jobs

GOP Threat: Cut Social Security and Medicare or we'll kill the economy. Americans say NO to both.

Roger Hickey — Sun, 06 Jan 2013 19:25:51 -0500

Here we go again. Republicans are very clear about their latest extortion threat to the American people: Unless you cut Social Security and Medicare benefits, within the next two months we will throw the US economy back into recession - by refusing to allow the US raise the debt ceiling and pay our bills - or by pushing the economy over another fiscal cliff of deep spending cuts and tax increases - or by shutting down the government by refusing to pass a continuing budget resolution.

But it is very important for progressives and politicians to remember that most Americans hate what the Republicans are doing here. Who but Right Wing terrorists could support pushing the economy back into recession, throwing millions of Americans out of work? That's what Republicans are threatening. And huge majorities also hate the price Republicans are demanding to prevent their threat of manufactured chaos: the idea of cutting Social Security and Medicare benefits.

Republicans can get their way only if Democrats fail to realize they have the American people on our side. And once Republicans are clear about their proposals, Americans turn against them.

During the election, Paul Ryan's plan to turn Medicare into a voucher was so unpopular that candidate Mitt Romney ran away from his Vice Presidential nominee's proposal. Democrats won the election.

Now, Tennessee Republican Senators Bob Corker and Lamar Alexander have dared to unveil a proposal (called their "dollar-for-dollar plan") that would only allow the debt ceiling to be raised by the amount we allow them to cut what they term "entitlements." How many Americans would embrace these changes?:

They would privatize Medicare by creating competing private options giving seniors greater choice of healthcare plans. Shades of the plan Mitt Romney endorsed and then ran from.
They would also give states more flexibility to cut Medicaid programs.
And they would gradually raise the Social Security retirement age and immediately impose the "chained CPI" formula to cost-of-living adjustments - a cut to retirement benefits of today's seniors.

"Unfortunately for America, the next line in the sand is going to be the debt ceiling," Corker told The Hill, laying out his leverage strategy for negotiations with Democrats. These guys couldn't be more explicit

Over the next two months, everyone who loves our country must rise up and say NO to this Republican nihilistic extortion. We must isolate them, ridicule and shame them. And we must force the Democrats to have the backbone to stand with us and reject Republican extortion and economic terrorism.

President Obama campaigned for reelection on his pledge to repeal the Bush tax cuts for people making more than $250,000, but he backed down and agreed to raise taxes only on people making more than $400,000. In return, he got an extension of unemployment benefits and important low income tax provisions. But he could only get Republicans to postpone for two months the Fiscal Cliff tax increases and spending cuts known as "sequestration." And he failed to get them to give up the threat to destroy the full faith and credit of the United States that their refusal to raise the debt limit ceiling would bring on. Their refusal to support the once-routine legislation insuring we can pay our debts is already causing the Treasury Department to juggle accounts and will reach crisis stage by the end of February.

President Obama has pledged that he will not bow to Republican extortion over the debt limit:

"I will not compromise over ... whether or not Congress should pay the tab for a bill they've already racked up. If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic. The last time Congress threatened this course of action, our entire economy suffered for it. Our families and our businesses cannot afford that dangerous game again."

But remember that President Obama did negotiate the last time Republicans threatened to crash the economy by refusing to raise the debt limit, in September 2011. Obama was willing to offer up Social Security benefit cuts (in the form of a new "chained CPI") and a change in the Medicare eligibility age (from 65, when many people are forcibly retired, to 67). It was only because Republicans refused to accept tax increases that Obama's dangerous offer was not accepted. Instead, in return for Republican votes to lift that last debt ceiling, the draconian fiscal cliff sequestration budget cuts scheme was created (now postponed until early March).

So while President Obama may refuse to negotiate with Republicans over their latest manufactured debt limit crisis, he could end up negotiating to avoid the threat of sequestration. And Social Security and Medicare cuts could be on that table.

A Powerful Coalition Reminding Democrats What Americans Want - And Don't Want.

President Obama and other Democrats need to listen to the voices of the groups who helped get them elected in 2012 - unions, community organizations, groups representing women, African Americans and Hispanics, and online activist groups like MoveOn and the Campaign for America's Future.

On November 8, many of these groups placed an ad in the Washington Post making a set of demands on the President and Congress. These demands have served as unifying principles for a powerful organizing and outreach coalition. Signed by organizations including the AFL-CIO, SEIU, Center for Community Change, Leadership Conference on Civil Rights, and the Campaign for America's Future, the ad was accompanied by an open letter to the White House and Congress signed by 146 national organizations.

If the President and the Democrats in Congress listen to these principles - and to these groups who have been communicating with them before and after the election - they will refuse to cut Medicare and Social Security in response to the Republicans' threat reject the debt ceiling and tank the economy. And they will discover they have the vast majority of Americans on their side.

Here what the ad said, in part:

To the President and The Congress.

As you face urgent budget decisions, you must keep the election results in mind and resist budget cuts that slow our economy and hurt families. The best way to reduce the deficit is to put people back to work and get our economy going again. That's why we are calling on national leaders from both parties to stand up for the middle class and demand that any budget agreement:

Asks all Americans to pay their fair share of taxes.

Prioritizes job creation first. It's time to grow--not slow--the economy.

Does not cut Medicare, Medicaid, or Social Security benefits and does not shift costs to beneficiaries or the states. Voters loudly and clearly spoke up for these programs.

Protects the safety net and vital services for low-income people.

Stops the sequester. The scheduled automatic budget cuts threaten our fragile recovery and put huge numbers of people out of work while cutting education, child care, job training and dozens of vital services people and communities need.

The groups involved have helped the American Majority of working families communicate these demands to the President and the Congress. So far, we have kept Social Security, Medicare and Medicaid off the chopping block. We are redoubling our efforts to prevent Democrats from capitulating to Republican hostage-taking and extortion. And we are turning our campaign to opposing conservative austerity - and fighting for jobs and robust economic growth.

Arm Yourself For Fiscal Cliff Arguments

Dave Johnson — Mon, 19 Nov 2012 13:27:53 -0500

I joined Campaign for America's Future's Richard Eskow to talk about the "fiscal cliff" scare, austerity, Social Security, Medicare and how we WON the election so we really should be talking about jobs instead.

