Robert B. Reich's Blog, page 138

Restore the Basic Bargain

For most of the last century, the basic bargain at the heart of the American economy was that employers paid their workers enough to buy what American employers were selling.

That basic bargain created a virtuous cycle of higher living standards, more jobs, and better wages.

Back in 1914, Henry Ford announced he was paying workers on his Model T assembly line $5 a day – three times what the typical factory employee earned at the time. The Wall Street Journal termed his action "an economic crime."

But Ford knew it was a cunning business move. The higher wage turned Ford's auto workers into customers who could afford to buy Model T's. In two years Ford's profits more than doubled.

That was then. Now, Ford Motor Company is paying its new hires half what it paid new employees a few years ago.

The basic bargain is over – not only at Ford but all over the American economy.

New data from the Commerce Department shows employee pay is now down to the smallest share of the economy since the government began collecting wage and salary data in 1929.

Meanwhile, corporate profits now constitute the largest share of the economy since 1929.

1929, by the way, was the year of the Great Crash that ushered in the Great Depression.

In the years leading up to the Great Crash, most employers forgot Henry Ford's example. The wages of most American workers remained stagnant. The gains of economic growth went mainly into corporate profits and into the pockets of the very rich. American families maintained their standard of living by going deeper into debt. In 1929 the debt bubble popped.

Sound familiar? It should. The same thing happened in the years leading up to the crash of 2008.

The latest data on corporate profits and wages show we haven't learned the essential lesson of the two big economic crashes of the last seventy-five years: When the economy becomes too lopsided – disproportionately benefitting corporate owners and top executives rather than average workers – it tips over.

In other words, we're in trouble because the basic bargain has been broken.

Yet incredibly, some politicians think the best way to restart the nation's job engine is to make corporations even more profitable and the rich even richer – reducing corporate taxes; cutting back on regulations protecting public health, worker safety, the environment, and small investors; and slashing taxes on the very rich.

These same politicians think average workers should have even less money in their pockets. They don't want to extend the payroll tax cut or unemployment benefits. And they want to make it harder for workers to form unions.

These politicians have reality upside down.

Corporations don't need more money. They have so much money right now they don't even know what to do with all of it. They're even buying back their own shares of stock. This is a bonanza for CEOs whose pay is tied to stock prices and it increases the wealth of other shareholders. But it doesn't create a single new job and it doesn't raise the wages of a single employee.

Nor do the wealthiest Americans need more money. The top 1 percent is already taking in more than 20 percent of total income — the highest since the 1920s.

American businesses, including small-business owners, have no incentive to create new jobs because consumers (whose spending accounts for about 70 percent of the American economy) aren't spending enough. Consumers' after-tax incomes dropped in the second and third quarters of the year, the first back-to-back drops since 2009.

The recent small pickup in consumer spending has come out of their savings. Obviously this can't continue, and corporations know it. Consumer savings are already at their lowest level in four years.

Get it? Corporate profits are up right now largely because pay is down and companies aren't hiring. But this is a losing game even for corporations over the long term. Without enough American consumers, their profitable days are numbered.

After all, there's a limit to how much profit they can get out of cutting American payrolls or even selling abroad. European consumers are in no mood to buy. And most Asian economies, including China, are slowing.

We're in a vicious cycle. The only way out of it is to put more money into the pockets of average Americans. That means extending the payroll tax cut. And extending unemployment benefits.

Don't stop there. Create a WPA to get the long-term unemployed back to work. And a Civilian Conservation Corp to create jobs for young people.

Hire teachers for classrooms now overcrowded, and pay them enough to attract people who are talented as well as dedicated. Rebuild our pot-holed highways. Create a world-class infrastructure.

Pay for this by hiking taxes on millionaires.

A basic bargain was once at the heart of the American economy. It recognized that average workers are also consumers and that their paychecks keep the economy going.

We can't have a healthy economy until that bargain is restored.

A Thanksgiving Reflection: Looking Beyond Election Day

Most political analysis of America's awful economy focuses on whether it will doom President Obama's reelection or cause Congress to turn toward one party or the other. These are important questions, but we should really be looking at the deeper problems with which whoever wins in 2012 will have to deal.

