Are ‘Globalization’s’ Costs Inevitable?

You hear often that we “live in a global world now.” You hear that “globalization” means we have to drop our wages and standards to match those in impoverished, Third-World countries. You hear that the “cost” of controlling pollution makes us uncompetitive in the world. Etc. Etc. Etc. It’s inevitable – a force of nature – so don’t fight it, they say. This is endlessly repeated as if we weren’t in a “global” world when the first camel crossed a border or the first sailing ship crossed a sea. But since that first camel countries have enacted policies to make things better for their people.

Sunday’s New York Times published an op-ed, “The Myth of Industrial Rebound,” by Steven Rattner, one more wealthy Wall Street executive who revolved through the door from being an Obama administration official after he revolved through the door from being a Wall Street executive. In his op-ed Rattner accurately describes many of our economy’s problems but concludes that we should let these things just happen to us because, “In a flattened world, there will always be another China.”

Rattner points out that many of the new manufacturing jobs are low-wage. “This disturbing trend is particularly pronounced in the automobile industry. When Volkswagen opened a plant in Chattanooga … the beginning wage for assembly line workers was $14.50 per hour, about half of what traditional, unionized workers employed by General Motors or Ford received.” Meanwhile, “in Germany, the average autoworker earns $67 per hour. … Volkswagen has moved production from a high-wage country (Germany) to a low-wage country (the United States).”

Rattner is correct that falling wages are slowing economic recovery. “These dispiriting wage trends are a central reason for the slow economic recovery; without sustained income growth, consumers can’t spend.”

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President Obama Should Raise Minimum Wage For Federal Contract Workers

Guess who is one of the biggest employers of minimum-wage employees? Your own federal government. After years of “privatization” and outsourcing, the government now contracts out a lot of work to companies that pay really, really low wages for jobs that when they were “government jobs” used to provide good pay and benefits. And this means that a lot of people – between 1 and 2 million – have to live in poverty. Now there are reports that President Obama is considering doing something about that.

An August, 2013 New York Times editorial, “The Government as a Low-Wage Employer,” explained the problem:

Recent studies have shown how hundreds of billions of dollars in federal contracts, grants, loans, concessions and property leases currently flow to companies that pay low wages and provide few if any benefits, even as executive pay among federal contractors has risen. In effect, tax dollars are being used to fuel the low-wage economy and, in the process, worsen inequality.

The links in that paragraph point to a National Employment Law Project (NELP) report, “Taking the Low Road: How the Federal Government Promotes Poverty-Wage Jobs Through its Contracting Practices, A Survey of Workers and Their Stories” and Demos study, “Underwriting Bad Jobs: How Our Tax Dollars Are Funding Low-Wage Work and Fueling Inequality.”

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GOP Economic Sabotage Continues With Filibuster of Jobless Benefits

Republicans are engaged in yet more hostage-taking obstruction. (Whatever gave them the idea that hostage-taking can work?) They are engaged in a filibuster of the effort to extend unemployment insurance, using it as a hostage to try to get even more cuts to the things government does to make our lives better. Their “pay-for” demand is really a demand for Democrats to agree to even more economic sabotage.

Senate Republicans Monday continued to fight Democratic efforts to pass an extension of federal unemployment insurance benefits for people who have been out of work longer than 26 weeks. Traditionally our government has provided this assistance to unemployed workers at times of high unemployment. This is an “automatic stabilizer,” meaning that this assistance helps stop the downward spirals that occur when business hit recession. Unemployed workers aren’t forced to pull back from paying mortgages or rent, or buying food and other basic needs, which then causes even more unemployment.

Many feel this economic stabilization effect is the reason Republican oppose the extension. They suspect Republicans want the loss of this assistance to cause more layoffs, foreclosures and economic hardship. This way the economy looks worse as the 2014 elections approach, and voters will turn on what they perceive as the “party in charge” – namely the Democrats.

By requiring “pay-fors” – cuts somewhere else – in exchange for allowing this assistance to the unemployed, they are removing the economic boost that the program provides, causing damage to the economy. In other words: they are engaged in economic sabotage.

