mindchanging politics

The Labor Department released its monthly jobs report today, and the picture was quickly muddled by Democratic and Republican pandering in an election year that is almost exclusively focusing on economic recovery. According to the report private employers added only 120,000 jobs to the economy in March, a disappointing number according to most analysts compared with the previous two months each of which added almost twice that number. Despite this slowing of the pace of hiring the unemployment rate dropped slightly from 8.3 to 8.2 percent.

However, the unemployment rate comes from a separate survey of households rather than employers and indicates that a lower portion of the population were looking for work rather than indicating more workers being added to the economy. Therefore, it is almost useless to look to the unemployment rate as a significant determinant of economic recovery without adding the caveat that fewer people looking for work does not strong job growth make.

The economic picture is further clouded by election year politics in which both parties seem to do little else but blame the other party for “failed economic policies.” In a speech this morning at the White House conference on “Women and the Economy,” President Obama acknowledged the difficulties posed by anemic job growth, calling the report worrying but stressing that the unemployment rate continues to decline (albeit, slowly). The President did not mention other disappointing news identified in the report. For example, fewer than half the persons in recent months added to payrolls, or that the drop in unemployment reflected the fact that more people had dropped out of the labor force.

The Republican front-runner, Mitt Romney, wasted no time in blaming the President personally for economic forces put in motion long before Obama’s election and far beyond his executive powers to change. “Millions of Americans are paying a high price for President Obama’s economic policies, and more and more people are growing so discouraged that they are dropping out of the labor market altogether,” Mr. Romney said.

To be fair, millions of Americans have been dropping out of the labor market over the last twenty years as a permissive regulatory environment, corporate tax loopholes, and other factors such as technological innovation encouraged American companies to move jobs and profits overseas. Yet, Mr. Romney has virtually nothing to say to his peers who are truly responsible for the economic malaise of the country.

Congressional leaders proved no better in offering Americans either a correct diagnosis or reasonable policies for extricating Americans from this malaise. House Speaker John A. Boehner said, “Today’s report shows that families and small businesses are still struggling to get by because of President Obama’s failed economic policies.” Surely, Mr. Boehner means that families and small business are struggling from an economic collapse precipitated by his party’s commitment to crony-style capitalism under eight years of Bush the Younger’s reign.

Politically speaking, the problem with the economy is that no one is willing to tell it like it is. After more than two decades of Republican-style economics, supported more or less by the Democratic Party and its ties to corporate America as well, Americans are neither getting the truth of the matter nor making much progress. Income inequality, poverty, the uninsured are at their highest levels since the Great Depression. Then again, so are profits margins and executive compensation as American corporations sit on mountains of cash they have expropriated from workers, consumers, and investors alike.

The conjunction of these two facts—deepening inequality and corporate greed—are the two largest road blocks standing in the way of economic recovery. Until politicians do their job, and some of this reserve is redistributed in the form of more hiring, rising wages, and pension and health care reform, there is little hope either of addressing this country’s many economic problems or escaping its self-inflicted malaise.

In a speech to journalists at the Associated Press (AP) President Obama roundly criticized the House Republican budget proposal and its economic presuppositions. The President wasted no time in taking off the gloves while talking to reporters, describing the budget proposal itself as a “Trojan Horse” and indicting its economic presuppositions as “thinly veiled Social Darwinism.” Both statements are basically true.

President Obama claims the budget proposal passed by Republicans is properly described as a “Trojan Horse.” The analogy is apt. In the Iliad the mythical horse represents a gift to the people of Troy from Agamemnon and his invading armies, but it actually provides cover for Odysseus and his warriors to pass unknowingly through the city’s gates and wait for the cover of night. The story is pretty much down hill from there, for both the Trojans and their fair city, as well as Odysseus, who gets lost for twenty years on his way home. The same can be said for the Republican offer on the table. We drank that Kool-Aid long ago with Reagan, Bush the Elder, and Bush the Younger. After decades of trying it their way we find ourselves worse off than before: more economic inequality, job insecurity, poverty, and homelessness in the wake of the housing bubble’s collapse. Common sense is that a budget crisis of this proportion cannot be resolved by slashing budgets alone, especially when those cuts affect all of us in terms of social services. That means not just less aid for those most in need, but fewer firemen, police officers, and public workers to keep our streets clean and safe. The budget gap is simply too big and requires something that should have been done long ago: a tax code that is really progressive and makes everyone pay their “fair” share. This means you, too, wealthy folks.

