Robert B. Reich's Blog, page 36

Public Health First

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The System: Who Rigged It, How We Fix It The coronavirus has...

The System: Who Rigged It, How We Fix It 

The coronavirus has starkly revealed what most of us already knew: The concentration of wealth in America has created a a health care system in which the wealthy can buy care others can’t. 

It’s also created an education system in which the super-rich can buy admission to college for their children, a political system in which they can buy Congress and the presidency,  and a justice system in which they can buy their way out of jail. 

Almost everyone else has been hurled into a dystopia of bureaucratic arbitrariness, corporate indifference, and the legal and financial sinkholes that have become hallmarks of modern American life.

The system is rigged. But we can fix it.

Today, the great divide in American politics isn’t between right and left. The underlying contest is between a small minority who have gained power over the system, and the vast majority who have little or none. 

Forget politics as you’ve come to see it – as contests between Democrats and Republicans. The real divide is between democracy and oligarchy.

The market has been organized to serve the wealthy. Since 1980, the percentage of the nation’s wealth owned by the richest four hundred Americans has quadrupled (from less than 1 percent to 3.5 percent) while the share owned by the entire bottom half of America has dropped to 1.3 percent [Saez & Zucman]. 

The three wealthiest Americans own as much as the entire bottom half of the population. Big corporations, CEOs, and a handful of extremely rich people have vastly more influence on public policy than the average American. Wealth and power have become one and the same.

As the oligarchs tighten their hold over our system, they have lambasted efforts to rein in their greed as “socialism”, which, to them, means getting something for doing nothing.

But “getting something for doing nothing” seems to better describe the handouts being given to large corporations and their CEOs. General Motors, for example, has received $600 million in federal contracts and $500 million in tax breaks since Donald Trump took office. Much of this “corporate welfare” has gone to executives, including CEO Mary Barra, who raked in almost $22 million in compensation in 2018 alone. GM employees, on the other hand, have faced over 14,000 layoffs and the closing of three assembly plants and two component factories.

Our system, it turns out, does practice one form of socialism – socialism for the rich. Everyone else is subject to harsh capitalism.

Socialism for the rich means people at the top are not held accountable. Harsh capitalism for the many, means most Americans are at risk for events over which they have no control, and have no safety nets to catch them if they fall.

Among those who are particularly complicit in rigging the system are the CEOs of America’s corporate behemoths. 

Take Jamie Dimon, the CEO of JPMorgan Chase, whose net worth is $1.4 billion. He comes as close as anyone to embodying the American system as it functions today.

Dimon describes himself as “a patriot before I’m the CEO of JPMorgan.”

He brags about the corporate philanthropy of his bank, but it’s a drop in the bucket compared to his company’s net income, which in 2018 was $30.7 billion – roughly one hundred times the size of his company’s investment program for America’s poor cities. 

Much of JP Morgan’s income gain in 2018 came from savings from the giant Republican tax cut enacted at the end of 2017 – a tax cut that Dimon intensively lobbied Congress for.

Dimon doesn’t acknowledge the inconsistencies between his self-image as “patriot first” and his role as CEO of America’s largest bank.
He doesn’t understand how he has hijacked the system.

Perhaps he should read my new book.

To understand how the system has been hijacked, we must understand how it went from being accountable to all stakeholders – not just stockholders but also workers, consumers, and citizens in the communities where companies are headquartered and do business – to intensely shareholder-focused capitalism.

In the post-WWII era, American capitalism assumed that large corporations had responsibilities to all their stakeholders. CEOs of that era saw themselves as “corporate statesmen” responsible for the common good.

But by the 1980s, shareholder capitalism (which focuses on maximizing profits) replaced stakeholder capitalism. That was largely due to the corporate raiders – ultra-rich investors who hollowed-out once-thriving companies and left workers to fend for themselves.

Billionaire investor Carl Icahn, for example, targeted major companies like Texaco and Nabisco by acquiring enough shares of their stock to force major changes that increased their stock value – such as suppressing wages, fighting unions, laying off workers, abandoning communities for cheaper labor elsewhere, and taking on debt – and then selling his shares for a fat profit. In 1985, after winning control of Trans World Airlines, he loaded the airline with more than $500 million in debt, stripped it of its assets, and pocketed nearly $500 million in profits.

As a result of the hostile takeovers mounted by Icahn and other raiders, a wholly different understanding about the purpose of the corporation emerged.

Even the threat of hostile takeovers forced CEOs to fall in line by maximizing shareholder profits over all else. The corporate statesmen of previous decades became the corporate butchers of the 1980s and 1990s, whose nearly exclusive focus was to “cut out the fat” and make their companies “lean and mean.”

As power increased for the wealthy and large corporations at the top, it shifted in exactly the opposite direction for workers. In the mid-1950s, 35 percent of all private-sector workers in the United States were unionized. Today, 6.4 percent of them are.

