Showdown Fatigue

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We’re one week away from a massive cut in federal spending — cuts that will hurt millions of lower-income Americans who’ll lose nutrition assistance, housing, and money for their schools, among other things; that will furlough or lay off millions of government employees, reduce inspections of the nation’s meat and poultry and pharmaceuticals and workplaces, eliminate the jobs of hundreds of thousands of people working for government contractors, and, according to Leon Panetta and other military leaders, seriously compromise the nation’s defenses.

Bad enough. If the spending cuts go through next week our fragile economy will slow further, causing more unemployment and misery. When consumers don’t have the money to buy enough to keep the economy moving, and government pulls back this much, businesses can’t justify keeping people on.

Yet the silence is deafening.

Republicans won’t deal. Obama has already cut $ 1.5 trillion out of the budget but Republicans insist on far more. They want the White House to propose major cuts in Social Security and Medicare.

Meanwhile, the Bush tax cuts have been extended permanently to everyone earning up to $ 400,000. Only the richest 2 percent have to pay at the rate they did under Bill Clinton, which was far lower than rich paid before 1981. That will generate $ 600 billion — less than half of the cuts Obama has accepted.

No one in their right mind would call this a balanced approach to deficit reduction. Yet Republicans won’t even consider raising taxes on the most fortunate members of our society. They won’t limit deductions and loopholes that have driven down the super-rich’s tax rates to single digits (remember Romney’s “carried interest” loophole for private-equity mavens?).

So where’s the outcry? Why aren’t more people up in arms? Why aren’t big businesses (including major military contractors) and Wall Street screaming into the ears of the GOP? Where’s the outrage from Main Street?

I suspect most Americans are suffering showdown fatigue. After all, we got through the debt-ceiling showdown of August 2011 and the fiscal-cliff showdown on January 1, and the world didn’t end. So most people figure Washington will find a way out of this one, too.

Others have bought the Republican-Fox News lies that the deficit is our biggest economic problem, and government spending is to blame. So a massive, abrupt, and indiscriminate cut in spending seems okay.

It’s not okay. It will hurt the most vulnerable members of our society, and much of the middle class.

Yet it would be even worse if Obama and the Democrats were to give in to Republicans, and not demand more from those who have never been wealthier. Inequality is widening again. All the economic gains since the Great Recession have gone to the top. The richest 400 have more wealth than the bottom 150 million Americans put together.

Why not limit the mortgage interest deduction to $ 25,000 a year, so the rest of us don’t have to subsidize mansion mortgages? Why not a wealth tax on assets in excess of $ 5 million to pay for early-childhood education? Why not a small tax on financial transactions (as Europe is now instituting) to finance better schools? Why not close the loophole that private-equity and hedge-fund moguls live off of, to finance child nutrition and social services for the poor?

It’s no time for showdown fatigue. It’s time to fight.

ROBERT B. REICH, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His latest is an e-book, “Beyond Outrage,” now available in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.

Follow Robert Reich on Twitter: www.twitter.com/RBReich

Robert Reich

Showdown Fatigue

The Real Debate Over American Citizenship

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Sometimes we have a national conversation without realizing it. We talk about different aspects of the same larger issue without connecting the dots.

That’s what’s happening now with regard to the meaning of American citizenship and the basic rights that come with it.

On one side are those who think of citizenship as a matter of exclusion and privilege — of protecting the nation by keeping out those who are undesirable, and putting strict limits on who is allowed to exercise the full rights of citizenship.

On the other are those who think of citizenship inclusively — as an ongoing process of helping people become full participants in America.

One part of this conversation involves immigration. I’m not just referring the question of whether or how people living in the United States illegally can become citizens. (Courtesy of our fast-growing Latino population, 70 percent of whom voted for President Obama last November, we’re far closer to resolving that one than we were a year ago.)

It’s also a question of who we want to join us. Engraved on a bronze plaque mounted inside the lower level of the pedestal of the Statue of Liberty are Emma Lazarus’ immortal words, written in 1883: “Give me your tired, your poor/ Your huddled masses yearning to breathe free/ The wretched refuse of your teeming shore./ Send these, the homeless, tempest-tost, to me.”

By contrast, a bipartisan group of lawmakers last week introduced a bill giving priority to the highly skilled. “Our immigration system needs to be … more welcoming of highly skilled immigrants and the enormous contributions they can make to our economy,” said one of its sponsors, Florida Senator Marco Rubio.

So is the priority to be those who need us, or those whom we need?

Another part of the same larger conversation concerns voting rights — the means by which citizens participate in our democracy.

Long waiting lines depressed voter turnout last November, especially in cities where Democrats outnumber Republicans.One study showed blacks and Hispanics on average had to wait nearly twice as long to vote as whites. Some gave up trying.

Voter registration is part of that issue, along with what sorts of proof of citizenship states may require. Dozens of legal challenges and lower-court decisions were made in the months leading up to the November election. Some are heading to appellate courts.

