Category Archives: Economics

“Spreadsheet Error” Economists Blame “The Left” Not “Science”

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In an op-ed in the NY Times today the “spreadsheet error” economists tell us all we need to know about their research and their conclusions. In the op-ed, Reinhart and Rogoff: Responding to Our Critics, skip to the last paragraph:

“Now we are being attacked by the left — primarily by those who have a view that the risks of higher public debt should not be part of the policy conversation. “

“The left?”

I think these two words tell the whole story. All the economists and other scholars who are criticizing the errors and selective use of favorable data in work represent “the left.” Actual science that looks at the real world to see what actually happens is “the left.”

Downward Spiral

Here is the situation:

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Deficit Falling Even More Dramatically, Few Know It

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Austerity is beginning to hit and the economy is slowing as a result. The most immediate effect is that flights are delayed, but unemployment checks are smaller and there are fewer things We the People do to make our lives and economy better — also called “government spending.” But hey, as Dean Baker writes in, Deficits Are Bad and the Sun Goes Around the Earth,

…many people can profit from slow growth and high unemployment. The after-tax profit share of GDP is at its highest level more than 60 years. For those who own lots of stock and are at the top of the income ladder, times are good. These people may see efforts to lower unemployment as posing a risk. With lower unemployment workers may be able to get a larger share of productivity growth. This may be good for most of the country and mean increased economic growth, but it would mean less for the one percent.

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Minimum Wage Raise Essential To Fix Our Economy

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The Walton (Walmart) heirs now have as much wealth as up to 40 percent of all Americans combined, and Walmart’s sales have been slowing down. What does the first fact have to do with the second? (Hint: Sign this petition for raising the minimum wage.)

The top 1 percent now rakes in 20 percent of the nation’s income and holds one-third of the country’s wealth. Meanwhile the economy remains stagnant because the incomes of regular people are stagnant and falling – meaning they can’t buy stuff and can’t invest in their own futures.

From the post “40% Of Americans Now Make Less Than 1968 Minimum Wage”:

The chart shows that wages used to go up as productivity went up, but in the 1970s they decoupled. Productivity kept going up but wages stagnated.

Regular people’s incomes have been stagnant since the 70′s while costs keep going up. In fact, 40 percent Of Americans now make less than the 1968 minimum wage if that minimum wage had kept rising along with productivity. If the minimum wage had stayed coupled to productivity the minimum wage would now be $16.50 an hour – which more than 40 percent of Americans now make!

Instead all of those people’s possible additional income went to the top. And that plus changes in taxation is why we have the inequality we have. That is what happened to our economy and to all of us.

Now, here’s another chart. This chart shows that financial-sector and non-financial-sector compensation used to rise together, but in the late 70′s / early 80′s they decoupled. Financial-sector compensation took off, while non-financial-sector compensation did not.

It is as simple as this: If we want our economy and democracy to recover, the minimum wage needs to be raised as a core part of the solution. (But only part.)

Sign this petition calling for “the leaders of the House and Senate to allow an up-or-down vote on the Fair Minimum Wage Act of 2013, which would raise the minimum wage to $10.10 an hour and then index it to inflation.” While $10.10 is too low, it’s a start, and it is what is before the Congress. There are other essential things we need to do, but we need to raise the minimum wage to set a floor that is not falling out from under us.

Inequality Holding Back Recovery

The recovery from the economic crash is stagnant, and unemployment remains in emergency territory.

In January Economist Joseph Stiglitz wrote this op-ed for The New York Times, listing four reasons why the terrible inequality we face today is holding back the recovery, “Inequality Is Holding Back the Recovery”:

There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth. While the top 1 percent of income earners took home 93 percent of the growth in incomes in 2010, the households in the middle — who are most likely to spend their incomes rather than save them and who are, in a sense, the true job creators — have lower household incomes, adjusted for inflation, than they did in 1996. The growth in the decade before the crisis was unsustainable — it was reliant on the bottom 80 percent consuming about 110 percent of their income.

Second, the hollowing out of the middle class since the 1970s, a phenomenon interrupted only briefly in the 1990s, means that they are unable to invest in their future, by educating themselves and their children and by starting or improving businesses.

Third, the weakness of the middle class is holding back tax receipts, especially because those at the top are so adroit in avoiding taxes and in getting Washington to give them tax breaks. The recent modest agreement to restore Clinton-level marginal income-tax rates for individuals making more than $400,000 and households making more than $450,000 did nothing to change this. Returns from Wall Street speculation are taxed at a far lower rate than other forms of income. Low tax receipts mean that the government cannot make the vital investments in infrastructure, education, research and health that are crucial for restoring long-term economic strength.

