A THANKSGIVING TOAST
Friends,If your family and friends are anything like mine, there will be a lot of talk today over turkey. Some of it will be gossip. Some of it, about sports or jokes or jobs or plans.
But some of your guests (perhaps even you) will want to talk about the distressing state of the nation and the world.Your cousin Sue worries about climate change and how little was accomplished in Glasgow. Your Trumpish uncle Bob can’t keep his mouth shut about Biden’s failures in Afghanistan and at the border. Your son Jared, back from college, wants to talk about systemic racism. Your friend Sid can’t stop worrying about the pandemic, or assault weapons, or hate crimes, or near-record inequality, or the opioid epidemic, or soaring homelessness, or voter suppression. Your daughter Sarah chimes in about the continuing menace of Donald Trump and lawmakers too timid to stand up to him.
All reasons for concern (except for those of your Trumpish uncle Bob), but I’d hope someone at your table also notes that America has gone through worse times, and have in some ways emerged better.
When I graduated college in 1968, I thought America would never recover. Martin Luther King Jr. had been assassinated, as had Robert F. Kennedy. Our cities were burning. Tens of thousands of young Americans (including several friends) were being ordered to Vietnam to fight an unwinnable and unjust war that ultimately claimed over 58,000 American lives and the lives of over 3 million Vietnamese. The nation was deeply and angrily divided. Young people were tear-gassed at the Democratic National Convention. And then in November of that year, Richard Nixon was elected president.
But we did recover. We enacted the Environmental Protection Act. Eventually we achieved marriage equality for gays and lesbians. We elected a Black man president of the United States. We passed the Affordable Care Act. In 2018 we elected a record number of women, people of color, and LGBTQ representatives to Congress, including the first Muslim women. Eighteen states raised their minimum wages. In 2020, Trump was sent packing, and Democrats took over the Senate and the House.
COVID was a horror but Congress created a safety net that prevented millions from falling into deep poverty because of it. More than 70 percent of us are now vaccinated against it. We will soon be investing over $1 trillion repairing our crumbling roads and bridges and creating hundreds of thousands of new jobs. And it seems likely (although hardly a certainty) that American families will get help with childcare and universal pre-K, and more.
What about the future? No one can tell, but there are some reasons for optimism. For one thing, we are on our way toward becoming a nation of startling diversity. Most Americans under 18 are now people of color. In ten years, most under 35 will be. In thirty years, most of us. That diversity will be a huge source of strength — as our growing diversity has strengthened us since our founding.
For another, our young people are determined to make America and the world better. I've been teaching for 40 years and I've never taught a generation of students as dedicated to public service and as committed to improving the nation and the world, as the generation I'm now teaching.
I should also point out that 60 percent of today’s college students are women, an astounding achievement. It portends more women in leadership positions – in science, politics, education, nonprofits, and in corporate suites. This will also be a great boon to America, and the world.
I’m no technophile but I can’t help being impressed by what science and technology are accomplishing, such as the COVID vaccines that have saved countless lives, and solar and wind energy sources that are rapidly replacing carbon fuels. With the right laws and incentives, science and technology could solve many more of the problems that plague the nation and the world.
I don't want to minimize our current plight. I’m deeply worried about climate change, systemic racism, and growing attacks on our democracy. I’m not going to tell any of my friends or relatives over dinner today that they’re wrong to feel angry or to despair.
But I will remind them of this nation’s resilience, and the many ways the future could be bright. And when we raise our glasses for a toast, I will ask that they never give up fighting for a more just society. Happy Thanksgiving, friends.
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How Unaccountable Institutions are Shaping Your Life
Three centers of power increasingly dominate our lives, but are less and less accountable: The Supreme Court, the Federal Reserve, and Big Tech.
The Supreme Court
Start with the high court. These nine unelected individuals – all appointed for life – are about to revolutionize America in ways the majority of Americans don’t want. This court is poised to overturn Roe v. Wade, the 1973 reproductive rights ruling; declare a century-old New York law against carrying firearms unconstitutional; and strip federal agencies such as the Environmental Protection Agency of the power to regulate private businesses. And much more.
Let me remind you that five of the current justices were put there by presidents who lost the popular vote in their first election. Only 40 percent of the public now approves of the Supreme Court’s performance, a new low. Yet because justices are appointed for life, its members are immune to checks and balances, no matter how unpopular their rulings may be.
The Federal Reserve
The Federal Reserve is almost as unaccountable as the high court.
Presidents appoint Fed chairs for 4-year terms, but tend to stick with them longer for fear of rattling Wall Street, which wants stability and fat profits. (Alan Greenspan, a Reagan appointee, lasted almost 20 years, surviving two Bushes and Bill Clinton). President Biden has just reappointed Jerome Powell, the current Fed chair, for example.
Because it sets interest rates and regulates finance, the Fed can either keep the economy going near full employment or put millions of people out of work. Powell has kept interest rates near zero —appropriate for an economy still suffering the ravages of the pandemic.
But he has also bailed out America’s biggest corporations by taking on their junk debt, which they then used to buy back their own stock to the benefit of their CEOs and major investors. And he’s allowed Wall Street to go back to risky betting—prompting Senator Elizabeth Warren to say this:
Warren: “Your record gives me grave concern. Over and over you have acted to make our banking system less safe, and that makes you a dangerous man to head up the fed.
Lastly, Amazon, Google, Apple, and Facebook all wield enormous power over our lives, and they too are unaccountable to the public good. They’re taking on roles that once belonged to the government, whether it’s blasting into space or running cybersecurity.
And their decisions about which demagogues are allowed to communicate with the public and what lies they’re allowed to spew have profound consequences for whether democracy or authoritarianism prevails.
Worst of all, they’re sowing hate and division. As Frances Haugen, a former data scientist at Facebook, revealed, Facebook’s algorithm is designed to choose content that will make users angry. Why? Anger generates the most engagement — and user engagement turns into ad dollars. (The same is likely true of the algorithms used by Google, Amazon, and Apple.)
And yet, decisions at these companies are accountable only to their shareholders, not the public.
Beware. Democracy depends on accountability. If abuses of power go unchallenged, those who wield power will continue to consolidate it. It's a vicious cycle that erodes faith in democracy and breeds cynicism.
So how do we break the cycle and hold these power centers accountable?
Rotate Supreme Court justices with appellate judges and add more justices to the Court.
Demand transparency from the Fed, and have an open debate on who should run it instead of letting Wall Street effectively decide.
And finally, treat Big Tech companies as public utilities and regulate them, or break them up.
I’ll be honest. It will take vast amounts of public pressure and intentional organizing to get these solutions enacted.
Our only option is to turn up the pressure and keep fighting for our democracy.
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What’s Really Driving Inflation? Corporate Power
The biggest culprit for rising prices that’s not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices.
If markets were competitive, companies would seek to keep their prices down in order to maintain customer loyalty and demand. When the prices of their supplies rose, they’d cut their profits before they raised prices to their customers, for fear that otherwise a competitor would grab those customers away.
