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The Fiscal Cliff Compromise

13 Nov

With just 7 weeks left, Congress is faced with a choice of what to do over the looming “Fiscal Cliff”.  The ”Fiscal Cliff” is comprised of a combination of mandatory spending cuts and the expiration of the Bush Tax Cuts.  All of these are set to happen at the same time.  This is a result of the deal struck in 2011 by Congress during the the debt ceiling debates.  The purpose of this measure was to ensure that neither side would wait until now to address the issues it faced.  Rather the hope at the time was that Congress would have addressed the issue before the country faced this challenge and would have come up with a plan to cut the deficit, as well as, found a suitable tax substitute for the expiring tax cuts.

In reality, what we have seen is partisan grandstanding and a childish game of chicken.  This is the same kind of behavior that caused the first credit downgrade in U.S. history.  The downgrade was not done because of the deficit or the total U.S. debt.  It was done as a result of the instability in the U.S. Government.  This instability is the same that we face today and the same we will likely face when the new Congress begins session in 2013.

The key issues separating the side are simple, yet divisive.  The GOP refuses to support tax increases and demands deficit reduction.  The Democrats demand tax increases on the wealthy and refuse to allow reductions to social program spending.  There you have it, that is what separates the two sides.

So what’s at stake if the “Fiscal Cliff” is allowed to happen?

Spending will be slashed dramatically, taxes will rise and the country will likely slip into recession (see chart below for breakdown).  To the average person, this is a no brainer.  To a politician it is not that simple.  Many Republicans in Congress have pledged not to raise taxes.  Others have made promises to reduce the deficit.  These too seem important and many support these things.  Democrats have also promised to reduce deficit spending, but see a different path than Republicans since they are not tied down to a no tax increase pledge.

One more thing, we still must raise the debt ceiling if we want to continue funding the government.  This must happen regardless whether we go over the ”Fiscal Cliff” or not.

If the country is allowed to go over the “Fiscal Cliff”, the impact could be disastrous   Allowing the Bush Tax Cuts to expire, especially on the middle class, would plunge the country’s flagging economy into turmoil.  The spending cuts would also produce a nightmare scenario.  Together, the rise in taxes and the spending cuts would eliminate approximately $600 billion from the economy which would surely drag it back into recession.  

Below is a chart from the non-partisan Congressional Budget Office outlining the potential impacts each portion of the “Fiscal Cliff” would have on the economy.

So what are the options for this Lame-Duck Congress?

Well this depends on who you talk to.  Republicans maintain the plan put forth by Paul Ryan (R-WI), which maintains that you can close loopholes to make up for the revenue needed to avoid the ”Fiscal Cliff” while decreasing the deficit.  This sounds great, except it could potentially jeopardize loopholes and deductions used by middle-class families who rely on those deductions to survive.

Democrats maintain that taxes must be raised on the wealthy in order to reduce the deficit and avoid the ”Fiscal Cliff”.  Republicans won’t support this plan, because it requires that taxes be increased (something that goes against their pledge).

President Obama has already addressed the country telling Congress to get to work on a bill that will avoid the ”Fiscal Cliff”, but clearly stated that he would not sign a bill that gave tax breaks for the wealthy.

It seems as if we have an impasse.  Recently there has been a new option that has come to light.  One that Mitt Romney supported and one that was introduced by the Obama Administration during their failed attempt to fund and pass the American Jobs Act.  This option caps all tax deductions at $50,000 for all.  This would allow any money the government to keep any money not refunded back to tax payers (above the $50,000 in deductions).  For middle class families, this would have little to no impact on their taxes (as can be seen by the graph below).

This option might be a possible path to compromise for Republicans and Democrats.  The increase the Democrats seek would be accounted for using this method and the Republicans could seek shelter here because they wouldn’t technically have agreed to a new tax increase.  This would simply be a reform to the tax code that achieved the same methods of raising taxes without actually doing so.  Of course the Bush Tax Cuts would need to be renewed for all if this method were to be used so this would call for Democrats to come off of their hard lined stance on tax cuts for the wealthy.  The debt ceiling would also have to be increased, but would play a minor role if plans for deficit reduction and taxes can be worked out.

Congress is likely to pursue the latter method, as it is more likely to receive bi-partisan support.  It will not be a surprise, however; if the Republicans and Democrats argue up until the eleventh hour again.



9 Nov


bullet dodgedO hai Romney transition website developer! Did you know that if you have a website you do not yet want people to see yet, you can hide it? Like, you could put up a splash page that says “coming soon,” with kittens with googly eyes, or you could just have it in development pages and not actually published to the Internet! We do not blame you, web development is hard! You know: UNLESS IT IS YOUR JOB TO DEVELOP THE WEB. Here are some screenshots of the Romney transition website, which unaccountably was live for the whole Internet (but especially Taegan Goddard at Political Wire) to see! It was here an entire day after Miffed “47 percent” Romney shit the electoral bed! We especially like the ones we are gonna show you after the jump!

We are not saying Mitt Romney should not have had someone working on a transition website! It is important to have your ducks in a row! It is just that, as with every other single thing on his campaign, they did a piss-poor job, and now we have no choice but to laugh at them. MITT ROMNEY WHY ARE YOU SO BAD AT THIS?

This “Join the Administration” page is the funniest one. Like, did you know it is not always awesome buying yourself a cabinet position or whatever?

Wait a minute, what did it just say?

Hahaha, it said you have to show your taxes and stuff. AS IF! From now on, no presidential candidate will ever have to show her taxes, due to the precedent set by Mr. Senor Romney, unless of course she actually would like to win.

Final battleground snapshot, and my predictions!

5 Nov

by kos

U.S. President Barack Obama addresses thousands of supporters in Madison, Wisconsin November 5, 2012, on his last day of campaigning.  REUTERS/Larry Downing

Victory’s eve.