Not to depress you, but our economic troubles are likely to continue for many years — a decade or more. At the current rate of job growth (averaging 90,000 new jobs per month over the last six months), 14 million Americans will remain permanently unemployed. The consensus estimate is that at least 90,000 new jobs are needed just to keep up with the growth of the labor force. Even if we get back to a normal rate of 200,000 new jobs per month, unemployment will stay high for at least ten years. Years of high unemployment will likely result in a vicious cycle, as relatively lower spending by the middle-class further slows job growth.

This, in turn, could make political compromise even more elusive than it is now, as remarkable as that may seem. In past years, politics has been greased by the expectation of better times to come – not only more personal consumption but also upward mobility through good schools, access to college, better jobs, improved infrastructure. It's been a virtuous cycle: When the economy grows, the wealthy more easily accept a smaller share of the gains because they still came out ahead of where they were before. And everyone more willingly pays taxes to finance public provision because they share in the overall economic gains.

Now the grease is gone. Fully two-thirds of Americans recently polled by the Wall Street Journal say they aren't confident life for their children's generation will be better than it's been for them. The last time our hopes for a better life were dashed so profoundly was during the Great Depression.

But here's what might be considered the good news. Rather than ushering in an era of political paralysis, the Great Depression of the 1930s changed American politics altogether — realigning the major parties, creating new coalitions, and yielding new solutions. Prolonged economic distress of a decade or more could have the same effect this time around.

What might the new politics look like? The nation is polarizing in three distinct ways, and any or all of could generate new political alignments.

Anti-establishment

A vast gulf separates Tea Party Republicans from the inchoate Wall Street Occupiers. The former disdain government; the latter hate Wall Street and big corporations. The Tea Party is well organized and generously financed; Occupiers are relentlessly disorganized and underfunded. And if the events of the last two weeks are any guide, Occupiers probably won't be able to literally occupy public areas indefinitely; they'll have to move from occupying locations to organizing around issues.

But the two overlap in an important way that provides a clue to the first characteristic of the new politics. Both movements are doggedly anti-establishment — distrusting politically powerful and privileged elites and the institutions those elites inhabit.

Justin Lane/European Pressphoto AgencyProtesters supporting the Occupy Wall Street movement in Union Square, New York City, on Oct. 11, 2011.

There's little difference, after all, between the right's depiction of a "chablis-drinking, Brie-eating" establishment and the left's perception of a rich one percent who fly to the Hamptons in private jets.

In political terms, both sides are deeply suspicious of the Federal Reserve and want it to be more transparent and accountable. Both are committed to ending "corporate welfare" — special tax breaks and subsidies for specific industries or companies. And for both, Washington's original sin was the bailing out of Wall Street.

Mere mention the bailout at any Tea Party meet-in or Occupier teach-in elicits similar jeers. The first expression of Tea Party power was the Utah Tea Party's rejection of conservative Republican senator Robert Bennett because of his vote for the bailout. At the Republican state convention, which ultimately led to the election of Senator Mike Lee, the crowd repeatedly shouted "TARP! TARP! TARP!" The Occupiers, too, began on Wall Street.

The historian Richard Hofstadter once wrote a famous essay about the recurring strain of, as he put it, a "paranoid style in American politics" — an underlying readiness among average voters to see conspiracies among powerful elites supposedly plotting against them. He noted that the paranoia arises during periods of economic stress.

But the web of interconnections linking Washington and Wall Street over the last decade or so — involving campaign contributions, revolving doors, and secret deals — has been so tight as to suggest that this newer anti-establishment activism is based on at least a kernel of truth.

Isolationist

Economic stresses caused Americans to turn inward during the Great Depression, and we're seeing the same drift this time around. Republican fulminations against the "cult of multiculturalism" are meeting similar sentiments in traditional Democratic precincts — especially when it comes to undocumented immigrants. Alabama and Arizona have spearheaded especially vicious laws, yet polls show increasing percentages of voters across America objecting to giving the children of illegal immigrants access to state-supported services.

