My CBPP colleagues contributed many important graphics to the debates of 2011 in lots of different areas, including fiscal, poverty, inequality, health care, and more. But which ones to highlight in this end-of-year look back at the best of 2011? I generally used a market test: these are the ones that were most widely circulated.
Economic writers in earlier times were more ready than their modern counterparts to confront the problem of debts growing so large as to be unpayable. In The Wealth of Nations (V, iii), Adam Smith observed that “Bankruptcy is always the end of great accumulation of debt. The liberation of the public revenue, if it has ever been brought about at all, has always been brought about by a bankruptcy; sometimes by an avowed one, but always by a real one, though frequently by a pretended payment.”
The United States is facing significant and fundamental budgetary challenges. The federal government's budget deficit for fiscal year 2011 was $1.3 trillion; at 8.7% of gross domestic product (GDP), that deficit was the third-largest shortfall in the past 40 years. (GDP is the sum of all income earned in the domestic production of goods and services. In 2011, it totaled $15.0 trillion.)
“Now, as to paper money, so called every on knows that paper money is the money of civilized people. The higher you go in civilization the less actual money you see. It is all bills and checks. What are bills and checks? Mere promises and orders. What are they based on? Principally on two sources—human energy and the productive earth. Humanity and the soil they are the only real basis of money.
WASHINGTON -- With the economy in a slump for nearly four years, corporate executives and conservative politicians have repeatedly invoked "uncertainty" as a major barrier to American job-creation. The "uncertainty" jab is a go-to talking point for any congressional Republican looking to tag President Barack Obama as a tax-raising, regulation-obsessed foe of American businesses.
But according to banking data compiled by economic research firm Moebs Services, the uncertainty plaguing the American economy has nothing to do with government regulations or taxes on millionaires. It's an uncertainty driven squarely by consumers and small-businesses who are worried about their short-term financial prospects. And it's been going on since well before Obama took up residence in the White House.
Billionaire brothers Charles and David Koch finally got their way in 2011. After their decades of funding the American Legislative Exchange Council, the collaboration between multinational corporations and conservative state legislators, the project began finally to yield the intended result.
Progressives had some fun last week with Frank Luntz, who told the Republican Governors' Association that he was scared to death of the Occupy movement and recommended language to combat what the movement had achieved. But the progressive critics mostly just laughed, said his language wouldn't work, and assumed that if Luntz was scared, everything was hunky-dory. Just keep on saying the words Luntz doesn't like: capitalism, tax the rich, etc.
It's a trap.
When Luntz says he is "scared to death," he means that the Republicans who hire him are scared to death and he can profit from that fear by offering them new language. Luntz is clever. Yes, Republicans are scared. But there needs to be a serious discussion of both Luntz's remarks and the progressive non-response.
We’ve Known for Thousands of Years
We’ve known for literally thousands of years that debts need to be periodically written down, or the entire economy will collapse. And see this.
We’ve known for 1,900 years that that rampant inequality destroys societies.
We’ve known for thousands of years that debasing currencies leads to economic collapse.
We’ve known for hundreds of years that the failure to punish financial fraud destroys economies.
We’ve known for hundreds of years that monopolies and the political influence which accompanies too much power in too few hands is dangerous for free markets.
We’ve known for hundreds of years that trust is vital for a healthy economy.
We’ve known since the 1930s Great Depression that separating depository banking from speculative investment banking is key to economic stability. See this, this, this and this.
We’ve known since 1988 that quantitative easing doesn’t work to rescue an ailing economy.
We’ve known since 1993 that derivatives such as credit default swaps – if not reined in – could take down the economy. And see this.
We’ve known since 1998 that crony capitalism destroys even the strongest economies, and that economies that are capitalist in name only need major reforms to create accountability and competitive markets.
We’ve known since 2007 or earlier that lax oversight of hedge funds could blow up the economy.