One such proposal from Republicans is to stop working people with disabilities from claiming both Social Security Disability Insurance and federal unemployment benefits. Cutting this really means preventing people with disabilities from taking the risk of going out and working to see if they can get off of disability. Michael Hiltzik writes about this at the Los Angeles Times in “An awful idea: Hammer the disabled to pay for unemployment benefits”:

It uniquely burdens the disabled among all workers, and it sets a terrible precedent of raiding Social Security to pay for other social programs.

… The idea that disabled persons are “double-dipping” by collecting wages or other compensation while also getting a disability check is enshrined in conservative attacks on disability. But it’s untrue. The Social Security disability program is designed as a bridge to full employment. Its benefits aren’t intended as a substitute for wages, but a supplement.

Michael Tomasky writes about the hostage-taking involved here in “The Fight Over Unemployment Benefits Underscores the Right’s Extremism” at The Daily Beast:

Republicans are insisting on cuts from elsewhere in the federal budget to pay for the benefits’ $6.4 billion cost. And Democrats are talking with them. But there’s no progress yet. In fact, it seems today that even the six Republicans who voted in the Senate last week to allow debate to proceed would not vote to extend the benefits just yet.

[. . .] if Democrats win, great. But it looks like they’ll only win by agreeing to the pay-for demand, which means that there’ll be new demands next time. There’s no end to how far right these people will go.

Richard Eskow (who really should have a column in the New York Times) writes about the economic sabotage of “pay for” in “No, Congress, You Shouldn’t “Pay For” Extending Unemployment Insurance”:

The simple truth is, Democrats are still being outmaneuvered by Republicans on economic policy. They’re letting the GOP call the shots, rhetorically, even though Republicans lost two out of three seats of federal government (the Senate and White House). They even lost the total popular vote for the House of Representatives.

… Here’s a better idea: Don’t try to pay for extended unemployment benefits. Don’t boast, as Reid did last week, that the extension is “entirely paid for.” Sure, Democrats will eventually need to make a deal – if they can – in order to extend unemployment insurance benefits. But why aren’t they first making the case against “paying for” those benefits on the Republicans’ terms?

Why aren’t Democrats instead speaking up against the “pay for” logic that gives a free pass to the wealthy and corporations – especially when the total cost is a blip, a rounding error, on a $1 trillion 2014 federal budget?

Economically, “pay for” is a Catch-22: It means every job-creating proposal must be offset with job-killing cuts elsewhere.

5 Reasons To Extend Unemployment Insurance

The AFL-CIO Now blog offers “5 Reasons Congress Must Extend Unemployment Insurance.” (Click through for details, charts and links.)

1. The long-term unemployment rate is higher than ever before.
2. The typical unemployed worker has been out of work longer than ever before.
3. More unemployed workers are running out of benefits than ever before.
4. The unemployment rate remains unacceptably high.
5. There are still three job seekers for every job opening.

Call To Action

The Coalition on Human Needs wants us to “tell your senators to renew federal unemployment insurance now, before the next recess, and don’t tie renewal to harmful amendments like denying the Child Tax Credit to low-income immigrant families or denying aid to unemployed workers with disabilities.”

If you haven’t called your senators yet (or even if you have!) please call 1-877-267-2485 (Toll Free). (Thanks to AFSCME for making this toll-free number available.)

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

A Moral And Economic Imperative To Extend Unemployment Benefits

Federal unemployment assistance for 1.3 million people who have been unemployed longer than 26 weeks expired last Saturday, after Republicans blocked efforts to extend them. 3.6 million more people will lose these benefits over this year. Restoring these benefits is a moral, economic and political imperative.

On Monday the Senate will hold the first procedural vote on bringing back unemployment benefits for people who have been out of work longer than 26 weeks. The hope is to break a Republican filibuster so the extension can be passed and sent to the House (where Republicans will likely refuse to even allow it to come up for a vote).

Click here to Tell Congress to Extend Unemployment Benefits.

A Moral Imperative

When the financial crisis hit the country provided assistance to (“bailed out”) the largest banks. We have a moral imperative to also help our fellow citizens. A democracy provides assistance for people who need help. A fair and just society provides assistance for people who need help. A moral society provides assistance for people who need help.