The wave of hostile takeovers pushed employers to raise profits and share prices by cutting payroll costs and crushing unions, which led to a redistribution of income and wealth from workers to the richest 1 percent. Corporations have fired workers who try to organize and have mounted campaigns against union votes. All the while, corporations have been relocating to states with few labor protections and so-called “right-to-work” laws that weaken workers’ ability to join unions.

Power is a zero-sum game. People gain it only when others lose it. The connection between the economy and power is critical. As power has concentrated in the hands of a few, those few have grabbed nearly all the economic gains for themselves.

The oligarchy has triumphed because no one has paid attention to the system as a whole – to the shifts from stakeholder to shareholder capitalism, from strong unions to giant corporations with few labor protections, and from regulated to unchecked finance.

As power has shifted to large corporations, workers have been left to fend for themselves. Most Americans developed 3 key coping mechanisms to keep afloat.

The first mechanism was women entering the paid workforce. Starting in the late 1970s, women went into paid work in record numbers, in large part to prop up family incomes, as the wages of male workers stagnated or declined. Then, by the late 1990s, even two incomes wasn’t enough to keep many families above water, causing them to turn to the next coping mechanism: working longer hours. By the mid-2000s a growing number of people took on two or three jobs, often demanding 50 hours or more per week.

Once the second coping mechanism was exhausted, workers turned to their last option: drawing down savings and borrowing to the hilt. The only way Americans could keep consuming was to go deeper into debt. By 2007, household debt had exploded, with the typical American household oweing 138 percent of its after-tax income. Home mortgage debt soared as housing values continued to rise. Consumers refinanced their homes with even larger mortgages and used their homes as collateral for additional loans.

This last coping mechanism came to an abrupt end in 2008 when the debt bubbles burst, causing the financial crisis. Only then did Americans begin to realize what had happened to them, and to the system as a whole. That’s when our politics began to turn ugly.  

So what do we do about it?

The answer is found in politics and rooted in power.

The way to overcome oligarchy is for the rest of us to join together and form a multiracial, multiethnic coalition of working-class, poor and middle-class Americans fighting for democracy.

This agenda is neither “right” nor “left.” It is the bedrock for everything America must do.

The oligarchy understands that a “divide-and-conquer” strategy gives them more room to get what they want without opposition. Lucky for them, Trump is a pro at pitting native-born Americans against immigrants, the working class against the poor, white people against people of color. His goal is cynicism, disruption, and division. Trump and the oligarchy behind him have been able to rig the system and then whip around to complain loudly that the system is rigged.

But history shows that oligarchies cannot hold on to power forever. They are inherently unstable. When a vast majority of people come to view an oligarchy as illegitimate and an obstacle to their wellbeing, oligarchies become vulnerable.

As bad as it looks right now, the great strength of this country is our resilience. We bounce back. We have before. We will again.

In order for real change to occur – in order to reverse the vicious cycle in which we now find ourselves – the locus of power in the system will have to change.

The challenge we face is large and complex, but we are well suited for the fight ahead.

Together, we will dismantle the oligarchy.

Together, we will fix the system.

It’s Morally Intolerable for the Privileged to Profit from this Emergency

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What’s Missing From the Coronavirus Bill

The public health and economic crises we’re experiencing are closely related. They reveal in stark terms the dangerous mythology of trickle-down self-sufficiency and the need for policies that respond to the real needs of people who are or will soon be affected.

But Trump doesn’t seem to understand that. Before agreeing to an actual coronavirus relief bill, his administration was considering more corporate tax cuts, tax cuts targeted to the airlines and hospitality industries, and a temporary payroll tax cut. 

But tax cuts will be useless. They’ll be too slow to stimulate the economy, and won’t reach households and consumers who should be the real targets. And they’ll reward the rich, who don’t spend much of their additional dollars, without getting money into the hands of the poor and middle-class, who do.

Thankfully, Congress has moved forward on some of the most urgent priorities like free coronavirus testing, strengthening unemployment insurance and food security programs. But it doesn’t go far enough.

Instead, Congress must immediately provide an emergency $500 billion to help all Americans protect themselves and their families, and keep the economy going.

The money should be used for:

Coronavirus testing and treatment. Diagnostic tests should be mandatory and universal, and free. And everyone with the virus should have access to treatment and to any future vaccines, regardless of ability to pay.

Guaranteed paid sick leave for ALL employees. The current relief bill does cover paid sick leave for some but has huge carve-outs, exempting all companies with over 500 employees and some small businesses under 50 employees. That exclusion could affect up to 20 million Americans. Without guaranteed paid sick leave and family leave, workers who are sick will not remain home and will end up exposing others.