As always, these are the TPM polling composites, comparing the trendlines from last Wednesday.

You’ll be glad to know that this battleground snapshot, the 31st I’ve written this year, is it. We’re done. Tomorrow, we’ll have real results, and the day can’t have come any sooner.

Particularly since President Barack Obama is winning handily.

Florida is about the only state where Obama lost ground, while he surged in Wisconsin. Everywhere else, the movement was incremental, and mostly in the president’s direction. And note—Obama’s deficit in Florida and North Carolina is smaller than the deficit in any of these other battleground states. And with undecideds breaking to Obama, Romney’s got zero room to grow.

Head below the fold for my predictions. Hint, it’s a 332-206 Obama victory.

Open thread: Will Ferrell will do anything to get you to vote

5 Nov




by Barbara Morrill

Revisiting Our February Jobs Prediction

3 Nov



Friday’s jobs report was a reasonably strong one, economically speaking. The economy added 171,000 jobs in October, according to the government’s survey of business establishments. In addition, estimates of jobs growth were revised upward for August and September.

The unemployment rate, which is calculated through a separate survey of households, ticked up to 7.9 percent. But this was because it was estimated that more workers, 578,000, entered the labor force in October, outweighing what it said were 410,000 people who found jobs.

Is the report good enough to have an impact on the waning days of the campaign? There is a dispute in the political science literature about whether voters react to underlying economic conditions, or rather, to the news media’s coverage of the economy.

If it’s the real-world conditions that count, the actual act of the government publishing the jobs figures is unimportant. People will already have observed local economic conditions and incorporated them into their decision of who they might vote for.

Indeed, measures of subjective economic attitudes, like consumer confidence, have shown more strength in the last two months, suggesting that the public has already “priced in” the idea that the economy is slowly returning back to normal.

If the news coverage matters instead, and perceptions are more important than the reality on the ground, then a report with good headline numbers (for example, the one last month, which had unemployment dropping to 7.8 percent) will have more impact than one where the strength is in the fine print (as it was in this latest report). Furthermore, it could matter which other stories the economic news is competing against. Right now, we’re already in a very busy news cycle, between Hurricane Sandy and the end of the presidential campaign.

These ideas are not mutually exclusive, of course. It’s very likely that both the reporting on the economy, and actual conditions on the ground, matter to some degree.

In this case, however, neither would be suggestive of much last-minute political impact. Subjective perceptions of the economy, and the statistical data we have about it, already seemed to have been roughly in line with one another. And the headline numbers in this jobs report were not quite strong enough to break through and dominate the news coverage over the final weekend.

This may be a case of two wrongs making a right. This report is a little stronger than it appears, but reporters also tend to over-interpret the meaning of the monthly swings in the jobs numbers, which are subject to a fair amount of statistical error.

Still, this month’s numbers are part of a longer-term story. With the relatively strong October numbers, and the upward revisions to August and September, the economy has now created an average of 157,000 jobs per month so far this year. This may be a slight underestimate, in fact. The government has announced, but not yet officially incorporated into the numbers, its estimates of annual benchmark revisions, which would add to the jobs numbers in January through March.

Those revisions would bring average jobs growth throughout the year to about 165,000 jobs per month.

In February, just before the jobs figures for January were announced, we published a simple statistical projection that forecast how the election would turn out based on President Obama’s approval ratings at that time, and the jobs numbers over the rest of the year.

Our conclusion was 150,000 represented the over-under line. If more than 150,000 jobs were created per month, then Mr. Obama would be a favorite for re-election, other factors being equal. Below that threshold, then he would be an underdog.

The actual numbers have come in just slightly ahead of the 150,000-job benchmark, it turns out, suggesting that Mr. Obama might be favored to win re-election, but is not a lock to do so.

And that’s pretty much what we’re seeing in the polls. There is not much time for the polls to change, and if they are right, Mr. Obama will win the Electoral College. But Mr. Obama’s advantage is marginal enough that Mitt Romney could win if the polls miss a couple of points high on Mr. Obama in the swing states.

What this jobs report perhaps does do is remove Mr. Romney’s best opportunity to shift the polls in his direction before the election. We’re very likely to wake up on Tuesday knowing that the polls have Mr. Obama as the Electoral College favorite. We’ll have to wait until Tuesday night (or longer) to know whether the polls have it right.

But if they do, and Mr. Obama wins narrowly, the outcome will be broadly in line with what the jobs numbers predict.

The Case for Barack Obama

1 Nov


Waiting in line for two-and-a-half hours is rarely an exciting experience. But when my son and I voted early—he for the first time—at a community center in Rockville, Md., both of us were inspired by the hundreds of other people intent on exercising democracy’s most basic right.

In our deep blue county, this was largely an Obama crowd, crossing the boundaries of race, class and age. It was white, African American and Latino, young, middle-aged and old. These citizens eager to lift their voices reminded us that in this campaign, one coalition includes almost every kind of American. If Obama wins, he will owe his re-election to a little bit of all of us: blue-collar white voters in the Midwest, upscale voters in the Northeast and on the West Coast, an overwhelming percentage of Latino voters turned off by a new nativism on the right, and near unanimous solidarity on his behalf among African Americans. Obama is not the sort to think about dismissing 47% of us.

The sweep of the Obama coalition represented in that snaking line led my son and me to conclude something else: The President Obama of 2012 may no longer stir the jubilation called forth by the Barack Obama of 2008. But the hope and resolve he spoke of then have not vanished.

Yes, those feelings have been tempered by hard times and four years of bitter political struggle. Obama appears now less as a savior than as a human being with flaws and virtues, failures and successes. The hope of four years ago has transformed itself into something more mature and durable: a confidence in what an increasingly diverse, tolerant and open America can achieve. It is a view that flatly rejects the fears of those who see our country in decline and who always insist that the good old days should be our standard for the future. A nation that has produced Greatest Generations in the past can do so again. Indeed, I think we’re doing so right now.