The President’s substantially correct indictment of the Republican Party’s economic presuppositions is also spot-on. Roughly, the phrase “Social Darwinism” was coined in the 1870’s to describe theories of society that emphasize the struggle for existence and the role of competition in weeding out inferior members of the species. In particular, the phrase applies to policies that rely on these notions for their justification, and at the expense of the least well off in society. What are the economic presuppositions of Republicans: no taxes, no regulation, dismantle social services, privatize everything, “let God sort them out” as they might say. After all, the core assumptions of their economic policy are often based on metaphors (“invisible hands,” “all boats lift with the rising tide,” “taxes hurt growth”), yadda yadda yadda.

Obama’s remarks reflect a fundamental truism of electoral politics made famous by a sign hanging in Gov. Bill Clinton’s campaign war office in 1992: “It’s the economy, stupid!” The same was true then, and now. Obama should keep the gloves off and keep pummeling the message home. America cannot settle for Mitt Romney and his tired and “time-tested-to-their-discredit” economic views. America is increasingly the land of prosperity for some; it needs to live up to its own self-image as a place where prosperity is possible for all.

Last week, Congress passed a much-weakened version of the STOCK Act banning insider trading by its members and their staffers. The law was significantly weakened by failing to place curbs on “political intelligence,” as well as failing to provide new clean-government rules for oversight of the financial dealings of Congressional members.

The legislation makes clear that lawmakers and key staffers are bound by the insider trading laws, but members of Congress are already bound by the laws of the United States so it is unclear what the purpose of this legislation is—except perhaps to promulgate convoluted language so they may continue to practice questionable financial dealings without much oversight. For example, the House version of the bill bars lawmakers from participating in IPOs, but whether this provision will remain in the conference version of the bill, which is reconciled between the Senate and House, remains to be seen.

Further proof that the law is anemic and intended to protect corruption in Congress can be found in two provisions that were cut at the last minute. One provision found in the Senate version requiring members and staffers who collect and trade so-called political intelligence—information from government that can move markets and stock prices—to register just like lobbyists was eliminated by House Republicans. Their version of the bill also cut a provision that cracks down on officials who are guilty of taking actions on the job to benefit themselves financially.

The STOCK Act represents an attempt by House Republicans to take the teeth out of the Senate version of the bill, and thereby preserve the political and financial corruption that have become hallmarks of Congress. The revisions even led Republican sponsors of the Senate version to criticize members of their own party. Sen. Chuck Grassley (R-Iowa) called the changes “astonishing and extremely disappointing.”

America’s reaction to the Supreme Court’s decision in Citizens United ranges from public outrage visible in the Occupy Wall Street movement to barely concealed glee among wealthy donors who seek to influence the outcome of elections with an avalanche of dollars.

Recent data compiled by the NYT from Federal Elections Commission (FEC) records reveal the following:  A supermajority of the millions is spent on wealthy or conservative candidates with financial ties to the financial and energy industries. Much of the money provided by individual donors is helping individual candidates win primaries that should be decided by intelligence, experience, believability, and integrity (virtues which few if any of the Republicans possess all together).

1. Restore Our Future—Mitt Romney’s PAC—$36.8 million total with 10 individuals contributing more than $1 million each. Most of this money has been spent on ads attacking Newt Gingrich.

Super PAC spent $38 million criticizing Gingrich to make this mediocre candidate appear more appealing.

2. American Crossroads — No known candidate ties. Spent $20 million on ads attacking President Obama before the general election has started.

3. Winning Our Future—Newt Gingrich’s PAC—$13.1 million with 2 individuals contributing $5 million each and 1 individual contributing $1 million by a PAC the candidate funded.

4. Make Us Great Again—Rick Perry’s PAC—$5.5 million spent on a candidate who is literally more stupid than that other governor turned president, George W. Bush.

