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NEWS ARCHIVE - OPINION FROM THE LEFT

Ending the Recession—5 Practical Solutions: Robert Reich

Sunday, September 05, 2010

Getting out of the Great Recession will require substantial changes in tax and public policy, writes Robert Reich, former secretary of labor in the Clinton administration. With job growth too weak to meet demand, Washington needs to make bold moves to put consumers back in a position to drive the economy.

Reich suggests:

1) Extending the earned income tax credit so it applies to the middle class. To fill the lost revenue to the U.S. Treasury from this decision, Washington could put a tax on carbon.

2) The government could exempt the first $20,000 of income from payroll taxes, and pay for it with a payroll tax on incomes over $250,000.

3) “Early childhood education should be more widely available, paid for by a small 0.5 percent fee on all financial transactions….In the longer term, Americans must be better prepared to succeed in the global, high-tech economy.”

4) Make public universities free. But graduates would be required to pay back 10% of their first 10 years of full-time income.

5) “Workers who lose their jobs and have to settle for positions that pay less could qualify for ‘earnings insurance’ that would pay half the salary difference for two years; such a program would probably prove less expensive than extended unemployment benefits.”

-Noel Brinkerhoff

The Real Lesson of Labor Day (by Robert Reich)

Tax the Super Rich by Adding Tax Brackets: James Surowiecki
Tuesday, August 24, 2010
	The problem with the Obama Administration’s plan for taxing the rich (by allowing the Bush tax cuts to expire) is that the increases really don’t target the super rich, writes James Surowiecki in The New Yorker. By relying on an antiquated tax system better “suited to nineteenth-century New Zealand” than modern day America, the administration is missing out on a chance to redefine the top tax brackets in order to distinguish the “so-called rich” from the really rich. By so-called rich, Surowiecki is referring to the professional class—doctors, lawyers, even some journalists—while the really rich, or “executive suite” wealthy, are in a class of their own. Critics of ending the Bush tax cuts claim that this would hurt small-business owners. That’s because someone making $375,000 a year is taxed at the same rate as someone making multiple millions. If more tax brackets were created at the top end of the scale, more revenue could be collected from the super rich, without putting an extra burden on the “sort of” rich. Why force “someone making two hundred thousand dollars a year and someone making two hundred million dollars a year pay at similar tax rates,” asks Surowiecki. “LeBron James and LeBron James’s dentist: same difference.” “This makes no sense—there’s a yawning chasm between the professional and the plutocratic classes, and the tax system should reflect that. A better tax system would have more brackets, so that the super-rich pay higher rates,” continues Surowiecki. -Noel Brinkerhoff Soak the Very, Very Rich (by James Surowiecki, New Yorker)

Is Obama Following Jesus’ Position on War?: John W. Whitehead
Sunday, August 08, 2010
	President Barack Obama considers himself a devout Christian who uses the teachings of Jesus Christ to guide his conduct and ideals—but how does that jive with Obama’s gusto for warfare, writes John Whitehead, founder and president of The Rutherford Institute. In a January 2008 interview with Christianity Today, Obama said, “I am a devout Christian. I believe in the redemptive death and resurrection of Jesus Christ. I believe that that faith gives me a path to be cleansed of sin and have eternal life. But most importantly, I believe in the example that Jesus set by feeding the hungry and healing the sick and always prioritizing the least of these over the powerful…. Accepting Jesus Christ in my life has been a powerful guide for my conduct and my values and my ideals.” Whitehead notes Obama took over the Oval Office “proclaiming hope and change and a personal adherence to the teachings of Jesus Christ, who preached a message of peace, love and nonviolence.” But instead of discarding the militaristic foreign policy of George W. Bush, Obama has continued to march American soldiers around the world. Under Obama, the government has the largest war budget since World War II, claims Whitehead, who says the combined cost of the Afghanistan and Iraq wars have now surpassed the $1 trillion mark. “Obama’s war machine is wreaking havoc far and wide on communities and families devastated by mounting military and civilian casualties, on the already faltering economy, and on America’s once-noble standing in the world,” he writes. Whitehead adds: “Halfway through his four-year term in office, it is increasingly clear that Obama’s presidential priorities are being dictated by war hawks rather than the principles of Jesus.” -Noel Brinkerhoff Obama and War: What Would Jesus Do? (by John W. Whitehead, Rutherford Institute)

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)

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