But strange enough, this isn’t happening. In fact, even in the face of supply constraints, corporations are raking in record profits. More than 80 percent of big (S&P 500) companies that have reported results this season have topped analysts’ earnings forecasts, according to Refinitiv.
Obviously, supply constraints have not eroded these profits. Corporations are simply passing the added costs on to their customers. Many are raising their prices even further, and pocketing even more.
How can this be? For a simple and obvious reason: Most don’t have to worry about competitors grabbing their customers away. They have so much market power they can relax and continue to rake in big money.
The underlying structural problem isn’t that government is over-stimulating the economy. It’s that big corporations are under competitive.
Corporations are using the excuse of inflation to raise prices and make fatter profits. The result is a transfer of wealth from consumers to corporate executives and major investors.
This has nothing to do with inflation, folks. It has everything to do with the concentration of market power in a relatively few hands.
It’s called “oligopoly,” where two or three companies roughly coordinate their prices and output.
Judd Legum provides some good examples in his newsletter. He points to two firms that are giants in household staples: Procter & Gamble and Kimberly Clark. In April, Procter & Gamble announced it would start charging more for everything from diapers to toilet paper, citing "rising costs for raw materials, such as resin and pulp, and higher expenses to transport goods."
Baloney. P&G is raking in huge profits. In the quarter ending September 30, after some of its price increases went into effect, it reported a whopping 24.7% profit margin. Oh, and it spent $3 billion in the quarter buying its own stock.
How can this be? Because P&G faces very little competition. According to a report released this month from the Roosevelt Institute, "The lion’s share of the market for diapers,” for example, “is controlled by just two companies (P&G and Kimberly-Clark), limiting competition for cheaper options."
So it wasn’t exactly a coincidence that Kimberly-Clark announced similar price increases at the same time as P&G. Both corporations are doing wonderfully well. But American consumers are paying more.
Or consider another major consumer product oligopoly: PepsiCo (the parent company of Frito-Lay, Gatorade, Quaker, Tropicana, and other brands), and Coca Cola. In April, PepsiCo announced it was increasing prices, blaming "higher costs for some ingredients, freight and labor."
Rubbish. The company recorded $3 billion in operating profits and increased its projections for the rest of the year, and expects to send $5.8 billion in dividends to shareholders in 2021.
If PepsiCo faced tough competition it could never have gotten away with this. But it doesn’t. In fact, it appears to have colluded with its chief competitor, Coca-Cola – which, oddly, announced price increases at about the same time as PepsiCo, and has increased its profit margins to 28.9%.
And on it goes around the entire consumer sector of the American economy.
You can see a similar pattern in energy prices. Once it became clear that demand was growing, energy producers could have quickly ramped up production to create more supply. But they didn’t.
Why not? Industry experts say oil and gas companies (and their CEOs and major investors) saw bigger money in letting prices run higher before producing more supply.
They can get away with this because big oil and gas producers don’t face much competition. They’re powerful oligopolies.
Again, inflation isn’t driving most of these price increases. Corporate power is driving them.
Since the 1980s, when the federal government all but abandoned antitrust enforcement, two-thirds of all American industries have become more concentrated.
Monsanto now sets the prices for most of the nation’s seed corn.
The government green-lighted Wall Street’s consolidation into five giant banks, of which JPMorgan is the largest.
It okayed airline mergers, bringing the total number of American carriers down from twelve in 1980 to four today, which now control 80 percent of domestic seating capacity.
It let Boeing and McDonnell Douglas merge, leaving America with just one major producer of civilian aircraft, Boeing.
Three giant cable companies dominate broadband [Comcast, AT&T, Verizon].
A handful of drug companies control the pharmaceutical industry [Pfizer, Eli Lilly, Johnson & Johnson, Bristol-Myers Squibb, Merck].
So what’s the appropriate response to the latest round of inflation? The Federal Reserve has signaled it won’t raise interest rates for the time being, believing that the inflation is being driven by temporary supply bottlenecks.
Meanwhile, Biden Administration officials have been consulting with the oil industry in an effort to stem rising gas prices, trying to make it simpler to issue commercial driver’s licenses (to help reduce the shortage of truck drivers), and seeking to unclog over-crowded container ports.
But none of this responds to the deeper structural issue -- of which price inflation is symptom: the increasing consolidation of the economy in a relative handful of big corporations with enough power to raise prices and increase profits.
This structural problem is amenable to only one thing: the aggressive use of antitrust law.
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How Wealth Inequality Spiraled Out of Control
Elon Musk's wealth has surpassed $200 billion. It would take the median U.S. worker over 4 million years to make that much.
Wealth inequality is eating this country alive. We’re now in America’s second Gilded Age, just like the late 19th century when a handful of robber barons monopolized the economy, kept wages down, and bribed lawmakers.
While today’s robber barons take joy rides into space, the distance between their gargantuan wealth and the financial struggles of working Americans has never been clearer. During the first 19 months of the pandemic, U.S. billionaires added $2.1 trillion dollars to their collective wealth and that number continues to rise.
And the rich have enough political power to cut their taxes to almost nothing — sometimes literally nothing. In fact, Jeff Bezos paid no federal income taxes in 2007 or in 2011. By 2018, the 400 richest Americans paid a lower overall tax rate than almost anyone else.
But we can not solve this problem unless we know how it was created in the first place.
Let’s start with the basics.
I. The Basics
Wealth inequality in America is far larger than income inequality.
Income is what you earn each week or month or year. Wealth refers to the sum total of your assets — your car, your stocks and bonds, your home, art — anything else you own that’s valuable.Valuable not only because there’s a market for it — a price other people are willing to pay to buy it — but because wealth itself grows.
As the population expands and the nation becomes more productive, the overall economy continues to expand. This expansion pushes up the values of stocks, bonds, rental property, homes, and most other assets. Of course recessions and occasional depressions can reduce the value of such assets. But over the long haul, the value of almost all wealth increases.
Lesson: Wealth compounds over time.
Next: personal wealth comes from two sources.The first source is the income you earn but don’t spend. That’s your savings. When you invest those savings in stocks, bonds, or real property or other assets, you create your personal wealth — which, as we’ve seen, grows over time.
The second source of personal wealth is whatever is handed down to you from your parents, grandparents, and maybe even generations before them — in other words, what you inherit.
Lesson: Personal wealth comes from your savings and/or your inheritance.
II. Why the wealth gap is exploding
The wealth gap between the richest Americans and everyone else is staggering.
In the 1970s, the wealthiest 1 percent owned about 20 percent of the nation’s total household wealth. Now, they own over 35 percent.
Much of their gains over the last 40 years have come from a dramatic increase in the value of shares of stock.
For example, if someone invested $1,000 in 1978 in a broad index of stocks — say, the S&P 500 — they would have $31,823 today, adjusted for inflation.
Who has benefited from this surge? The richest 1 percent, who now own half of the entire stock market. But the typical worker’s wages have barely grown.
Most Americans haven’t earned enough to save anything. Before the pandemic, when the economy appeared to be doing well, almost 80 percent were living paycheck to paycheck.
Lesson: Most Americans don’t make enough to save money and build wealth.