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This Video Explains Why Economists Say The Weird Things They Say

Have you ever wondered why an economist would say that giving tax cuts to the rich makes the economy better? Or why they say that getting rid of unions is good for the economy?

Watch this to learn why some economists say things like this:

Rachel Maddow shares details of a report showing Koch brothers funding behind an economic report flattering to conservative economic policies.

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Who Will Fight To Help The Unemployed?

At the beginning of November, the poor went over the “Hunger Cliff” as Food Stamps were cut. Now long-term unemployment assistance will run out at the end of December. Regular people think the government has given up on them. They have been hit by one blow after another, with little or no help in sight. They see shutdowns and budget cuts at the very time the government needs to spend more to help Americans.

This is part of the Republican effort to turn Americans against government, because the public will blame Democrats. Democrats have to stop letting Republicans get away with it, and return to being seen as trying to help the unemployed and poor.

Long-Term Unemployment Assistance Running Out

In a few days, long-term unemployment benefits run out in spite of a “budget deal.” This cutoff of long-term aid means that in most states aid will end after a person is unemployed for 26 weeks, and in other states even less - some dramatically less. It occurs at a time when the average length of unemployment is 37 weeks, and there is still only one job for every three people still bothering to look for work.

1.3 million people will lose this assistance immediately, just after Christmas. By mid-2014 another 2 million will lose this aid as well.

“If my wife loses her benefit before she finds a job, we lose our house.” – Philadelphia resident.

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Did The Stimulus Work? See For Yourself

Did the “stimulus” work? Republicans claim it was a failure, a waste of money, and was the reason the deficit soared. So let’s see what happened. And I do mean “see.”

(Actually, the deficit soared in Bush’s last budget year — all the way to $1.4 trillion! The stimulus kicked in after that. And now the deficit is down by more than half from where Bush left it. But hey, apparently repetition of lies is better than knowledge of facts…)

Anyway … did the stimulus work? See for yourself:

The very left side of this chart shows the last few months of the Bush administration. Those lines going down and down and down show job losses. By the time Bush left we were losing over 800,000 jobs per month.

Then the stimulus kicked in. See how the lines start going up and up and up? After a year the country was gaining jobs again, and has been ever since.

The stimulus worked, but it was not enough.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Budget Deal Is More “Awesomely Destructive,” Economy-Killing Austerity

Austerity is holding back our economy — and that’s the plan. There is simply no other way to explain it. Republicans know voters blame (or credit) the party of the President for the economy, and they are doing everything they can to make things as bad as can be. This new “budget deal,” for example, holds the country in full austerity, with spending lower than even the original “Ryan budget” that shocked everyone.

Austerity kills economies and jobs, and they know it. We know it, they know it, everyone knows it. It is obvious in front of our faces, and Republicans continue to force cuts — with many Democrats going along.

Spending

Since the financial collapse government spending has been cut and the results have been terrible for the economy. Under every previous President government spending and hiring propped up the economy until recovery was underway. Republicans as well as Democrats understood this is how it has to be done. Until now.

In Charts: What if Obama spent like Reagan? Ezra Klein explains, “It’s simply a fact that real government spending fell in three of President Obama’s first four years.” Klein compares government spending to Reagan and ‘W’ Bush:

Under Reagan and ‘W’ spending went up. This helped the economy get out of recessions. Under Obama, with a much worse recession, Republicans forced spending to go down.

What was the effect of these cuts? This next chart shows how this is a drag on GDP:

So yes, the spending cuts are obviously hurting the economy.

Paul Krugman’s blog post, Unprecedented Austerity comments on this. He starts with a chart showing what has happened to government spending since Obama took office, writing, “Look at total government spending — federal, state, and local — and correct it for inflation …”

Krugman writes, “You can see that there was a brief, modest spurt in spending associated with the Obama stimulus — but it has long since been outweighed and swamped by a collapse in spending without precedent in the past half century.” He calls this, combined with private-sector deleveraging, “awesomely destructive.”

“Awesomely destructive.” And you can see it.

That “modest spurt in spending associated with the Obama stimulus”? This is the effect the stimulus spending had on jobs:

The stimulus took us from losing more than 800,000 jobs each month to gaining jobs every month since. It completely turned the situation around. But then it stopped and Republicans were able to force austerity and kill off the recovery.

