That Seal Was Real

robertreich:

The news today from the Bureau of Labor Statistics is that the U.S. job market is treading water.

The number of new jobs created in December (155,000), and percent unemployment (7.8), were the same as the revised numbers for November.

Also, about the same number of people are looking for work (12.2 million), with additional millions too discouraged even to look.

Put simply, we’re a very long way from the job growth we need to get out of the gravitational pull of the Great Recession. That would be at least 300,000 new jobs per month.

All of which means job growth and wage growth should be the central focus of economic policy, not deficit reduction.

Yet all we’re hearing from Washington — and all we’re likely to hear as Republicans and Democrats negotiate over raising the debt ceiling — is how to cut the deficit.

The typical American worker’s paycheck will drop this week because his or her Social Security tax will rise, from 4.2 percent to 6.2 percent. That’s nonsensical.

We need to put more money into the pockets of average workers, not less. The first $25,000 of income should be exempt from Social Security taxes altogether, and we should make up the difference by eliminating the ceiling on income subject to Social Security taxes.

robertreich:

President Obama is cutting his Christmas holiday short, returning to Washington for a last attempt at avoiding the fiscal cliff. But he’s running headlong into the Republican strategy of fanaticism.

It’s a long-established principle of game theory (see Thomas Schelling’s classic 1956 essay in the American Economic Review) that a fanatic who restricts his freedom to avert a disaster puts maximum pressure on his opponent to give ground.

In a game of highway chicken, for example, the driver that can’t swerve because he’s tied his hands to the steering wheel and chained his foot to the accelerator forces the other to swerve in order to avoid crashing.

The trick is for the first driver to convince the second that he’s crazy enough to have committed himself to instant death if the second doesn’t act rationally.

House Speaker John Boehner’s failure to persuade rank-and-file House Republicans to raise taxes even on millionaires fits the fanatic’s strategy exactly. Boehner can now credibly claim he has no choice in the matter – Republican fanatics in the House have tied his hands and manacled his feet — so the only way to avoid going over the cliff is for Obama and the Democrats to make more concessions.

The White House’s hope of getting the Senate to pass legislation that raises taxes on the wealthy in order to pressure Boehner won’t work because the legislation can’t possibly get through the House. That’s the point: Boehner has demonstrated he has no choice; the fanatics are in charge there.

Obama could decide going over the cliff isn’t so bad after all – as long as he and congressional Democrats introduce legislation early in the 2013 that gives a tax cut to the middle class retroactively to January 1^st (extending the Bush tax cut to the first $250,000 of income) and restores most spending — and Republicans feel compelled to go along.

But with Boehner’s hands tied and the fanatics in charge, this gambit becomes far riskier. What if we go over the cliff and House Republicans continue to hold out against any tax increases on the rich while demanding major cuts in Medicare and Social Security?

The path of least resistance is for Obama and the Democrats to offer to keep everything as is, through 2013 – extend all the Bush tax cuts and continue all current spending (lifting the debt limit along the way) – unless or until a “grand bargain” on the budget is agreed to before the end of the next year.

This is likely to satisfy enough Republican fanatics to gain a majority in the House. And it would avoid the fiscal cliff, kicking the can down the road and giving everyone more time.

Deficit hawks in both parties won’t like it, but that’s okay. Unemployment is still way too high and growth too meager to justify trimming the deficit any time soon.

The real problem with this gambit is it doesn’t change the game. Even down the road, Boehner’s hands will still be tied and the fanatics will remain in charge — which will give Republicans the stronger position in negotiations leading to a “grand bargain.” Compromise would have to be almost entirely on the Democrats’ side. 

That’s why I’d recommend going over the cliff and forcing the Republicans’ hand. It’s a risky strategy but it would at least expose the Republican tactic and put public pressure squarely on rank-and-file Republicans, where it belongs.

The fanatics in the GOP have to be held accountable or they’ll continue to hold the nation hostage to their extremism. Even if it takes until the 2014 midterms to loosen their hold, the cost is worth it.

robertreich:

Remarkably, John Boehner couldn’t get enough House Republicans to vote in favor of his proposal to keep the Bush tax cuts in place on the first million dollars of everyone’s income and apply the old Clinton rates only to dollars over and above a million.

What? Even Grover Norquist blessed Boehner’s proposal, saying it wasn’t really a tax increase. Even Paul Ryan supported it.

What does Boehner’s failure tell us about the modern Republican party?

That it has become a party of hypocrisy masquerading as principled ideology. The GOP talks endlessly about the importance of reducing the budget deficit. But it isn’t even willing to raise revenues from the richest three-tenths of one percent of Americans to help with the task. We’re talking about 400,000 people, for crying out loud.

It has become a party that routinely shills for its super-wealthy patrons at a time in our nation’s history when the middle class is shrinking, the median wage is dropping, and the share of Americans in poverty is rising. 

It has become a party of spineless legislators more afraid of facing primary challenges from right-wing kooks than of standing up for what’s right for America.