So as income inequality has widened, the amount that the few high-earning households save — their wealth — has continued to grow. Their growing wealth has allowed them to pass on more and more wealth to their heirs.
Take, for example, the Waltons — the family behind the Walmart empire — which has seven heirs on the Forbes billionaires list. Their children, and other rich millennials, will soon consolidate even more of the nation’s wealth. America is now on the cusp of the largest intergenerational transfer of wealth in history. As wealthy boomers pass on, somewhere between $30 to $70 trillion will go to their children over the next three decades.
These children will be able to live off of this wealth, and then leave the bulk of it — which will continue growing — to their own children … tax-free. After a few generations of this, almost all of America’s wealth could be in the hands of a few thousand families.
Lesson: Dynastic wealth continues to grow.
III. Why wealth concentration is a problem
Concentrated wealth is already endangering our democracy. Wealth doesn’t just beget more wealth — it begets more power.
Dynastic wealth concentrates power into the hands of fewer and fewer people, who can choose what nonprofits and charities to support and which politicians to bankroll. This gives an unelected elite enormous sway over both our economy and our democracy.
If this keeps up, we’ll come to resemble the kind of dynasties common to European aristocracies in the seventeenth, eighteenth, and nineteenth centuries.
Dynastic wealth makes a mockery of the idea that America is a meritocracy, where anyone can make it on the basis of their own efforts. It also runs counter to the basic economic ideas that people earn what they’re worth in the market, and that economic gains should go to those who deserve them.
Finally, wealth concentration magnifies gender and race disparities because women and people of color tend to make less, save less, and inherit less.
The typical single woman owns only 32 cents of wealth for every dollar of wealth owned by a man. The pandemic likely increased this gap.
The racial wealth gap is even starker. The typical Black household owns just 13 cents of wealth for every dollar of wealth owned by the typical white household. The pandemic likely increased this gap, too.
In all these ways, dynastic wealth creates a self-perpetuating aristocracy that runs counter to the ideals we claim to live by.
Lesson: Dynastic wealth creates a self-perpetuating aristocracy.
IV. How America dealt with wealth inequality during the First Gilded Age
The last time America faced anything comparable to the concentration of wealth we face today was at the turn of the 20th century. That was when President Teddy Roosevelt warned that “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power” could destroy American democracy.
Roosevelt’s answer was to tax wealth. Congress enacted two kinds of wealth taxes. The first, in 1916, was the estate tax — a tax on the wealth someone has accumulated during their lifetime, paid by the heirs who inherit that wealth.
The second tax on wealth, enacted in 1922, was a capital gains tax — a tax on the increased value of assets, paid when those assets are sold.
Lesson: The estate tax and the capital gains tax were created to curb wealth concentration.
But both of these wealth taxes have shrunk since then, or become so riddled with loopholes that they haven’t been able to prevent a new American aristocracy from emerging.
The Trump Republican tax cut enabled individuals to exclude $11.18 million from their estate taxes. That means one couple can pass on more than $22 million to their kids tax-free. Not to mention the very rich often find ways around this tax entirely. As Trump’s former White House National Economic Council director Gary Cohn put it, “only morons pay the estate tax.”
What about capital gains on the soaring values of wealthy people’s stocks, bonds, mansions, and works of art? Here, the biggest loophole is something called the “stepped-up basis.” If the wealthy hold on to these assets until they die, their heirs inherit them without paying any capital gains taxes whatsoever. All the increased value of those assets is simply erased, for tax purposes. This loophole saves heirs an estimated $40 billion a year.
This means that huge accumulations of wealth in the hands of a relatively few households can be passed from generation to generation untaxed — growing along the way — generating comfortable incomes for rich descendants who will never have to work a day of their lives. That’s the dynastic class we’re creating right now.
Lesson: The estate tax and the capital gains tax have been gutted.
Why have these two wealth taxes eroded? Because, as America’s wealth has concentrated in fewer and fewer hands, the wealthy have more capacity to donate to political campaigns and public relations — and they’ve used that political power to reduce their taxes. It’s exactly what Teddy Roosevelt feared so many years ago.
V. How to reduce the wealth gap
So what do we do? Follow the wisdom of Teddy Roosevelt and tax great accumulations of wealth.
The ultra-rich have benefited from the American system — from laws that protect their wealth, and our economy that enabled them to build their fortunes in the first place. They should pay their fair share.
The majority of Americans, both Democrats and Republicans, believe the ultra rich should pay higher taxes. There are many ways to make them do so: closing the stepped up basis loophole, raising the capital gains tax, and fully funding the Internal Revenue Service so it can properly audit the wealthiest taxpayers, for starters.
Beyond those fixes, we need a new wealth tax: a tax of just 2 percent a year on wealth in excess of $1 million. That’s hardly a drop in the bucket for centi-billionaires like Jeff Bezos and Elon Musk, but would generate plenty of revenue to invest in healthcare and education so that millions of Americans have a fair shot at making it.
One of the most important things you as an individual can do is take the time to understand the realities of wealth inequality in America and how the system has become rigged in favor of those at the top — and demand your political representatives take action to unrig it.
Wealth inequality is worse than it has been in a century -- and it has contributed to a vicious political-economic cycle in which taxes are cut on the top, resulting in even more concentration of wealth there -- while everyone else lives under the cruelest form of capitalism in the world.
We must stop this vicious cycle — and demand an economy that works for the many, not one that concentrates more and more wealth in the hands of a privileged few.
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What Happened to the Party of Limited Government?
I’m old enough to remember when the Republican Party stood for limited government -- when Ronald Reagan thundered “Government is not the solution to our problem, government is the problem.”
Today’s Republican Party, while still claiming to stand for limited government, stands for government intrusion everywhere:
Republican governors ban masks in schools.
Republican states outlaw abortions.
Republican lawmakers prohibit teachers from teaching about America’s racist past.
Republican legislators force transgender students to play sports and use bathrooms according to their assigned gender at birth.
And across the country, Republican lawmakers are making it harder for people to vote.
This is not limited government, folks. This is social control. Republicans have a particular ideology and are determined to impose that ideology on citizens holding different views and values.
This is not about freedom, either. Just the opposite: It’s Republicans denying people their freedoms: The freedom to be safe from COVID. Freedom over their own bodies. The freedom to learn the truth about our history. The freedom to vote and participate in our democracy.
Once, Republicans had a coherent view about individual liberties and limiting the role of government. That’s not to say this ideology was beneficial to the country -- far from it. But it was coherent, and they were committed to it.
Now, they only want to get reelected.
They are misusing government to advance a narrow and restrictive set of values — intruding on the most intimate acts, and banning what’s necessary for people to exercise their most basic freedoms.
This is not mere hypocrisy. The Republican Party now poses a clear and present threat even to the values it once espoused.
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Why I Remain Hopeful
A bit over a month ago, I began a newsletter with the goal of starting a different kind of conversation with people who wanted to go beyond the headlines, to connect the dots between various political and economic phenomena, and to have a thoughtful, ongoing dialogue about where we're headed as a society.