This Budget Deal

So that’s the story of what has happened to government spending as Republicans impose austerity. Down down down. Now we have a “budget deal” (that even leaves out help for the long-term unemployed and doesn’t replace the “Hunger Cliff” $5 billion Thanksgiving Food Stamp cut, etc…) This next chart shows where this budget deal fits with earlier budgets proposals.

This is what is missing from the explanations of this budget “deal:” spending will still go way down. This is not a spending increase, it is less of a destructive, devastating cut than the full “sequester” would be next year. But it is still a cut, and it will still cost us jobs and economic growth. It will still be “awesomely destructive.”

And that is their plan. It will still let them campaign on “Obama’s terrible economy.”

Jobs

This chart from Calculated Risk shows how government hiring pulled us out of previous recessions, which government firing is holding us in this one.

Key point, Presidents Reagan, GHW Bush, Clinton and ‘W’ all increased public hiring to help get us out of recessions. But under Obama and austerity the public sector has lost 703,000 jobs.

The public sector grew during Mr. Reagan’s terms (up 1,414,000), during Mr. G.H.W. Bush’s term (up 1,127,000), during Mr. Clinton’s terms (up 1,934,000), and during Mr. G.W. Bush’s terms (up 1,748,000 jobs).

However the public sector has declined significantly since Mr. Obama took office (down 703,000 jobs). These job losses have mostly been at the state and local level, but more recently at the Federal level. This has been a significant drag on overall employment.

The 2014 Election

So let’s take bets: do you disagree that Republicans are planning to campaign in 2014 by saying that the terrible economy is Obama’s fault?

PS: Some of these charts are from Three Charts That Show That Republicans Have Won The Budget War by Danny Vinik, who writes that “the fact of the matter is that the GOP has won the budget wars.” Let’s see if they take credit for the economy and terrible human pain they are causing.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

A Corporate Tax Idea That Fixes Lots Of Problems

Here is one thing Congress could do that would create more jobs, boost the economy and reduce both the budget deficit and the trade deficit. This one thing would not only provide a big boost now, but would provide an ongoing boost from now on. Congress should modify the “deferral” tax loophole that lets companies dodge their taxes by moving and keeping profits “out of the country.” Tax this cash at 5% a year.

The top corporate tax rate is currently 35%. But corporations are allowed to “defer” paying taxes on profits earned outside of the country until they “repatriate” those profits, which means bringing the money back into the country. (Any taxes paid elsewhere are deducted from the amount owed.) There are solid reasons to allow corporations to do this. Simply put, they might need to put that money to good use, which will benefit the company, which in theory will later benefit our country.

But this tax deferral has turned into a huge loophole that is draining our country of jobs, tax revenue, investment, manufacturing infrastructure and other good things We the People are supposed to receive in return for allowing these corporations to operate. Companies not only are keeping profits out of the country, the loophole gives them an incentive to engage in schemes that shift more and more jobs, production and profit centers out of the country. (One well-known example: Apple transferred ownership of it’s “crown jewels” — “intellectual property” — to Ireland.)

A Ton Of Cash That We The People Could Really Put To Use

The amount now being held outside of the country is astounding. Some estimates say that it is as much as $1.5 to 2 trillion, or even more. If the full amount were brought back and the tax rate applied that would bring a $525-700 billion windfall that the government could use to hire people to get things done that really, really need to get done like modernizing our infrastructure, hiring teachers, building high-speed rail, retrofitting homes and buildings to be energy-efficient … so many things… (Of course it would be less because of taxes paid elsewhere, etc., but we’re still talking hundreds of billions.)

And, of course, after that $1.5-2 trillion is brought back and the appropriate taxes are paid the rest would either be invested or distributed to shareholders — another nice boost to the economy.

Beyond the one-time windfall from bringing that cash back there would be two other major effects of changing this deferral loophole. The first, of course, is that tens of billions of revenue now withheld each year would be coming in to be taxed, thereby reducing the budget deficit. But perhaps more important, the incentive to move jobs, factories and profit centers (“crown jewels”) out of the country would be eliminated, so companies would keep factories and jobs here.