Meanwhile, Americans are turning against global trade. Notwithstanding new trade agreements with South Korea, Panama, and Colombia, only a minority of Americans now believes trade agreements benefit the U.S. economy. A growing percentage also want the U.S. out of the World Trade Organization. China has emerged as a special bogeyman. The Democratic-controlled Senate recently passing a bill to punish China for under-valuing its currency, but China-bashing is becoming bipartisan. Mitt Romney accuses former U.S. leaders of having "been played like a fiddle by the Chinese."

Nelson Ching/Bloomberg NewsContainers stacked at the Dayaowan Bonded Port Area in Dalian, Liaoning Province, China, in Sept. 2011.

Neither immigration, nor trade, nor China's currency manipulation is the cause of America's high unemployment. All three predated the crash of 2008, before which unemployment was only 5 percent. Yet the current drift toward isolationism is not entirely irrational. As hundreds of millions of workers in emerging economies — especially in Asia — continue to enter the global workforce with steadily-improving skills and higher productivity, more and more Americans are losing ground. Meanwhile, immigration and trade are boons to top executives and professionals who gain access to cheaper labor and larger markets for their own skills and insights.

Generational

A third division likely to widen if the economy remains bad runs along a demographic fault-line. Many aging boomers whose nest eggs have turned the size of humming-bird eggs are understandably anxious about their retirement, while America's young — whose skins are more likely than those of boomer retirees to be brown or black — face years of joblessness.

The jobless rate among people under 25 is already over 17 percent. For young people of color it's above 20 percent. For young college grads — who assumed a bachelors' degree was a ticket to upward mobility — unemployment has reached 10 percent. Yet these percentages are likely to rise if boomers decide they can't afford to retire, and thereby block the jobs pipeline for younger people seeking employment.

Demonstrators protesting the lack of jobs in Chicago.

Old and young will also find themselves increasingly at odds over public spending. In many communities retirees already resist property tax hikes to pay for local schools. Expect that resistance to grow as boomers have to live on fixed incomes smaller than they expected, and a new wave of young people swarm into the nation's educational systems. The federal budget will also be a scene of generational conflict. Medicare and Social Security, the two giant entitlement programs for seniors that cost more than $1 trillion a year and account for about a third of the federal budget, will be traded off against programs that benefit the young: Title I funding for low-income school-age students; Head Start; food stamps; child nutrition; children's health; and vaccines. It's likely that Medicaid — Medicare's poor stepchild, half of whose recipients are children — will also be on the cutting board.

After the enactment of Medicare in 1965, poverty among the elderly declined markedly. But poverty among America's children continues to rise. Yet children don't have nearly as effective a lobbying presence in Washington. AARP spent $9.7 million on lobbying during first six months of this year, according to the Center for Responsive Politics. By contrast, the Children's Defense Fund spent just $48,245 last year. Yet because the future lies with the young and with an increasingly diverse America, politicians and parties looking toward the longer term will have to take heed.

Solutions?

How our political parties and leaders will cope with these three fault lines is far from clear, partly because the lines don't all move in same direction. Young Americans tend to be more anti-establishment than older Americans, for example, but are also more open to other nations and cultures. By the same token, a generational war over the budget might be avoided if anti-establishment movements succeed in reducing corporate welfare, raising taxes on the rich, and limiting Wall Street's rapacious hold over economic decision making.

What seems certain, however, is that continued high unemployment coupled with slow or no growth will create a new political landscape. This will pose a special challenge — and opportunity. If our political leaders don't manage the new dividing lines effectively they could invite a politics of resentment that scapegoats certain groups while avoiding the hard work of setting priorities and making difficult choices.

On the other hand, if political leaders take advantage of the energies and possibilities this new landscape offers, they could usher in an era in which the fruits of growth are more widely shared: between elites and everyone else; between the beneficiaries of globalization and those most burdened by it; and between older Americans and young. This itself could reignite a virtuous cycle — a broad-based prosperity that not only generates more demand for goods and services and therefore more jobs, but also a more inclusive and generous politics.