In making electoral decisions, voters sensibly combine hard judgments about where candidates stand with instinctive calculations about how character might influence their choices in situations we cannot imagine today.

Ronald Reagan offered the most widely honored question about the practical matters: Are you better off than you were four years ago? And for most of the country, the answer is yes. Obama inherited an economy in shambles—the GDP was shrinking at an annual rate of nearly 9% when he took office—and turned it around. Unemployment is well down from its peak, 4.5 million private-sector jobs have been created since January 2010, the stock market has doubled since it hit bottom, and the housing market is stabilizing. Mitt Romney can promise 12 million more jobs in the coming four years because Obama’s policies have already put us on track to produce them, courtesy of a revival of manufacturing, a rise in exports and a new wave of research and innovation.

Most relevant to this year’s choice is the fact that the economy is in far better shape than it would have been if we had followed the counsel of Obama’s foes. They would have allowed the auto industry to collapse. They would have ignored history’s lesson that government must step in to stimulate economic activity when private demand plummets. We know from the experience of Europe that austerity leads to stagnation. Obama made the better choice.

Romney has at times condemned Obama’s stimulus plan while standing in front of enterprises returned to prosperity by the stimulus. Paul Ryan denounced the stimulus and then sought its succor for companies in his district. Watch what they do, not what they say.

Obama has revived a practical, sober and realistic foreign policy in the tradition of George H.W. Bush. Democrats crow about the killing of Osama bin Laden and thrill to Vice President Joe Biden’s handy bumper-sticker line “Osama bin Laden is dead, and GM is alive.” But behind the quip is a reality: Obama has transformed the war on terrorism from an all-purpose slogan designed to rationalize all manner of foreign policy adventures to a focused effort to keep the country safe. By ending the war in Iraq, winding down our commitment in Afghanistan and abandoning grandiose adventurism, he has redirected U.S. foreign policy toward the classic and sensible goals of preserving our power and influence and shaping an international environment congenial to our prosperity and our values.

Republicans bridle at the idea that Obama has restored respect for our country around the world. But it’s true. An Obama defeat would threaten many of his diplomatic achievements, including building what one pro-Western ambassador called “a successful coalition of the unlike-minded and unwilling” to confront Iran.

The strongest endorsement of Obama’s choices came from his opponent. In the third debate, Romney abandoned months of bellicose rhetoric and lined up behind one Obama decision after another. In this polarized political era, poll-tested imitation is about the only form of flattery we can expect. When Romney declared that “we don’t want another Iraq,” he was blessing the transition from George W. Bush’s era to Obama’s.

Obama’s decision to ignore cautious political advisers and see through the health care reform fight came at great political cost. Even some of his allies think the electoral price was too high. But this is a measure of Obama’s fortitude. By bringing the promise of health insurance to tens of millions of our citizens, Obama ended a national scandal. No other wealthy nation allows so many to live without basic coverage for illness or to rely on emergency rooms as a last resort. They either arrive there long after the opportunity to get well has passed, or they survive only to face years, sometimes a lifetime, of debt. The Affordable Care Act is an achievement worthy of our great reforming Presidents.

Once again Romney’s behavior proves the point. He speaks of repealing Obamacare only in general terms. When it comes to so many of the specifics—on prohibiting insurance discrimination against those with pre-existing conditions, for example, or on making it easier for parents to cover their adult children—Romney winds up backing what Obama did.

Beyond these large questions are concrete Obama achievements: his support for women’s rights, including the Lilly Ledbetter Fair Pay Act; the end of “Don’t ask, don’t tell” and his endorsement of gay marriage; passage of Wall Street reform, including the creation of the Consumer Financial Protection Bureau; reform of the student-loan program; his appointments of Elena Kagan and Sonia Sotomayor to the Supreme Court, checking the right-wing drift in the judiciary that gave us decisions like Citizens United; and many of the investments in the stimulus package, notably in clean energy. In quieter times, these would be playing a much larger role in the campaign.

All are part of the case for Obama. But the best reason for his re-election goes back to what motivated so many middle-of-the-road voters four years ago. Americans who want to replace polarization with balance, extremism with moderation, obstruction with problem solving and blind partisanship with compromise need Obama to win again. An Obama defeat would empower those whose go-for-broke approach to politics is largely responsible for the distemper of our public life and the dysfunction in Washington.

This election does not represent a choice between left and right. It represents a choice between balance and a new, extreme form of conservatism. This new conservatism cannot accept any tax increases as part of a deal to reduce the deficit. For all his attempts to sound moderate in the campaign’s closing days, Romney has not altered the response he gave during a Republican-primary debate rejecting a hypothetical deal involving a 10-to-1 ratio between spending cuts and tax increases. This refusal to acknowledge the need for more revenue is a recipe for eviscerating government—and the cuts, as Ryan’s budget shows, would fall disproportionately on programs for Americans with the lowest incomes.

The new right has broken with conservatism’s past—and our country’s most constructive traditions—by adopting a new and radical individualism that largely ignores our country’s gift for community.

The America of Alexander Hamilton, Henry Clay, Abraham Lincoln and both the Republican and Democratic Roosevelts understood that government has a role to play in tempering the market and making investments the market depends on but will not make itself. The new conservatism measures freedom almost entirely in terms of the share of the nation’s GDP that flows to the state, as if spending on Medicare, Social Security, student loans, community colleges and infrastructure improvements somehow made us less “free.” And in the face of growing economic inequality, the new conservatism regularly discounts or condemns government’s role in leaning toward modestly greater equity, promoting upward mobility and checking concentrated economic power. It is this variety of conservatism that Romney bowed to in the primaries and would be forced to accommodate if he became President, whatever his constantly shifting views might actually be.