This was a GREAT hour, and hold the information you need to arm yourself to win holiday-dinner conversations with your right-wing brother-in-law.

The conversation refers to my post, Fiscal Cliff Scare Talk Follows Shock Doctrine Script as well as several posts by Richard Eskow including, Wall Street Finds a ‘Third Way’ to Plunder Our Wealth, The “Fiscal Cliff” Is a Hoax … and a Mel Brooks Routine, The Grand Swindle – Veterans on a Cliff, After the Election, a New Mandate – and New “Fiscal Cliff” Math

Click here to listen, or listen using the widget below:

Listen to internet radio with Jay Ackroyd on Blog Talk Radio

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It's Okay To Lose Your Job Since You Can Always Buy "Stuff" From China.

Steven Capozzola — Wed, 24 Oct 2012 12:00:03 -0400

Here we go again. In the Washington Post's 'Wonkbook,' Dylan Matthews trumpets the tired old canard that American consumers benefit from the low price of Chinese imports.

Matthews cites a University of Chicago study that tried to estimate how Chinese exports have affected the cost of living for low-income Americans. They found that non-durable goods from China comprise a much bigger share of low-income Americans’ spending than that of wealthier U.S. consumers. Because of this, "from 1994 to 2005, inflation among poor U.S. households grew 6 percentage points slower than among rich households."

Basically, the study is saying that poor America shops at Wal-Mart and CVS. And this is great because those folks can buy low-cost goods there.

It's a great, simple theory. But it also overlooks the overall ramifications of an increased reliance on exports. The wider long-term national cost of our mushrooming trade deficit with China is closed factories, lost jobs, and stagnant wages. In fact, the Economic Policy Institute (EPI) found that the trade deficit with China has cost 2.7 million U.S. jobs, 2001-2011.

On a personal note, I was one of those low-income Americans. When I lost my job in the 2001 recession, I was unemployed for nine months. All I could find in that time was a job at a bookstore. I earned roughly $6.50/hour. After taxes, I was earning roughly $5.35/hour. A typical, non-durable good, like the ones Matthews celebrates, was a regular-sized Speed Stick deodorant. At CVS, it cost $4. So, it was taking me almost one hour to earn the money to buy one household good.

When we lose good-paying jobs, we can’t afford to buy much of any supposed low-cost imports. To me, Matthews blog piece is frustratingly elitist.

One more example: A paper mill worker in Wisconsin is earning $70,000/year, with benefits and healthcare for his family. Thanks to China's massive subsidization of its paper industry, plus its illegal currency manipulation, he loses his job. Now, he's earning hourly wages while working at Wal-Mart or CVS. How does he support his family, pay for healthcare, put his kids through college?

Sorry, Matthews, your viewpoint doesn't hold up in the real world.

The Next Debate: China and Trade Deficit

Dave Johnson — Fri, 19 Oct 2012 14:56:15 -0400

Monday's final campaign debate focuses on foreign policy. Will it focus on our policy of running huge trade deficits with China? Every dollar of trade deficits makes our country a dollar poorer. That trade deficit is the deficit that our Washington elites should be worried about.

The China Trade Deficit

For some reason, when we close a factory here,lay off the workers and ship the equipment to China, and then ship the same goods back here to sell in the same stores, that is called "trade." And when we buy vastly more stuff from China than they buy from us, that is also called "trade."

We have a huge "trade" deficit with China. We sent China $28.7 billion dollars in August alone - $295 billion last year. So in one year we transferred $295 billion of our wealth to China.

The trade deficit not only drains the economy and our jobs, it sends essential pieces of our industrial ecosystems out of the country. And this means that it is sending our ability to make a living in the future out of the country, too.

President Obama is working to double American exports, but imports also continue to rise. The problem here is that even if we double exports we continue to drain our economy if the export increase doesn't catch up to the level of imports.

From Trade Deficit - One Root Of Many Problems,

You buy things till your wallet is empty. So you raid the savings account to buy more stuff. Then you get a loan, and buy more stuff. Another loan, another, you keep buying stuff... Finally you're selling off the tools you had used to make a living. That's where the country is now because of the huge imbalance in our trade relationships. We buy more from them than they buy from us and we have let this go on and on and on. This is the deficit we should be worried about.

Trade Deficit Costs Jobs

From, Report On Job Cost Of Trade Deficit With China,

A new report, The China Toll, takes a look at the effect of our trade deficit with China since that country joined the World Trade Organization (WTO) ten years ago, and comes up with some very specific numbers. In summary:

"Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state"

The Economic Policy Institute (EPI) released the report, The China toll, Thursday.

According to the report,

Between 2001 and 2011, the trade deficit with China eliminated or displaced more than half of all U.S. manufacturing jobs lost over that period. The growing trade deficit with China has cost jobs in every congressional district in all 50 states as well as in the District of Columbia and Puerto Rico.

The total losses include 662,100 jobs from 2008 to 2011 alone—even though imports from China and the rest of the world plunged in 2009 before recovering and surpassing the previous peak reached in 2008. The trade deficit in the computer and electronic parts industry grew the most, displacing more than 1 million jobs in high-tech industries. In fact, rapidly growing imports of computer and electronic parts, including computers, semiconductors and audio-video equipment, accounted for nearly 55 percent of the $217.5 billion increase in the U.S. trade deficit with China between 2001 and 2011.

Again: Half of our manufacturing job loss is lost to the trade deficit with China. ... The trade deficit in the computer and electronic parts industry grew the most, displacing more than 1 million jobs in high-tech industries.

Trade Deficit Makes Workers Afraid

The trade deficit and resulting job loss makes workers afraid, so they work longer hours, skip vacations and accept cuts in wages and benefits, which also hurts the economy. From Job Fear From Trade Deficit Is What Happened To Jobs And The Middle Class,

The middle class is disappearing. Our economy is "hollowing out" because the money goes to the top and the people fall to the bottom. This is because we allow American companies to close factories here and open them there, shipping the same goods back here to sell in the same stores, costing jobs, companies, industries and our economy. This makes us afraid for our own jobs and afraid to make waves. By helping a few at the top get fabulously rich, China has essentially recruited our own businesses leaders to fight against our own government - and us.