Fourth, inequality is associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile and vulnerable. Though inequality did not directly cause the crisis, it is no coincidence that the 1920s — the last time inequality of income and wealth in the United States was so high — ended with the Great Crash and the Depression. The International Monetary Fund has noted the systematic relationship between economic instability and economic inequality, but American leaders haven’t absorbed the lesson.

Translation:

  1. Top 1 percent (a few people) taking most of the gains, income in the middle (lots of people) is falling, they can’t buy stuff.
  2. Middle class disappearing, unable to invest in education or start businesses.
  3. Tax system rigged so gains going to 1 percent not bringing revenue to government, with incomes to the rest falling, revenue to government decreasing. Government can’t afford to invest in infrastructure, research, education, health and other things the help economy.
  4. Inequality that drives such massive amounts to a top few makes even the rich feel poor so they speculate and engage in quick-buck schemes, economy becomes “volatile and vulnerable.”

Raising the minimum wage is at the center of a set of policies. It is one part of what to do if we want economy to work again for regular people and for the future. Other parts include but are not limited to:

  • New tax brackets for higher incomes,
  • restoring the estate tax,
  • restoring corporate taxation,
  • getting rid of tax incentives that encourage corporations to move jobs and factories and profit centers out of the country,
  • possibly a wealth tax to address the deficit and debt,
  • a tax on Wall Street speculation,
  • restoring government services that help lower- and middle-income people obtain affordable higher education and get job training,
  • renegotiating trade deals that pit American workers against exploited, underpaid workers in non-democracies, thereby making American democracy and wages a competitive disadvantage
  • and many other steps to address the changes brought in since the “Reagan Revolution” that drove the huge increase in inequality and decrease in government investment in our economy’s future.

Raising the minimum wage is not only the moral thing to do, it is essential to bringing the low end up and start distributing the gains more fairly.

Even Walmart’s Sales Hurting Now

After the economic crash Walmart was ascendant. More and more people were moving down the income ladder toward the bottom, they were moving from the upper-scale stores to the bottom, i.e. Walmart.

But now so many people have fallen below the bottom that even Walmart’s sales are slowing down. Seeking Alpha recommends a SELL on Walmart stock because,

WMT derives most of its revenues from domestic operations in the U.S. where it has a dense network of stores and logistic centers. However, U.S. growth has almost flattened over the last couple of years eking out a yearly growth rate of just 1 percent.

Walmart can’t just raise wages on their own because that will give their competitors an advantage, and soon we’ll all be complaining about Target instead.

Even Walmart needs someone to come along and force wages up. Who could that someone be? It’s up to government – We the People – to make all employers raise wages so they can all have customers again.

Government Needed

All businesses will tell you that if they didn’t do everything they can to boost profits, someone else will, and then they’re screwed. Business is a cut-throat game and you have to fight to survive. You have to fight as dirty as the rules let you fight. Businesses will tell you that if they don’t keep wages as low as possible, deny health insurance, cut safety costs, cheapen products, and everything else they can get away with they will be gone, replaced by businesses that will.

The key to the equation is the “what the rules allow” and the “what they can get away with” part of that dirty fight. Businesses compete on a playing field, and the rules and enforcement of those rules determine the way the game is played.

Every individual business wants to save on labor and other costs. But if all businesses do the same, the result is that no one has any money to spend and all of those businesses are in trouble. This is where government comes in. Government is the essential part of this equation, setting and enforcing the rules in ways that make up for what inevitably happens if all businesses cut wages, costs, etc. And government is essential for enforcing those rules.

From “You Can’t Have Healthy Businesses Without Strong Government”:

Imagine this, though it might be difficult: some people are greedy and want more for themselves, at the expense of the rest of us. Yes, this is shocking, but true!

Government protects us from those who would take advantage and take too much. Government does this both domestically and internationally. At home it protects us from criminals and exploiters. Government also protects us from physical and economic threats from other countries.

[. . .] When too many business reduce costs by cutting employees or paying less, the system collapses from lack of demand. Government is needed to keep businesses from laying off too many people or cutting pay. Sometimes government does this by stepping in and hiring people (or just giving them money like unemployment benefits), or buying things, thereby creating demand, causing businesses to hire.

Crucial to this equation:

When government is strong we have more enforcement of a level playing field for all of us, more education for all of us, more security for all of us, more protection of our environment, more infrastructure so our own startup businesses can flourish and compete, more parks, more promotion of the general welfare.