And we knew before the 2008 financial crash and subsequent bailouts that:
The easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, and “the use of gimmicks and palliatives” by central banks hurt the economy
Anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”
Bailouts of big banks harm the economy
The Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis
Given the insane levels of debt, rampant inequality, currency debasement, failure to punish financial fraud, growth of the too big to fails, repeal of Glass-Steagall, refusal to rein in derivatives, crony capitalism and other shenanigans … the financial crisis was entirely foreseeable.
Here’s how I saw this back in the mid-2000s, in the heart of the GW Bush years, when the YOYOs were riding high (from my book, All Together Now: Common Sense for a Fair Economy):
… One central goal of the YOYO movement is to continue and even accelerate the trend toward shifting economic risks from the government and the nation’s corporations onto individuals and their families. You can see this intention beneath the surface of almost every recent conservative initiative: Social Security privatization, personal accounts for health care (the so-called Health Savings Accounts), attacks on labor market regulations, and the perpetual crusade to slash the government’s revenue through regressive tax cuts — a strategy explicitly tagged as “starving the beast” — and block the government from playing a useful role in our economic lives. …
While this fast-moving reassignment of economic risk would be bad news in any period, it’s particularly harmful today. As the new century unfolds, we face prodigious economic challenges, many of which have helped to generate both greater inequalities and a higher degree of economic insecurity in our lives. But the dominant vision has failed to develop a hopeful, positive narrative about how these challenges can be met in a way as to uplift the majority.
Instead, messages such as “It’s your money” (the mantra of the first George W. Bush campaign in 2000), and frames such as “the ownership society,” stress an ever shrinking role for government and much more individual risk taking. Yet global competition, rising health costs, longer life spans with weaker pensions, less secure employment, and unprecedented inequalities of opportunity and wealth are calling for a much broader, more inclusive approach to helping all of us meet these challenges, one that taps government as well as market solutions.
Research shows that a mere 1 percent of small business owners make more than $1 million per year. Only about 5.4 million of the nation’s 20 million small businesses pay any wages at all. The Republican claim about wealthy small business job creators, it turns out, is based on a convenient and overly broad definition of “small” that includes partnerships and S-corporations, like hedge funds, accounting firms, law practices and other often big businesses.
So when they claim to be protecting small business from high-end taxes, Republicans are really talking about protecting big companies whose owners fall into the one-half of 1 percent of taxpayers who are millionaires or better. A surtax would certainly not hurt them.
House Speaker John Boehner claimed that “small-business people” make up more than half of those who would be hit by a tax increase on “millionaires.” Not really. Only 13 percent of those making over $1 million get even as much as one-fourth of that income from small business, according to government tax experts.
We wanted to talk to business owners who would be affected. So, NPR requested help from numerous Republican congressional offices, including House and Senate leadership. They were unable to produce a single millionaire job creator for us to interview.
So we went to the business groups that have been lobbying against the surtax. Again, three days after putting in a request, none of them was able to find someone for us to talk to. A group called the Tax Relief Coalition said the problem was finding someone willing to talk about their personal taxes on national radio.
Cosma Shalizi urges economists to stop doing what they are doing: Fitting large complex models to a small set of highly correlated time series data. Once you add enough variables, parameters, bells and whistles, your model can fit past data very well, and yet fail miserably in the future. Shalizi tells us how to separate the wheat from the chaff, how to compensate for overfitting and prevent models from memorizing noise. He introduces techniques from data mining and machine learning to economics -- this is new economic thinking.
As ThinkProgress has been reporting for some time, the corporate front group American Legislative Exchange Council (ALEC) has been colluding with the billionaire Koch brothers to privatize government and eliminate environmental regulations that interfere with profits.
GOP legislators in many states have given ALEC free reign to write anti-health care reform and anti-environment legislation. Now, ALEC is fighting to kill Environmental Protection Agency (EPA) rules limiting the sale of rat poisons that pose a serious health threat to children and the ecosystem.
Robert Pollin, James Heintz, Heidi Garrett-Peltier and Jeannette Wicks-Lim show that since 2009, U.S. commercial banks and large nonfinancial corporations have been carrying huge cash hoards and other liquid assets, totaling $1.4 trillion. Small businesses, by contrast, have been locked out of credit markets. The authors examine the impact on job creation of mobilizing these excess liquid assets into productive investments, finding that U.S. employment could expand by about 19 million jobs by the end of 2014, with unemployment falling below 5 percent. The paper discusses policies to transform these hoards into job-generating investments, both for the national economy and, specifically, the Los Angeles and Seattle regions.