There is a precedent for the second alternative. The structural reforms begun in the depression decade of the 1930s generated just this kind of virtuous cycle in the three decades after World War II. And in devising and implementing these reforms, the Democratic Party came to represent Americans with little power relative to the financial and business elites that had dominated the country before the great crash of 1929. That political realignment was the most profound and successful of the twentieth century.

Will it happen again? At this point, both parties are doing remarkably little given the gravity of the continuing jobs depression and the widening gap of income and wealth. Taming the budget deficit is the only significant issue anyone in Washington seems willing to raise yet Congress seems incapable of achieving any significant progress on this. And the budget itself is only indirectly related to the deeper questions of how to restart economic growth, how much of that growth should be allocated to public goods such as the environment or education, and how the benefits of that growth are to be shared.

Political elites are worried about thunder on the right and the left, but they show scant understanding of what these growing anti-establishment forces signify. Meanwhile, the nation drifts.

The First Amendment Upside Down. Why We Must Occupy...

The First Amendment Upside Down. Why We Must Occupy Democracy

You've been seeing this across the country … Americans assaulted, clubbed, dragged, pepper-sprayed … Why? For exercising their right to free speech and assembly — protesting the increasing concentration of income, wealth, and political power at the top.

And what's Washington's response? Nothing. In fact, Congress's so-called "supercommittee" just disbanded because Republicans refuse to raise a penny of taxes on the rich.

Meanwhile, the Supreme Court says money is speech and corporations are people. The Supreme Court's Citizens United decision last year ended all limits on political spending. Millions of dollars are being funneled to politicians without a trace.

And a revolving door has developed between official Washington and Wall Street – with bank executives becoming public officials who make rules that benefit the banks before heading back to the Street to make money off the rules they created.

Other top officials, including an increasing proportion of former members of congress, are cashing in by joining lobbying power houses and pressuring their former colleagues to do whatever their clients want.

Millionaires and billionaires on Wall Street and in executive suites aren't contributing all this money out of sheer love of country. Their political spending is analogous to their other investments. Mostly they want low tax rates and friendly regulations.

Why else do you suppose tax rates on the super rich are now lower than they've been in three decades, and why – even though the long-term budget deficit is horrendous – those rates aren't rising? Why else do the 400 richest Americans (whose wealth is larger than the combined wealth of the bottom 150 million Americans) now pay an average tax rate of only 17 percent?

Why do you think Wall Street got bailed without a single string attached – not even being required to help homeowners to whom they sold mortgages, who are now so far under water they're drowning? And why does the financial reform legislation have loopholes big enough for bankers to drive their Ferrari's through?

And why else are oil companies, big agribusinesses, military contractors, and the pharmaceutical industry reaping billions of dollars of government subsidies and special tax breaks?

Experts say the 2012 presidential race is likely to be the priciest ever, costing an estimated $6 billion. "It is far worse than it has ever been," says Republican Senator John McCain.

If there's a single core message to the Occupier movement it's that the increasing concentration of income and wealth at the top endangers our democracy. With money comes political power.

Yet when real people without money assemble to express their dissatisfaction with all this, they're told the First Amendment doesn't apply. Instead, they're treated as public nuisances – clubbed, pepper-sprayed, thrown out of public parks and evicted from public spaces.

Across America, public officials are saying Occupiers have to go. Even in universities – where free speech is supposed to be sacrosanct – peaceful assembly is being met with clubs and pepper spray.  

The First Amendment is being stood on its head. Money speaks, and an unlimited amount of it can now be spent bribing and cajoling politicians. Yet peaceful assembly is viewed as a public nuisance and removed by force.

This is especially worrisome now that so many Americans are in economic trouble. The jobs recession grinds on, seemingly without end. Homes are being foreclosed upon. Qualified students cannot afford college. Or they're forced to take on huge debt loads they can't repay in a jobless economy. Schools are firing teachers. Vital social services are being axed.

How are Americans to be heard about what should be done about any of this if they are not allowed to mobilize and organize?  When the freedom of speech goes to the highest bidder, moneyed interests have a disproportionate say.

Now more than ever, the First Amendment needs to be put right side up. Nothing less than the future of our democracy is at stake.

 

Stop the Austerity Train Wreck! The biggest question right...

Stop the Austerity Train Wreck! 