Trade Actions

The President has filed several trade complaints against China, including actions involving tires, steel pipes and solar panels. This has made a difference. Just yesterday the WTO found in favor of the United States in a dispute challenging China’s imposition of duties on U.S exports of grain oriented flat-rolled electrical steel (GOES). This ruling ensures that American workers and businesses that make certain types of steel won’t face Chinese retaliatory tariffs.

But these trade actions are just one piece of the big puzzle. Another piece is confronting China's currency manipulation.

The Currency Problem

China manipulates their currency. Because their currency is "weak" goods made there cost as much as 30% less than goods made here, even before you take into account the effect of various Chinese government subsidies and other trade cheating.

There is a bill in Congress to crack down on China's currency manipulation. This is a bipartisan bill that has passed the Senate. In past years this bill has overwhemingly passed in the House, and the current bill has more than 60 Republican co-sponsors.

But that bill cannot get a vote in the House, even with more than 60 Republican co-sponsors. Wall Street's front group The Club For Growth has made the currency bill a litmus test. Politico: Club for Growth warns GOP on China currency bill,

The influential Club for Growth is pressuring Republican presidential candidates and lawmakers to oppose bipartisan legislation cracking down on China’s currency policies.

... The Club for Growth has urged lawmakers to vote no on the bill, warning that the vote will be included in the group’s 2011 Congressional Scorecard, used to measure how fiscally conservative they are.

So Speaker Boehner refuses to bring the bill to the floor for a vote -- because it will pass. And the 60+ Republican co-sponsors in the House refuse to sign a discharge petition that forces the bill to come to the floor for a vote because they fear retaliation from Wall Street.

Romney Says he Will Crack Down On China, Refuses To Actually Crack Down On China

On the campaign trail Mitt Roney says he will crack down on China. He says he will do something about China's currency manipulation on the first day he is in office.

But there is something he will not do: he will not actually crack down on China right now, by pressuring Boehner to bring the currency bill to the floor, or by asking the 60+ Repubican co-sponsors of the bill to sign a discharge petition.

If Romney wants to crack down on China he should crack down on Boehner and House Republicans right now. This needs to be part of Monday's final campaign debate.

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Is This Why Romney Won't Talk To Sensata Workers Whose Jobs Are Being Shipped To China?

Dave Johnson — Wed, 10 Oct 2012 14:17:14 -0400

On the campaign trail Romney says we shouldn't ship jobs to China and should "crack down" on China trade problems. But he refuses to help or even meet with the Sensata workers whose jobs are being shipped to China right now.

Why the refusal to line up his actions with his promises? A must-read, must-read, must-read news report explains how part of Romney's $400,000/week income comes from ... get this ... shipping jobs to China!

First, the background...

Sensata - Happening Today

Mitt Romney started the "private equity" firm Bain Capital. Bain purchases companies using "leveraged buyouts" that borrow huge sums using the purchased company's own assets as collateral, uses the borrowed money to immediately pay itself, then cuts costs by doing things like sending jobs to China, cutting wages and manipulating tax rules to cut taxes owed, along with standard big-business practices like consolidating business units, taking advantage of economies of scale not available to smaller competitors, squeezing distribution channels for price cuts, and other practices that bring competitive advantages. (See So DID Mitt Romney Really "Create Jobs" At Staples?) After reorganizing the purchased companies Bain then "harvests" them for profit.

One company Bain Capital purchased is Sensata, a sensor manufacturer that makes key components for our automobile supply chain. Sensata then announced it is closing a factory in Freeport, Ill., and sending the manufacturing and jobs to China. (China is engaged in efforts to dominate American auto supplies. See China Cheating Costs 400K Auto Parts Jobs and Why The Latest Trade Complaint Against China Matters.)

Bain/Sensata brought in Chinese workers and made the Freeport workers train them. Bain/Sensata is moving the equipment out of the Freeport factory and shipping it to China right now. The Freeport employees have set up a camp outside the factory that they call Bainport and are trying to stop the Bain trucks that are moving the equipment out for shipment to China. Supporters were arrested this week, trying to stop those trucks.

The Sensata employees heard Romney on the campaign trail, and somehow got the idea that he opposes sending our jobs to China. So they asked him to come to Freeport/Bainport and help them. Read on to learn about Romney's response to the Sensata workers, and how Romney is actually making big money right now from shipping their jobs to China.

"The week before they came they took the American flag down outside the plant. The week after they left they put it back up."

The China Problem – The Public Gets It

During the George W. Bush administration we lost more than 50,000 factories and at least 6 million manufacturing jobs directly to China. (Never mind the effect on the supply chains, the grocery and clothing stores where those people shopped, etc... The foreclosures, the bankruptcies, the misery...) Thanks, George!

This chart from Think Progress shows what happened to our manufacturing base immediately after Bush took office. Seriously, look at this chart and see if you can just guess why we have such a terrible economy today:

The public gets it – the problem is China. Polls show that the public overwhelmingly – by percentages in the 80s and 90s for Democrats and Republicans alike – understands that a huge part of our economic troubles come from the was we have been shipping jobs, factories and industries to China.

ABC News, from July: ‘Made In America’ Policies Hugely Popular, Survey Shows

Nearly 9 out of 10 Republicans and Independents and 91 percent of Democrats said they support “Buy America” preferences, according to the survey, which was conducted by the Democratic-leaning Mellman Group.

Another poll,

When it comes to trade with China, the poll found that voters emphatically support tough action on Beijing’s cheating on currency and other trade obligations.

Another, from a key state: New Zogby Poll: Ohio Voters Favor Boycott of China Over Unfair Trade.

Romney Can Read Polls

One thing the Romney campaign can do is read polls. So Mitt Romney sees the polls and says he wants to do something about China.