5. Priorities USA Action—President Obama’s PAC—$4.5 million spent on a sitting President who has been in office three years trying to fix the problems caused by a decade of deregulation. Super PAC support of the President during the general election will likely increase significantly.

More to follow from a political system that permits private individuals to finance candidates without much public oversight. If money is free speech, then some people have more speech than others! So much the worse for the democratic principle “one person, one vote.”

In his third State of the Union address President Obama drew a picture of cooperation between government and business for an America that is “built to last”—a phrase he repeated frequently that was intended to remind listeners of his successful plan to bail out America’s auto industry. The President pointed to Detroit as a prime example of what government can do when it works with business to keep America’s factories and jobs from going under or being shipped overseas. He rightly claimed a victory here that did more good for Americans than settling our score with Osama bin Laden:  “We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back.”

The picture of cooperation is starkly different than the antagonism between government and business painted by the “loyal” opposition of the Republican Party. In his televised response to Obama’s address, Governor Mitch Daniels of Indiana laid the blame for America’s economic downturn squarely at the President’s feet despite acknowledging that the recession began under his party’s own watch. (He did not mention that Republican-style economic policy was almost entirely to blame for America’s economic mess.) The tepid speech was out of touch with basic facts and did nothing but rehash the same time tired rhetoric this party has been jabbering for years:  smaller government, no taxes, less regulation and oversight of the economy.

Take the following assertion Mr. Daniels made about spending under the Obama administration:  “In three short years, an unprecedented explosion of spending, with borrowed money, has added trillions to an already unaffordable national debt.” Or again, the assertion that the “grand experiment in trickle-down government has held back rather than sped [sic] economic recovery.” The claim that the debt has increased under Obama is true, but the assertion that it comes from new spending, or that government stimulus like that from the Detroit example failed, are shameless lies that stink of political desperation.

The fact is that federal spending was already on pace to “explode” the national debt, and not because the President had the power to spend more money on new programs. Rather, the debt spiraled out of control for two reasons:  first, the Bush-era tax cuts dried up revenue to keep pace with spending; and second, the financial collapse, and subsequent shrinking of growth and income, scorched the earth of what was left of tax-based revenue sources. Since most revenue goes to servicing the national debt it exploded once the principal source of revenue was destroyed by the Republican give-away of tax cuts to the wealthiest 1 percent of Americans. Republican attitudes and policies on taxes and deregulation are more to blame for the skyrocketing debt in the last three years than anything the President has the power to do.

The starkly different pictures of the relationship between government and business are apparent, but the picture painted by the Republicans reveals economic fantasizing that lacks common sense. Like a work by Monet, this picture looks good from far off but closer inspection reveals the outlines lack a coherent shape and details are fuzzy. Here is a soundbite that feeds such fantasizing because it lacks any grounding in real facts about our present economic problems:  “We do not accept that ours will ever be a nation of haves and have nots; we must always be a nation of haves and soon to haves.”

Never mind that economic inequality has grown significantly in the last two decades, much of it in the last several years, and is now at its greatest point since the Great Depression. Never mind that the rate of poverty, in which individuals and families live on approximately $10,000 annually, has grown by 30 percent in the last three years. These economic facts are ignored by the “loyal” opposition in favor of talking points that are seemingly designed to reassure themselves of a world picture that never was, isn’t now, and never will be. Republicans are not interested in what’s true as a matter of fact, they are only interested in what sounds true to millions of unskilled listeners who, like them, paint in big brush strokes, but can’t keep between the lines when it comes to drawing a coherent picture that remotely looks like reality.

 A Gallup News Poll released Monday is telling. Americans trust their bankers more than their elected officials. According to the poll, 64 percent of Americans rate the honesty and ethical standards of Congress as low/very low. This is the lowest rating since the poll was first started in 1976 to rate the public’s perception of the trustworthiness of various professions. Congressional representatives (and presumably senators) are now tied with lobbyists, who are consistently ranked at the bottom along with the ubiquitously sleazy profile of used car salesmen and telemarketers. (Won’t somebody give good ‘ol Gil a break?) In other words, well over half of Americans believe their politicians are liars.