By plane, train and bus, thousands of activists are converging on Washington, D.C. this week to “Take Back Our Capitol.” Though the pilgrimage borrows the some of the language of the Occupy protests, and includes a contingent of those activists, the crowd hails largely from nonprofits and political organizations.
"We came to tell members of Congress that they should represent the 99 percent not just corporations and the 1 percent," said Colleen Bugarske, 59, a volunteer from West Los Angeles with MoveOn.org, a national nonprofit political advocacy group.
BILL MOYERS: You've no doubt figured out my bias by now. I've hardly kept it a secret. In this regard, I take my cue from the late Edward R. Murrow, the Moses of broadcast news.
Ed Murrow told his generation of journalists bias is okay as long as you don't try to hide it. So here, one more time, is mine: plutocracy and democracy don't mix. Plutocracy, the rule of the rich, political power controlled by the wealthy.
The conventions of our money supply are so arcane that explanation is daunting. Journalist William Greider once observed that the American process of money creation is “a powerful mystery to most citizens.” Indeed, he wrote, it is a mystery to most elected leaders, who tend to believe that the process is best “left to the experts, a forbidden area where politicians [are] not supposed to intrude.” In Secrets of the Temple: How the Federal Reserve Runs the Country, Greider quoted the head of the Federal Reserve Bank of New York, who went so far as to assert that “no President really understands these things.”
If that’s true, it’s nothing less than a major civic tragedy, one we should not allow to continue. Why should we tolerate a state of affairs in which people use economic jargon instead of giving an intelligible answer to the following conceptual questions: Where does modern money come from? And what does it consist of?
Former Speaker and current GOP presidential candidate Newt Gingrich might well have said that he wants to kill his personal physician because he didn’t like being told his blood pressure was too high.
But that’s the equivalent of what Gingrich did say during a recent debate, when he made it clear that the Congressional Budget Office has to be eliminated if health care reform is going to be repealed.
According to Gingrich, the CBO should be done away with because its analysis shows that, as enacted, health care reform reduces the federal budget deficit. This means that repealing it — as many in the GOP base to which Gingrich is appealing wants to do — will increase the deficit and, therefore, require spending cuts or revenue increases to offset the impact. That, of course, will make the repeal effort much harder and far less likely.
Gingrich's hypocrisy on the issue of work is unbelievable, given the fact that when he himself was a student, according to an interview , his stepmother gave to Gail Sheehy, quoted in a PBS Frontline story, " The Inner Quest of Newt Gingrich", during his college years, Newt called his father and stepfather to ask for financial help. His stepmother recalls that his exact words were
"I do not want to go to work. I want all my time for my studies.."
Not only that, but according to Dolores Adamson, Gingrich's district administrator from 1978 to 1983, his wife Jackie "put him all the way through school. All the way through the P.h.D...He didn't work."
The principal problem facing the US and Europe for the next few years is an output shortfall caused by a lack of demand. Nothing would increase the incomes of all citizens – poor, middle-class and rich – as much as an increase in demand and associated increases in incomes, living standards and confidence in institutions and the future.
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It would, however, be a serious mistake to suppose that our problems are only cyclical or amenable to macroeconomic solution. Just as the evolution from an agricultural to an industrial economy has far-reaching implications for almost all institutions, so too does the evolution from an industrial to a knowledge economy. Trends that pre-date the Great Recession will be with us long after any recovery.
The most important of these is the strong shift in the market reward for a small minority of citizens relative to the rewards available to most citizens. According to a recent Congressional Budget Office study, the incomes of the top 1 per cent of the US population, after adjusting for inflation, rose by 275 per cent from 1979 to 2007. At the same time, the income for the middle class grew by only 40 per cent. Even this dismal figure overstates the case of typical Americans, as the number unable to find work or who have abandoned the search has risen. In 1965, only 1 in 20 men between 25 and 54 was not working; by the end of this decade it will probably be 1 in 6, even if the full cyclical recovery is achieved.