And when government is weak we end up with a very few greedy, ruthless billionaires and their giant corporations controlling the economy, stifling competition, scamming and defrauding us, and consuming the environment and resources for their own short-term profit.

Sign a SignOn.org petition posted by the Campaign for America’s Future calling for “the leaders of the House and Senate to allow an up-or-down vote on the Fair Minimum Wage Act of 2013, which would raise the minimum wage to $10.10 an hour and then index it to inflation.”

It is the nature of our current economic system that things will concentrate into fewer and fewer hands. When you let the ones with more money win the game and set the rules it is inevitable that they will increasingly set the rules to they always win the game. When the winner gets more stuff, eventually a very few winners have to end up with all the stuff.

The Fair Minimum Wage Act

The Fair Minimum Wage Act is up before the Congress. Isaiah J. Poole explains in Time To Demand A Vote To Increase The Minimum Wage:

The Fair Minimum Wage Act would increase the current federal minimum wage, $7.25, to $10.10 in three steps over a three-year period, and then index it annually to inflation from that point forward.

The bill would make an even more significant difference for tipped workers, mostly in the restaurant industry. They currently have a minimum wage of $2.13 an hour that has not increased since 1991. Under the bill, tipped workers would earn a minimum 70 percent of the regular minimum wage.

… House members have in fact had one opportunity to vote on the bill in March, in the form of a motion instructing the House to add the minimum wage increase to a workforce training bill. The motion was unanimously rejected by House Republicans.

The bill, though, deserves a stand-alone vote in its own right. It’s been three years since the minimum wage went up to $7.25, and that increase did not undo the damage done to low-wage workers by decades of congressional failure to keep this wage floor from sinking.

Sign a SignOn.org petition posted by the Campaign for America’s Future calling for “the leaders of the House and Senate to allow an up-or-down vote on the Fair Minimum Wage Act of 2013, which would raise the minimum wage to $10.10 an hour and then index it to inflation.”

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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

DC Should Talk About Fixing The TRADE Deficit

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The economy is not working for We, the People. But even with $4 trillion already cut from deficit projections, a deficit drop of about 50 percent as a share of gross domestic product, and Congressional Budget Office projections that the deficit is stable for the next 10 years Washington remains focused on even more economy-killing austerity. It’s talking only about what and how to cut instead of how to meet the needs of the people of the country and grow the economy.

This fight over spending cuts led to the “sequester,” which might take us back into recession. The fight will now roll into another manufactured crisis over the continuing resolution, with a government shutdown as the hostage, and of course this will be a further drag on the recovery.

Economics 101, Europe’s austerity experiment and the experience of history all tell us that cutting government is contractionary policy. Cutting government cuts economic growth and costs jobs, which leads to to lower tax revenue and higher government expenditures. Economics 101 and the experience of history also tell us that government investment in jobs, infrastructure, education, research and the rest grows the economy, which fixes deficits. Cutting deficits and debt is important but clearly should not be done when the economy is weak. This is the time to invest, and the investment returns will pay for the investment and more.

Again: There is no real discussion or debate about what we ought to be doing to make this economy work for working people. There is only discussion of what and how to cut. This is the wrong approach to our economic problems.

CAF is presenting job-creating and economy-growing ideas that ought to be debated so we can begin to turn this economy around and make it work for all of us instead of just a few of us. Jobs and growth fix deficits.

The Vast Trade Deficit Drains Our Economy And Jobs

Recently the 2012 U.S. international trade deficit in goods and services was announced. It fell slightly in 2012 (due in part to a decline in petroleum imports), to $540.4 billion from $560 billion in 2011. But 2012 saw a record trade deficit of $315 billion with China – approaching $1 billion a day. That is $540 billion a year drained from our economy, $315 billion of that just to China.

This vast trade deficit represents the loss of millions of jobs, tens of thousands of factories and entire industries. It hits at our ability to fix our economic problems. In particular, this problem affects our manufacturing companies, which provide solid, middle-class jobs and exports that strengthen the country.

Instead of the current focus on budget deficits, Washington should be talking about how to fix this vast trade deficit. Here are some of the things they should be talking about — and doing.

Fix Currency

Countries manipulate their currency rates because a “weak” currency means products made there are much more price-competitive. China’s currency is still estimated to be at least 20 percent below “market” rate, meaning goods made in China cost at least 20 percent less than goods made here, even before you factor in other things China does to give itself a trade advantage.