This dim view of American democracy is consistent with the public’s low disapproval rating of the job Congress is doing, or not doing as it were. An overwhelming 82 percent of the electorate is dissatisfied with its performance, whereas 10 years ago an average of 60 percent of those surveyed approved of the job Congress was doing. Times have changed. Or have they?

Two troubling facts stand out when placed alongside these statistics.

1. The incumbency rate in Congress has been above 80 percent since 1964. That means less than 20 percent of the U.S. House of Representatives turns over from year to year. In the Senate the numbers vary slightly more but not by much. Since 1964 the incumbency rate in the U.S. Senate has never dropped below 50 percent, and since 1982 it has remained steady at 70-80 percent. What does this mean? Despite skepticism of both the profession and institution, Americans continue to send the same people back to Washington over and over again. In short, they reward the apparently poor performance of representatives and senators by reelecting them. (This fact can be related to the alarming salaries and bonuses that corporate executives are giving themselves despite their poor performance. Got Enron-fever, anyone?)

2. In addition, Americans rate the honesty and ethical standards of various business professionals higher than Congress. Only 22 percent of responders ranked real estate agents as low/very low, 26 percent for bankers, 32 percent for executives, 37 percent for lawyers, and 40 percent for stockbrokers. This means that on average Americans trust big business more than democracy despite the fact that the former is paying off the latter to do its dirty work, and despite the fact that the public is supposed to exercise control over the latter with the power of voting.

What is troubling about these statistics is that Americans are clearly losing (have lost) control of their democracy, and the numbers explain exactly why this is happening. They basically trust the corporate world (slightly) more than their politicians. Yet it is corporate America that is getting its way in Washington and having its way with America—by flooding the nation’s capital with billions of dollars in election money, corporate sponsorship of policy think tanks, and downright graft. Even though the electorate is apparently aware that the honesty and ethical standards of politicians have been compromised, they are alarmingly less aware that the source of that corruption can be traced to corporate America.

For all the vaunted talk of the Tea Party’s renewal of responsible government it is the anger and frustration reflected in the Occupy movement that best reflects the political reality. The exclusive blame for America’s problems lies neither with politicians and big government, nor corporations and their greedy executives. There is plenty of blame to spread around there, and OWS has taken an important first step in exposing this evil collusion between elected officials and big business. When it comes down to it, the electorate shares much of the blame for sending the same people back to Congress year after year, effectively preserving a perverse incentive structure for rewarding incompetence and corruption. Maybe it’s time to run for Congress?

On the growth of inequality in America:  “But for most Americans, the basic bargain that made this country great has eroded.  Long before the recession hit, hard work stopped paying off for too many people.  Fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success.  Those at the very top grew wealthier from their incomes and investments than ever before.  But everyone else struggled with costs that were growing and paychecks that weren’t – and too many families found themselves racking up more and more debt just to keep up.”

On the need for rebuilding the middle-class:  “But this isn’t just another political debate.  This is the defining issue of our time.  This is a make or break moment for the middle class, and all those who are fighting to get into the middle class.  At stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.”

On President Teddy Roosevelt’s call for economic and social justice in America:  “In 1910, Teddy Roosevelt came here, to Osawatomie, and laid out his vision for what he called a New Nationalism.  “Our country,” he said, “…means nothing unless it means the triumph of a real democracy…of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him.”

For this, Roosevelt was called a radical, a socialist, even a communist.  But today, we are a richer nation and a stronger democracy because of what he fought for in his last campaign:  an eight hour work day and a minimum wage for women; insurance for the unemployed, the elderly, and those with disabilities; political reform and a progressive income tax.”

On protecting and renewing American workers:  “And if you’re someone whose job can be done cheaper by a computer or someone in another country, you don’t have a lot of leverage with your employer when it comes to asking for better wages and benefits – especially since fewer Americans today are part of a union.”

On the lies of Republican economics:  “Now, just as there was in Teddy Roosevelt’s time, there’s been a certain crowd in Washington for the last few decades who respond to this economic challenge with the same old tune.  “The market will take care of everything,” they tell us.  If only we cut more regulations and cut more taxes – especially for the wealthy – our economy will grow stronger.  Sure, there will be winners and losers.  But if the winners do really well, jobs and prosperity will eventually trickle down to everyone else.  And even if prosperity doesn’t trickle down, they argue, that’s the price of liberty.

