What if the Congressional Progressive Caucus invited the supercommittee to an ad hoc hearing on job creation, and the supercommittee didn’t show up? Yesterday, I found out.
On Wednesday morning, the Congressional Progressive Caucus held a hearing on what ought to be the top agenda item in Washington: jobs, jobs, jobs. One by one, the speakers issued a wake-up call that resonates with millions of Americans — America needs jobs, not cuts. Americans — from students graduating with mountains of debt, into the worst job market in decades, to aging baby boomers for whom retirement is suddenly further out of reach, and Patriotic Millionaires ready to do their part — demand jobs, not cuts.
OurFuture.org’s Robert Borosage underscored the urgent need for action on jobs, and seize the agenda from the “supercommittee” before it takes America down the road to ruin.
If a drunken bus driver were careening down the wrong road that leads directly off a steep cliff, we would want him to fail to get where he is going. That is exactly the case with the Super Committee. They are headed down the wrong road and it will be ruinous if they succeed in getting where they are going.
This is a nation with 26 million people in need of full time work. Wages are not keeping up with prices. Poverty, now at record levels, is spreading. One in five homes with a mortgage is underwater. Companies are sitting on trillions in profits waiting for customers. Over the past eleven years, we have added 30 million more people and lost 1.8 million private sector jobs.
And next year, an economy that is barely growing will be hit with severe shocks. The boost provided by recovery act spending will come to an end. If unemployment insurance and the payroll tax cut are also not renewed, JPMorgan Chase analysts project that will cut growth by 1.5 to 2%. More and more mortgages in arrears will face foreclosure, with ruinous effect on their neighbors. Even if the Euro somehow survives, Europe is headed back into recession, with knock off effects on our exposed banks and investment houses and on export markets.
We should be having a fierce argument about how to put people to work and get this economy going. Republicans should be demanding tax cuts, Democrats public investment and jobs programs. Instead the Super Committee is pushing Republicans to accept tax hikes (or at least pretend to accept them) and Democrats to embrace cuts in Social Security and Medicare. This is grand folly.
The timeliness of the speakers remarks underscored the “fierce urgency of now,” in that each of their remarks echoed some of the most troubling of today’s headlines.
Dr. Jeffrey Sachs, economist, author, and Director of the Earth Institute at Columbia University focused on what he called an iceberg-sized problem threatening our economy. “This is not a business cycle problem,” Sachs said, “but a long-term, structural problem” — one more than 30 years in the making, having got its start under Ronald Reagan, as Sachs wrote in a recent New York Times column.
OCCUPY WALL STREET and its allied movements around the country are more than a walk in the park. They are most likely the start of a new era in America. Historians have noted that American politics moves in long swings. We are at the end of the 30-year Reagan era, a period that has culminated in soaring income for the top 1 percent and crushing unemployment or income stagnation for much of the rest. The overarching challenge of the coming years is to restore prosperity and power for the 99 percent.
Thirty years ago, a newly elected Ronald Reagan made a fateful judgment: “Government is not the solution to our problem. Government is the problem.” Taxes for the rich were slashed, as were outlays on public services and investments as a share of national income. Only the military and a few big transfer programs like Social Security, Medicare, Medicaid and veterans’ benefits were exempted from the squeeze.
Reagan’s was a fateful misdiagnosis. He completely overlooked the real issue — the rise of global competition in the information age — and fought a bogeyman, the government. Decades on, America pays the price of that misdiagnosis, with a nation singularly unprepared to face the global economic, energy and environmental challenges of our time.
The price of that misdiagnosis, Sachs said, can be seen in the concentration of unemployment in young people, and the low percentage of Americans with more than a high school diploma, that have left us unprepared to compete in the global economy. “Unless we have a solution that helps kids get all the way through high school, and to complete college or get a certificate in certificate in areas that are in high demand,” Sachs said, “we will stay unprepared.”