 Why They Do It

The reason so much $$ is being kept away is that companies have good reason to believe that eventually they will be allowed to bring it back without paying the taxes they owe. Congress made a huge mistake in 2004 and gave corporations a “tax repatriation holiday.” They allowed companies that were holding profits outside of the country to bring those profits back without paying all of the taxes due. This created the expectation that Congress will of course do this again (and again). So, not looking a gift horse in the mouth, companies started to find ways to increase their outside-the-country profits and reduce their inside-the-country profits. Jobs, factories, production, profit centers (desks, chairs, carpets…) and everything else that could be moved out of the country started to be … moved out of the country. And it gets worse every year.

Solution: Put A Surtax On Money Held Outside The Country

Some people say we should just repeal the rule that lets companies defer taxes due on profits earned outside of the country until they bring it home. But that undoes the benefits that were the original reason to allow deferral.

Here is a simple idea that could go a long way toward solving this problem. Don’t eliminate the deferral, tax it. As I said, there are good reasons to allow it in certain instances. Instead, put a surtax on profits held outside of the country. Just for illustration, suppose this surtax was 5%. This means that if a company decides to keep $1 billion of profits outside of the country, they would pay 5% of that, $50 million, each year they do this. This is not later used to reduce the amount of taxes due when they eventually bring the money home; when they finally “repatriate” the profits they would be still taxed at the same rate as now (up to 35% minus taxes paid elsewhere, etc.) But instead of gaining from keeping the money out of the country, it instead costs them 5% each year they keep it out.

Of course, this must be coupled with the end of any hope that Congress will eventually give in to hostage-taking and let companies bring profits back at some reduced rate. That was a mistake that has cost the country dearly in lost revenue, jobs, factories, profit centers, (desks, chairs, carpets…) and also cost the country money that should be either invested or distributed to shareholders.

If the companies decide to continue to hold that $1.5-2 trillion outside of the country this surtax would bring the government between $75 and $100 billion per year of additional tax revenue, and these companies would also eventually have to bring it back and pay the up-to-$700 billion due in taxes as well. I’d be happy with that, and so would the country.
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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Martin Luther King’s Dream Of Jobs And Freedom

Martin Luther King Jr. outlined his dream 50 years ago this weekend. We made much of it happen. Let’s dream some more. Let’s dream about what we could do in the next 50 years.

Fifty years ago Martin Luther King Jr. led the March on Washington for Jobs and Freedom and famously told the country “I have a dream.” Fifty years later there is progress and there are setbacks. We no longer have segregation — separate schools and bathrooms and the rest. Many states finally allow everyone to marry the person they love, but at the same time many states are returning to apartheid-era restrictions of voting rights.

One huge part of the “Jobs and Freedom” Dream that still evades us is the goal of full employment or an income until a job becomes available.

On August 16, 1967 King delivered a speech titled, “Where Do We Go From Here?” addressing the need for everyone to have a job or an income,

…our emphasis must be twofold: We must create full employment, or we must create incomes. People must be made consumers by one method or the other. Once they are placed in this position, we need to be concerned that the potential of the individual is not wasted. New forms of work that enhance the social good will have to be devised for those for whom traditional jobs are not available. In 1879 Henry George anticipated this state of affairs when he wrote in Progress and Poverty:

The fact is that the work which improves the condition of mankind, the work which extends knowledge and increases power and enriches literature and elevates thought, is not done to secure a living. It is not the work of slaves driven to their tasks either by the, that of a taskmaster or by animal necessities. It is the work of men who somehow find a form of work that brings a security for its own sake and a state of society where want is abolished.

A Country Based On A Dream

Our country was founded on the dream that We the People can do things for each other instead of depending on the rich and powerful to throw us scraps.

If you look at our Constitution you see that our country is supposed to be for We the People. And I mean just look at it, not read it. The only words you see from any distance are the words “We the People.” The Founders were making a point.

The Constitution told the world about a dream that “We the People” would build a country that protects and empowers us, where together we do things for the common good, to make our lives better. And for a while we did that.

We have lost sight of that dream. We no longer seem to recognize who our country is for. We no longer talk about the common good.

Who is our country for? Who is our economy for? Certainly a We the People economy would at the very least guarantee that We the People have jobs and an income until a job is available.

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