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NEWS ARCHIVE - OPINION FROM THE LEFT

Austerity Movement Dooms the Nation to Failure: Hale "Bonddad" Stewart

Wednesday, July 21, 2010

Cutting back on government spending to reduce the deficit is wrongheaded, argues Hale “Bonddad” Stewart at FiveThirtyEight. Stewart says economic austerity plans have proven to be a bad idea in Europe, where the results have been high unemployment and stagnant growth. The U.S. deficit has doubled since 2001 because the government cut taxes but did not cut spending.

Stewart points to the Baltic States and Ireland as examples of the misguided approach to slashing their budgets without indulging in stimulus spending. Latvia endured an 18% reduction in its economy, and even after things stabilized, “wages have plummeted while unemployment has rocketed, with more than a fifth of the Latvian labour force out of work.”

In Ireland, the government cut public spending and raised taxes. The consequences were a 7.1% drop in economic growth and unemployment hovering above 13%, with long-term joblessness having doubled to 5.3%.

Stewart concludes that “the policy of austerity is an abject failure” and that “Countries that inject massive amounts of the proper stimulus (such as infrastructure spending) grow at high rates.”

-Noel Brinkerhoff, David Wallechinsky

The Stupidity and Hypocrisy of the Austerity Movement (by Hale “Bonddad” Stewart, FiveThirtyEight)

Obama More like Reagan than FDR: Bob Samuels
Thursday, July 15, 2010
	Conservatives can rail all they want about the liberalism of President Barack Obama, but the truth is the man in the White House is much more like GOP idol Ronald Reagan than Democratic icon Franklin Roosevelt, says Bob Samuels, president of the University Council—AFT, the union governing body that represents lecturers and librarians employed by the University of California system. Obama’s “underlying philosophy” is based on four elements of the Republican revolution of 1980: “distrusting the government, cutting taxes, idealizing free markets, and expanding the military budget.” For instance, his health care overall does not follow the European model of regulating costs and profits. Instead, it “lets the insurance companies, pharmaceutical corporations, and medical institutions continue to establish their own free market approach to pricing and compensation.” When it comes to Wall Street, Obama has utilized a “combination of free market fundamentalism and an anti-government rejection of regulation.” But the most Reagan-like behavior Obama has displayed is with the military. He has been willing to support huge increases for the Department of Defense and risk a ballooning of the national deficit. “Like Reagan, Obama has indicated that he will reduce everything except the defense budget, and this strategy will result in the need to cut relatively inexpensive social programs, while costly military projects continue to expand,” writes Samuels. -Noel Brinkerhoff Obama More like Reagan than FDR (by Bob Samuels, Huffington Post)

Make Goldman Sachs Give Back $13 Billion to the American People: Cenk Uygur
Tuesday, May 25, 2010
	The mess that Wall Street made of itself two years ago wasn’t as complicated to understand as you might think, writes Cenk Uygur, host of The Young Turks, a daily web television talk show. A lot of the trouble was caused by side bets—high-stakes gambling that some securities would succeed or fail. Those banks and firms that bet wrong, and lost, ended up getting bailed out by the federal government. What really bothers Uygur is that many of those rescued weren’t much different than bookies, and since when were bookies considered vital to the health of the American economy? Especially troubling were the bailouts to AIG’s partners, such as Goldman Sachs, which received nearly $13 billion for its stakes in the insurance giant that nearly crashed to earth. Goldman hedged its investments in risky mortgages and other securities by taking out the equivalent of failure insurance with AIG. When so many of these investments did in fact fail, AIG didn’t have the money to pay off, so the federal government covered their losses and paid off Goldman Sachs and others. “That’s all taxpayer money,” says Uygur. “All of it went to Goldman for some silly bet they made with a buffoonish company that never had the money in the first place. As ‘sophisticated investors’ they should have realized that AIG never really had the cash to pay them.” That’s why Uygur wants Goldman to pay back $12.9 billion to the U.S. Treasury. He’s urging Americans to sign a petition calling for Treasury Secretary Timothy Geithner to go after Goldman and get the money back. Those interested in the cause can also partake in a protest scheduled for June 7 outside the Treasury building in Washington, DC. -Noel Brinkerhoff Ask Goldman Sachs to Give it Back! (by Cenk Uygur, Young Turks)