It’s a simple theory – one that speaks to our rugged individualism and healthy skepticism of too much government.  It fits well on a bumper sticker.  Here’s the problem:  It doesn’t work.  It’s never worked.  It didn’t work when it was tried in the decade before the Great Depression.  It’s not what led to the incredible post-war boom of the 50s and 60s.  And it didn’t work when we tried it during the last decade.

Look at the statistics.  In the last few decades, the average income of the top one percent has gone up by more than 250%, to $1.2 million per year.  For the top one hundredth of one percent, the average income is now $27 million per year.  The typical CEO who used to earn about 30 times more than his or her workers now earns 110 times more.  And yet, over the last decade, the incomes of most Americans have actually fallen by about six percent.

It’s heartbreaking enough that there are millions of working families in this country who are now forced to take their children to food banks for a decent meal.  But the idea that those children might not have a chance to climb out of that situation and back into the middle class, no matter how hard they work?  That’s inexcusable.  It’s wrong.  It flies in the face of everything we stand for.

But in the long term, we have to rethink our tax system more fundamentally.  We have to ask ourselves:  Do we want to make the investments we need in things like education, and research, and high-tech manufacturing?  Or do we want to keep in place the tax breaks for the wealthiest Americans in our country?  Because we can’t afford to do both.  That’s not politics.  That’s just math.”

The Department of Labor announced that jobless claims were down from 9 to 8.04 percent in November, the single largest decline since March 2009. The fraction translates into roughly 120,000 new jobs created by private employers. However, the report grimly noted that the decline in jobless claims was also partly due to workers giving up looking for jobs in the grim labor market, particularly women.

The report also revised higher the average number of jobs created each month to 143,00 over the three-month period going back to September, an average that is higher than the historic low from May to August, in which anemic job growth signaled the unwillingness of investors and firms to take on new workers at the height of the European debt crisis and the earthquake in Japan that disrupted shipping and supply chains globally.

This November job “rally” can be traced in large part to retailers who added temp workers during the holiday season, so it is unclear whether there is cause for celebration as the transient nature of these 50,000 jobs may become all too apparent in January when retailers let go of their seasonal workers. (Can we expect a rise in jobless claims after the holidays?) In addition, this year’s record-breaking figures by retailers for Black Friday also improved prospects that consumers are more willing to spend in the hopes of a brighter economic future.

However, while economists are claiming that the labor report shows the economy is “improving at a faster clip,” the real news on the ground is that anemic job growth is hampering the economic recovery as workers without jobs spend less on goods and services and firms continue to find ways of cutting workers in order to bolster their bottom lines. The seasonal affective disorder known as “holiday shopping” is only a temporary respite from the really bad news, which is that the real wages of Americans are down and their credit card debt is on the rise again.

These are “not” the signs of a healthily recovering economy, but given the dismal performance and prospects of economic growth in the near future, economists, politicians and investors alike are holding onto this bare bit of news that jobless claims are down, literally, by .06 percent. This is an embarrassing piece of evidence that sound economic policy, which must include job creation (thank you very much, Republicans, for voting against jobs for Americans), has been substituted for the rather conventional approach of grasping at straws in a rising flood.

In a sign that the U.S. and European Union are serious about resolving the ongoing debt crisis in the euro zone, the central banks of five countries, including the European Central Bank, the Bank of England, Bank of Japan, Bank of Canada and the Swiss National Bank, announced a plan to infuse banks across the E.U. with fresh capital. The move comes in an effort to assure financial markets that the debt crisis is being taken seriously and policies are being developed to resolve it.

The announcement comes on the heels of global financial markets being battered in the last two weeks as investor confidence has withered in the face of the ongoing debt crisis, as well as the inability of governments to take swift action to alleviate it. The move by the central banks is supposed to reduce the cost of a program under which banks in foreign countries can borrow money from their own central banks by about 40 percent, with much of the money coming from the Federal Reserve Bank in the U.S. This is supposed to infuse banks with fresh capital and shore up their liquidity in the hopes that they will begin lending again.

