise living standards and use progressive taxation, public regulation, central banking and financial reform to distribute wealth fairly and make societies more equal. Today’s financial aim is the opposite: to concentrate wealth at the top of the economic pyramid and lower labor’s returns. High finance loves low wages.
Germany has been a frequent cudgel in recent fights over the American economy. When Germany has grown faster than the United States, stimulus skeptics like to point across the Atlantic Ocean and say that austerity works. When it has grown more slowly, people who think the American stimulus made a big difference — including me — return the favor.
But the full story is more interesting than any caricature. In the last decade, Germany has succeeded in some important ways that the United States has not. The lessons aren’t simply liberal or conservative. They are both.
It has become a truism among conservative activists that college professors typically have a liberal bias which causes them to give lower grades to students who express right-wing opinions.
In 2005, for example, when Rep. Michele Bachmann (R-MN) was a Minnesota state senator, she and another Republican legislator called for a law to forbid this sort of alleged bias.
Martin Woods, an Englishman in his mid-40s, is blessed with a Sherlock Holmes instinct and demeanor. Woods is an expert at sniffing out "dirty" money passing through International Banking Systems.
A police officer for 18 years and later a detective with London Metro Police Agency, Woods capitalized on his unique expertise as a fraud expert by joining Wachovia's London-based Bank in March 2005 as an anti-money laundering officer.
When the war in Libya began, the U.S. government convinced a large number of war supporters that we were there to achieve the very limited goal of creating a no-fly zone in Benghazi to protect civilians from air attacks, while President Obama specifically vowed that "broadening our military mission to include regime change would be a mistake." This no-fly zone was created in the first week, yet now, almost three months later, the war drags on without any end in sight, and NATO is no longer even hiding what has long been obvious: that its real goal is exactly the one Obama vowed would not be pursued -- regime change through the use of military force. We're in Libya to forcibly remove Gaddafi from power and replace him with a regime that we like better, i.e., one that is more accommodating to the interests of the West. That's not even a debatable proposition at this point.
Fox & Friends attacked President Obama's economic record, saying that the president "seems to be differing from the facts" and that administration has not "fired up the job machine." However, the evidence shows Obama's policies have contributed to a trend of job creation.
Suppose you were a policy maker who wanted to pivot away from emphasizing the need to reduce the budget deficit and towards the need to reduce the jobs deficit.
You’d get out there on TV and stress the 20+ million un- and underemployed, including the 45% of the unemployed who have been jobless for at least half a year (about as high as it’s ever been). You’d stress the recent slowing of any already slow-growth recovery, and you’d stress the low cost of borrowing, which significantly boosts your bang-for-buck in terms of spending on jobs right now. And you’d remind anyone listening that you haven’t forsaken the truly necessary work of getting the budget on a sustainable path. It’s just that with unemployment at 9.1%, deficit reduction simply isn’t the country’s most important mandate right now. That would be jobs.
There is a dignity in the Hoover Dam, a massiveness that speaks to a grand national purpose. A country — our country — decided to build it. As the Hoover Dam was constructed, in the middle of the Great Depression, the nearby city of Las Vegas stretched itself from a sleepy town of 5,000 to accommodate tens of thousands of new residents: the people building the dam and staffing the associated businesses.
In 1956, President Dwight Eisenhower embarked on the most aggressive public works project in U.S. history — the jobs-producing interstate highway system. And throughout the 1930s and ’40s, the government designed an elaborate set of public financing vehicles to build the great postwar suburban housing stock.
Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.
Last week I showed that total taxes at the federal level — individual and corporate income taxes, payroll taxes and so on — are at a 60-year low as a share of the broadest measure of income, the gross domestic product.
Some readers took issue with my failure to include state and local taxes in the calculation. I have now done that, using data from the Organization for Economic Cooperation and Development, which represents the major developed countries. Among its most important responsibilities is the collection of internationally comparable data on a wide variety of topics, including taxes and health care spending.If you want to transform the economy, you have to cut Wall Street down to its proper size. One way to do that is to tax the short-term speculative activities that dominate and distort financial markets.
For ordinary investors, the costs would be negligible, like a tiny insurance fee to protect against crashes caused by speculation. But for the highfliers who are most responsible for the financial crisis, the tax could raise the cost of highly leveraged derivatives trading and stock-flipping enough to discourage the most dangerous behavior.
The White House is considering adopting a temporary Social Security tax cut on employers to stimulate the economy as part of the debt ceiling negotiations with the Republicans, according to a Bloomberg News article [1].
If the Administration so much as puts another Social Security tax cut on the table, they will be throwing Social Security under the bus for uncertain—indeed, unlikely—economic gain.
It seems like déjà vu. Wasn’t it just last year that progressives had to talk themselves blue in the face explaining the harm that a temporary payroll tax cut would do?
In case you hadn’t heard, the Obama Administration already enacted a one-year 2 percent payroll tax cut on the employee side as part of the tax cut deal with Republicans in December 2010. The revenue that Social Security would have gotten from the missing 2 percent of taxable payroll is being replaced by a one-time transfer of $105.2 billion from the general fund. (Click here [2] for more on how Social Security is funded.)
At the time, the payroll tax cut was criticized by progressives for endangering Social Security’s finances and undermining the program's political underpinnings. A critique [3] made by Nancy J. Altman, a nationally renowned Social Security expert and co-chair of the Strengthen Social Security Campaign, still offers the best explanation for why a payroll tax cut is disastrous.