The Hill: Romney, campaigning in Ohio, vows to stop China's 'cheating' trade practices

Bloomberg: Romney Ad Says He Will `Stand Up to China': Video

The Hill: New Romney ad says Obama won’t ‘stand up to China’ on trade, jobs

So, on the campaign trail Romney says he will stand up to China's cheating, and opposes companies that send jobs and factories to China.

Romney Refuses To Help – Even Talk With – Sensata Workers

Romney wants to be President, and polls show that the public overwhelmingly wants something done about the problem of jobs and factories moving to China, and the resulting was pressure that puts on the rest of us and on our economy. So Romney says he will do something about it.

But Romney's current actions are opposite his current words. He complains about China currency manipulation, but refuses to ask the Republican House leadership to bring the China currency bill up for a vote, and refuses to ask more than 60 Republican co-sponsors of that bill to sign a "discharge petition" that would force a vote.

And Romney refuses to even meet with Sensata workers. When asked if Romney would help these workers the Romney campaign says Romney will not do it:

"Governor Romney has not worked at Bain Capital for over a decade, but for four years President Obama has been presiding over an economy that is creating too few jobs and sending more jobs overseas. Despite the President being invested in Sensata through his personal pension fund, and the government owning a major Sensata customer in GM, President Obama has not used his powers to help this situation in any way."— Curt Cashour, Romney Campaign Spokesman.

Why is Romney saying he wants to do something about the trade problem with China, but refusing to actually do anything about the trade problem with China? Here is one possible reason why.

Romney Making Big Money From Bain Sending Sensata Jobs To China

A must-read news report today by Sharon LaFraniere and Mike McIntire in The New York Times explains. As Romney Repeats Trade Message, Bain Maintains China Ties (emphasis added, for emphasis),

Mr. Romney also has millions invested in a series of Bain funds that have a controlling stake in Sensata Technologies, a manufacturer of sensors and controls for vehicles, aircraft and electric motors that employs 4,000 workers in China. Since Bain took over the operation in 2006, its investment has quadrupled in value. Bain continues to own $2.6 billion worth of Sensata’s shares.

Two years ago, Sensata bought an operation that made automobile sensors in Freeport, Ill. At the first meeting with the plant’s 170 workers, Sensata managers announced that by the end of 2012 all the equipment and jobs would be relocated, mostly to Jiangsu Province. Workers have staged demonstrations, pleading for Mr. Romney to intervene on their behalf.

Chinese engineers, flown to Freeport for training on the equipment, described their salaries as a pittance compared with Freeport wages. Tom Gaulrapp, who has operated machines at the factory for 33 years, said he fears he will go bankrupt after he loses his job on Nov. 5.

“This goes to show the unbelievable hypocrisy of this man,” he said of Mr. Romney. “He talks about how we need to get tough on China and stop China from taking our jobs, and then he is making money off shipping our jobs there.”

So there you have it. Mitt Romney says he opposes sending jobs to China, and says he will "crack down" on China. But he refuses to do things that he could do right now that would make an actual difference right now. And it turns out that right now he is making big money from Sensata and other companies that are sending people's jobs to China right now.

Laying off American workers – usually shipping the jobs to China – and pocketing their wages for themselves is the story of the rise of the wealth of the 1%, and the decline of the American middle class. It is the Romney/Bain/Sensata business model. And the remaining workers have to do the jobs of the laid-off workers, often for lower pay, and are threatened with losing their jobs, too, if they don't like it.

Please read the entire New York Times report, As Romney Repeats Trade Message, Bain Maintains China Ties. There is much more there about Romney, China, Bain and the huge gap between what Romney says on the campaign trail, and how Romney made his current $400,000/week income and how Bain Capital still makes its money.

Visit the Bainport blog for pictures and details about the Sensata workers who are trying to stop the Bain trucks from shipping the equipment from the factory to China.

More On Sensata

You Should Know About Sensata - It's What The Election Is About

Election Or Not, What Happens To Sensata-Style Workers?

Blocking Bain Trucks To Save Jobs In Freeport – This Is An IMPORTANT Story

Breaking – Arrests At Sensata "Bainport" Camp

Also, see:

Bain Of Our Existence - Go-To place for stories and info about Bain Capital.

Unraveling The Romney/Bain Tax Story,

Romney, Jobs And China – Let's Connect Dots

Rights Report Describes Romney-Owned "Brutal Chinese Sweatshop"

Romney, Republicans Again Side With China Over US Companies

Ohio And China – One Side Promises While The Other Delivers

Update: Here is a Democracy Now! report:

So DO Tax Cuts Create Jobs?

Dave Johnson — Fri, 05 Oct 2012 00:27:10 -0400

In Wednesday's debate Mitt Romney repeated his claim that cutting individual and corporate income taxes creates jobs. But when you look at what actually happened, the periods when we had the highest tax rates were the periods we had the greatest job and economic growth. And the periods with lower taxes had lower job and economic growth. (And we all know what happened in the Bush years...)

Here is Romney at Wednesday's debate,

"54 percent of America's workers work in businesses that are taxed not at the corporate tax rate, but at the individual tax rate. And if we lower that rate, they will be able to hire more people. For me, this is about jobs. This is about getting jobs for the American people."

and,

"The problem with raising taxes is that it slows down the rate of growth. And you could never quite get the job done. I want to lower spending and encourage economic growth at the same time."

So DO tax cuts for rich people and already-profitable businesses create jobs? DO businesses hire people when they have extra money? When few customers are coming through the door will tax cuts cause businesses to hire people to sit around reading newspapers or checking Twitter?

I think that people with jobs have money to spend and then the businesses that get their business will hire people, and will make money and be happy they have profits to pay taxes on. And I think that the numbers -- and charts that help us visualize those numbers -- back me up. Here are some of those numbers.

Michael Linden at Center for American Progress took a look at tax rates and job creation, in Rich People’s Taxes Have Little to Do with Job Creation, Conservative Arguments that Higher Income Taxes for the Wealthy Hurt Employment Don’t Hold Up to Scrutiny,

... in years when the top marginal rate was more than 90 percent, the average annual growth in total payroll employment was 2 percent. In years when the top marginal rate was 35 percent or less—which it is now—employment grew by an average of just 0.4 percent.