Confronting currency manipulation offers the biggest “bang for the buck,” requiring no tax dollars and reaping huge returns, shrinking the federal budget deficit by between $78.8 billion and $165.8 billion over three years.

Fixing this one problem could create between 2.2 million and 4.7 million jobs and increase GDP between 1.4 percent and 3.1 percent, helping manufacturers in particular, gaining between 620,000 and 1.3 million of those jobs. It would reduce the U.S. trade goods deficit by at least $190 billion and as much as $400 billion over three years.

Reform Trade Agreements

A $540 billion trade deficit doesn’t come from balanced trade; it is the result of one-sided trade agreements we have entered into. These trade agreements exposed America’s companies, workers, factories and tax base to direct competition with non-democracies, impoverished and exploited workers and countries that do not protect the environment. That could only go one way.

We have a democracy, in which people have a say. So they say they want good wages, safe workplaces and a clean environment. When we open that system up to direct, unregulated competition from places where people have no say and are told they can’t have those things, we put our democratic system at a competitive disadvantage in world markets. We make it a disadvantage to protect the environment, pay well, provide benefits, protect worker safety and the other things that we do and others do not do. Those become just “costs” to be eliminated.

Those trade agreements could have had different terms that lead to different results that lifted working people on both sides of the trade border instead of pushing terrible and increasing worldwide inequality. They could have lifted environmental protections on both sides of trade borders. They could have increased worker and consumer protections. They still can.

Our country’s trade agreements can still be reformed to do these things, rebalancing trade and lifting people and the environment. Future trade agreements should learn the lessons.

Bring Back The Bring Jobs Home Act

Last year Senate Republicans filibustered the Bring Jobs Home Act, but the bill had tremendous public support. It should be revived.

The Bring Jobs Home Act would have cut taxes for U.S. companies that move jobs and business operations to the United States, and ended tax loopholes that reward companies for shipping jobs overseas. The bill would have allowed companies to qualify for a tax credit equal to 20 percent of the cost associated with bringing jobs and business activity back to the United States. It would have closed a loophole allowing a company moving jobs overseas to deduct various relocation costs.

Additionally, any new bill should tax the overseas income of U.S. corporations the same way domestic income income is taxed, so there would be no tax advantage to them from shifting income and jobs overseas.

Strengthen Buy America In Federal And State Procurement

There is no reason our own government should be undermining American manufacturers. “Buy America” provisions should be a mandate on federal, state and local government purchases, consistent with our trade laws. To accomplish this, our bottom line should be:

  • All federal spending should have “buy America” provisions giving American workers and businesses the first shot at procurement contracts.
  • New federal loan guarantees for energy projects should require the utilization of domestic supply chains for construction.
  • Our military equipment, technology and supply purchases should have increased domestic content requirements.
  • Renewable and traditional energy projects should use American materials in construction. State-level spending should have similar requirements, as well as strategies for getting them in place.

Many state-level procurement laws are very weak. As a result, a lot of tax dollars go to purchase goods made overseas instead of goods made in the USA. States should also strengthen their procurement policies to promote buying American-made materials.

The Invest in American Jobs Act of 2013, announced Tuesday, is a good start and deserves support and discussion. The Act strengthens Buy America preferences, closes loopholes and improves transparency in the federal waiver process.

These are a few examples of the things that Washington should be talking about. These proposals solve real problems in practical ways that help the American people.

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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

Both Sides Are NOT To Blame For Sequester!

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If you are a citizen in a democracy you need to have correct information about important issues so you can make decisions and know who to hold accountable for things they do. But you wouldn’t know anything if you follow America’s corporate news media. For example, you certainly wouldn’t know that the deficit is currently falling at the fastest rate since the end of WWII. (Only 6% of the public knows that the deficit is falling, not rising.)

Watch as NBC News (March 1 broadcast) blames “both sides” and “Congress” for the sequester cuts that could bring in a new recession:

Visit NBCNews.com for breaking news, world news, and news about the economy

“Congress” has left town – not that Republicans adjourned without doing allowing votes.

“No serious attempt all week long” to stop this.

“President didn’t rise above political rhetoric.”

“Both sides maintained the blame game.”

Deficit Is Falling Dramatically, But Only 6% Know That

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There is no deficit problem. The deficit is down about 50 percent as a share of gross domestic product just since President Bush’s fiscal year 2009 deficit and is falling at the fastest rate since the end of World War II. Yet the Washington debate is about how and where to cut us back into recession. Why?