Obama, to a fault, devoted enormous energy during his first 21⁄2 years in office trying to move his opponents to compromise. Thus was almost a third of his stimulus plan devoted to tax cuts. Thus did he model his health care plan after Romney’s in Massachusetts. Thus did he seek a deal with House Speaker John Boehner during the debt-ceiling confrontation that, if enacted, would have disappointed many of the President’s progressive supporters. Only those who confuse compromise with capitulation can claim that Obama did not try mightily to keep his promise to end partisanship in Washington.

Obama should win a referendum on his stewardship. But this is also a choice—a “big choice,” just as Romney says—between moderation and a return to an approach to government more suited to the Gilded Age than to the 21st century. Obama is battling to defend the long consensus that has guided American government successfully since the Progressive Era. It is based on the view that ours is a country whose Constitution begins with the word we, not me, and that the private success we honor depends on a government that serves a common good and remembers the most vulnerable among us. The task of our moment is to revive that long consensus and renew it. Of the two major candidates, only Barack Obama accepts this mission as his own.

Dionne is a Washington Post columnist and the author of Our Divided Political Heart (Bloomsbury). He is a professor at Georgetown

The American Recovery and Reinvestment Act of 2009 Dissected

1 Nov

The American Recovery and Reinvestment Act of 2009 was designed to address the faltering economy by filling a liquidity void left by the struggling private economy, using government funds.  As a result of the economic crash credit markets were frozen, consumer purchasing power was in decline and the country was losing millions of jobs.  Large corporations were feeling the same pain that millions of people were feeling.  Corporations couldn’t borrow money to cover their day-to-day expenditures and with a lack of demand in the economy, no one was buying products, which forced these corporations to either borrow money or lay off workers.  Due to the frozen credit market, companies had no choice but to lay off workers in order to keep doors open.  Simply put, there was not enough money to go around.  Similar to the key issue faced during the great depression, only this time instead of bank runs, the lending of credit came to an abrupt halt.  Because of these factors, there was no way that the private market could step in to assist with the broad challenges many companies and people were facing.  By the time The American Recovery and Reinvestment Act was introduced in the House, the economy had already lost 2 million jobs in 4 months.  The government had no choice but to step in and inject capital into the economy in hopes that they could plug the hole of a economy spiraling out of control.  This economic principle is one based on the Keynesian macroeconomic theory, which maintains that during recessions the government should offset losses in the private sector by increasing public investment in the economy.  This theory makes the basic point that government can serve as a counter balance to a struggling economy in need of rescue.

Prior to taking office, then President-Elect Barack Obama released a report detailing the impact of the financial crisis on the U.S. Economy.  Additionally, the administration outlined numerous potential proposals that might strengthen the struggling economy.  One of which was a model used to draft The American Recovery and Reinvestment Act.  The basic purpose of The American Recovery and Reinvestment Act is listed in Section 3 and reads as follows: “1. To preserve and create jobs and promote economic recovery.  2. To assist those most impacted by the recession.  3. To provide investments needed to increase economic efficiency by spurring technological advances in science and health.  4. To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.  5. To stabilize State and local government budgets in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.”  The act goes on to say that 37% of the package is devoted to tax incentives ($288 billion) and 18% is to be disbursed to the state and local governments for relief ($144 billion), with nearly 90% of that total targeted towards Medicaid and education.  The remaining 45% is targeted towards federal spending projects in the areas of communication, energy efficiency upgrades, extension of federal unemployment benefits, private/federal building upgrades, sewer infrastructure, scientific research, transportation and waste water ($357 billion).

No other bills were introduced in the house as alternatives to The American Recovery and Reinvestment Act.  Dave Obey (D-WI), the House Appropriations Committee Chairmen sponsored a bill in cooperation with 9 other Democrats (Barney Frank-MA, Barton Gordon-TN, George Miller-CA, James Oberstar-MN, Charles Rangel-NY, John Spratt-SC, Edolphus Towns-NY, Nydia Velazquez-NY, & Henry Waxman-CA).  On January 26, 2009 that bill (H.R. 1), was introduced to the U.S. House of Representatives by Obey.  H.R. 1 would come to be known as the American Recovery and Reinvestment Act of 2009.  Speaker Nancy Pelosi referred H.R. 1 to the House Appropriations Committee, where it passed and was sent to the House floor for vote.  On January 28, 2009, H.R. 1 passed the House 244-188.  The bill was highly controversial, due to its lack of bi-partisan support.  In fact, not a single Republican voted in favor of the bill, joined by 10 Democrats, with 1 Republican abstaining from voting.  Prior to the bill’s passage in the House, 4 Amendments to the bill were introduced.  None of the 4 amendments came close to passing (all 4 were supported by Republicans).

On January 6, 2009, a Senate version of the bill (S. 1) was introduced.  This version would later be substituted in the form of an amendment to the House bill (S. Amendment 570).  S. 1 was sponsored by Harry Reid (D-NV), Senate Majority Leader and cosponsored by 16 Democrats (Mark Begich-AK, Jeff Bingaman-NM, Barbara Boxer-CA, Sherrod Brown-OH, Robert Casey-PA, Hillary Rodham Clinton-NY, Richard Durbin-IL, Edward Kennedy-MA, John Kerry-MA, Amy Klobuchar-MN, Frank Lauterberg-NJ, Carl Levin-MI, Clair McCaskill-MO, Robert Menendez-NJ, Charles Schumer-NY and Debbie Stabenow-MI) and 1 Independent (Joeseph Lieberman-CT).  S. 1 included a $70 billion extension of the alternative minimum tax, which was not included in the H.R. 1.  Republicans in the Senate proposed several amendments, including: spending cuts, tax cuts and trimming of the overall amount of the stimulus.  Additional amendments were also considered including: an increase in housing tax credits for all home buyers, tax incentives for electric vehicles and even removing language from the bill preventing funds from being used by religious institutions.  In a rare occurrence, the Senate began a debate of the bill on a Saturday.  This debate occurred as a result of great encouragement on the part of President Obama.  The following Monday (February 9, 2009) voted to end the debate and put the bill to a vote in the Senate.  On February 10, 2009, the bill passed the Senate with all Democrats voting in favor along with 3 Republicans.