And there’s no cherry-picking here. Pick any threshold. When the marginal tax rate was 50 percent or above, annual employment growth averaged 2.3 percent, and when the rate was under 50, growth was half that.

In fact, if you ranked each year since 1950 by overall job growth, the top five years would all boast marginal tax rates at 70 percent or higher. The top 10 years would share marginal tax rates at 50 percent or higher. The two worst years, on the other hand, were 2008 and 2009, when the top marginal tax rate was 35 percent. In the 13 years that the top marginal tax rate has been at its current level or lower, only one year even cracks the top 20 in overall job creation.

OK, got that? The periods of highest job growth correspond to the periods of highest tax rates on the wealthy. 70% top tax rates. 90% top tax rates. Maybe this is because that money gets used to build roads and bridges and buildings and ports and dams and the things that make our economy more efficient and competitive. And maybe because the years of low tax rates are the years of government cutbacks because there isn't enough revenue coming in -- infrastructure not maintained, education budgets cut, etc.

What do tax rates do to economic growth? Romney says raising taxes hurts the economy. Is that what happens?

Michael Linden looked at what happens with taxes and GDP growth, in The Myth of the Lower Marginal Tax Rates, Conservatives’ Go-To Growth Solution Doesn’t Hold Up (I'll spare you the blow-up photo of Speaker Boehner's face),

The top marginal income tax rate has ranged all the way from 92 percent down to 28 percent over the last 60 years. With such a large range, it should be easy to see the enormous impact of lower rates on overall economic growth, as conservatives routinely claim. Years with lower marginal rates should boast higher growth, right?

That’s definitely not what happened. In fact, growth was actually fastest in years with relatively high top marginal tax rates. Back in the 1950s, when the top marginal tax rate was more than 90 percent, real annual growth averaged more than 4 percent. During the last eight years, when the top marginal rate was just 35 percent, real growth was less than half that.

Altogether, in years when the top marginal rate was lower than 39.6 percent—the top rate during the 1990s—annual real growth averaged 2.1 percent. In years when the rate was 39.6 percent or higher, real growth averaged 3.8 percent. The pattern is the same regardless of threshold. Take 50 percent, for example. Growth in years when the tax rate was less than 50 percent averaged 2.7 percent. In years with tax rates at or more than 50 percent, growth was 3.7 percent.

These numbers do not mean that higher rates necessarily lead to higher growth. But the central tenet of modern conservative economics is that a lower top marginal tax rate will result in more growth, and these numbers do show conclusively that history has not been kind to that theory.

Zaid Jilani at CAP's Think Progress also takes a look, in Top Reagan Economic Advisor: Return To Clinton-Era Tax Rates Would Not Hurt Economic Growth,

Historically, the United States has actually had some of its strongest periods of economic growth while taxes were high. As this graph from Slate shows, some of our strongest periods of growth in gross domestic product actually occured while taxes were very high:

In the 1950s, which had one of the sharpest periods of economic growth in all of American economic history, the top marginal tax rates for the richest Americans stretched above 90 percent. Likewise, economic growth in the relatively higher-taxed 1990s was much stronger than in the 2000s. This isn’t to say that higher taxes necessarily cause greater economic growth, but it does seem to show that higher taxes do not appear necessarily to be impeding job growth, nor are lower taxes especially helpful.

OK, did you see those charts? Not only do high taxes on the rich not impede growth, but growth looks to be higher when taxes are higher. Maybe this is because higher taxes on the rich means that the government -- We, the People -- has more to spend on the things that make our economy more efficient and competitive like schools, roads, bridges, transit systems, courthouses, judges, etc...

And, again, the periods of low taxes are the periods of government cutbacks ...

David Leonhardt at the NY Times looks at recent numbers, in Do Tax Cuts Lead to Economic Growth?

President George W. Bush and Congress, including Mr. Ryan, passed a large tax cut in 2001, sped up its implementation in 2003 and predicted that prosperity would follow.

The economic growth that actually followed — indeed, the whole history of the last 20 years — offers one of the most serious challenges to modern conservatism. Bill Clinton and the elder George Bush both raised taxes in the early 1990s, and conservatives predicted disaster. Instead, the economy boomed, and incomes grew at their fastest pace since the 1960s. Then came the younger Mr. Bush, the tax cuts, the disappointing expansion and the worst downturn since the Depression.

(Click that graphic for larger)

Whoa, did you see what happened after Bush cut taxes for the rich? Do you remember what happened after Bill Clinton got taxes increased on the rich?

My own 2010 post, Did The Rich Cause The Deficit? included this chart, (The red line is the tax rates, the blue is growth and the red arrow shows the trend.

But, from that post, one thing that cutting taxes on the rich obviously does cause is deficits:

And deficits cause government to cut back, cut infrastructure projects, cut the things government -- We, the People - does for We, the People. And the economy slows...

The real job creators are working people with money in their wallets.

Tax the rich, use the money to modernize our infrastructure and help regular working people. Build roads, schools, bridges, ports, airports, dams, courthouses, wind farms, water systems, high-speed rail, municipal transit systems, all the things that make our economy efficient and competitive...

(PS I also came across a chart showing that lowering capital gains rates correlates with lower, not higher, economic growth. But somehow we knew that would be the case...)

Election Or Not, What Happens To Sensata-Style Workers?

Dave Johnson — Thu, 27 Sep 2012 14:48:46 -0400

A group of workers whose jobs are being outsourced to China is touring the "rust belt." They are trying to make an election point. But what about the day after the election?

Sensata Workers - More Jobs Going To China

Two weeks ago I wrote about the workers at the Sensata factory, You Should Know About Sensata - It's What The Election Is About,

Workers facing outsourcing by Bain Capital are camping outside the Sensata factory in Freeport, Ill. They are asking Mitt Romney to show up and help save their jobs. They say they will stay camped there until Romney shows up and stands with them – or with Bain.

Mitt Romney can can use this to show us if he wants to be president of the whole United States, or just president of, by and for the outsourcing 1 percenters.

All Mitt has to do is show up and help these workers. He says he is not part of Bain, and wants to be President of all of the country. Mitt Romney can can use this to show us if he wants to be president of the whole United States, or just president of, by and for the outsourcing 1 percenters. He could - and should - do that.