I have been overwhelmed by the responses -- the enthusiasm, and the level of engagement and respect people are bringing to this community dialogue. (Some of you have even kindly said you like my daily drawings.)
I was delighted to learn that one reader named Herbert voted for my favorite leftie vice president, Henry Wallace, in 1948. (By my math, Herbert must be 94 and is still on top of politics!) Another reader, Robin, asked a provocative question about whether oral arguments before the Supreme Court really do change minds. And Kathy reminded us all of the importance of dignity and respect at work. I could go on and on.
With all the news coming out of Washington DC, I’ve been sharing my take on the week ahead every Monday morning. Most Americans are utterly confused or misinformed about what’s at stake in the ongoing negotiations of Biden’s Build Back Better Agenda and what’s happening behind the scenes, so I’ve tried to provide clear analysis by outlining the issues, the players, and their motives (and you can bet that I took a close look at Joe Manchin and Kyrsten Sinema — and their big money backers that seem to be calling the shots.)
Frankly, I've been disappointed with the job the mainstream media has done reporting on Biden's initiatives, so I’ve been working to fill in the gaps and give more context to the news. For example, the media completely misinterpreted the latest jobs report. The coverage was almost universally gloomy, emphasizing “weak” growth and the number of unfilled jobs. But the real story is not bad news, it’s good news! For the first time in decades, American workers are standing up and demanding better wages and improved working conditions. In the wake of so much hardship, illness and death during the past year, I think many peoples’ priorities have shifted. I’ve called it an unofficial general strike.
And then sometimes I share personal memories, like the time I went on a date with Hillary (then) Rodham or when I went to law school with Clarence Thomas, Bill Clinton, and Hillary.
I’d like to add: Sometimes when I write pieces about corruption, our rigged system, corporate hypocrisy, or money in politics, I worry that pointing these out will make people even more cynical than they already are about American politics, resulting in a kind of fatalism or resignation that causes many to give up — and thereby cede the entirety of our democracy to the moneyed interests.
But my hope is that when people hear about this sort of thing, they're outraged enough to become even more politically active. (One reader, however, did ask me what keeps me optimistic about the future. For me, it’s a no-brainer: my students, who are among the most diverse, intelligent, and committed I’ve ever taught.)
Many have shared that they’re feeling isolated – physically, politically, or otherwise. So my hope is that this newsletter becomes a space where we can re-ignite our optimism, gain solace from the views and experiences of others, ask the hard questions, and get beyond frustration or isolation. We are building a community committed to learning, with an ongoing conversation between you and me and among one another.
For those who’ve yet to sign up, please consider joining us.
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Don't believe corporate America's "labor shortage" bullshit. This is an unofficial general strike.
For the first time in years, American workers have enough bargaining leverage to demand better working conditions and higher wages -- and are refusing to work until they get them.
Here’s where that leverage comes from. After a year and a half of the pandemic, consumers have pent-up demand for all sorts of goods and services. But employers are finding it hard to fill positions to meet that demand.
The most recent jobs report showed the number of job openings at a record high. The share of people working or looking for work has dropped to a near-record low 61.6 percent. In August, 4.3 million Americans quit their jobs, the highest quit rate since 2000.
Republicans have been claiming for months that people aren’t getting back to work because of federal unemployment benefits. Rubbish.
The number of people working or looking for work dropped in September -- after the extra benefits ran out on Labor Day.
The reluctance of people to work doesn’t have anything to do with unemployment benefits. It has everything to do with workers being fed up.
Some have retired early. Others have found ways to make ends meet other than a job they hate. Many just don’t want to return to backbreaking or mind-numbing low-wage jobs.
In the wake of so much hardship, illness and death, peoples’ priorities have shifted.
The media and most economists measure the economy’s success by the number of jobs it creates, while ignoring the quality of those jobs. Just look at the media coverage of the September jobs report: The New York Times emphasized “weak” job growth. For CNN, it was “another disappointment.”
But when I was Secretary of Labor, I met with working people all over the country who complained that their jobs paid too little and had few benefits, or were unsafe, or required unwieldy hours. Many said their employers treated them badly.
With the pandemic, it’s even worse. That’s why, in addition to all the people who aren’t returning to work, we’re also seeing dozens of organized strikes around the country -- 10,000 John Deere workers, 1,400 Kellogg workers, over 1,000 Alabama coal miners, and thousands of others.
Not to mention the unauthorized strikes and walkouts since the pandemic began, like the mostly Black sanitation workers in Pittsburgh or the Amazon warehouse workers in Staten Island.
In order to lure workers back, employers are now raising wages and offering other incentives. Average earnings rose 19 cents an hour in September and are up more than $1 an hour over the last year. But clearly, that’s not enough to get workers back.
Corporate America is trying to frame this as a “labor shortage.”
But what’s really happening is more accurately described as a living-wage shortage, a hazard pay shortage, a childcare shortage, a paid sick leave shortage, and a health care shortage.
Unless these shortages are rectified, this unofficial general strike will continue.
I say it’s about time.
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Why the hell are Democrats keeping your drug prices high?
Excuse me but I have to vent.
Three House Democrats and one Democratic senator are now blocking a proposal to allow Medicare to negotiate drug prices. Medicare is such a big purchaser of drugs that it has the bargaining leverage to cut drug prices for everyone — if allowed to do so. This would save at least $450 billion over the next 10 years and significantly lower prescription drug prices.
But four Democrats are standing in the way.
Before I get to why they’re doing this, let me identify them. In the House: Scott Peters (whose district includes San Diego), Kurt Schrader (Oregon’s central coast), and Kathleen Rice (central and southern Nassau County on Long Island).
And in the Senate: Kyrsten Sinema (Arizona).
Okay, so why are these four Democrats blocking this measure?
Not because this policy is unpopular with the public. To the contrary, 88 percent of voters favor allowing the federal government to negotiate lower drug prices, including 77 percent of Republicans.
In fact, at least 90 percent of these four lawmakers’ own constituents support allowing Medicare to negotiate drug prices. Get this: The idea is so popular that both Kathleen Rice and Kyrsten Sinema actively campaigned on it.
And not because the pharmaceutical industry needs extra money in order to continue to generate new drugs. Taxpayers already fund much of its basic research through the National Institutes of Health. Also bear in mind that a big portion of the costs of bringing a drug to market goes into advertising and marketing — which shouldn’t even be allowed for prescription drugs (and isn’t in most other rich countries, and wasn’t in the US until Big Pharma lobbied for the law to change).
Oh, and pharmaceutical firms have been overflowing with so much cash they’ve been buying back their own shares of stock.
In other words, allowing Medicare to negotiate lower drug prices should be a no-brainer.
So what gives? The question should be who gives. Follow the money.
From 2019 to 2020, Kyrsten Sinema received over $120,000 in Big Pharma contributions, even though she’s not up for re-election until 2024. Throughout her political career, she’s taken over half a million dollars from Pharma PACs and executives. Just before Sinema officially came out publicly against allowing Medicare to negotiate drug prices, a group bankrolled by Big Pharma began running TV and digital ads and sending mailers praising her for “fighting as an independent voice.”