The reason we don’t have those things, Sachs said, is because we have abandoned government as part of the solution. “We have gutted government in this country,” Sachs said. “When we started electing presidents that attacked government , we started attacking the very fiber of this country. We have gutted the very things we need to be inclusive, fair, and to be sustainable.”
Dr. Julianne Malveaux, economist and president of Bennett College for Women, echoed Sach’s concerns. “We are 11th in the world, in the number of people with bachelor’s or associates degrees,” Malveaux said. “We have not improved our ability to deliver and develop educational technology in 30 years.” Citing the magnitude of the unemployment crisis, Malveaux addressed the cuts the super committee is expected to announce in less than ten days. “A country does not work its way through a recession by cutting unemployment or cutting programs. “A country does not work its way through a recession by cutting unemployment and cutting programs,” she said, adding that “debt might be eliminated more quickly if Americans are put back to work .”
John Irons, Research and Policy Director of the Economic Policy Institute, further emphasized the scope of the jobs crisis. Filling the current unemployment gap, Irons said, would require creating 400,000 jobs per month since the start of the rescission. Citing a statement from Moody’s analysis that a super committee failure would cause an automatic U.S. downgrade, Irons said Congress should be listening to Main Street instead of bending over backwards for the bond market. “The main worry for businesses is a lack of demand for goods and services,” he said. “The main worry for individuals is a lack of jobs.” Irons added that if Congress fails to act on jobs, the result will be long-term damage to the economy — which he called “scarring” — as millions of Americans suffer long-lasting, and in some cases permanent damage to their earning capacities. “The bottom line,” Irons concluded, “is that Congress needs to focus on putting people back to work.”
Robert Johnson, Senior Fellow and the Director of the Project on Global Finance at the Roosevelt Institute, picked up where Dr. Sach’s left off, addressing the context in which jobs are created — or in which Congress fails to act on job creation. “We have a crisis of institutions in our society,” Johnson said. “Trust in unfettered free markets, and in experts is devastated, in the aftermath of the financial crisis. One response could have been that trust in government would have been invigorated.”
But, Johnson said, Americans have become despondent about raising taxes — a solution that the majority of Americans support, even among Republicans and tea partiers — because they don’t trust that the money will be used where it’s needed most. Johnson pointed to a recent report, assembled by Republican Sen. Tom Coburn, showing that the government spends about $30 billion per year on “welfare” for millionaires, as a example of what has eroded trust in government.
In all, millionaires receive hefty help from Uncle Sam. The $30 billion in handouts, to put it in perspective, amounts to twice as much as the government spends on NASA, and three times the budget of the Environmental Protection Agency. On the other hand, it would only cover the cost of fighting about three months in Iraq and Afghanistan. Still, eliminating them would help make a small dent in the $1.5 trillion congressional leaders are trying to find by Thanksgiving.
…Yet the crux of the argument—that millionaires are using the social safety net as a luxury hammock—fuels an ongoing campaign by the White House to raise some taxes on top earners. “Republicans need to stop supporting tax breaks for the richest Americans so we can use some of that money to create jobs and reduce the deficit,” says White House spokesperson Amy Brundage. Or as Obama likes to put it, folks like him can afford to give more and take less.
Johnson previewed the remarks of the next speaker when he supported raising taxes on millionaires like himself, and cataloged how that money could be spent. “Raise taxes on millionaires,” he said, “and you can direct those programs to science and education programs” — such as the kind of programs and investment Sachs and Malveaux said earlier are needed to put Americans back to work and prepare American workers to compete in a global market.
“In order to have a gainfully employed society, we need trust in government,” Johnson said. “Public goods are not provided by unfettered free markets. Essential public services compliment private productivity and inspire investment. Other countries get that message,” he added. “But the U.S. is withering because of lack of trust in government.”