Greed vs. Regulation: Robert Reich
Sunday, May 09, 2010
	Some of the highest profile business disasters in recent history have been driven by greed, demonstrating how important it is to usher in a new era of government regulation, argues Robert Reich, formerly of the Clinton administration and now a professor at the University of California, Berkeley. BP, whose oil rig is polluting the Gulf of Mexico, Massey Energy, whose West Virginia mine killed 29 workers, and Goldman Sachs, whose stock market schemes helped bring about the 2008 financial crisis, were all involved in “massive plunder.” The push by their shareholders to earn bigger and bigger profits spurred reckless decisions by executives whose income is linked to stock market performance, but the companies also benefited from three decades of deregulation in Washington that spanned both Democratic and Republican administrations. “After thirty years of deregulation, it’s time for the rebirth of regulation: Not heavy-handed and unnecessarily costly regulation, but regulation that’s up to the task of protecting the public from companies and executives that will do almost anything to make a buck,” writes Reich. -Noel Brinkerhoff The Rebirth of Regulation (by Robert Reich)

Why Does the U.S. Spend $1 Trillion a Year to Fight an Enemy with No Ships, Warplanes or Tanks?: George C. Wilson
Monday, April 26, 2010
	The United States spends more than $1 trillion a year on national defense, argues George C. Wilson of Congress Daily—an amount that seems ridiculous considering the nature of the enemy. Total spending on America’s security goes far beyond the Department of Defense’s yearly budget, currently at about $550 billion. There also is the $160 billion for the wars in Iraq and Afghanistan; $122 billion for the Department of Veterans Affairs; $65.3 billion for defense-related international affairs;; $43.6 billion for the Department of Homeland Security; $26 billion on defense-related expenses by the Department of the Treasury; nearly $19 billion spent by the Department of Energy for nuclear weaponry; $7.6 billion on miscellaneous accounts related to the common defense; and $53.4 billion for just the interest on the Pentagon’s healthcare fund and defense portion of the national debt. All told, the U.S. “is spending more than $1 trillion a year on national defense despite fighting only two little wars against enemies with no ships, warplanes or tanks,” writes Wilson. -Noel Brinkerhoff Rational Defense (by George C. Wilson, Congress Daily)

5 Amendments for True Financial Reform: Zach Carter
Saturday, April 24, 2010
	Legislation that proponents claim will reform the financial industry will fall far short of this goal, writes Zach Carter, economics editor for AlterNet and fellow at the Campaign for America’s Future. Instead, Carter has highlighted five amendments that various members of Congress have proposed for fixing the Wall Street reform bill. First, Congress should adopt the Brown-Kaufman Amendment, which would shrink the size of behemoth institutions like Bank of America by capping their liabilities at 2% of the country’s gross domestic product (BofA is currently at 7%). “Too big to fail” has got to go, Carter argues. Second, adopt the Jack Reed Amendment. The reform plan first proposed by President Barack Obama included creating a new Consumer Financial Protection Agency. But Senate banking committee chair Christopher Dodd gutted this provision to win over Republican votes. Carter insists the country needs the new agency. “A vote against the Reed bill is a vote in favor of the banking industry’s right to pillage your pocketbook,” he says. Third, approve the Cantwell-McCain Amendment, which would reinstate the Glass-Steagall Act, which for more than 65 years prevented financial institutions from being both commercial and investment banks. It’s not a coincidence that the banking crisis followed only a few years after Glass-Steagall was repealed in 1999. Fourth, pass Blanche Lincoln’s Derivatives Bill, which would ban banks from dealing in derivatives and force derivatives to be traded on open exchanges. And fifth, pass the Bernie Sanders Amendment, the proposed Senate version of a bipartisan House bill that would give the Government Accountability Office the power to audit the Federal Reserve. “It’s our money,” Carter writes. “We deserve to know where it’s going.” -Noel Brinkerhoff Five Ways the Wall St. Reform Bill Needs to Be Fixed (by Zach Carter, AlterNet) 10-Year Anniversary of the Bill That Led to the Current Economic Crisis(by Noel Brinkerhoff and David Wallechinsky, AllGov) Bill to Audit Federal Reserve Moves Forward (by Noel Brinkerhoff, AllGov)