How three decades of flawed economic thinking have helped to create record numbers of long-term unemployed and undermine America’s middle class.
Steven J. Davis, Senator McCain’s chief economics advisor during his presidential campaign, has written a political hit piece on the man that defeated his candidate. His co-authors were Scott R. Baker and Nicholas Bloom. For the sake of brevity I will refer to the authors as “the authors” or “Davis.” They published the piece in
Bloomberg The article purports to be a straight scientific piece, but it is a partisan screed relying on faux statistics created by Davis to support his views. Davis’ statistical methodology is not simply unscientific, it is embarrassingly bad.
The economic crisis of the 1970s, which heralded the end of a generation of U.S. economic dominance, helped their cause by laying bare the limitations of the New Deal order. The country's economic and social policy regime -- which relied heavily on the private provision of important social protections, such as pensions and health insurance -- may have been adequate for a globally dominant industrial economy that generated 30 years of widely shared growth and stable employment for millions of industrial workers. But in the 1970s, it began to prove thoroughly inadequate for an era of globalization, deindustrialization, and economic dislocation, as displaced workers found themselves unable to rely on the government for economic protection. This, in Hacker and Pierson's parlance, was policy drift on a massive scale.
Ascendant conservatives seized on this state of affairs to argue that the whole New Deal edifice of social protection, financial regulation, progressive taxation, and civil rights should be dismantled rather than reinforced. Beginning with the Carter administration, the expanding business lobby successfully defeated proposal after reform proposal and aggressively promoted an opening round of tax cuts and deregulation -- mere down payments on the frenzy to come.
Republican media strategist Roger Ailes launched Fox News Channel in 1996, ostensibly as a "fair and balanced" counterpoint to what he regarded as the liberal establishment media. But according to a remarkable document buried deep within the Richard Nixon Presidential Library, the intellectual forerunner for Fox News was a nakedly partisan 1970 plot by Ailes and other Nixon aides to circumvent the "prejudices of network news" and deliver "pro-administration" stories to heartland television viewers.
The Republican Governors Association met this week in Florida to give GOP state executives a chance to rejuvenate, strategize and team-build. But during a plenary session on Wednesday, one question kept coming up: How can Republicans do a better job of talking about Occupy Wall Street?
"I'm so scared of this anti-Wall Street effort. I'm frightened to death," said Frank Luntz, a Republican strategist and one of the nation's foremost experts on crafting the perfect political message. "They're having an impact on what the American people think of capitalism."
Luntz offered tips on how Republicans could discuss the grievances of the Occupiers, and help the governors better handle all these new questions from constituents about "income inequality" and "paying your fair share."
The notion of a well-running market is applicable to manufactured goods; different items are produced to be alike and can be evaluated by consumers. But the products of the finance and health industries are individualized and complex. The consumer cannot seriously evaluate them—a situation that economists call “asymmetric information.”
This casts light on the claim that the problem is one of personal ethics, of greed. After all, the search for improvement in technology, and consequently in the general standards of living, is motivated by greed. When the market system works properly, greed is tempered by competition. Hence, most of the gains from innovation and good service cannot be retained by the providers.
But in situations of asymmetric information, the forces of competition are weakened. The individual patient or financial client does not have access to all the relevant information. Indeed, when the information is sufficiently complex, it may be impossible to provide adequate information.
In these circumstances, greed becomes more relevant. There arises an obligation to present the relevant information as fully as possible, an obligation that has been violated in the financial industry. In the medical field, this challenge has to a considerable extent been met historically by standards of proper practice. These may involve revelation of all information, or at least the requirement that differences in information not be exploited.
It is clear that the financial industry is well behind the medical in this respect. A proper sense of responsibility has to be enforced by legislation, as it was in the 1930s. There has been some erosion in the law, for example under the Clinton administration, and in enforcement. The Dodd-Frank law is a step in the right direction, but the influence of the financial industry watered it down and created unnecessary complications.