“Most of us don’t spend that extra money,” Johnson continued, “We save it.” Though he didn’t mention it specifically, a 2010 report from Moody’s Analytics supports his assertion that the wealthy save tax cuts instead of spending and putting that money back into the economy. “We’re in a savings glut,” Johnson said. A recent report tallying the stash of the super rich at $25 trillion, of which the ultra-wealthy in the U.S. hold about $5.9 trillion, bringing the context Johnson initially set for in to even sharper focus.
These numbers need a bit more context to have any real meaning, and we can take a stab at providing that context by glancing over at the “super committee” deficit-reductions deliberations now underway in Washington, D.C.
The 12 lawmakers on this congressional super committee — six Republicans and six Democrats — are trying to trim $1.2 trillion off federal red ink over the next ten years. On their chopping block: Medicare, Social Security, and assorted other programs essential to the well-being of America’s 99 percent.
The super committee reporting-out deadline comes next week. No one knows how much budget-cutting pain the panel will be recommending. But panel members could actually avoid all that pain — and raise over $1 trillion in new money for investing in America — simply by subjecting all U.S. individual net worth over $30 million to a modest wealth tax.
Our U.S. ultra wealthy, Wealth-X calculates, together hold almost $5.9 trillion over this $30 million threshold. An annual 5 percent wealth tax on this overage would raise over $293 billion a year, or $2.9 trillion over the next decade — more than double the $1.2 trillion the super committee is so desperately looking to find.
The most amazing part of this? America’s ultra rich could easily pay this 5 percent annual wealth tax for the next ten years and remain as rich as ever.
That’s because wealth begets wealth. All those trillions of dollars America’s ultras are currently holding don’t sit under some mattress. The ultra wealthy have those trillions invested in assets that generate short- and long-term returns.
If America’s ultras averaged returns on those investments not that far above 5 percent over the next ten years, they could pay the wealth tax and still end the decade with higher personal net worths than when the decade began.
And some of America’s wealthy are willing to do their part, as Garrett Gruener of Patriotic Millionaires, made clear. With a contingent of Patriotic Millionaires seated behind him, Gruener debunked some popular myths about tax cuts, investment and job creation. “Republicans have a good line,” Gruener said. “Cut my taxes and I will go out and create jobs. I’ve seen a little bit of the process of job creation and I’ve heard this myth about marginal tax rates. Not once have any of my decisions been a function of marginal tax rates.”
“We just don’t think about it,” Gruener continued. “The numbers are on my said,” Gruener said of the prosperity the Bush tax cuts were promised to create. “What happened was a decade of stagnant incomes for the middle class, and anemic job growth. If the proposition they’re pushing had a basis in reality, I’d be interested. But, in fact, it doesn’t.”
Before the hearing started, the Patriotic Millionaires handed out spiral bound copies of the open letter to President Obama and John Boehner that’s also posted on their website. During Gruener’s remarks, I read the letter and one passage in particular stood out to me.
Our country faces a choice – we can pay our debts and build for the future, or we can shirk our financial responsibilities and cripple our nation’s potential.
Our country has been good to us. It provided a foundation through which we could succeed. Now, we want to do our part to keep that foundation strong so that others can succeed as we have.
The members of the supercommittee weren’t in the room to hear from the very people whose tax cuts they are willing to make cuts to education, Social Security, Medicare and Medicaid in order to “protect.” Maybe they were busy counting their money after a surge of campaign contributions to super committee members. And when the Patriotic Millionaires took their message to Capital Hill, they found that members of Congress — half of whom are fellow millionaires, were not interested in hearing what they have to say.
So, what happens if the Progressive Caucus invites the supercommittee to an ad hoc hearing on job creation and the supercommittee doesn’t show up? Well, they don’t hear what they don’t want to hear. They end ducking millionaires wandering around Capital HIll bearing checkbooks, and ready to write checks — just not to their campaign war chests.
Yesterday that worked. But there are signs today that not even the supercommittee can outrun the voice of the 99 percent, let alone the voice of the 1 percent with the decency to stand with the 99 percent.