The news led to today’s rally on Wall Street, one of the biggest yet, with the three main indexes rising 4 percent or more, representing the largest gain since March 2009. Stock markets across followed favorably with exchanges in London, Paris, Berlin, and Euro Stoxx rising from 3 to 5 percent.

However, the rally will be short lived, as they have proven to be in the past. Although investor confidence depends heavily on the perception that governments are taking strong action to deal with avalanche of debt arising from a slowing global economy and shrinking tax revenues, the underlying reality is that the fundamentals of the global economy are not sound. There is too much money controlled by two few private actors, particularly large hedge funds and other investment banks, that can be moved around too quickly, thanks in large part to financial deregulation and advanced communications technology. Moreover, there is too little democratic accountability, particularly in the U.S., which has deregulated banks, insurance carriers, and other financial institutions to the point where the fraud and theft of “complex financial instruments” are legal grey areas.

Plagued by serious unemployment both the U.S. and E.U. cannot jump-start their economies even if the debt crisis is resolved favorably. Assume banks achieve stability and return some of their liquidity to businesses and consumers in the form of loans. Very few companies will enact aggressive expansion strategies that require hiring new workers, and banks will not lend to consumers without jobs. Thus, even if the debt crisis is resolved, there is no guarantee that the labor market will improve, leaving governments in the lurch as revenues from taxes remain stagnant and requiring them to make further cuts in entitlement programs that exist to help citizens beset by difficult financial times.

This catch-22 is not lost on investors, who more than once in the last few years, have rallied markets on some slim piece of good news like the announcement made today by central banks, only to have their hopes dashed the next day by a slim piece of bad news, for example, that jobless claims are up. The surge in markets today is therefore not “good” news in the sense that it does not guarantee that the so-called “jobless recovery” is actually underway.

The national dialogue started by Occupy Wall Street will continue, but the last of the encampments that have sprung up in big and small cities across America will be cleared out tonight.

Occupy LA the last to be evicted.

Last Friday, Mayor Antonio Villaraigosa and Police Chief Charlie Beck held a press conference announcing the city of Los Angeles was issuing an eviction order for the lawn of City Hall where hundreds of protesters associated with Occupy Los Angeles have been camped since October. On Monday at midnight police began enforcing that eviction order, arresting dozens of protesters in a largely peaceful manner. This is in stark contrast to other cities and university campuses where police have used unnecessary and outrageous force to evict protesters from public spaces.

This signals the end of the first stage of this movement, to occupy these spaces in order to draw the nation’s attention to its unchecked economic and political corruption. Although media commentators, some members of the general public, and FOX News have nurtured doubts about the “focus” or the “message” of this movement, there can be no doubt that this Occupy Movement has restored the problem of economic inequality in the conscience of the nation.

The question now is what the second stage of this movement will look like. As protesters and sympathizers search for the means to continue raising consciousness about the problem of inequality, efforts must be made to create a national organization with state and local outreach. This should be done to counter the perception that the Occupy Movement is merely a bunch of malcontents, anarchists, and homeless persons without a message.

In reality, it is a movement made up of diverse Americans all of whom have been adversely impacted by an economic and political system that no longer serves the interests of the supermajority of its stakeholders. These Americans include young and old alike, whether they are homeless, poor, unemployed, or employed is irrelevant. The Occupy Movement represents the most authentic cross-section of America to date, and therefore speaks honestly to the very real problems that plague our friends, families, and fellow citizens.

We live in the wealthiest country in the world. Roughly speaking, that wealth is controlled by 1 percent of its citizens. Meanwhile, the lives and prospects of the remaining 99 percent continue to suffer and diminish in the face of permanent unemployment, massive credit card and student loan debt, and a democracy that has been hijacked by money and special interests. Despite attempts by corporate hacks and establishment apologists to discredit the Occupy Movement for lack of “focus” or “message” because it lacks “sexy” marketing, the nation owes these brave souls who have suffered derision, endured bad weather and faced the batons and pepper spray of police officers, for bringing the real problems of this country to the table.