It is not superfluous to argue that steepening the income tax progression, removing a number of blatant loopholes, such as the special treatment of capital gains, and reducing the exemption level for estates would add considerably to post-tax equality.
It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.
Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.
"A truly pathetic episode," Mann added. "Agents doing the dirty bidding of the fossil fuel industry know they can't contest the fundamental science of human-caused climate change. So they have instead turned to smear, innuendo, criminal hacking of websites, and leaking out-of-context snippets of personal emails in their effort to try to confuse the public about the science and thereby forestall any action to combat this critical threat."
Trickle-down economics has not worked since Herbert Hoover tried it. It is a myth that adding money to the wealthy through tax cuts stimulates jobs and grows the economy. Under Democratic presidents since 1930 who have emphasized people programs and resisted tax breaks for the richest, annual growth in GDP has averaged 5.4 percent, according to Commerce Department and Office of Management and Budget statistics.
The American worker has been getting thrashed for thirty years. Jobs leaving the country, wages flat, his boss getting rich. One coal miner from Pennsylvania knows exactly what to do about it.
I’ve been a Republican all my adult life. I have worked on the editorial page of The Wall Street Journal, at Forbes magazine, at the Manhattan and American Enterprise Institutes, as a speechwriter in the George W. Bush administration. I believe in free markets, low taxes, reasonable regulation, and limited government. I voted for John McCain in 2008, and I have strongly criticized the major policy decisions of the Obama administration. But as I contemplate my party and my movement in 2011, I see things I simply cannot support.
To get a sense of how progressive, here’s a graph comparing the spending cuts and tax increases in all of the major deficit-reduction packages proposed thus far. (Note: I’m measuring revenues against the tax code as it it is right now, and I’m not including savings on interest payments.)
In my column today, I note that because certain things will happen automatically if Congress does nothing, inaction would lead to $7.1 trillion in deficit reduction over the next decade. For that reason, I argue, failure by the supercommittee to reach a deal would not necessarily be a bad thing for those who want a balanced approach to deficit reduction.
Households headed by older adults have made dramatic gains relative to those headed by younger adults in their economic well-being over the past quarter of a century, according to a new Pew Research Center analysis of a wide array of government data.
At the time, Rand's novels were almost universally panned. Her ideas were called "the height of immorality." Her followers, the objectivists, were seen as a radical sideshow in politics and economics.
Back in that 1959 interview, Wallace asked Rand why — if her ideas were so right — Americans, in their democracy, hadn't voted to protect the all-important producer class.
Her answer? Because the people hadn't been given that choice.
"Both parties today are for socialism, in effect — for controls. And there is no party, there are no voices, to offer an actual pro-capitalist, laissez-faire, economic freedom and individualism," she said. "That is what this country needs today."
If Rand were alive today, she might be pleased to see that, more and more, Americans do have that choice. And her ideas are alive and well-represented in the U.S. Capitol.
A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.
Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.
Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them.
Jonathan Gruber, a key intellectual architect of President Obama's overhaul of the American health care system, is a little frustrated.http://www.capitalnewyork.com/article/culture/2011/11/4156059/architect-obamas-health-care-plan-fears-political-decision-supreme-c
"I'm frustrated that the future of the American health care system rests in the hands of one or two of these unelected people who might make the decision based on political grounds," Gruber, an M.I.T. professor, told me in a phone interview on Monday, a few hours after the Supreme Court granted a writ of certiorari to hear challenges to the Affordable Care Act. "It's very disturbing."
Yesterday Paul Ryan released a very serious looking report entitled: “A deeper look at inequality.” Ryan’s effort — a rebuttal to that recent CBO report on growing inequality that got so much attention — was applauded by conservatives as an important contribution to the debate.http://www.washingtonpost.com/blogs/plum-line/post/paul-ryans-solution-to-inequality-helps-the-rich-does-nothing-for-poor/2011/11/18/gIQAbt1OYN_blog.html
Through the 1970s, income for Americans across all social classes rose nearly in lockstep, by an annual average of roughly 3 percent. Starting in the 1980s, however, this trend underwent a fundamental transformation. Granted, the economy continued to grow -- but almost exclusively to the benefit of the country's top earners. The major economic expansion under President Ronald Reagan benefited only a few, and the problem only grew worse under George W. Bush.