The Bain Workers Bus Tour

Workers from Sensata have left Missouri and are stopping in are stopping in Iowa, Wisconsin, Michigan, Ohio, Pennsylvania, Virginia, Florida, the presidential debate in Hempstead, NY -- and are (eventually) heading toward Boston where both Bain Capital and the Romney headquarters are located.They want Romney and Bain to ask them not to send their jobs to China. You can read about their progress at BainWorkerBus.com.

The thing is, these workers might be at this plant, run by this company, but there are millions of workers - millions - in the same boat. Or whose jobs have left or are leaving on the same boat, anyway.

The Chart That Says It All

It is more than just these Sensata workers -- they are a symbol of the damage that our terrible "trade" policies have done and are doing to our country. A company can just close a factory here, open it there, bring the same stuff back to sell in the same stores here and call that "trade?" And they can get tax breaks for doing that? They can use the threat of doing that to bust unions and cut our wages? Polls show that We, the People overwhelmingly want this changed, yet it doesn't change.

Look at the chart in this post at Think Progress: After Nearly A Decade Of Declines, Manufacturing Jobs Begin Rebound. It shows what happened to our manufacturing base literally immediately after George 'W' Bush took office. Seriously. Look at this chart and see if you can just guess why we have such a terrible economy today.

During the Bush administration we lost more than 50,000 factories and at least 6 million manufacturing jobs directly to China. (Never mind the effect on the supply chains, the grocery and clothing stores where those people shopped, etc... The foreclosures, the bankruptcies, the misery...) We have a huge trade deficit with China -- money that we send to China and then complain that there is not enough money to do things here.

Imagine how our economy would be doing if we had actual trade with China, where we buy things from them and they buy just as many things from us?

After The Election

After the election the country is going to be diverted into a battle over how much more damage we can do to ourselves. Instead of addressing the trade deficit -- the cause of our budget and jobs deficit -- our plutocrat-funded elites are going to play a Shock Doctrine game of whipping up hysteria about the budget deficit. They are going to terrify the public about "the fiscal cliff" that occurs when the Bush tax cuts expire, and when the deal that put off the hostage-taking over the debt ceiling cuts the military budget, and then the safety net.

Instead of addressing jobs and inequality and wage stagnation and trade and climate and crumbling infrastructure and manufacturing policy and, and, and, they are going to all try to outdo each other offering ways to cut the things that We, the People do for each other -- all to keep taxes low for the super-wealthy. Some call this the "Grand Bargain" where they offer up austerity -- working so well in Europe -- instead of jobs.

Bob Borosage wrote about an alternative approach. Since Jobs Fix Deficits, let's wait on attacking the budget deficit until there are enough jobs. He calls this a "Jobs Trigger" - enough jobs triggers the time to cut the deficit. From Good Jobs First: No Grand Bargain Without A Jobs Trigger,

Poll after poll shows that voters are concerned most of all about jobs and the economy. Yet in Washington and on the campaign trail, attention has turned to deficits and how to get our books in order.

[. . .] The presidential candidates and Congress should be pressed to adopt a budget version of the “jobs trigger.” Putting people back to work is the first step to getting our books in order. So Congress should pass a fiscal trigger as part of any grand bargain: Comprehensive deficit reduction measures will kick in only when the economy is moving, and unemployment comes down to 5 percent or so.

Please go read the whole post, We must all demand a jobs trigger after the election. Jobs first, then fix the deficits.

And to fix jobs, we have to fix "trade." We have to stop this idea that it is OK to close a factory here, open it there, then send the same goods back here to sell in the same stores, and use the threat of doing that to even more of us to force wage and benefit cuts, bust unions, etc.

Romney's Perfect Example of the Republican Strategy of Economic Sabotage

Brian Dockstader — Thu, 20 Sep 2012 13:00:18 -0400

For a long time — basically ever since Senate Minority Leader Mitch McConnell infamously stated that the Republican Party's #1 goal was to defeat President Obama — it has been plainly obvious that the Republican Party was committed to a strategy of economic sabotage to further their political ambitions.

The rationale is simple: The worse the state of the economy, the higher the unemployment rate, the worse President Obama's chances for reelection become. Thus their sabotage strategy: Make sure the economy doesn't recover. Make sure the unemployment rate stays high. Oppose all attempts to create jobs. Kill jobs that have already been created. Turn the public against Obama. Win back the White House and Congress.

Like I said, this has been their transparent plan from the very beginning. Anyone who doesn't think this is the game plan is either disingenuous or blind. And in case you had any doubts, the Romney campaign just laid this strategy out in the most blatant way possible.

First, a little background. You've hopefully heard about something called the "wind production tax credit" (PTC) that is going to expire at the end of the year, unless Congress acts. The tax credit is important because it helps level the energy playing field relative to fossil fuels (a game that is stacked greatly against renewable energy, as I noted here). It also helps create market certainty, which stimulates investment, which stimulates the economy, which creates JOBS (to say nothing of the innumerable other other reasons renewable energy is important, including environmental, public health, national security, etc). But let's focus on the jobs, because that's what the Republican Party is against (refer back to the Grand Strategy to Defeat Obama).

So the PTC is set to expire, and the wind industry has warned that this will destroy 37,000 American jobs. Even Republicans in pro-wind states like Iowa have come out in favor of the PTC, because it doesn't help them politically to sabotage their own local economies. At the national level, however, renewable energy is being demonized by the Republican Party, and Mitt Romney has called for the elimination of the PTC (and all renewable energy incentives that might help clean energy compete with fossil fuels--the GOP's big money corporate donors).