Congressional Democrats are pushing legislation to require states to ease voting requirements — allowing more early voting, online voting, and quicker means of registering. Meanwhile, the Supreme Court is preparing to hear a major challenge to the Voting Rights Act of 1965 potentially giving states more leeway to tighten voting standards.

A different aspect of the citizenship conversation concerns the rights of corporations to influence elections. The Court’s bizarre 2010 decision in “Citizens United versus Federal Election Commission” — deeming corporations people under the First Amendment, with unlimited rights to spend money on elections — didn’t consider the question of corporate citizenship as such.

But it’s likely to become a big issue in the future as large American companies that pour lots of money into our elections morph into global corporations without any particular national identity.

Most of Chrysler is owned by Fiat, and most of Fiat is owned by non-Americans. Both IBM and GE have more non-American employees and customers than American, and foreign ownership of both continues to increase. At what point do these global entities forfeit their right to influence U.S. elections?

And then there’s the growing debate about whether American citizens have the right to a trial by an impartial judge and jury before the government executes them.

You might think so. The Constitution guarantees American citizens “due process” of law. But a “white paper” from the Justice Departmeny, recently obtained by NBC News, argues that an “informed, high-level” government official can unilaterally decide to put an American citizen to death without any judicial oversight if that official decides the citizen in question is an operational leader of Al Qaeda or one of its allies.

Even if you trust high-level officials in the current administration, their argument should give you pause. The relative ease by which targeted drones can now kill particular individuals far from recognized battlefields (as did the drone attack on American-born Anwar al-Awlaki in Yemen in September, 2011) raises uncomfortable questions about the protections accorded American citizens, as well as the potential for arbitrary decision making about who lives or dies.

They may seem unrelated, but all these issues — who gets to be an American citizen, how easily American citizens can vote, whether global corporations are American citizens entitled to influence our elections, and whether American citizens are entitled to a judge and jury before being executed — are pieces of the same larger debate: Are we more fearful of “them” out there, or more confident about “us”? Is our goal to constrain and limit citizenship, or to enlarge and fulfill its promise?

It’s an old debate in America. The greatness of our nation lies in our overriding tendency to choose the latter.

ROBERT B. REICH, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His latest is an e-book, “Beyond Outrage,” now available in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.

Follow Robert Reich on Twitter: www.twitter.com/RBReich

Robert Reich

The Real Debate Over American Citizenship

Coming Tuesday (Hopefully): The State of the Union"s Economy

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If you’re sitting in the well of the House when a president gives a State of the Union address (as I’ve had the privilege of doing five times), the hardest part is on the knees. You’re required to stand and applaud every applause line, which means, if you’re in the cabinet or an elected official of the president’s party, an extraordinary amount of standing and sitting.

But for a president himself, the State of the Union provides a unique opportunity to focus the entire nation’s attention on the central issue you want the nation to help you take action on.

President Obama has been focusing his (and therefore America’s) attention on immigration, guns, and the environment. All are important. But in my view none of these should be the central theme of his address Tuesday evening.

His focus should be on the joblessness, falling real wages, economic insecurity, and widening inequality that continue to dog the nation. These are the overriding concerns of most Americans. All will grow worse if the deficit hawks, austerity mavens, trickle-down charlatans, and government-haters who have commanded center stage for too long continue to get their way.

In coming weeks the GOP will be using another fiscal cliff, a funding crisis, and another debt ceiling showdown to convince Americans of an outright lie: that the federal budget deficit is our most important problem, that it is responsible for the continuing anemic recovery, and that we must move now to reduce it.

The President should make it clear that any Republican effort to hold the nation hostage to the GOP’s ideological fixation on the budget deficit and a smaller government will slow the economy, likely pushing us into another recession. And that those most imperiled are the middle class and the poor.

He should emphasize that the real job creators are not the rich but the vast majority of ordinary Americans whose purchases give businesses reason to add jobs. And that if most Americans still cannot afford to buy, the government must be the spender of last resort.

Perhaps it’s too much to hope for, but I’d encourage the President to call for boosting the economy: Reversing the recent Social Security tax hike by exempting the first $ 20,000 of income from payroll taxes and lifting the ceiling on income subject to it, to make up the shortfall. Reviving the WPA and CCC, to put the long-term unemployed directly to work. Raising the minimum wage. Imposing a 2 percent annual tax surcharge on wealth in excess of $ 7 million to fund a world-class system of education, so all our kids can get ahead. Cutting corporate welfare and the military but not cutting public investments or safety nets the middle class and poor depend on. Giving tax credits to companies that create more new jobs in America. Helping states and locales rehire the teachers, fire fighters, police officers, and social workers they need.

This is the most fragile recovery in modern history, from the deepest downturn since World War II. Most Americans are not experiencing a recovery at all. As has been shown in Europe, austerity economics is a cruel hoax. President Obama must acknowledge this in his State of the Union, and commit to fighting those who would impose it on America.