Can Anyone Really Create Jobs?
The fact is that creating them in a far-too-sluggish economy is practically impossible in our current capitalist democracy. No corporate leader is rewarded for hiring people who aren’t absolutely required. Most companies hire only when its workforce can no longer keep up with the demand for its products.
"Ryan spoke of his “disappointment” that “the politics of division are making a big comeback.” He accused Obama of using “divisive rhetoric” and of “going from town to town, impugning the motives of Republicans, setting up straw men and scapegoats, and engaging in intellectually lazy arguments.”
“Instead of working with us on . . . common-sense reforms,” Ryan declared, “the president is barnstorming swing states, pushing a divisive message that pits one group of Americans against another on the basis of class.”
Now it takes some temerity for a Republican to charge Obama with divisiveness, given the GOP’s willingness to promote or countenance assaults on the president as “a socialist,” as someone not even born in the United States, as a supporter of “death panels,” and on and on. Republicans calling Obama divisive is the equivalent of those of us who are Red Sox fans criticizing another team for folding under pressure.
But what’s most instructive is that Ryan would not have given this speech if the Republican Party were not so worried that it is losing control of the political narrative. In particular, growing inequalities of wealth and income — which should have been a central issue in American politics for at least a decade — are now finally at the heart of our discourse. We are, at last, discussing the social and economic costs of concentrating ever more resources in the hands of the top sliver of our society.
Ryan offered the classic defense of inequality, arguing that what really matters is upward mobility, and that the United States has more of it than those horrible welfare states in Europe. “Class is not a fixed designation in this country,” he declared. “We are an upwardly mobile society with a lot of movement between income groups.”
The only problem is that upward mobility has declined as inequality has grown, and social mobility is now higher in Europe than it is in the United States. That’s shameful. And don’t believe me on this: Republican presidential candidate Rick Santorum brought this up at a recent debate, backed by a study from the Economic Mobility Project."
"ConservativeSpeak has so infiltrated the language that we now need a glossary."
This matters a great deal — but not for the silly political reasons you have been led to think. No, its not about class warfare. No, its not about redistributing the wealth.
The reason this matters is quite simple: Healthy societies have modest, but not extreme wealth and income inequalities. There are inequalities because not everyone has the same skills and capabilities, and some inequality in wealth and income provides an incentive system.
However, massive, widely disparate economic inequality has historically led to bad — and in some cases, extremely bad — outcomes. It contributes to social unrest, excessive political populism, and mob violence.
I write this as someone who, due to a fortuitous combination of luck and work, developed a skill set that is highly valued by modern society. This is in part to an accident of birth, to have an excellent education, to some serendipity. Overcoming some adversity didn’t hurt; figuring out how to turn some deficits to an advantage was hugely beneficial. Thus, I find myself in that top 1% economically; but I know deep down in my soul that if I was born 100 years earlier — and maybe even 30 years earlier — I would not have been. This makes me acutely aware of the risks and dangers of our current wide disparity of wealth and income.
Healthy societies allow their citizens to have a realistic chance at fulfilling their potential. This is done through a combination of economic freedom, enforcement of laws and contracts, legitimate democratic elections, basic education for its citizens, tax fairness, regulatory oversight of influential corporations an other entities, and the institutional value of protecting individual liberty.
They found that the proposal would raise taxes on 84 percent of households -- and, broadly speaking, those 84 percent of households would be the bottom 84 percent. A family in the bottom 20 percent of the income distribution can expect their tax bill to rise by more than $1,600. A family smack in the middle will be paying will be paying $3,238 more. It's not until you get to households making more than $200,000 that you begin to see tax cuts. If you're in the top one percent, your tax bill will drop by $307,000. The top 0.1 percent? A tax cut of almost $1.7 million.