Now, the PTC is about to expire. If the PTC expires, 37,000 jobs will be lost. Thus Romney/Republicans oppose the PTC because they believe a bad economy is good politics for them. Now, as predicted, the possible expiration of the PTC is causing market uncertainty and leading to layoffs in the wind industry. Siemens, a wind turbine manufacturer, just announced that they were being forced to cut 38% of their U.S. workforce due to this political stunt over the PTC (and these aren't the first layoffs caused by these political games). Cue Romney's press release (emphasis mine):

Today’s layoffs at Siemens are yet another unfortunate reminder of the Obama Economy where American families have suffered from chronic unemployment, increased poverty and falling incomes. There is a fundamental disconnect between President Obama’s philosophy of the need for redistribution of wealth and the free market economy which our country was founded on. President Obama has focused on attacking the success of others rather than applauding their accomplishments and urging others to strive for similar success. Mitt Romney’s plan for a stronger middle class will foster the dignity of work, champion innovation, generate new wealth, and create 12 million new jobs in his first term alone in a variety of sectors, including wind.

It doesn't get any more simple than that. Romney knows he is advocating a policy that is killing wind jobs (even Republicans have told him this). Then, when these layoffs start happening, he immediately tries to politicize it by attacking President Obama's policies, even though President Obama wants to extend the PTC and create more clean energy jobs.

And there you have it, yet another blatant example of the Republican strategy of economic sabotage in action. Hurt the economy, blame Obama, hope the voters don't notice the sabotage. And why would they? It isn't like the media is going to point out the hypocrisy or the shocking underhandedness of this whole strategy, even though it deserves to be front page news.

Obama, Yes. And Win the House Too.

Roger Hickey — Sun, 09 Sep 2012 18:37:57 -0400

President Obama is enjoying a post-convention bump in job approval (Gallup says 7 percentage points – from 45 to 52 percent) after the negative and divisive Republican convention, followed by the energetic populism of the Democrats in Charlotte. With large leads among women and people of color, and the stark contrast on economic issues building movement toward Obama even among white males in key states, the prospects for Obama winning a second term are starting to look pretty good.

But what about the House? Prospects for Democrats keeping the Senate are looking better, but if the House of Representatives stays in Republican hands, even if President Obama is re-elected his second term will be crippled. Obama can still name good Supreme Court justices, and he can veto terrible legislation – both good reasons to vote for him – but, in the face of Republican obstructionism, he will be virtually powerless to pass economic recovery laws aimed at creating jobs and getting the economy growing and not shrinking.

Obama has repeatedly told voters they have the opportunity to "break the current stalemate in Washington between two fundamentally different ideas on how to create strong, sustained economic growth," – as he said in Cleveland on June 14. A few days later he told a campaign crowd, "What's holding us back is a stalemate in Washington between two fundamentally different visions on which direction we should go, and this election is your chance to break that stalemate."

Obama is right, of course, but only if the voters reelect him AND sweep into office at least 25 Democrats to seats now held by Republicans. You didn't hear much about taking back the House as a goal of Democrats at the Charlotte convention – an indication that they don't want to look like failures if they fall short. But for the same reasons Obama now looks like a winner, Democrats and independent activists now have the possibility of "nationalizing" contests for the House and turning this election into an historic wave election that can truly "break the stalemate" and put the nation on a course of decisive change. How do we do that?

1. Tell voters Republican economics won't just fail--they will kill jobs and plunge us back into recession.
Too many Democrats describe the Mitt Romney-Paul Ryan-Republican economic plans as taking us back to "the failed Bush policies." But they are much worse than that – because they would not only cut taxes for the rich, THEY WOULD KILL JOBS AND PUSH AMERICA BACK INTO RECESSION. Republican candidates Romney and Ryan (and every House member who voted for the Ryan budget) would cut public spending so drastically they would destroy our struggling recovery and throw millions more Americans onto the unemployment rolls. Republicans have voted repeatedly for this kind of European-style austerity. Democratic challengers should call them what they are: job killers. And challenge incumbent Republican Members of Congress to repudiate their votes for the Ryan budget.

2. Oppose outrageously unfair tax cuts for the wealthy.
House Republicans think making the Bush tax cuts for millionaires permanent is very popular with voters – but they are very wrong. All but four House Republicans voted for the Ryan budget containing these tax provisions. Many of them were committing political suicide – if Democrats take them on. Every tax provision in the Ryan budget is wildly unpopular in the minds of the majority of voters who reject the idea of more tax cuts for the super-rich. A June 2012 Peter Hart and Associates poll of likely voters for Americans for Tax Fairness found:

72 percent favor increasing tax rates on household income above $250,000 (rolling back the Bush tax cuts).
68 percent favor ending tax breaks for corporations shipping jobs overseas.
64 percent want to ensure large corporations pay their fair share of taxes.
And 46 percent want to end the low (capital gains) tax rate on income from stocks and bonds.

The take-away: Americans hate the idea of tax cuts for the wealthy – on fairness grounds alone. But Republicans claim tax cuts for the rich are the best way they will create jobs, so the unpopularity of their tax plan (if we expose it) undercuts the entire GOP (so-called) jobs and growth plan as well.

3. Stand up for Social Security, Medicare and Medicaid – and expose all GOP incumbents who have voted to destroy those popular programs.
A large number of House Republicans are on record calling for cuts to Social Security benefits or increases in the retirement age. And many support the kind of privatization of Social Security that Ryan called for in his 2010 Roadmap for America's Future, embraced by most of the House Republican caucus. If Democratic challengers are bold enough to declare opposition to Social Security benefit cuts and attack the idea of privatization, they will find they can put their Republican opponents on the defensive, as these damaging changes to America's most important retirement program are unpopular, even to members of the Tea Party.

All but four House Republican incumbents voted for the 2012 Ryan budget, which passed the House only to be defeated in the Senate. Denounced by the U.S. Catholic bishops for its very large cuts to programs aimed at reducing poverty, including Medicaid, the Ryan budget was described by the bishops as "failing to meet the moral test." And the "Nuns on the Bus" have been touring the country, rallying voters against Medicaid cuts.

The Ryan budget would also turn Medicare into a voucher system, which would cost seniors a larger and larger portion of their incomes, as the value of vouchers fail to keep up with the cost of health care. And it would force older Americans to deal with a confusing array of private insurance plans in their retirement years. This Medicare voucher plan, embraced by Romney, is very, very unpopular with seniors and Americans of all ages. Aggressive defense of Medicare by Democratic challengers can turn many a contest into an upset.