Extended unemployment insurance. Without it, large numbers of Americans will be furloughed or laid off without adequate income to support themselves and their families. As it is, unemployment insurance reaches a measly 27 percent of the unemployed. 

Extended Medicaid. No one should avoid seeing a doctor because of fears about out-of-control medical bills. Right now, 28 million Americans have no health insurance, and countless more are reluctant to see a doctor because of large deductions or co-payments. Especially in a health emergency, health care should be available to all regardless of ability to pay. 

Immediate one-time payments of $1,500 to every adult and $500 per child, renewable if necessary. Some consumers might spend the money right away to meet rent if they lose their regular paycheck. Others might have stronger balance sheets and spend the money at whatever uncertain date the virus is contained. 

Suspension of the Trump administration’s “public charge” rule that enables federal officials to deny green cards to immigrants who use social safety net programs. Programs like, Medicaid, Food Stamps, Temporary Assistance to Needy Families, and Women Infants and Children are more important than ever.

For the same reason, testing and treatment should be available to undocumented immigrants, without fear of deportation.

Trickle-down economics and trickle-down public health are deeply flawed. Corporate tax cuts won’t save us. The coronavirus doesn’t distinguish between rich and poor. We are in this imminent health and economic emergency together, and our own health and wellbeing are dependent on the health and wellbeing of everyone else. 

Each of us is only as healthy as the least-healthy among us.

America Doesn’t Have a Public Health System

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Will He Get A Second Term?

Donald Trump has proven himself to be the most corrupt, dishonest, and incompetent president in American history. 

But despite all of the lies, abuses of power, and damage to the country – I must warn you – there’s a very real possibility he could be reelected. This doesn’t have to be the case. 

Let me explain.

Although Trump has been impeached and is one of the most unpopular presidents in modern history, he still has devoted support among his core base. Nearly 90 percent of Republicans still approve of the job he’s doing, a rate that’s held constant throughout his presidency. According to one survey, a third of Trump supporters said there was nothing he could do to lose their support.

Trump still maintains substantial support in key swing states as well. Recent polls show him neck and neck with leading Democratic candidates in the key states of Michigan, Pennsylvania, Wisconsin, Florida, Arizona, and North Carolina. Remember, Hillary Clinton won the popular vote in 2016 by 3 million votes but still lost the election because of the power of these states in the Electoral College.

Big money donors are also forking over record sums of money to keep Trump in office. In the last quarter of 2019 alone, he raked in a staggering $46 million, far outpacing any of his Democratic opponents. He now has more than $100 million in the bank, not to mention the millions raised by pro-Trump Super PACs. The GOP’s biggest donors – some of whom didn’t support him in 2016, but received massive windfalls from Trump’s tax cut – are now paying him back.  

At the same time, voter suppression is on the rise. To suppress turnout by likely Democratic voters, Republican officials have doubled down on their efforts to keep low-income and minority voters from the polls. They are intimidating immigrant voters, purging voter rolls, closing polling places, and making it harder to register in the first place. 

Florida went so far as to institute a modern-day poll tax, requiring people with past felony convictions to pay off any fines or fees before exercising their right to vote. In 2016, over 20 percent of black voting-age Floridians weren’t able to vote due to past felony convictions, and now, hundreds of thousands could still be prevented from going to the polls this November in this key state.

We are also at risk of foreign powers trying to interfere in the election, as they did in 2016. Experts warn that many states still lack the necessary safeguards to protect against interference. The FBI, Department of Justice and National Security Agency have also raised concerns that Russia, China, and Iran might attempt misinformation campaigns. I can’t believe I even have to say this, but foreign governments should not have a say in our elections.

So why am I telling you all of this? I don’t mean to scare you. And the last thing I want to do is cause you to be hopeless, and give up. To the contrary, I want you to be more determined than ever. Despite all these attacks on democracy, we have what it takes to make Trump a one-term president. But only if we remain focused and united.

It may seem daunting. We’re up against a full-fledged attack on our democratic institutions. But there is a way forward: 

We can defeat Trump and his enablers by building a multiracial, multi-class coalition. And we do that by supporting a true progressive with a bold vision for an economy and democracy that works for all Americans. That way enough voters will be inspired to show up to the polls and stop Trump’s authoritarian machine for good.

This isn’t a pipe dream. We already beat the liar-in-chief by 2.8 million votes in 2016. And the 2018 elections had the highest turnout of any midterm election since 1914 – handing House Republicans their most resounding defeat in decades. People are outraged – and we must keep fighting.

If we come together, we will prevail.

The coronavirus outbreak has officially been labeled a pandemic...

The coronavirus outbreak has officially been labeled a pandemic by the World Health Organization, potentially grinding the global economy to a halt. Yet every step of the way, the Trump administration’s response has been to deny, blame, obfuscate, and generally cover up. 