The Woman Who Knew Too Much
Millions of Americans hoped President Obama would nominate Elizabeth Warren to head the consumer financial watchdog agency she had created. Instead, she was pushed aside. As Warren kicks off her run for Scott Brown’s Senate seat in Massachusetts, Suzanna Andrews charts the Harvard professor’s emergence as a champion of the beleaguered middle class, and her fight against a powerful alliance of bankers, lobbyists, and politicians.
By Suzanna Andrews Photograph by Nigel Parry
Mounting a clever public relations gimmick to conceal the fact that nearly every American pays taxes in the form of payroll taxes, sales taxes, and fees, CNN’s Erick Erickson helped start the “We Are The 53%” website. The website, a parody of the popular We Are The 99 Percent Tumblr, features Americans posting messages about how they work hard and do not complain about diminishing living standards or the phenomenon that a tiny segment of the population is slowly accumulating most of the nation’s wealth.
Erickson’s message is a scribbled rant that reads:
I work 3 jobs./I have a house I can’t sell./My family insurance costs are outrageous./But I don’t blame Wall Street./Suck it up you whiners./I am the 53% subsidizing you so you can hang out on Wall Street and complain.
The three jobs Erickson wants you to believe he scrapes by on include occasional paid opinion blogging at RedState.com, a lucrative television contract with CNN, and a radio gig that paid the previous host $165,183 a year (Herman Cain’s financial disclosures show he was paid this amount before Erickson took over his spot). The house Erickson can’t sell? Bibb County, Georgia records reveal that Erickson just bought a new $374,900 house in February of this year, and owns another that, according to an estimate by the website Zillow, might be worth slightly less than the amount he paid for it in 2001. And its likely that Erickson’s CNN job alone provides him with a personal driver and covered travel expenses when he needs to appear on the show.
Moreover, when Erickson says he doesn’t blame Wall Street, who could be surprised? Erickson should be grateful to big corporations since they sponsor his blog and provide him with content:
– Shilling For Banks: During the congressional battle over the Durbin Amendment, a rule that limits the amount banks can charge businesses to process debit-card fees, Erickson came out fiercely on the side of big banks. According to Bloomberg, Erickson had spoken with public relation firms employed by bank lobbyists while writing his posts. In his defense, Erickson told Bloomberg he became “leery” that bank lobbyists were excited about his March 14 post supporting the banker position. But later that month, he kept hawking banker talking points.
– Shilling For Walmart: The first major evidence of RedState’s corporate sock-puppetry came in 2006 when the New York Times broke the story that Mike Krempasky, a RedState founder and blogger, was being paid by Walmart to orchestrate online attacks on the company’s critics. Krempasky had secured the Walmart deal through his job at the public relations firm Edelman, which maintained a major contract Walmart at the time. Since the first reports of Krempasky’s corporate contract, RedState has been a stalwart defender of Walmart.
– Selling Erick Erickson ‘Video Endorsements’: An email uncovered earlier this year from Eagle Publishing, the owner of RedState, sold not only traditional advertisements and sponsorship opportunities, but also a “video endorsement” from Erick Erickson. “Organizations with issues, candidates and viewpoints that are in line with Erick’s positions can truly benefit from his endorsement,” read the sales pitch. Erickson has rented his list to MyWireless.org, a telecom front group funded by industry, as well as the American Petroleum Institute, an oil lobbying association.
– Representatives For Corporate Lobbyists Guest Blog For Erickson’s Website: The U.S. Chamber of Commerce, a lobbying association for top firms like Goldman Sachs, Chevron, AIG and Dow Chemical, has partnered with RedState for blogger briefings and guest posts. Pat Cleary, a longtime communications person for the Chamber, is a regular front page writer for RedState.
–Erickson’s Blog Caught In Pay-For-Blogging Scheme Orchestrated By Malaysian Lobbyists: The most unusual example of RedState’s fraudulent blogging may be the case of Josh Trevino, RedState’s co-founder. The government of Malaysia paid a consulting firm owned by Trevino and other regular RedState contributors to promote the ruling party using various conservative websites. Trevino, who recently collaborated with Erickson to created “We Are The 53%” site, even sponsored blogger meet and greets and fake media town halls with the current Malaysian prime minister.