For those who doubt Dems can win in tough races, consider the 2011 special election victory of Rep Kathy Hochul, a Democrat running in Jack Kemp's old upstate district, New York 26 – which hadn't elected a Democrat in four decades. A Washington Post article attributed her victory to her opposition to the "House Republicans' budget plan authored by Wisconsin Rep. Paul Ryan – and, in particular, his proposal to turn Medicare into a voucher program." Hochul's winning message could win almost anywhere this year: "I won't to let them cut Social Security benefits and end Medicare as we know it while giving more tax cuts to the rich." That was, and is, a winning message. Add a plan for jobs, and your opponent is on the ropes by Election Day.

4. Fight for JOBS FIRST--and go after every incumbent who opposed Obama's American Jobs Act.
Republicans won the House in 2010 by pointing to high unemployment and charging the Democratic economic program had failed. At that point Democrats had no new jobs plan to run on. A year ago, President Obama stopped talking about deficit reduction and put the American Jobs Act on the table. Every Democrat running for a House seat this year can accuse the Republican incumbent of blocking that jobs plan, which independent experts have estimated would have produced 1.9 million jobs by rebuilding America's infrastructure and schools and helping states hire, not lay off, teachers and cops and firefighters. Democrats need to campaign as a party with a popular plan to put people to work, grow the economy, and get the private sector growing faster. And it would be great if President Obama would campaign a little bit more like Harry Truman, denouncing Republicans in the House (what Truman called the "do nothing Republicans") for their obstructionism in blocking passage of his jobs bill.

Democratic candidates for the House also need remind voters that the (Romney-Ryan) Republican plan to slash public spending will kill jobs and throw the US back into recession – just as similar radical austerity regimes in Britain and Ireland and Spain and other European countries have caused recession to sweep the continent. We have to expose the Republicans' post-election plans to cut taxes for the wealthy (which won't stimulate the economy) and their plans to slash public investment, which will kill economic growth and increase joblessness.
While acknowledging that we have to get deficits under control in the long term, Democrats must insist that America's first priority must be to get unemployment down and economic growth up. And that means getting voters educated and alerted to Republican plans to impose draconian austerity if they manage to keep the House. In the next 60 days, Democrats must be the champions of full-employment, and get the voters to see Republicans as the job killers that they are.

5. Charge up the Democratic base voters--and give them a reason to get out and vote.
The spectacle of Republicans in Tampa attacking women, welfare-baiting minorities, and doubling-down on tax cuts for the rich has fired up Democratic base voters – even among progressives, who may have problems with Obama, but who know letting Romney and a Republican Congress run the country would be a disaster. The Charlotte convention helped as well: showing off Democrats as both diverse and united – and fighting for a much more progressive vision of our economic future.

President Obama is right when he says this election offers us the opportunity to "break the current stalemate in Washington between two fundamentally different ideas on how to create strong, sustained economic growth." But we all have to work to get him to go beyond a pitch for his own re-election. He should ask voters to "send to Washington a new group of Congressional leaders who will work with me to break that stalemate." As he gets more confident in his own re-election, I hope we can get him to call for throwing out the obstructionists.

However, as we've learned, we can't wait for Obama. It's our country, and we need to save it. So it's our job to get to work in every Congressional district that might produce that swing of 25 seats. We've got to teach the Democratic candidates how to campaign – against the Romney-Ryan job-killing plan, for Social Security, Medicare and Medicaid, against unfair tax cuts for the wealthy, and for the Democratic plan for jobs.

As I write this, MoveOn is sending around Nate Silver's new analysis in the NY Times that finds "Obama's chance of victory would be an amazing 91% if everyone who's registered actually votes this year." MoveOn asks for your contribution to raise $600,000 this week to create (with the AFL-CIO's Workers' Voice) the largest independent get-out-the-vote operation in the country. This kind of thing is doable, and you can contribute here, because getting out the Democratic base vote – and giving them good reasons to vote – is going to be crucial in the next two months.

Here's another encouraging sign: Political scientists Jacob Hacker and Nate Loewentheil recently published a paper that summarizes in accessible (and non-political) language, the first four points above. After a blogger conference call to discuss A New Strategy for Prosperity, the legendary Digby and colleagues got the document to progressive House candidates they are supporting, and 16 of them have endorsed the ideas and are running under the banner of Americans for Real Prosperity.

The old optimism from 2008 is coming back – tempered by the realities of the last four years. We should all work for the re-election of Barack Obama, but we should also work to make sure he has a Congress that can help him carry out the big changes that America needs. And we've got to make sure that after the election there is a powerful progressive movement pushing President Obama and the new Congress to do what needs to be done.

It's Not About the Food Stamps; It's About a Job At a Living Wage

Joseph M. Firestone — Sat, 08 Sep 2012 13:44:52 -0400

Got this in an e-mail from my brother, Hal:

“June food stamp Recipients Hit All Time High As Three Times As Many Americans Enter Poverty As Find Jobs, bringing the total to a new all time high of 46.670 million and once again rising fast.”

This headline, circulating via e-mail, seems to be picked up from Zero Hedge by merging the title of one its posts with a phrase from the body of the blog post. The way it's constructed can easily be misinterpreted as suggesting that 46.670 million are now receiving Food Stamp assistance. But actually that's the BLS number for the number of people in poverty. The Food Stamp number is 22.4 million households.

Apart from wondering about the accuracy of the headline being circulated, and noting the sky is falling tone of the whole thing, I had the following brief reaction.

Those Republican bastards want to cut food stamps as part of their continuing program to make the middle class poor and get the poor people to die quickly (h/t Alan Grayson of course).

But, the Government safety net including Food Stamps is the bread and butter of people who have fallen on hard times; and there's only one primary reason for unemployment: there aren't enough jobs.

You want to get rid of unemployment? Then, quit yer complaining about the Food Stamps and make the jobs!

Doesn't matter if they're public or private: who gives a shit besides neo-liberal, Ayn Randian ideologists?

The only thing that matters is that people who want them get jobs at a LIVING wage, which means: Make sure those new jobs aren't at Walmart or McDonald's!

And, yeah, we can afford it!

(Cross-posted from Correntewire.com.)