The biggest question right now on Planet Washington is whether the congressional supercommittee will reach an agreement.

That's the wrong question. Agreement or not, Washington is  on the road to making budget cuts that will slow the economy, increase unemployment, and impose additional hardship on millions of Americans.  

The real question is how to stop this austerity train wreck, and substitute the following: 

FIRST: no cuts before jobs are back – until unemployment is down to 5 percent. Until then, the economy needs a boost, not a cut. Consumers – whose spending is 70 percent of the economy – don't have the money to boost the economy on their own. Their pay is dropping and they're losing jobs.  

SECOND: Make the boost big enough. 14 million Americans are out of work, and 10 million are working part time who need full-time jobs. The President's proposed jobs program is a start but it's tiny relative to what needs to be done. It would create fewer than 2 million jobs. We need a big jobs program – rebuilding America's crumbling infrastructure, and including a WPA and Civilian Conservation Corps.

THIRD: To pay for this, raise taxes on the super-rich. It's only fair. Never before has so much income and wealth been concentrated at the very top, and taxes on the top so low. Go back to the 70 percent marginal tax we had before 1980. And include more tax brackets at the top. It doesn't make sense that any income over $375,000 is taxed at the same 35 percent, even if it's a billion dollars. And tax all sources of income at the same rate, including capital gains.  

FOURTH: Cut the budget where the real bloat is. Military spending and corporate welfare. End weapons systems that don't work and stop wars we shouldn't be fighting to begin with, and we save over $300 billion a year. Cut corporate welfare – subsidies and special tax breaks going to big agribusiness, big oil, big pharma, and big insurance – and we save another $100 billion.

Do you hear me, Washington? Do these four things and restore jobs and prosperity. Fail to do these, and you'll make things much, much worse.

Mario Savio Memorial Lecture, November 15, 2011

Mario Savio Memorial Lecture, November 15, 2011

Occupiers Occupied: The Hijacking of the First Amendment

A funny thing happened to the First Amendment on its way to the public forum. According to the Supreme Court, money is now speech and corporations are now people. But when real people without money assemble to express their dissatisfaction with the political consequences of this, they're treated as public nuisances and evicted. 

First things first. The Supreme Court's rulings that money is speech and corporations are people have now opened the floodgates to unlimited (and often secret) political contributions from millionaires and billionaires. Consider the Koch brothers (worth $25 billion each), who are bankrolling the Tea Party and already running millions of dollars worth of ads against Democrats. 

Such millionaires and billionaires aren't contributing their money out of sheer love of country. They have a more self-interested motive. Their political spending is analogous to their other investments. Mostly they want low tax rates and friendly regulations. 

Wall Street is punishing Democrats for enacting the Dodd-Frank financial reform legislation (weak as it is) by shifting its money to Republicans. The Koch brothers' petrochemical empire has financed, among many other things, candidates who will vote against environmental protection.

This tsunami of big money into politics is the real public nuisance. It's making it almost impossible for the voices of average Americans to be heard because most of us don't have the dough to break through. By granting First Amendment rights to money and corporations, the First Amendment rights of the rest of us are being trampled on. 

This is where the Occupiers come in. If there's a core message to the Occupier movement it's that the increasing concentration of income and wealth poses a grave danger to our democracy. 

Yet  when Occupiers seek to make their voices heard — in one of the few ways average people can still be heard — they're told their First Amendment rights are limited. 

The New York State Court of Appeals along with many mayors and other officials say Occupiers can picket — but they can't encamp. Yet it's the encampments themselves that have drawn media attention (along with the police efforts to remove them). 

A bunch of people carrying pickets isn't news. When it comes to making views known, picketing is no competition for big money .

Yet if Occupiers now shift tactics from passive resistance to violence, it would spell the end of the movement. The vast American middle class that now empathizes with the Occupiers would promptly desert them. 

But there's another alternative. If Occupiers are expelled from specific geographic locations the Occupier movement can shift to broad-based organizing around the simple idea at the core of the movement: It's time to occupy our democracy. 