Due to changes to the bill in the Senate, the original House bill was reduced in its amount by about $150 billion.  These changes would have an impact on areas that needed it most.  These areas included: reduced and restricted assistance for states, and much smaller tax credits for low-income workers.  The primary beneficiaries of the amendments were seniors and high-income workers.  The original price tag on the bill was $838 billion, but was reduced down to $827 billion by the time it was introduced by Senate Democrats.  As a result of the amendments, the bill was further reduced to $820 billion.  After the bill passed the Senate and was sent to the House in the form of an amendment, it was then sent to a conference committee where the final version could be pieced together.  The final version had a price tag of $787 billion.  The funds allocated for this bill were in addition to funds already provided for the fiscal year budget and therefor were not reallocated from another area.  All funding was newly allocated funding not previously factored into the budget, was provided by government loan and tacked on to the already finalized budget.  The bill includes a section that amends the budget for that fiscal year and for the following 2 years while it is in effect.

The American Recovery and Reinvestment Act was meant to stimulate growth and inject capital across a broad range of areas struggling as a result of the flailing economy.  This was achieved by providing funds in several different ways.  The spending of funds can be broken down into 23 target groups.  Those groups are as follows: aid to low-income workers, alternative minimum tax, auto sales, bonds, bonus depreciation, direct cash payments, education, energy, energy production, expanded child credit, expanded college credit, expanded earned income tax credit, government contractors, health care, home energy credit, homebuyer credit, homeland security, infrastructure, law enforcement, money losing companies, new tax credit, repeal bank credit, and unemployment.  Various sectors received benefits as a result of The American Recovery and Reinvestment Act.  Most prominent recipients of assistance are the banking sector and auto industry.  By investing in a wide range of sectors within the economy, the bill proposed a strengthened economic base across a wide range of sectors which had either suffered as a result of the economic collapse or provided an opportunity for much needed upgrades that the government could provide through the funding of projects.

Debates about the bill did not actually surround the need for the investment.  Due to a failing economy, both Republicans and Democrats saw a need to provide a boost to the economy.  Rather, the key debates revolved around the size and scope of the economic stimulus and what areas should be targeted.  Democrats targeted their proposal at various industries, low-income workers/families, unemployment insurance and state/local government relief.  Republicans wanted funding for further tax cuts and decreased government spending.  Democrats compromised on a few issues, but for the most part pushed their agenda.  This was due in part to the fact that Democrats held a majority in the House and a super-majority in the Senate, which prevented Republicans from blocking any agenda they decided to push through, provided that they could garner enough support from within the Democratic Party.  The few compromises that were made were a decrease in the price tag on the size of the stimulus and some tax breaks given (as pointed out before).

The American Recovery and Reinvestment Act did not create new laws or regulations and was intended to be a temporary program to boost GDP growth in the economy.  The policy of economic stimulus seeks to invest in public and private projects in order to bring the economy out of negative GDP growth.  As identified before, this is achieved by investing government funds in a wide variety of sectors and government programs.  This type of stimulus is similar to that of the one put in place during The Great Depression (The New Deal), but also different.  It is also different than the stimulus program passed in 2008 (TARP).  TARP sought to inject money directly into the financial sector in order to prevent a collapse of the financial sector as a result of loose credit, unqualified applicants, an overpriced housing sector, and investment firms who were selling bundled mortgage backed securities as investments that were unstable due to home owners who could not realistically afford the houses that banks had given them loans for.  This was put in place, because the financial sector posed a risk to the rest of the economy due to de-regulation (repeal of The Glass-Steagall Act), which separated financial institutions from investment institutions.  Due to this de-regulation, if the investment firms failed, so too did the financial institutions who provided credit to individuals and businesses.  With this failure, money supply would be in short supply and the entire economy would fall into a depressed state.  TARP was somewhat successful, but not large enough to prevent the cascading effects mentioned above.  The New Deal was an economic stimulus which not only injected capital into the economy via industry and government services, but also created programs such as: The Civilian Conservation Corps, The Civil Works Administration, The Federal Housing Administration, The Federal Security Administration, The Homeowners Loan Association, The National Recovery Act, The Public Works Administration, The Social Security Act, The Tennessee Valley Authority, and The Works Progress Administration.  All of these programs were created either to protect people from further economic risk or to create jobs.  The difference between The American Recovery and Reinvestment Act and TARP is simple.  TARP provided funds to a single industry, but did not provide economic investment elsewhere, which in turn did not prevent a depressed economy.  The differences in The New Deal and The American Recovery and Reinvestment Act are also simple.  While both provided economic stimulus in a wide variety of industries in order to provide a stable base from which the economy could level off, The American Recovery and Reinvestment Act did not create new job programs.  It did, however, limit economic risks for people by providing things like extended unemployment benefits.

The American Recovery and Reinvestment Act sought to beef up short-term funding for various federal agencies that fall into the 23 categories it targeted.  Those federal agencies had set guidelines from which they were required to follow in order to receive funding for the projects or improvements they undertook.  Additionally, some federal agencies were tied to projects set forth in the bill and could not use funds for any other purpose.  Other funds were given less restriction, such as those dealing with federal contracts.  As long as the agencies were abiding by the general purpose of the projects for which they were to use the funds, they were free to seek their own agenda.  One rule that was stipulated in The American Recovery and Reinvestment Act, however, was a general requirement that public works projects or public buildings funded under this act must use manufactured goods, steel, and iron that was made in the United States.  This rule is known as the “Buy American Provision”.  In addition to federal projects and funds given to federal agencies, funds were also invested into the private sector in areas such as healthcare, scientific research, the energy sector and green energy research.  These areas benefited tremendously, which is a clear sign of lobbyist for these groups influencing the areas funding

Hearings were also held about The American Recovery and Reinvestment Act, although none of the hearings took place prior to the bill being passed and signed.  The bill was swept through Congress quickly, due to the immediate need of the economy.  Subsequent hearings that have been held have related to the disbursement of funding by the various federal agencies, ensuring accountability.  Additionally, the government created an method of accountability for the funds via a website.  The purpose was to allow the public to track where the funds were being distributed across the country, what programs they were being allocated to and what factors determined the amount of distributed funds to the various areas.