For all these reasons it has become irrelevant to the problems America faces.

The Republican Party in the process of marginalizing itself out of existence. I am tempted to say good riddance, but that would be premature.

robertreich:

I hope the President starts negotiations over a “grand bargain” for deficit reduction by aiming high. After all, he won the election. And if the past four years has proven anything it’s that the White House should not begin with a compromise.

Assuming the goal is $4 trillion of deficit reduction over the next decade (that’s the consensus of the Simpson-Bowles commission, the Congressional Budget Office, and most independent analysts), here’s what the President should propose:

First, raise taxes on the rich – and by more than the highest marginal rate under Bill Clinton or even a 30 percent (so-called Buffett Rule) minimum rate on millionaires. Remember: America’s top earners are now wealthier than they’ve ever been, and they’re taking home a larger share of total income and wealth than top earners have received in over 80 years.

Why not go back sixty years when Americans earning over $1 million in today’s dollars paid 55.2 percent of it in income taxes, after taking all deductions and credits? If they were taxed at that rate now, they’d pay at least $80 billion more annually — which would reduce the budget deficit by about $1 trillion over the next decade. That’s a quarter of the $4 trillion in deficit reduction right there.

A 2% surtax on the wealth of the richest one-half of 1 percent would bring in another $750 billion over the decade. A one-half of 1 percent tax on financial transactions would bring in an additional $250 billion.

Add this up and we get $2 trillion over ten years — half of the deficit-reduction goal.

Raise the capital gains rate to match the rate on ordinary income and cap the mortgage interest deduction at $12,000 a year, and that’s another $1 trillion over ten years. So now we’re up to $3 trillion in additional revenue.

Eliminate special tax preferences for oil and gas, price supports for big agriculture, tax breaks and research subsidies for Big Pharma, unnecessary weapons systems for military contractors, and indirect subsidies to the biggest banks on Wall Street, and we’re nearly there.

End the Bush tax cuts on incomes between $250,000 and $1 million, and — bingo — we made it: $4 trillion over 10 years.

And we haven’t had to raise taxes on America’s beleaguered middle class, cut Social Security or Medicare and Medicaid, reduce spending on education or infrastructure, or cut programs for the poor.

Mr. President, I’d recommend this as your opening bid. With enough luck and pluck, maybe even your closing bid. And if enough Americans are behind you, it could even be the final deal.

hgssethan:

November 8, 2012

Florida has yet to submit their electoral votes

But see.. this was the plan all along. Florida never submits their electoral votes.

This election never actually ends

Obama remains in office for the next 25 years until he dies. His two daughters joint take over. The United States of America becomes the United States of Obama. The south secedes.

robertreich:

The two most important trends, confirmed in today’s jobs report from the Bureau of Labor Statistics, are that (1) jobs slowly continue to return, and (2) those jobs are paying less and less.

Today’s report showed 171,000 workers were added to payrolls in October, up from 148,000 in September. At the same time, unemployment rose to 7.9 percent from 7.8 percent last month. The reason for the seeming disparity: As jobs have begun to return, more people have been entering the labor force seeking employment. The household survey, on which the unemployment percentage is based, counts as “unemployed” only people who are looking for work.

As I’ve said, you have to take a single month’s report with a grain of salt because the job reports bounce around a great deal, and are often revised. Last month the BLS announced that 114,000 new jobs were created in September. Today the BLS revised that September figure upward to 148,000.

Overall, the jobs trend is in the right direction. The President and Democrats can take some comfort.

The most disturbing aspect of today’s report is the continuing decline of wages. Average hourly earnings climbed 1.6 percent in October from the same time last year. That’s not enough to match the rate of inflation – meaning that hourly earnings continue to drop in real terms.

It’s also the smallest gain since comparable year-over-year records began in 2007, before the Great Recession. Earnings for production workers – about 80 percent of the workforce — rose only 1.1 percent in the 12 months to October. That’s way behind inflation, and the weakest wage growth since the BLS began keeping records on wages in 1965.

The biggest challenge ahead isn’t just to get jobs back. They’re coming back. It’s to raise the wages of most Americans.

This isn’t a new challenge. The median wage has been flat for three decades, when you adjust for inflation. Since 2000 it’s been dropping.

What does all of this have to do with the upcoming election? Plenty. Some of the biggest wage losses over the last several decades have been among white men who haven’t attended college. And, not coincidentally, they’re the ones who have been abandoning the Democrats in droves.

Three decades ago, non-college white men were solidly Democratic. Many of them were unionized. They had jobs that delivered good middle-class incomes.

But over the last three decades they stopped believing the Democratic Party could deliver good jobs at decent wages.

Republicans have done no better for them on the wages — in fact many policies touted by the GOP, such as its attack on unions, have accelerated the downward wage trend.

But Republicans have offered white non-college males the scapegoats of racism and immigration — blaming, directly or indirectly, blacks and Latinos — and the solace of right-wing evangelical Christianity. Absent any bold leadership from Democrats, these have been enough.