Why We May Be In Store for a Passionless Presidential Race

Polls show Americans angrier and more polarized than at any time since the Vietnam War. That's not surprising. We have the worst economy since the Great Recession and the worst politics in living memory. The rise of the regressive right over the last three decades has finally spurred a progressive reaction. Occupiers and others have had enough.

Yet paradoxically the presidential race that officially begins a few months from now is likely to be as passionless as they come.

President Obama will be supported by progressives and the Democratic base, but without enthusiasm. His notorious caves to Republicans and Wall Street — failing to put conditions on the Street's bailout (such as demanding the Street help stranded home owners), or to resurrect Glass-Steagall, or include a public option in health care, or assert his constitutional responsibility to raise the debt limit, or protect Medicare and Social Security, or push for cap-and-trade, or close Guantanamo, or, in general, confront the regressive Republican nay-sayers and do-nothings with toughness rather than begin negotiations by giving them much of what they want — are not the stuff that stirs a passionate following.

Mitt Romney will surely be the Republican presidential candidate — and Romney inspires as little enthusiasm among Republicans as Obama does among Democrats. The GOP will support Romney because, frankly, he's the only major Republican primary candidate who does not appear to the broader public to be nuts.

But Republicans don't like Romney. His glib, self-serving, say-whatever-it-takes-to-win-the primaries approach strikes almost everyone as contrived and cynical. Moreover, Romney is the establishment personified — a pump-and-dump takeover financier, for crying out loud — at the very time the GOP (and much of the rest of the country) are becoming more anti-establishment by the day.

At this point neither the Republican right nor the mainstream media wants to admit the yawn-inducing truth that Mitt will be the GOP's candidate. The right doesn't want to admit it because it will be seen as a repudiation of the Tea Party. The media doesn't want to because they'd prefer to sell newspapers and attract eyeballs.

The media are keeping the story of Rick Perry's cringe-inducing implosion going for the same reason they're keeping the story of Herman Cain's equally painful decline going — because the public is forever fascinated by the gruesome sight of dying candidacies. With Bachmann, Perry, and Cain gone or disintegrating, the right wing-nuts of the GOP have only one hope left: Newt Gingrich. His star will rise briefly before he, too, is pilloried for the bizarre things he's uttered in the past and for his equally bizarre private life. His fall will be equally sudden (although I don't think Gingrich is capable of embarrassment).

And so we'll be left with two presidential candidates who don't inspire — at the very time in American history when Americans crave inspiration.

Instead of a big debate about the basics (how to truly restore jobs and wages, financial capitalism versus product capitalism, the place and role of America in the world, how to rescue our democracy), we're likely to have a superficial debate over symbols (the budget deficit, the size of government, whether we need a "businessman" at the helm).

This means political passions are likely to move elsewhere — finding their voices in grass-roots movements, social media, demonstrations, boycotts, and meet-ups — on the Main Streets and in the backwaters, and only episodically in the mainstream media or in normal election-year events.

In some ways this may not be such a bad thing. The regressive right has had thirty years to build itself into a political power. Newly-energized progressives (Occupiers and others) need enough time to develop concrete proposals and strategies. What's the rush? If polls are to be believed, most of the nation is progressive, not regressive (witness last Tuesday's results in Wisconsin and elsewhere). So it is, after all, only a matter of time.

Yet viewed another way, a passionless presidential race may be dangerous for America. The nation's problems may not wait. They require bold action, and soon.

Trigger Happy: Why Deficit Cuts Should Be Triggered Only When Unemployment Drops to 5 Percent

On planet Washington, where reducing the federal budget deficit continues to be more important than creating jobs, everyone is talking about "triggers" that automatically go into effect if certain other things don't happen.

Yet no one is talking about the most obvious trigger of all — no budget cuts until the official level of unemployment falls to 5 percent, its level before the Great Recession. 

The biggest trigger on the minds of Washington insiders is $1.2 trillion across-the-board cuts that will automatically occur if Congress's supercommittee doesn't come up with at least $1.2 trillion of cuts on its own that Congress agrees to by December 23. 

That automatic trigger seems likelier by the day because at this point the odds of an agreement are roughly zero.

Here's the truly insane thing: The triggered cuts start in 2013, a little over a year from now. 