Congress should just repeal the sequester – we don’t need it. We have 10 years to fix the long-term deficit situation. We should not be stampeded by deficit-scare propaganda and instead take the time to carefully consider the right approach. That way we won’t make the mistakes that Europe is making.

Deficit Falling

Here is a chart of the deficit as a percent of GDP: (Data sources below)

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Is Ths Where The (Middle-Class) Money Went?

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Tuesday’s post, 40% Of Americans Now Make Less Than 1968 Minimum Wage, was updated with this chart:

The chart shows that wages used to go up as productivity went up, but in the 1970s they decoupled. Productivity kept going up but wages stagnated.

Now, here’s another chart. This chart shows that financial-sector and non-financial-sector compensation used to rise together, but in the late 70′s / early 80′s they decoupled. Financial-sector compensation took off, while non-financial-sector compensation did not.

Correlation isn’t causation, but just sayin’…

In the post, 40% Of Americans Now Make Less Than 1968 Minimum Wage, I wrote this about that:

This means the gains went … somewhere else. See if you can guess who got them? (Hint: it’s the 1%; this is one driver of the terrible income and wealth inequality.) This breakoff of wages from productivity growth is partly (largely?) the result of trade agreements that pit Americans against exploited workers in non-democracies. This weakened the bargaining power of unions, moved factories and industries out of the country, devastated entire regions of our country — and gave the giant multinational corporations, Wall Street and the billionaires the leverage they needed…

(*Click charts for sources.)
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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

40% Of Americans Now Make Less Than 1968 Minimum Wage

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You may have seen the charts showing how working people’s wages stopped going up along with productivity gains:

null

Update: I am adding this chart of productivity gain and wages, from EPI’s The wedges between productivity and median compensation growth:

This means the gains went … somewhere else. See if you can guess who got them? (Hint: it’s the 1%; this is one driver of the terrible income and wealth inequality.) This breakoff of wages from productivity growth is partly (largely?) the result of trade agreements that pit Americans against exploited workers in non-democracies. This weakened the bargaining power of unions, moved factories and industries out of the country, devastated entire regions of our country — and gave the giant multinational corporations, Wall Street and the billionaires the leverage they needed…

Economist Dean Baker describes one effect of this in Minimum Wage: Who Decided Workers Should Fall Behind?

“If the minimum wage had risen in step with productivity growth [since 1968], it would be over $16.50 an hour today. That is higher than the hourly wages earned by 40 percent of men and half of women.”

Baker is referring to this CEPR study: The Minimum Wage and Economic Growth.

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DO Companies Lay People Off Because Of Taxes Or A Minimum Wage Rise?

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Florida Senator Marco Rubio gave a “Republican Response” to the President’s State of the Union address. He said that taxes cause employers to reduce hours or lay people off. Others say that raising the minimum wage will mean layoffs. Let’s take a closer look at that.

In Wednesday’s post, What Do Republicans, Rubio And Rand Have If They Don’t Have Deficits? I focused on one line from Rubio’s speech,

One line of Rubio’s stands out: “Because more government raises taxes on employers who then pass the costs on to their employees through fewer hours, lower pay and even layoffs.”

With this Rubio is trying to scare people who are worried about jobs. Business taxes are on profits. Good businesses employ the right number of people, so a company that is making profits isn’t going to reduce staff or hours. That is simply preposterous to anyone who has ever run a business.

I was in a local CVS store today. There weren’t enough employees in the store, and there was a long line of people waiting to pay for items at the only checkout register. There was also a long line of people in line at the pharmacy. I saw a one person give up, leave their nearly-full carrier on a shelf, and just leave the store. I saw another person come in the door, take one look at the line and leave. I left without buying anything and went to a different store — not a CVS, for what I was looking for.

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Fix The Trade Deficit, Fix The Economy.

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Yet another report is out showing how the trade deficit is costing us millions of jobs and hurting our economy. This report has specific numbers: between 2.2 million and 4.7 million U.S. jobs, between 1 percent and 2.1 percent of the unemployment rate and a gross domestic product increase of between 1.4 percent and 3.1 percent.

These are real numbers that were carefully calculated. This is a real problem that is hurting people, hurting small and mid-sized companies, hurting communities, hurting our tax base and hurting our ability to make a living in the future. And there are real solutions available to fix the problem.

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Why Are Republicans Trying To Cut Us Back Into Recession?

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The deficit problem is largely solved. Yet Republicans are still trying to cut us back into recession. Before the election they had an excuse: if they kept the economy down people might vote against Obama. But now? What is their game? Jobs fix deficits, and to fix jobs, fix trade and invest.