Unfortunately, Erickson’s phony economic victim act is slowly catching on. In what has become a strange display of American feudalism, people are now contributing messages to Erickson’s 53 Percent site and boasting about being screwed by the economy. As Gawker notes, one 53 Percent post features a man who proudly says that he works hard yet lacks health insurance and can “barely afford” his rent. Another, a “former marine,” says he hasn’t had “4 consecutive days off in 4 years.” Blogger Max Read thinks Erickson has exposed “where the best of American values meet their most masochistic applications.” Reading through the contributions to the 53% site, Read concludes: “‘paid time off’ and ‘health insurance’ and ‘a living wage’ are apparently the demands of an unreasonably entitled parasitic class.”
Reading the transcript of Tuesday’s Republican debate on the economy is, for anyone who has actually been following economic events these past few years, like falling down a rabbit hole. Suddenly, you find yourself in a fantasy world where nothing looks or behaves the way it does in real life.
"And this idea that Herman Cain said that, you know, if you're not rich, blame yourself - this is what bothers me about rich people. They don't, first of all, as Elizabeth Warren said, they don't cotton to the idea they wouldn't be rich if they didn't have this great country that provides the roads and the schools and all the other things that allow them to be rich. But also this idea, they never understand it's a fluke mostly, that what you do is something that made you rich....Yes, Herman Cain was good at business. Great. He became very rich from it. But what about teachers and cops and firemen? You know those people we always say are our heroes. They're such heroes that we pay them like crap. Well, they do what they do very well. It doesn't happen to be something that is ever going to make you rich. So, this idea that if you're not rich, blame yourself - oh, really bugs me. But I tried to hide it." -Bill Maher, host of "Real Time with Bill Maher," on the wealth divide and how people become rich
Which gets to perhaps the main way in which there is no 9-9-9 plan: This plan wouldn’t work. Not as policy and, as I expect Cain will soon find out, not as politics. Moving to an 18 percent consumption tax is, among other things, very bad for older voters, who make up a substantial portion of the Tea Party base. Jacking up taxes on the poor and the middle class even as you sharply reduce them on the rich and completely eliminate them on overseas income for corporations isn’t popular among anyone in the political system who isn’t specifically paid by the Club for Growth. The 9-9-9 plan is a great slogan. But the more seriously Cain gets taken, the more seriously the plan is going to get taken. And as that happens, it will soon become clear that it’s very poor policy.
Cain’s plan would do away with the complex system of deductions and loopholes that currently plague the tax code, but it would also redistribute the tax burden from the wealthy to middle and low income Americans, Bartlett states.
Bartlett said that under the 9-9-9 phase of Cain’s plan, the only phase the GOP presidential candidate usually mentions, the poor and middle classes will “unquestionably pay more,” while the rich, who pay most of their taxes though the capital gains tax that Cain would eliminate, will pay “almost nothing.”
"Having lots of experience with big business and big business management I can uncharactristally say things like "regulatory uncertainty" and fear of future taxes just do not enter in at anything but the most cursory level. Large business, at least in the "real economy" (I cannot speak for the leaches in the financial industry) simply do not factor these sort of details into their business plans and certainly would never say, not hire or buy because of it.
I think most talking here have little experience with the inner workings of real corporations and moreover give far too much credit to the analytical processes that go on. Like most Americans, they just aren't looking that far ahead, in part for the same reason most do not - it is a useless exercise given the variables involved and the ever present change of political climate.
Mostly however they are are focused, appropriately I may add, on the day to day processes of running their corporations and the shorter term returns demanded by their shareholders.
"
"In recent work (Berg, Ostry, and Zettelmeyer, 2011; and Berg and Ostry, 2011), we discovered that when growth is looked at over the long term, the trade-off between efficiency and equality may not exist. In fact equality appears to be an important ingredient in promoting and sustaining growth. The difference between countries that can sustain rapid growth for many years or even decades and the many others that see growth spurts fade quickly may be the level of inequality. Countries may find that improving equality may also improve efficiency, understood as more sustainable long-run growth."