If you think this was a coincidence, I have a bridge in Brooklyn to sell you.
Scott Peters, meanwhile, happens to be the House’s single biggest recipient of Big Pharma campaign cash in the 2022 election cycle so far. Since being elected in 2012, Peters has socked away over $860,000 from Big Pharma. The day after his letter to House Speaker Nancy Pelosi opposing using Medicare to negotiate lower drug prices was published in May 2021, Peters began receiving thousands of donations from executives at pharmaceutical companies and the industry’s powerful lobbying group.
Another coincidence? P-l-e-a-s-e.
Kurt Schrader has raked in nearly $615,000 from Big Pharma since taking office in 2008. This election cycle he’s already got $24,500 from Pharma PACS, the second most of any industry donating to him. One of former his top aides left his office earlier this year and is now lobbying for Big Pharma. According to ethics disclosures, the former aide’s lobbying efforts focus on … guess what? Drug pricing.
The third House Democrat, Kathleen Rice, has received over $84,000 from Big Pharma.
The grand total of Big Pharma cash going to these four lawmakers: over $2 million. When you consider the billions that Big Pharma will rake in for keeping drug prices high, this is a small potatoes for them. You might even call it a great investment.
But it’s a huge cost for the rest of us.
The measure isn’t being blocked solely because these four Democrats oppose it. No Republican members of Congress are in support.
But it does seem odd that Democrats would stand in the way of this sort of reform, rebuffing their own president and party — and rejecting the overwhelming preference of voters, including their own constituents — to tank a policy that they themselves campaigned on. I mean, what’s the Democratic Party for if it won’t reduce drug prices for average people? Why were these four Democrats elected in the first place?
Sometimes I worry that pointing out this sort of corruption (and it is a form of corruption) will make people even more cynical than they already are about American politics, resulting in a kind of fatalism or resignation that causes many to give up — and thereby cede the entirety of our democracy to the moneyed interests. My hope is just the opposite: that when people hear about this sort of thing, they’re outraged enough to become even more politically active.
In my experience spanning fifty years of American politics — from interning for Senator Bobby Kennedy in 1967 to serving as secretary of labor in the Clinton administration to advising President Obama — most of the elected lawmakers I’ve dealt with sincerely want to do the right thing. Some don’t feel they can do the right thing if they want to be reelected, and confuse means and ends. A very few are on the take.
By which I mean to say that the situation is hardly hopeless. I refuse to give up on democracy. And I won’t give up on the Democratic Party. But I’m only going to fight for candidates from the Democratic side of the Democratic Party.
What can you do? For one thing, contact your members of Congress and tell them that the first step in getting big money out of politics is to support the Freedom to Vote Act. (You might put in an extra call to Joe Manchin’s office and say you expect him to deliver 10 Republican senators’ votes for this bill — which he helped author — or else agree to reform the filibuster to let voting rights bills be enacted with a bare majority.)
Here’s something else you can do: If you happen to be a constituent of one of these four Democrats, don’t vote for them when they’re up for reelection. Make sure they’re primaried, and then vote in the Democratic primaries for true public servants — who care more about advancing the public good than protecting private profits.
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The General Strike of 2021
On Tuesday, the Labor Department reported that some 4.3 million people had quit their jobs in August. That comes to about 2.9 percent of the workforce -- up from the previous record set in April, of about 4 million people quitting.
All told, about 4 million American workers have been leaving their jobs every month since last spring.
Add this to last Friday’s jobs report showing the number of job openings at a record high. The share of people working or actively looking for work (the labor force participation rate) has dropped to 61.6 percent. Participation for people in their prime working years, defined as 25 to 54 years old, is also down. Over the past year, job openings have increased 62 percent.
What’s happening? You might say American workers have declared a national general strike until they get better pay and improved working conditions.
No one calls it a general strike. But in its own disorganized way it’s related to the organized strikes breaking out across the land – Hollywood TV and film crews, John Deere workers, Alabama coal miners, Nabisco workers, Kellogg workers, nurses in California, healthcare workers in Buffalo.
Disorganized or organized, American workers now have bargaining leverage to do better.
After a year and a half of the pandemic, consumers have pent-up demand for all sorts of goods and services. But employers are finding it hard to fill positions.
This general strike has nothing to do with the Republican bogeyman of extra unemployment benefits supposedly discouraging people from working. Reminder: The extra benefits ran out on Labor Day.
Renewed fears of the Delta variant of COVID may play some role. But it can’t be the major factor. With most adults now vaccinated, rates of hospitalizations and deaths are way down.
Childcare is a problem for many workers, to be sure. But lack of affordable childcare has been a problem for decades. It can’t be the reason for the general strike.
I believe that the reluctance of workers to return to or remain in their old jobs is mostly because they’re fed up. Some have retired early. Others have found ways to make ends meet other than remain in jobs they abhor. Many just don’t want to return to backbreaking or boring low-wage shit jobs.
The media and most economists measure the economy’s success by the number of jobs it creates, while ignoring the *quality* of those jobs. That’s a huge oversight.
Years ago, when I was Secretary of Labor, I kept meeting working people all over the country who had full-time work but complained that their jobs paid too little and had few benefits, or were unsafe, or required lengthy or unpredictable hours. Many said their employers treated them badly, harassed them, and did not respect them.
Since then, these complaints have only grown louder, according to polls. For many, the pandemic was the last straw. Workers are burned out, fed up, fried. In the wake of so much hardship, illness and death during the past year, they’re not going to take it anymore.
To lure workers back, employers are raising wages and offering other inducements. Average earnings rose 19 cents an hour in September and are up more than $1 an hour – or 4.6 percent -- over the last year.
Clearly, that’s not enough.
Corporate America wants to frame this as a “labor shortage.” Wrong. What’s really going on is more accurately described as a living-wage shortage, a hazard pay shortage, a childcare shortage, a paid sick leave shortage, and a health care shortage.Unless *these* shortages are rectified, many Americans won’t return to work anytime soon. I say it’s about time.
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How Trump Might Save the Democrats
The unofficial kickoff of the former guy’s presidential campaign was a rally Saturday night in Des Moines. Unfortunately for the GOP, Trump’s speech focused on his Big Lie that the 2020 election was stolen rather than on Joe Biden, whose approval ratings keep sliding because of the Delta variant’s continuing impact as well as fumbles at the border and in exiting Afghanistan.
All indications are that Trump is going to cast the midterm elections as a referendum on himself rather than on Biden. That’s hardly surprising, given Trump’s sociopathic ego. He cast his entire presidency as a referendum on himself.
What’s surprising is how quickly the rest of the Republican Party is falling prey to this. We’ve already observed it at the state level: Trump’s Big Lie has moved 18 Republican-dominated states to enact 33 laws suppressing the votes of likely Democratic voters, on the false pretext of eliminating “voter fraud” that doesn’t exist. Several of these state laws will also let Republican legislatures ignore future electoral results they dislike. Under the same pretext, Republican states have undertaken bogus “audits” of the 2020 election.