Trump and his enablers are focused only on mitigating the economic consequences of the outbreak, especially before the election – mulling proposals like corporate tax cuts and bailouts for airlines and the hotel industry, but resisting the needs of average Americans and our broken healthcare system. 

The outbreak has also revealed the utter weakness of our social safety nets: workers may be forced to choose between a missed paycheck and risking their health because too many employers have no paid sick leave, schools are weighing whether or not to shut down because hundreds of thousands of poor children rely on them for hot meals, and our cruel for-profit healthcare system is preventing people from getting tested for the virus for fear of a hefty bill.

And, remember, 80 percent of Americans are living paycheck to paycheck. Coupled with Trump’s incompetence and narcissism, it’s a recipe for total disaster.

Meanwhile, the Democratic electorate is in the midst of a primary to unseat this sociopath. After Tuesday, Biden has kept his delegate lead with wins in Idaho, Michigan, Missouri, and Mississippi. And while the race isn’t over yet, it’s wise to start making contingency plans.

Biden’s biggest weakness is his failure to attract progressives and young voters. In a CNN exit poll for Michigan, Bernie won a whopping 82 percent of voters age 18-29. Without these voters, if Biden is the nominee, Democrats will not be able to get the votes needed to defeat Trump.

So what are Biden’s options for getting out the vote of this crucial portion of the Party? He must select a true progressive for Vice President, like Elizabeth Warren or even Bernie Sanders, who can push bold progressive ideas like a wealth tax, Medicare for All, tuition-free college, cancelling student debt, and a Green New Deal.

These progressive policies are also winners with the electorate – a majority of voters even in Mississippi and other southern states supported replacing the current healthcare system with a single-payer system, and polling continues to reflect this appetite for transformative change. Even if Bernie isn’t getting the support he counted on, his ideas are.

And don’t count Bernie out just yet. A debate is coming up this weekend that could boost his campaign enough to help him secure wins in later key states like Ohio and Pennsylvania.

But if he fails to get traction, he needs to do whatever he can to help reunite the party, and most importantly, keep working to shift the party in a progressive direction. Behind the scenes he needs to negotiate with Biden a pathway to gain progressive support.

Meanwhile, Biden needs to take up the issues of concern to young people, who are the future of the party and who Democrats can’t win without. This might seem like a pipe dream, but Biden has no choice. This is not 2016. The nation cannot afford another 4 years of Trump. If you’re angry – and rightfully so – use that anger to keep pushing the movement.

How to Respond to the National Emergency

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Everyone got Super Tuesday wrong. The three biggest surprises:1....

Everyone got Super Tuesday wrong. The three biggest surprises:

1. The expectation was for a long, drawn-out primary with many candidates. But more quickly than anyone expected, the Democratic primary has come down to Bernie Sanders and Joe Biden.

2. Joe Biden was all but counted out before last week. A crucial endorsement from Congressman James Clyburn helped him cruise to a resounding victory in South Carolina. After his moderate rivals Amy Klobuchar and Pete Buttigieg dropped out to back him on the eve of Super Tuesday, he came roaring back.

3. And the Democratic establishment –  I’m talking about the Democratic National Committee, the major Democratic funders and bundlers, the platoons of political consultants and advisers, pundits and op-ed writers, and corporate media – suddenly came down like a ton of bricks on Bernie Sanders and rallied around Joe Biden to help give Biden decisive victories in key states.

Neither Biden nor Bernie is a perfect candidate. Bernie’s personality grates on some, while Biden’s policy history turns off some. In the coming contest between Bernie and Biden, younger and older Democrats have very different ideas about who can best defeat Trump. The generation gap is huge. The biggest problem with Biden’s electability is he is practically incapable of connecting with young people. In Massachusetts on Tuesday, Biden won just 18 percent of voters under 45; in Texas, just 16 percent of voters under 45; in Minnesota, just 17 percent; in California, an appalling 8 percent. Sanders does almost as poorly among voters over 65.

The eventual nominee will have to bridge the divide between these factions within the party. Bernie must find a way to tailor his populist message in a way that will appeal to older voters, and black voters in particular. Even with strong policies on racial justice and equality, Bernie’s message still has not resonated with black voters. If he wants to be the nominee, something must change.

And the only way Biden can win the presidency is if he reaches out to young, progressive Democrats, and inspires them. This poses a huge lift: Biden’s establishment message of maintaining the status quo is as uninspiring as it gets for young voters who have only ever experienced the worst of our politics and the economy. In 2016, the Democrats’ presidential nominee had a similar message and similar problems with young voters. We cannot afford a repeat of a centrist candidate who stands for more of the same.

Perhaps Trump is so loathsome that whoever emerges as the Democratic candidate will attract enough votes to consign Trump to the trash bin of history regardless of their limitations. But we would be foolish to count on that.