Proof In Pudding

We now have (even more) clear evidence of what we already knew for sure: cutting government cuts the economy. Along with every other country that has tried cutting their way to growth (now and in all of history, ever, anywhere), our economy was forced into decline last quarter and that decline was entirely caused by cuts in government.

Bob Borosage yesterday, quoted in the Huffington Post’s Jobs Deficit: Austerity Politics Threaten Obama’s Economy,

As Europe has shown and the IMF has warned, inflicting austerity on a weak economy is ruinous and is likely to drive us back into a recession. Those dismissing the downturn as due to an odd drop in government spending should consider that more of these are on the docket.

And Borosage again in Warning: Austerity Hysteria Endangers Your Job,

The U.S. economy shrank unexpectedly in the last three months of 2012, ending over 30 months of economic growth. Exports lagged, reflecting, in part, declining markets in Europe, now suffering a costly recession inflicted by misguided austerity policies. But the greatest cause of the decline was unexpectedly large cuts in government spending, particularly in the military.

Yes, Virginia, cutting government spending in a weak economy costs jobs.

A three-month downturn is a caution, not a catastrophe. But Washington seems too wrapped in its deficit delusions to pay attention to the flashing yellow lights.

Krugman today, in Looking for Mister Goodpain, points out that everywhere else this has been tried the result is higher unemployment and slower growth. After describing the search of an austerity success story Krugman concludes that we should start fixing unemployment,

So what do we learn from the rather pathetic search for austerity success stories? We learn that the doctrine that has dominated elite economic discourse for the past three years is wrong on all fronts. Not only have we been ruled by fear of nonexistent threats, we’ve been promised rewards that haven’t arrived and never will. It’s time to put the deficit obsession aside and get back to dealing with the real problem — namely, unacceptably high unemployment.

Jobs Fix Deficits

The cutters have had their chance. We all understand that the deficit scare is not about deficits at all, it is really about cutting what they want to cut: the things We, the People do to make our lives better, because they want that money for the 1% who pay for their campaigns.

If you really want to worry about deficits the way to fix deficits is jobs. Invest in our economy and the things that make our lives better, and the growth will come. Because democracy is the best economic policy.

Invest in a modern, 21st-century infrastructure and the economy will grow, and deficits as a percent of that economy will become very small — just like what happened when we did that before. (Unless you think the interstate highway system and airports, etc. didn’t help the economy.)

Look to history, people, not to corporate/billionaire propaganda. Look at what has worked, and do that. Investing grows economies, cutting kills economies.

A Deficit To Worry About: Our Trade Deficit

We do have a deficit to worry about, and that is the trade deficit. More than $1 billion dollars a day is drained out of our economy by the trade deficit.

The same crowd (billionaires and their giant, anti-competitive corporations) that promotes the budget deficit scare is benefitting from the trade deficit.

Since Reagan (coincidence?) we have been buying more than we sell and moving jobs and factories out of the country. This pits American workers against low-paid, exploited workers in countries that do not protect people or the environment. And it gets worse every year.

The result of Republican policies has been millions of people begging for work at any wage, and the middle class forced into ever-increasing debt. Meanwhile all the income and wealth accumulates at the very top. … It almost looks like that is the real Republican plan.

See also:

Me, October: Trade Deficit – One Root Of Many Problems.

Borosage, today: Why a Trade Strategy Should Be a State of the Union Priority

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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

If You Want To Reform Something, Reform The Trade Agreements

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When you hear anyone from the big multinationals or Wall Street using the word “reform,” watch out! The way they use the word, it means give them more and We, the People get less. They want to “reform” Social Security, “reform” Medicare and “reform” the income tax code. And now they want to “reform” the taxes corporations pay on money made outside the US. It’s like “reforming” an oak tree with an ax.

$420 Billion In Taxes Owed

American corporations are holding a lot of (their shareholders’) cash “outside of the country.” (But not really outside.) HOW much money are we talking about? Approx $1.2 trillion as of last March. This is money these companies have made in international profits, owed to their shareholders or potentially used for investment in US jobs, facilities and equipment. But they won’t bring the money back to the US because they would have to pay taxes if they did. Instead they are holding it “outside of the country” and pushing for “reform” — meaning let them out of their tax bill. If this $1.2 trillion were repatriated and taxed at the full corporate tax rate of 35% this would bring an additional $420 billion to the treasury for We, the People to use to rebuild our infrastructure, etc.

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