Yet no one in their right mind believes unemployment will be lower than 8 percent by then. 

The cuts will come on top of the expiration of extended unemployment benefits, the end of a payroll tax cut, and continuing reductions in state and local budgets — all when American consumers (whose spending is 70 percent of the economy) will still be reeling from declining jobs and wages and plunging home prices. Even if Europe's debt crisis doesn't by then threaten a global financial meltdown, this rush toward austerity couldn't come at a worse time.  

In other words, what will really be triggered is a deeper recession and higher unemployment. 

Democrats on the supercommittee are acting as if they haven't met an unemployed person. They're proposing $2.3 trillion in deficit reductions — half from spending cuts (including $350 billion from Medicare), half from tax increases. To make the tax increases palatable to Republicans, Democrats want to give Congress a chance to find the new revenues by overhauling the tax code. If that effort fails, automatic tax increases would be triggered. The top tax rate won't rise (another bow to Republicans) but top earners' itemized deductions will be limited. 

Oh, and by the way, under the Democrats' proposal, spending cuts and tax increases, triggered or not, would start in 2013.

The President (remember him?) is still hawking his $450 billion jobs bill, but he's having a hard time being heard above the deficit-reduction din — in large part because he himself is simultaneously calling for deficit reduction, and most people outside Washington can't make sense of how we do both.  

The public is confused because they don't get it's a matter of sequencing. We need to do more spending now in order to bring back jobs and growth, then do less spending in the future — after the economy is once again generating jobs and growth. 

That's why it make more sense for Democrats to propose a deficit reduction plan that goes into effect only when jobs are back. The trigger should be the rate of unemployment — and a 5 percent rate would signal we're back on track. 

True, the unemployment rate is an imperfect measure of how bad things are (it doesn't include everyone who's working part-time but needs a full-time job, and those too discouraged to look for work), but at least it's a useful way of comparing how much worse or better we are than we've been. And it can't be fiddled with (the Bureau of Labor Statistics guards the calculation like gold in Fort Knox). 

Deficit hawks in both parties fear if we put off the spending cuts we'll never do them. But if we cut now, the ratio of deficit to the total economy just gets worse — because the economy stagnates and the swelling ranks of unemployed don't pay taxes. 

So the best of all worlds is to have a big jobs plan now, and also commit to automatic cuts triggered when unemployment falls to 5 percent. 

The hawks should find this acceptable. Reasonable Republicans (if any are left) will, too. Democrats, if they still care about jobs, should lead the way. 

Trigger Happy: Why Deficit Cuts Should Be Triggered Only When Unemployment Reaches 5 Percent

On planet Washington, where reducing the federal budget deficit continues to be more important than creating jobs, everyone is talking about "triggers" that automatically go into effect if certain other things don't happen.

Yet no one is talking about the most obvious trigger of all — no budget cuts until the official level of unemployment falls to 5 percent, its level before the Great Recession. 

The biggest trigger on the minds of Washington insiders is $1.2 trillion across-the-board cuts that will automatically occur if Congress's supercommittee doesn't come up with at least $1.2 trillion of cuts on its own that Congress agrees to by December 23. 

That automatic trigger seems likelier by the day because at this point the odds of an agreement are roughly zero.

Here's the truly insane thing: The triggered cuts start in 2013, a little over a year from now. 

Yet no one in their right mind believes unemployment will be lower than 8 percent by then. 

The cuts will come on top of the expiration of extended unemployment benefits, the end of a payroll tax cut, and continuing reductions in state and local budgets — all when American consumers (whose spending is 70 percent of the economy) will still be reeling from declining jobs and wages and plunging home prices. Even if Europe's debt crisis doesn't by then threaten a global financial meltdown, this rush toward austerity couldn't come at a worse time.  

In other words, what will really be triggered is a deeper recession and higher unemployment. 

Democrats on the supercommittee are acting as if they haven't met an unemployed person. They're proposing $2.3 trillion in deficit reductions — half from spending cuts (including $350 billion from Medicare), half from tax increases. To make the tax increases palatable to Republicans, Democrats want to give Congress a chance to find the new revenues by overhauling the tax code. If that effort fails, automatic tax increases would be triggered. The top tax rate won't rise (another bow to Republicans) but top earners' itemized deductions will be limited. 