ROBERT B. REICH, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His latest is an e-book, “Beyond Outrage,” now available in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.

Follow Robert Reich on Twitter: www.twitter.com/RBReich

Robert Reich

Coming Tuesday (Hopefully): The State of the Union"s Economy

The Biggest Republican Lie

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Senate minority leader Mitch McConnell (R., Ky.) says Senate Republicans will unanimously support a balanced-budget amendment, to be unveiled Wednesday as the core of the GOP’s fiscal agenda.

There’s no chance of passage so why are Republicans pushing it now? “Just because something may not pass doesn’t mean that the American people don’t expect us to stand up and be counted for the things that we believe in,” says McConnnell.

The more honest explanation is that a fight over a balanced-budget amendment could get the GOP back on the same page — reuniting Republican government-haters with the Party’s fiscal conservatives. And it could change the subject away from social issues — women’s reproductive rights, immigration, gay marriage – that have split the Party and cost it many votes.

It also gives the Party something to be for, in contrast to the upcoming fights in which its members will be voting againstcompromises to avoid the next fiscal cliff, continue funding the government, and raising the debt ceiling.

Perhaps most importantly, it advances the Republican’s biggest economic lie – that the budget deficit is “the transcendent issue of our time,” in McConnell’s words, and that balancing the budget will solve America’s economic problems.

Big lies can do great damage in a democracy. This one could help Republicans in their coming showdowns. But it could keep the economy in first gear for years, right up through the 2014 midterm elections, maybe all the way to the next presidential election.

Perhaps this has occurred to McConnell and other Republicans.

Here’s the truth: After the housing bubble burst, American consumers had to pull in their belts so tightly that consumption plummeted — which in turn fueled unemployment. Consumer spending accounts for 70 percent of economic activity in the U.S. No business can keep people employed without enough customers, and none will hire people back until consumers return.

That meant government had to step in as consumer of last resort — which it did, but not enough to make up for the gaping shortfall in consumer demand.

The result has been one of the most anemic recoveries on record. In the three years after the Great Recession ended, economic growth averaged only 2.2 percent per year. In the last quarter of 2012 the economy contracted. Almost no one believes it will grow much more than 2 percent this year.

In the wake of the previous ten recessions the U.S. economy grew twice as fast on average — 4.6 percent per year. It used to be that the deeper the recession, the faster the bounce back. The Great Depression bottomed out in 1933. In 1934, the economy grew more than 8 percent; in 1935, 8.2 percent; in 1936, almost 14 percent.

Not this time. Unemployment is still sky high. The current official rate of 7.9 percent doesn’t include 8 million people (5.6 percent of the workforce) working part-time who’d rather be working full time. Nor those too discouraged even to look for work. The ratio of workers to non-workers in the adult population is lower than any time in the last thirty years — and that’s hardly explained by boomer retirements.

Wages continue to drop because the only way many Americans can find (or keep) jobs is by settling for lower pay. Most new jobs created since the depth of the Great Recession pay less than the jobs that were lost. That’s why the real median wage is now 8 percent below what it was in 2000

Republicans who say the budget deficit is responsible for this are living on another planet. Consumers still don’t have the jobs and wages, nor ability to borrow, they had before the recession. So their belts are still tight. To make matters worse, the temporary cut in Social Security taxes ended January 1, subtracting an additional $ 1,000 from the typical American paycheck. Sales taxes are increasing in many states.

Under these circumstances, government deficits are not a problem. To the contrary, they’re now essential. (Yes, we have to bring down the long-term deficit, but that’s mostly a matter of reining in rising healthcare costs – which, incidentally, are beginning to slow.)

If Republicans paid attention they’d see how fast the deficit is already shrinking. It was 8.7 percent of the Gross Domestic Product in 2011. The Congressional Budget Office forecasts it will shrivel to 5.3 percent by the end of 2013 if we go over the fiscal cliff on March 1 — and some $ 85 billion is cut from this year’s federal budget. Even if March’s fiscal cliff is avoided, the CBO expects the deficit to shrink to 5.5 percent of the GDP, in light of deficit reduction already scheduled to occur.

This is not something to celebrate. It translates into a significant drop in demand, with nothing to pick up the slack.

Look what happened in the fourth quarter of 2012. The economy contracted, largely because of a precipitous drop in defense spending. That may have been an anomaly; no one expects the economy to contract in the first quarter of 2013. But you’d be foolish to rule out a recession later this year.

The budget deficit and cumulative debt are not the “transcendent issue of our time.” The transcendent issue is jobs and wages. Cutting the budget deficit now will only result in higher unemployment, lower wages, and more suffering.

ROBERT B. REICH, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His latest is an e-book, “Beyond Outrage,” now available in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.

Follow Robert Reich on Twitter: www.twitter.com/RBReich

Robert Reich

The Biggest Republican Lie