By the third quarter of 2009, the effects could be seen in the economy.  During the first quarter of 2009, GDP was -4.9%, and by the third quarter of the same year, the GDP had reversed course to 1.6%.  By no means a healthy number, 1.6% GDP was proof positive that the investment had in fact paid off.  By the following quarter, GDP rose to 5.0%.  Since then, the economy has seen strong growth, showing that the policy was indeed effective.  One point that should be mentioned though is that eventually the effects of the stimulus will wear off and if the private sector is not healthy enough to take over, GDP could suffer.  A stimulus, such as The American Recovery and Reinvestment Act, is meant to be a temporary stopgap measure until economic health returns.  When stimulus is used effective, as is the case with The American Recovery and Reinvestment Act, it can be good policy that benefits the public good.

Few economists debate the fact that the stimulus did in fact achieve its purpose in stabilizing the economy and stopping the economic free-fall, however, numerous economists have insisted that the American Recovery and Reinvestment Act was in fact too small in size to achieve a quick return to full economic health.  There is no doubt that a correlation can be made between the implementation of the American Recovery and Reinvestment Act and economic improvement.  As for whether a larger stimulus would have returned the economy to full strength is a bit harder to prove, although judging by the gains as a result of The American Recovery and Reinvestment Act or examining the effects of The New Deal during The Great Depression, it is likely that a larger investment would have achieved this kind of economic improvement.

Why Obama?

30 Oct

U.S. President Barack Obama speaks during a campaign rally in Denver, Colorado October 4, 2012. Reuters/Kevin Lamarque

By Deepak Bhargava

Much—perhaps too much—has been said about the president and the shortcomings and accomplishments of his administration over the past four years. The record is more mixed than either his cheerleaders or fiercest critics would like to admit.

On the positive side, under this administration we achieved healthcare reform that will provide coverage to 35 million uninsured people; a Recovery Act that represents the largest expansion of anti-poverty programs in more than forty years; financial reform; student loan reform; the repeal of “don’t ask, don’t tell”; the Lilly Ledbetter Fair Pay Act; landmark executive action to protect more than 1 million immigrant youths from deportation; and an end to the war in Iraq.

For all the supposed preparation progressives did for a return to political power, we haven’t figured out how to relate to an actual government. If progressives cannot “own” landmark achievements like healthcare and financial reform, how can we expect anyone else to?

On the downside, there were the failures to hold Wall Street accountable for crashing the economy; to do right by millions of homeowners facing foreclosure; to reverse the erosion of civil liberties in the “war on terror”; to halt an alarming increase in deportations; and to take bold action on climate change. Perhaps greatest of all was the failure to convey a compelling alternative to market fundamentalism—an ideology that, notwithstanding its disastrous track record, continues to dominate policy-making and the public dialogue at all levels.

Progressives may evaluate the success of Obama’s first term differently depending on how much weight they assign to each of these issues. But however we judge the past four years, it is crucial that we lean into this election without ambivalence, knowing that while an Obama victory will not solve all or even most of our problems, defeat will be catastrophic for the progressive agenda and movement.

We confront a conservative movement that is apocalyptic in its worldview and revolutionary in its aspirations. It is not an exaggeration to say that this movement wants to roll back the great progressive gains of the twentieth century—from voting rights to women’s rights, from basic regulations on corporate behavior to progressive taxation, from the great pillars of Social Security, Medicare and Medicaid to the basic rights of workers to organize and bargain collectively. After the emergence of the Tea Party, the 2010 elections, the extreme Paul Ryan budget proposal and the 2011 state legislative sessions (which featured voter suppression, nativism, attacks on reproductive rights and vicious anti-unionism), there can be no doubting the seriousness or the ferocity of our opponents. It is also important to note the deep racialized underpinnings of this movement, which seeks to entrench the power of an older, wealthier white constituency and prevent an emerging majority of color from finding its voice. The battles over the role and size of government, taxes, the safety net, immigration and voter suppression have become proxies for this underlying demographic tension. Should Obama lose this election, we can expect a ruthless effort to dismantle the social contract—including efforts to use state power to decimate sources of resistance by further restricting the franchise, destroying unions and attacking any remaining centers of power for communities of color and workers. All of this was clear even before, in a leaked video, Mitt Romney made plain his contempt for nearly half of the American people.

Immediately after the election, we will face one of the most important social policy debates of our generation. Before the end of this year, President Obama and Congress must confront the so-called fiscal cliff—the deep automatic cuts in defense and domestic spending that have been mandated by the last debt deal unless a new budget framework can be reached. This discussion of mounting debts and deficits will take place as the Bush tax cuts are scheduled to expire, setting the stage for a clash of ideologies from which the victor will enjoy the spoils for years to come. Winning the elections does not guarantee a progressive outcome to this debate—far from it—but losing certainly means that the dark politics of austerity will dominate the country, resulting in misery on a scale we can’t now imagine.