Oh, and by the way, under the Democrats' proposal, spending cuts and tax increases, triggered or not, would start in 2013.

The President (remember him?) is still hawking his $450 billion jobs bill, but he's having a hard time being heard above the deficit-reduction din — in large part because he himself is simultaneously calling for deficit reduction, and most people outside Washington can't make sense of how we do both.  

The public is confused because they don't get it's a matter of sequencing. We need to do more spending now in order to bring back jobs and growth, then do less spending in the future — after the economy is once again generating jobs and growth. 

That's why it make more sense for Democrats to propose a deficit reduction plan that goes into effect only when jobs are back. The trigger should be the rate of unemployment — and a 5 percent rate would signal we're back on track. 

True, the unemployment rate is an imperfect measure of how bad things are (it doesn't include everyone who's working part-time but needs a full-time job, and those too discouraged to look for work), but at least it's a useful way of comparing how much worse or better we are than we've been. And it can't be fiddled with (the Bureau of Labor Statistics guards the calculation like gold in Fort Knox). 

Deficit hawks in both parties fear if we put off the spending cuts we'll never do them. But if we cut now, the ratio of deficit to the total economy just gets worse — because the economy stagnates and the swelling ranks of unemployed don't pay taxes. 

So the best of all worlds is to have a big jobs plan now, and also commit to automatic cuts triggered when unemployment falls to 5 percent. 

The hawks should find this acceptable. Reasonable Republicans (if any are left) will, too. Democrats, if they still care about jobs, should lead the way. 

The Corporate Pledge of Allegiance

Despite what the Supreme Court and Mitt Romney say, corporations aren't people. (I'll believe they are when Georgia and Texas start executing them.)

The Court thinks corporations have First Amendment rights to spend as much as they want on politics, and Romney (and most of his fellow Regressives) think they need lower taxes and fewer regulations in order to be competitive.

These positions are absurd on their face. By flooding our democracy with their shareholders' money, big corporations are violating their shareholders' First Amendment rights because shareholders aren't consulted. They're simultaneously suppressing the First Amendment rights of the rest of us because, given how much money they're throwing around, we don't have enough money to be heard.

And they're indirectly giving non-Americans (that is, all their foreign owners, investors, and executives) a say in how Americans are governed. Pardon me for being old-fashioned but I didn't think foreign money was supposed to be funneled into American elections.

Romney's belief big corporations need more money and lower costs in order to create jobs is equally baffling. Big corporations are now sitting on $2 trillion of cash and enjoying near-record profits. The ratio of profits to wages is higher than it's been since before the Great Depression. And a larger and larger portion of those profits are going to top executives. (CEO pay was 40 times the typical worker in the 1980s; it's now upwards of 300 times.)  

But, hey, if the Supreme Court and regressive Republicans insist big corporations are people and want to treat them as American citizens, then why not demand big corporations take a pledge of allegiance to the United States?

And if they don't take the pledge, we should boycott them. (Occupiers — are you listening?)

Here's what a Corporate Pledge of Allegiance might look like:

The Corporate Pledge of Allegiance to the United States

The [fill in blank] company pledges allegiance to the United States of America. To that end:

We pledge to create more jobs in the United States than we create outside the United States, either directly or in our foreign subsidiaries and subcontractors.

If we have to lay off American workers, we will give them severance payments equal to their weekly wage times the number of weeks they've work for us.

We further pledge that no more than 20 percent of our total labor costs will be outsourced abroad.

We pledge to keep a lid on executive pay so no executive is paid more than 50 times the median pay of American workers. We define "pay" to include salary, bonuses, health benefits, pension benefits, deferred salary, stock options, and every other form of compensation.  

We pledge to pay at least 30 percent of money earned in the United States in taxes to the United States. We won't shift our money to offshore tax havens and won't use accounting gimmicks to fake how much we earn.

We pledge not to use our money to influence elections.

Companies that make the pledge are free to use it in their ads over the Christmas shopping season.