But for a brief time it seemed as if senior Republicans in Washington would try to move the party away from Trump. They now appear to have given up. Several who in January criticized him for provoking the Capitol insurrection are now defending him and minimizing the attempted coup – including, notably, Senator Chuck Grassley, who showed up at Saturday’s Des Moines rally, and former vice president Michael Pence, who is now minimizing and excusing the riot.
For Trump to make the midterm elections into a referendum on himself and his Big Lie is useful for the Democrats. It takes the focus off Biden, reminds Americans how vile the former president is, and forces Republicans to try to defend him. If you watched Fox News Sunday, you might have seen Chris Wallace repeatedly ask House Minority Whip Steve Scalise whether he thought the 2020 election was stolen, and Scalise repeatedly squirm to avoid answering the question.
Scalise also refused to say whether he would vote to hold in contempt of Congress Trump advisers, such as Steve Bannon, who are resisting subpoenas issued by the January 6 Committee. Bannon is invoking executive privilege, at Trump’s request — an absurd position because by the 2020 election Bannon hadn’t worked in the White House for years.
January 6 Committee Chair Bennie Thompson and Vice Chair Liz Cheney say they “will not allow any witness to defy a lawful subpoena or attempt to run out the clock, and we will swiftly consider advancing a criminal contempt of Congress referral.”
This means even more of an ongoing focus on Trump and his attempted coup. Before Congress can refer a criminal contempt to the Justice Department for prosecution, the full House has to vote on it. So you can expect a near party-line vote, which will put Republicans further on record as supporting Trump and, by implication, others who instigated the insurrection.
The criminal contempt of Congress statute, enacted in 1857 and only slightly modified since, provides that any person who willfully fails to comply with a properly issued committee subpoena for testimony or documents is punishable by a substantial fine and imprisonment for up to one year. Once the House votes in favor of criminal contempt, the Speaker is required to report it to the Department of Justice, which then determines whether to prosecute. (Unfortunately, Attorney General Merrick Garland so far has not distinguished himself for holding Trump or his cronies accountable for anything.)
House Republicans could soon find themselves in an even more awkward position as the January 6 Committee investigates the roles several of them played in the insurrection. Senate Judiciary Chair Dick Durbin has asked the committee to investigate the help Rep. Scott Perry gave Trump in pressuring the Justice Department to overturn the election, as well as Rep. Jim Jordan’s contacts with the White House before and during the insurrection. (You may remember that in the 2016 presidential election, Jordan, the top Republican on the House Judiciary Committee, dug into allegations of impropriety at the FBI and Justice Department, and defended the power of the subpoena to compel testimony from executive-branch officials.)
The January 6 Committee also issued a subpoena last week to Ali Alexander, the leader of the pro-Trump “Stop the Steal” organization, who has claimed he worked on the pre-insurrection rally with several GOP lawmakers, including Reps. Paul Gosar, Mo Brooks, and Andy Biggs.
Trump’s speech in Iowa Saturday night suggests we’re already in the gravitational field of the 2024 midterms. But in making that speech mostly about himself, Trump may have given Democrats more leeway to do what Americans – including most Trump supporters – need them to do.
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The Real Reason the Economy Might Collapse
Skyrocketing wealth inequality isn’t just wrong. It’s also weakening our economy.
70 percent of the US economy depends on consumer spending. So American consumers need to spend enough money to buy most of the goods and services Americans are capable of producing.
This means that over the long term their incomes need to keep pace with their productivity.
But their incomes haven’t. Over the past 40 years, most people’s wages have basically stagnated, while worker productivity has soared.
Where did the economic gains go? Mostly to the top. The wealthy now own more of the economy than at any time since the 1920s.
Here’s the economic problem: The wealthy spend only a small percentage of their income and wealth. Their spending is not enough to fulfill the consumer demand that keeps the economy churning.
Lower-income people, on the other hand, spend almost everything they have – which is becoming very little. Most workers aren’t earning nearly enough to buy what the economy is capable of producing.
The result is a gap between potential output and potential consumption.
To fill the gap, the economy depends on people going deeper and deeper into debt so they can buy. Even in 2018, when the economy appeared strong, 40% of Americans had negative net incomes and were borrowing money to pay for basic household needs.
The Fed has had to keep short-term interest rates lower and lower to accommodate this buying. And the government has to spend more and more to fill the remaining gap.
None of this is sustainable. At some point, widening inequality causes the economy to collapse.
We’ve seen this before. Years ago, Marriner Eccles, chairman of the Federal Reserve from 1934 to 1948, explained that the Great Depression occurred because the buying power of most Americans fell far short of what the economy was producing.
He blamed the increasing concentration of wealth at the top: “A giant suction pump had by 1929-1930 drawn into a few hands an increasing portion of currently produced wealth. As in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”
While the wealthy of the 1920s didn’t know what to do with all their money, most Americans could maintain their standard of living only by going into debt. When that debt bubble burst, the economy tanked.
Fast forward 100 years and we see the same pattern. While the typical Americans’ wages have barely budged for decades, adjusted for inflation, most economic gains have gone to the top, just as Eccles’s so-called “giant suction pump” drew an increasing portion of the nation’s wealth into a few hands before the Great Depression.
The result has been an economy whose underlying structure is far more fragile than it may seem.
Remember the housing and financial bubbles that burst in 2008? We avoided another Great Depression then only because the government pumped enough money into the economy to maintain demand, and the Fed kept interest rates near zero. Then came the pandemic.
The Fed has had to keep interest rates near zero. And the government has had to pump even more money into the economy. While these programs have been crucial to staving off a pandemic-induced depression, they're only temporary.
Over the long term, the real worry continues to be on the demand side. Widening inequality means not enough demand.
America’s wealth gap is now more extreme than it’s been in over a century. Until this structural problem is remedied, the American economy will remain perilously fragile.
It will also be vulnerable to the next demagogue wielding anger, racism, and resentment as substitutes for real reform.
Closing our staggering wealth gap is crucial to the survival of both our economy and our democracy.
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Today’s jobs report reveals a striking thing: A large portion of the American Workforce is now effectively on strike.
The U.S. added just 194,000 jobs in September, down from the 366,000 added in August and far below the million-plus in July (before the Delta variant took hold). This is being described in the media as a disappointment or a problem, but a closer look reveals something quite different.
We're still 5 million jobs below February 2020 levels, and 2.7 million people have been out of work for six months or more, the standard threshold for long-term unemployment. Many of these people are hurting, to be sure.
But the number of job openings is at a record high, and many employers report having a hard time filling positions. Why? Some workers have retired early or found other ways to make ends meet. Others simply don’t want to return to backbreaking, low-wage shit jobs.
Note that the share of people who were working or looking for work last month (the labor force participation rate) dipped to 61.6 percent, down slightly from the prior month. Participation for people in their prime working years, defined as 25 to 54 years old, also ticked down.
In other words, many American workers are now engaged in the equivalent of a general strike.
As a result, employers are raising wages and offering other inducements to lure applicants. Average earnings rose 19 cents an hour in September and are up more than $1 an hour over the last year, after a series of strong monthly gains. Average hourly earnings have jumped by 4.6 percent over the last year.