So the elections—not just for the presidency but for Congress and statehouses across the country—are job one. But we know winning those elections is a necessary but not sufficient condition for a revival of progressive politics. What’s next? In the period following the election, progressives must remain engaged and mobilized. Given the looming fiscal debate, we need to step up with an alternative to austerity that emphasizes three points:

§ We face a jobs crisis. Creating millions of new jobs—by investing in infrastructure, the green economy, care jobs and, yes, the public sector—is not just a matter of reducing human suffering; it is essential to laying the foundation for long-term fiscal stability and shared prosperity. As progressives, we cannot buy into the “deficit first” frame. There is no winning if we do not begin to redefine the problem and break the elite consensus.

§ We need to protect and strengthen Social Security, Medicare, Medicaid and other critical programs, particularly those serving the most vulnerable people. It has become conventional wisdom that we must “reform” entitlements—which is code for reducing benefits and raising the retirement age, since “we” are all living longer anyway, aren’t we? This is nonsense. As Paul Krugman has put it: “the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever.” Simple measures such as lifting the cap on the payroll tax threshold would guarantee solvency for Social Security for more than seventy-five years and allow us to finance more generous benefits for low-income beneficiaries.

§ To invest in job creation and preserve our social contract, we need to end the Bush tax cuts for the wealthy.

This agenda is not in the mainstream of the Beltway discussion. But we won’t break the austerity consensus without, well, breaking from it! We must shift the frame of the debate to the left without fear or apology.

One great lesson of Obama’s first term was that we made progress when we pushed, and we stalled out when we waited and watched. The LGBT and immigrant rights movements challenged both Republicans and Democrats and achieved significant policy wins. Healthcare reform would never have made it over the finish line without relentless pressure from the grassroots on moderate Democrats. Only robust campaigns operating independently of both parties have a chance at putting jobs, foreclosures, immigration reform and climate change on the agenda.

This is especially urgent in the case of racial justice. The real unemployment rate for African-Americans is now above 22 percent, including part-time workers who want full-time jobs and those who gave up looking altogether. That’s nearly twice the rate that white workers face, and it amounts to a catastrophic depression in cities like Cleveland, Detroit and Buffalo. People of color have seen a generation of progress in building wealth wiped out by the recession. Median white wealth is now nearly $100,000, compared with under $5,000 for blacks and Latinos. Whatever the real or perceived constraints on the president’s ability to engage the confluence of race, poverty and economics, those constraints do not apply to us.

It is also critical that we push for an agenda to strengthen democracy in 2013 to combat the growing power of organized money. Measures to strengthen unions, expand the franchise and provide a path to citizenship for immigrants are not just good public policies; they also empower working people. The right used its takeover of state governments to shrink democracy, as in Wisconsin, which passed harsh anti-union and voter suppression laws. If and when we have a chance to use power to expand democracy, whether through immigration reform or executive actions to strengthen unions or enforce voting rights, we must do so—not just because these measures are important in themselves but because they are levers that can push the other changes we seek.

If 2008 was a time for the audacity of hope, the years ahead are a time for sobriety, determination, patience and resilience. The problems we face are deep enough that there will be no quick fix. The most important question for progressives is how to build a movement for economic justice—a people’s movement that can topple the elite austerity consensus and overcome the massive money and energized conservative movement on the other side. The real crises facing the country are barely being discussed inside the Beltway, and rarely are the solutions proposed commensurate with the problems at hand: more than 106 million people—one in three Americans—are facing material hardship (defined as living under 200 percent of the poverty line); 20 million are living in extreme poverty; 12.5 million are officially unemployed; and wages and working conditions are in decline for a majority of Americans. The new framework for shared prosperity developed by Jacob Hacker and Nate Loewentheil, endorsed by a broad swath of labor, community and civil rights groups, spells out an alternative to austerity with the capacity to address these crises—but only an organized constituency can give such ideas life.

Part of the task before us is to build a deep alliance of movement forces—labor, community, women, faith, civil rights, immigrants and others—behind a broad social vision. No part of the movement has the resources or strategic capacity to solve its problems by itself. The other part of the task is to reach out to Americans who do not already agree with us, or who perhaps haven’t heard from us. An insular left that deludes itself into thinking we are stronger than we are, that talks mainly to itself and is not constantly creating new on-ramps to participation, will fail dismally to meet the challenges of this historic moment.

This recruitment challenge presents some hurdles for progressives. Most Americans hold complicated and sometimes contradictory views about the economy, but there has been a turn away from public solutions and toward private ones. As Ronald Brownstein observed in National Journal earlier this year: “One theme consistently winding through the polls is the emergence of what could be called a ‘reluctant self-reliance,’ as Americans look increasingly to reconstruct economic security from their own efforts, in part because they don’t trust outside institutions to provide it for them. The surveys suggest that the battered economy has crystallized a gestating crisis of confidence in virtually all of the nation’s public and private leadership class—from elected officials to the captains of business and labor. Taken together, the results render a stark judgment: At a time when they believe they are navigating much more turbulent economic waters than earlier generations, most Americans feel they are paddling alone.”

Those changes in perspective, together with the attack on and decline of unions—where habits of community, reciprocity and collective action have historically been nourished—mean that we face a very steep climb in making the case for public, collective action. We will have to experiment with new ways of building power and giving voice to working people. Such experiments are, in fact, already under way in diverse settings around the country. What they have in common is reconstructing the role of paid organizers, putting volunteers front and center, aligning people behind deeply meaningful visions instead of short-term issue transactions, and combining deep education and relationship building with creative action. There is nothing new about any of these methods—they have powered all the great movements that have changed America—but we must recommit ourselves to them. The patient work of movement building lacks the seductive power of many of the strategies in vogue among progressives, but there is no substitute for it—and there is a huge appetite for it in working-class communities across the country.