Replace Corporate Income Tax with VAT: Fritz Hollings
Friday, April 23, 2010
	Former U.S. Senator Fritz Hollings of South Carolina has taken exception with the Senate’s recent decision to reject the imposition of a valued added tax (VAT). Hollings, a conservative Democrat, believes a VAT should be used to replace the corporate income tax in order to raise revenues and boost American exports. Hollings points out that the Senate resolution only related to imposing a VAT in addition to current taxes. Hollings argues for a 5% VAT, of which 2% would go towards replacing corporate income taxes, 1% would help cover health care reform and the remaining 2% would pay down trillion dollar deficits. A VAT would be “politician’s dream,” according to Hollings, because it would result in raising revenues and cutting taxes. “The 5% VAT is a winner for the poor, the middle-class, and the rich, and it is absolutely necessary in the trade war,” he writes. -Noel Brinkerhoff Replace the Corporate Income Tax! (by Fritz Hollings, Huffington Post)

Time to Take a Closer Look at the Work Progress Administration: Mike Elk
Sunday, April 11, 2010
	Now is the time to revisit the New Deal’s Work Progress Administration (WPA), which was created 75 years ago, writes Mike Elk at Campaign for America’s Future. The WPA provided more than three million jobs for a struggling economy in the 1930s, giving good reason to examine the lessons learned from the historic program. “First, we learned that after the private sector suffers a major shock to the system, it can’t quickly recover on its own. Government must step in,” argues Elk. “Second, direct government hiring not only replaces jobs that have been lost, it also primes the pump so the private sector can start hiring again. Finally, effective government hiring targets the communities hardest hit by economic crisis.” Elk points out that the National Youth Administration helped 2.7 million young people stay in school while working or gave them job training, while the Civilian Conservation Corps focused on hiring unskilled young people to construct 800 parks and planted three billion trees. Elk supports the recently introduced Local Jobs for America Act, which currently has 120 co-sponsors in the House of Representatives. The bill would spend $100 billion to create jobs and job training in local communities that have been hardest hit by the economic downturn. -David Wallechinsky Happy 75th, WPA: Its Genius Holds Lessons for Today's Jobs Crisis (by Mike Elk, Campaign for America’s Future)

Bring Back Reagan Tax Rate to Pay for Health Care: Gerald Scorse
Tuesday, March 30, 2010
	By returning to the strategy employed by a conservative icon, President Barack Obama could impose a liberal tax policy, writes Gerald Scorse, a member of the advocacy group, Responsible Wealth. Scorse argues that Obama could pay for most of the cost of health care reform by doing what Reagan did in 1986: Raise the tax on long-term capital gains and use the same rate as for taxing earned income. Currently, short-term capital gains are taxed at the same rate as earned income 33-35%, but long-term capital gains are taxed at only 15%. When Bill Clinton became president, he cut the long-term rate to 20%, and then George W. Bush dropped it to 15%. Bush’s tax cuts are due to expire at the end of 2010, at which time the rate will return to 20%. But if Reagan’s tax equality was restored, the IRS could collect tens of billions of dollars extra. “The policy is equal taxes on income from wealth and income from work,” says Scorse. “Returning to an equal-tax policy would come close, all by itself, to paying for the health care bill now before Congress.” -Noel Brinkerhoff, David Wallechinsky Tax Equity Could Pay for Health Care (by Gerald Scorse, Talking Points Memo)

Obama Needs to Bring Back the Privacy and Civil Liberties Oversight Board: Lanny Davis
Thursday, March 18, 2010
	Wary of the McCarthyism-like rhetoric leveled by Dick Cheney and his daughter, Liz, on the Obama administration for expressing concern about the civil liberties of suspected terrorists, Washington lawyer Lanny Davis says it’s time to bring the Privacy and Civil Liberties Oversight Board back to life. Davis, a former special counsel to President Bill Clinton and friend of President George W. Bush, served on the first board, which was established in 2004 upon the recommendation of the 9/11 Commission, and through that experience he learned the value of having an independent oversight body advising the government on matters of terrorism and civil liberties. “While I cannot disclose details, I can say that I was immensely impressed by the multiple levels of checks and balances, supervision and concern, about compromising the privacy rights and civil liberties of American citizens by those responsible for conducting the TSP (Terrorist Surveillance Program),” writes Davis. He argues there is “nothing inconsistent between a strong antiterrorism position and protection of civil liberties.” Unfortunately, though, President Barack Obama has yet to appoint any members to the oversight board, causing the body to languish. Members of Congress have called upon the White House to act, and Davis seconds this notion. “I hope and expect Obama—despite all the other items on his crowded agenda — will heed these words from leaders of both parties and expedite the appointment of a new Privacy and Civil Liberties Oversight Board,” he concludes. -Noel Brinkerhoff Time to Restore the Privacy and Civil Liberties Oversight Board (by Lanny Davis, The Hill)

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