Corporate America wants to frame all this as a “labor shortage.” But that’s not what’s really going on. In reality, there's a living wage shortage, a hazard pay shortage, a childcare shortage, a paid sick leave shortage, and a health care shortage -- and American workers are demanding an end to all these shortages. Or they won’t return to work.
They deserve it.
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The media's rotten reporting on Biden's social and climate bill (and it's not just Fox News)
Friends, I recently started a newsletter on power, politics, and the economy. I’m still getting the hang of it, but so far I’ve been delighted and encouraged by the responses and the community we've built. For those who’ve yet to sign up, please consider joining us at https://robertreich.substack.com.
The ambitious social and climate legislation now working its way through Congress will be enacted in some form. But its agonizing journey to date reveals the rotten job done by the media that’s supposed to inform Americans about our democracy.
Last week, the New York Times described the delay in House Democrats’ approval of the infrastructure bill as caused by a “liberal revolt.” On Saturday it reported that Biden had “thrown in” with his party’s “left” rather than its “center,” thereby “leaving his agenda in doubt.”
This is pure rubbish. There was no “liberal revolt” and there’s no standoff in the party between a leftwing fringe and a larger center. The vast majority of Democratic lawmakers in both the House and Senate support Biden’s agenda. The only “doubt” comes from two Democratic senators, Arizona’s Kyrsten Sinema and West Virginia’s Joe Manchin.
Passage of the infrastructure bill was held up in the House last weekend because Sinema and Manchin wouldn’t negotiate the size of the social and climate bill that was supposed to be attached to it.
The media describes Sinema and Manchin as “moderates” but they’re to the right of the rest of the party. If they’re “moderates,” does that make most Democratic lawmakers “extremists?” And why does the media continue to characterize them as “pragmatic” when, as Joan Walsh of The Nation points out, “it’s actually the progressives who have compromised; they are the pragmatists.”
You can see the same bias in how Biden’s social and climate bill is being described. The media almost never mentions what’s in it – a slew of extraordinarily popular items including childcare, pre-K, community college, paid family leave, child tax credits, and measures to slow climate change. Instead, almost the sole media focus is on how much it would cost. “Biden’s 3.5 trillion package” is the standard description.
Even this is wrong because the $3.5 trillion is spread over 10 years, making it $350 billion per year – about half of what we spend each year on national defense.
To make matters worse, the media’s focus on the bill’s cost ignores the larger costs of not passing it.
Millions of people without childcare, for example, can’t join the labor force – costing the economy tens of billions each year. Young people who can’t afford community college end up costing the economy vast sums in terms of lost productivity and whatever public assistance they may need down the line. If we don’t slow climate change, we’ll be spending hundreds of billions more per year dealing with worsening wildfires, floods, and droughts. If we don’t begin to reverse widening inequality, half of America won’t be able to buy the goods and services the economy produces. Talk about costs.
These biases in the mainstream media aren’t the result of intentional decisions among publishers, editors and writers to favor the status quo over progressive change. They simply reflect the dominant views of the American establishment, as seen mainly through the lenses of New York and Washington. The establishment supports the status quo and puts a high burden of proof on those seeking fundamental change because it is the establishment.
Yet as a result, the mainstream media is doing a rotten job informing America about one of the most important pieces of legislation to come along in decades, at a time in our nation’s history when fundamental change is badly needed.
What do you think? Tell me in the comments at https://robertreich.substack.com/p/the-medias-rotten-reporting-on-bidens.
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This Week's Worst Influential American
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Call me old-fashioned, but I think people in public life need to be accountable for whatever damage they’re doing to public life. So from time to time I’m going to call out the person I consider to be the worst influential person in American public life.
Tough decision this week, given Kyrsten Sinema and Joe Manchin’s efforts to torpedo Biden’s (and America’s) one shot at reversing widening inequality and combatting climate change, but this week’s winner isn’t either of them. He’s not even a politician. He’s the most popular talking head on Fox News, with 3 million viewers — and the most dangerous demagogue since Donald Trump. His name: Tucker Carlson.
He gets the prize because he recently played a 2015 clip of then-Vice President Joe Biden discussing America’s long history of benefiting from immigration. Then Carlson looked straight at the camera and said the reason Biden was in favor of immigration was “to change the racial mix of the country.”
Carlson continued: “That’s the reason, to reduce the political power of people whose ancestors lived here, and dramatically increase the proportion of Americans newly arrived from the Third World.” And then added: "It's horrifying. But there’s a reason Biden said it. In political terms, this policy is called the great replacement, the replacement of legacy Americans with more obedient people from far-away countries.”
Carlson has spewed this “great replacement” excrement before, but it’s particularly absurd now because the Biden administration is doing just the opposite – to my horror. It just deported thousands of Haitian refugees desperate to escape Haiti’s deathly chaos. (Oh, and the Obama administration set a record for deportations.)
A liberal “great replacement” conspiracy? Horse manure. If there’s any conspiracy it involves right-wing hate-mongers like Carlson -- who are intent on sowing more anger and division in an America still reeling from four years of Trump.
My great grandparents came to this land from Russia and eastern Europe, mainly because their lives were endangered. They and other waves of immigrants have made America into what it is today, both the good and the bad. They didn’t “replace” anyone.
The only people entitled to complain about a “great replacement” are native Americans.
Tucker knows this but he doesn’t care. He’s just an opportunistic cynic who wants to drive up his ratings by feeding white resentment. For that, he’s this week’s worst influential American.
What do you think? Tell me in the comments at https://robertreich.substack.com/p/this-weeks-worst-influential-american/comments.
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The Democrats’ One Chance to Cut Child Poverty in Half
The Biden administration has a plan that is estimated to cut child poverty in half. And it’s already in place.
It’s called the Child Tax Credit.
Here’s how it works. Parents of children aged 6 and younger across the country are receiving direct payments of up to $300 per month per child, or $3,600 per year per child. The payments drop to $250 a month for children between the ages of 6 and 17, and phase out for families with higher incomes.
It’s an historic expansion of the original credit that’s already helping millions of working families.
The direct payments are coming because the Child Tax Credit is a refundable tax credit. Normal, non-refundable tax credits simply cut your taxes. But a refundable tax credit, like the Child Tax Credit, helps you even if you don't earn enough for it to reduce your taxes — so it’s a direct payment to you.
Say you owe $3,000 in taxes. A non-refundable tax credit of $3,600 won’t be worth $3,600 to you. It would just reduce your taxes to zero. So you wouldn’t get the full benefit. And if you don’t owe any taxes to begin with, a non-refundable tax credit wouldn’t do you any good at all since you can’t reduce your taxes to less than zero dollars.
But a refundable tax credit would help you. You’d get the money no matter what, the full $3,600. That’s why this expansion is such a big deal: it ensures that the money gets to lower-income families.
The early results show that this policy is a game-changer. Over 3 million more households with children now report having enough to eat after just the first two payments. More report being able to make rent, stay in their homes, and afford basic necessities. And 3 million children have been lifted out of poverty.