Perhaps the most resonant line of President Obama’s Democratic National Convention speech was when he said, “So you see, the election four years ago wasn’t about me. It was about you.” If we ever thought that an Obama presidency would by itself produce dramatic change, we are wiser in 2012. Our progressive history is a history of getting our hope fix from movements, not just from individuals. The extraordinary example of Brazil—which has defied world trends, lifted 40 million people out of poverty, reduced inequality and passed major affirmative action legislation—demonstrates the power of social movements today. Over many years, Brazilian leaders aligned key movement sectors around a transformative vision, focused on recruiting the unorganized, engaged in politics and changed a country. There are signs of movement right here at home—in senior centers in Akron, in housing projects in Charlotte and churches in Phoenix, where ordinary people are coming together to talk about how we got into this mess, what it has meant to them and the people they love, and what we can do to get out of it. They are working tirelessly in this election because they know just how much it matters, but they are clear-eyed about the organizing work that must continue after election day. That’s change we can believe in.

We Need More than a New President

30 Oct

Supporters react to seeing President Barack Obama stake the stage during a campaign event at the University of Wisconsin-Madison, Thursday, Oct. 4, 2012, in Madison, Wis. (AP Photo/Pablo Martinez Monsivais)

By Saket Soni

In Mitt Romney’s America, 47 percent of the people live on government handouts, incapable of taking responsibility for their lives. In the real America, ordinary people are working harder than ever for less and less. Work once held a promise: it would allow workers to sustain their families, contribute to a community, and realize their full potential as human beings. In today’s economy, this promise no longer holds.

Workers know something about the economy that neither party has faced up to: work in America has changed, fundamentally and forever. First, the nature of employment has changed. Millions of people don’t work for the ultimate beneficiary of their labor, but for subcontractors or suppliers. Millions more are temporary, part-time or “self-employed.” A third of the US workforce—42.6 million workers—is now contingent. Tens of millions of workers no longer know who their real boss is.

Second, the nature of unemployment has shifted. Workers used to be employed for long periods; unemployment was short-term. Workers now face long-term unemployment interrupted by intermittent employment. Forty percent of the unemployed have been jobless for twenty-seven weeks. Unemployment is twice as high for African-Americans as for whites, and one and a half times as high for Latinos.

Third, the US workforce itself has changed. Today’s workforce isn’t just middle-aged white men: it’s women (49 percent), people of color, undocumented immigrants, young workers, baby boomers forced to delay retirement and guest workers. US companies now source workers from all over the globe, importing cheap labor for local jobs. And where there is prospective job growth, it’s overwhelmingly in low-wage sectors like service and retail.

Ana Rosa Diaz can tell you what the US workplace will look like at the end of this road. Jobless in Mexico, Ana was recruited to come to the United States as a guest worker. She peeled crawfish for a Walmart supplier in Louisiana that subjected her and her fellow workers to forced labor: they were compelled to work up to twenty-four-hour shifts with no overtime pay and were also locked in the plant to prevent breaks. When the workers spoke up, the boss threatened violence against their families.

On our current path, we all end up as guest workers: trapped in an economy of temporary, intermittent work, subcontracted, migratory, struggling with debt rather than building wealth, sourced into labor supply chains rather than climbing career ladders.

We need to use a second Obama term to create the conditions for winning a new social contract for a new economy. That means creating new forms of collective bargaining that let contingent workers and service workers bargain directly with the corporate actors that set the conditions of their jobs and their lives. It also means winning a vastly expanded role for the state in protecting all workers, including a new social safety net that addresses the rise of contingent work and long-term unemployment.

That will take more than a president; it’ll take a social movement. Because what’s really at stake isn’t the next four years—it’s the next forty.

Pollster: Undercounted Cellphone Users Hide Obama’s Lead

29 Oct


Are Obama voters underrepresented in presidential polls because they use cellphones?

That’s the argument put forward by Democratic pollster Stan Greenberg in a new memo released Monday. Government data shows that an increasing percentage of Americans have ditched their traditional land-line phones and now use only cellphones. A year ago, 32 percent of adults used only a cellphone, according to the Center for Disease Control, which tracks cellphone usage. But more and more Americans are relying solely on their cellphones—Greenberg estimates that that figure is now 37 percent. And government statistics show still larger percentages of hispanics, blacks, and young people—all of whom are more likely to favor Obama, polls show—use cellphones only.

Why does this uptick in cell-only users matter? Because, as Greenberg writes, some polls used to gauge the state of the presidential race don’t reach these people—and could therefore be lowballing Obama’s standing. (Robocalls are used by many pollsters, but cellphones are blockedfrom receiving robocalls.) Greenberg went back and analyzed 4,000 of his polling firm’s interviews this election season and found that cell-only voters break for Obama in significant numbers. As the following charts show, people who only use a cellphone said they’d vote for Obama by an 11-point margin, and those who mostly use a cell opted for Obama by 9 points. On the other hand, those who said they used a landline and a cellphone backed Romney by 3 points.


Courtesy of Greenberg Quinlan Rosner

Courtesy of Greenberg Quinlan Rosner

Cellphone-only respondents, Greenberg says, are “attitudinally and culturally distinct.” They’re less conservative, but not necessarily libertarian, either, though they praise both the National Rifle Association and same-sex marriage. They’re a crucial piece of the electorate not entirely captured by polls used in the presidential race.

Greenberg isn’t the first pollster to point out Obama’s bump from cellphone users. Back in September, the New York Times‘ Nate Silver found that Obama fared better in polls that include cellphone users. The right-leaning Rasmussen polling shop—which tends to show Romney faring better than Obama—doesn’t include cellphones; neither does the left-leaning Public Policy Polling, which shows Obama doing better in the race. Gallup—which puts Obama ahead among registered voters and Romney in the lead among likely voters—includescellphones in its sampling.

Greenberg’s key takeaway is this: Pollsters aren’t capturing what he calls “the new diversity of the American electorate” if they aren’t surveying voters who depend on cellphones. If pollsters were doing that, Greenberg suggests, Obama would have a bigger lead over Mitt Romney than he’s got right now.