It’s reduced racial disparities, as well. Hunger has fallen by one-third among Latinx families and by one-quarter among Black families.
It bears repeating that if the credit is made permanent, and reaches everyone it should, it could cut child poverty in half.
Yet the Republican Party — the so-called “party of family values” — is dead set against it. That’s because the program works.
Every single Republican in Congress voted against the American Rescue Plan, which contained the initial expansion of the Child Tax Credit. You can bet they’re all going to vote against making that expansion permanent as part of the Democrats’ $3.5 trillion budget plan. It’s obvious: they do not care about helping working families.
Democrats must get this done, no matter how staunch the Republican opposition. In the richest country in the world, it is inexcusable that millions of our children are living in poverty.
For decades, almost all economic gains have gone to the top, leaving working families behind. This historic expansion of the Child Tax Credit is a crucial step towards righting this wrong.
Poverty is a policy choice. Congress must make the Child Tax Credit permanent.
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The Week Ahead: Everything hangs in the balance, but the economy is a wild card
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I’m no soothsayer, but I can make a few confident predictions about the week ahead.
Funding for government spending is secure for now, at least through early December — at which time Congress will pass another continuing resolution. (Remember: neither party wants to be seen as being responsible for a government shutdown.)
But expect more fear-mongering this week over failure to raise the nation’s debt ceiling. Mitch McConnell and the Republicans won’t budge. What will happen? Over the next few weeks, the Treasury will stave off a default until Senate Democrats pass a debt-ceiling increase on a 50-vote (plus Vice President) reconciliation bill that won’t require any Republican votes.
What about President Biden’s ambitious social and climate “Build Back Better” package? The media is full of “Democrats in disarray” stories, but that’s simplistic. Actually, almost everything is on track.
Last Thursday, Joe Manchin declared that he’ll agree to no more than $1.5 trillion of spending for it, less than half what Biden is seeking (which itself was half what he originally promised). But this is just his opening position, signaling the start of negotiations between Manchin and the White House — which begin this week. Biden and Manchin know each other well and are experienced negotiators. I expect the final figure to be between $2.3 trillion and $2.6 trillion.
The biggest fight will be over which initiatives in the package are pared back. The most vulnerable are drug-price controls, tax increases on the wealthy, and expansion of Medicare to include dental, hearing, and vision coverage. That’s because these measures are most despised by the corporate backers of conservative Democrats. (Note that they’re also the most popular with the public.)
Other possible casualties are expanded pre-K, community college, paid family leave, child tax credits, and clean energy. They’re also popular – and important.
But the public may never know any of these measures have been sacrificed because Democrats have several ways of keeping them in the bill while quietly paring them back: covering fewer years (4 instead of 10, for example), cutting back on who’s eligible (phasing out a benefit at $80,000 of yearly income rather than $120,000), and, on the revenue side, widening tax loopholes and carving out more exemptions.
If Manchin finally agrees to this, I believe Sinema will come around. After that, the whole package could get done quickly — possibly as soon as this week through a Senate reconciliation bill. Then it will move swiftly through the House, with progressives and conservative Democrats voting for the infrastructure bill as well. (Of course, Republicans will oppose both, but the Democrats have the votes to get them through.)
The biggest uncertainty is the economy.
This coming Friday, the Bureau of Labor Statistics will report on jobs and wages for September. The August jobs report was a disappointment, mainly because of the negative effects of the Delta COVID variant. I expect the September report to show slow job growth, too. But keep your eye on wage growth. If wages continue to rise as fast as they have been, workers will have more money to purchase all sorts of things — thereby getting the economy back on track.
You’ll also be hearing lots of scaremongering this week about inflation and “labor shortages.” Last Friday, the Fed reported that prices climbed in August at the fastest pace in 30 years. This -- along with uncertainty about jobs and the Delta variant -- has already rattled the stock market. (But as I’ve said a thousand times, the stock market is not the economy! The richest 1 percent of Americans own half of all stocks, the richest 10 percent own over 80 percent.)
The major reason for inflation is supply bottlenecks, both in the US and around the world, which are pushing up prices of everything from crude oil to semiconductor chips. These bottlenecks should ease over the year. In fact, so-called “core” inflation (which excludes food and fuel) has been slowing somewhat.
But this hasn’t stopped Republicans from claiming that the spending Biden and the Democrats want to do will spur more inflation. Rubbish. It will expand the capacity of the economy to produce goods and services, thereby relieving shortages and reducing inflation over time. (When more people have childcare, for example, they’re freer to work – reducing “labor shortages.”)
Republicans also claim that the stronger safety nets in the bill will make people more reluctant to join the labor force. Additional rubbish. America has the weakest safety nets of all rich countries. Giving Americans slightly more economic security will help the economy, by allowing them to get additional skills, change jobs, and get better pay.
In many ways, Biden’s plan will improve the lives of the bottom 90 percent of Americans – people who don’t have much wealth and own almost no shares of stock. This is something the corporate backers of Republicans and conservative Democrats don’t seem to care about, but they should.
What do you think?
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Remembering my date with Hillary
Last Tuesday, during a Guardian Live interview, Hillary Clinton said the United States remained in a "real battle for our democracy" against pro-Trump forces on the far right who are seeking to entrench minority rule and turn back the clock on women's rights.
"I do believe we are in a struggle for the future of our country,” she said, adding that "the January 6 insurrection at our capitol was a terrorist attack."
Her words reminded me of the warning she issued back in September 2016 — that Trump had “lifted up” and “given voice” to the “racist, sexist, homophobic, xenophobic, Islamophobic” parts of America. He had legitimized them, she said, with his “offensive, hateful, mean-spirited rhetoric,” and she noted that “their websites that used to only have 11,000 people, now have 11 million.”
She was widely criticized at the time for demeaning Trump supporters. I suppose calling them “deplorables” wasn’t the best way to earn their affection and votes.
But her overall concern was exactly right. She still views America’s central challenge as a battle over hate and intolerance, and she’s still right.
I first met Hillary Clinton in the fall of 1966 when she was a college sophomore named Hillary Rodham. (Five years later I introduced her to Bill, but that’s another story.) She had long hair and thick glasses, and an infectious laugh. She was president of her class and I was president of mine. We were both interested in reforming American education. I invited her out — not so much for a date as a kind of presidential summit. We went to the Nugget Theater in Hanover, New Hampshire, to watch Antonioni’s film “Blow Up.” That’s all I remember.
Fifty years later, when she ran for president, a reporter from the New York Times phoned me. He had come across some of her letters from college. In one of them she mentioned our “date.”
His voice grew serious. “Is there anything you can remember from your date with her that might shed light on how she would perform as President?”
I didn’t know how to respond. This was the New York Times, for crying out loud.
I told him we had gone to see Antonioni’s “Blow Up.”
“Anything else?” he asked.
I paused. “I probably shouldn’t be saying this...”
“What’s that?” I could hear the eagerness in his voice.
“She wanted an inordinate amount of butter on her popcorn.”
There was a long silence.
“Hello?” I asked, fearing my lame attempt at humor had put him off.
“Still here,” he said. “Just writing all this down.”
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