Killer Politics Page 5

  This is the bad behavior we bailed out. You bet it was a tough pill to swallow. But my hope is that eventually, the market will recover and the American taxpayer will see a profit from the resale of these “toxic assets.” I expect this recovery to be a measured one because there will be less consumer spending—the American consumer can’t or won’t go further into personal debt to bail out the economy this time—and in some respects that’s actually good news because the result of this fiasco is that Americans have begun to reduce personal debt and save more. However, to keep the economy from stalling, the Obama administration was forced to do what FDR did: spend stimulus money. It’s another bitter pill to swallow for a guy like me who hates too much debt, but I recognize that the cure is marginally less painful than the ailment.

  Here’s what is exasperating, though. George W. Bush ran up the debt to nosebleed levels. It really galls me to hear how Bush and Cheney made us safer! They left us with our asses hanging out in the wind is what they did. You can’t have a strong country without a strong economy. They left us broke down and busted, critically weakened. They may as well have used all that red ink to paint a target on our backs. Bush and Cheney left Obama with no recourse other than to spend more to keep our economy moving. That is exactly what respected economists say must be done, even when deficit spending and lagging tax receipts have the country facing a trillion-dollar budget deficit for the first time in history.

  Mark Thoma, an economist at the University of Oregon, expresses a common view on his personal website: “The question of how bad would economic conditions be right now if there had been no stimulus package and no financial bailout is receiving considerable attention. There’s no way to know for sure, but I believe the economy would have been much worse off without these two policy interventions.”

  I also agree with President Obama that we have to trim programs where we can as a matter of efficiency, a word not often mentioned in the same sentence as government. When it comes to social safety net programs, we must have a renewed, transparent effort to root out abuse and corruption. It’s not so much that all conservatives aren’t willing to lend a hand to those truly in need, it’s that they pessimistically believe there are too many freeloaders. I agree. There probably are, but you don’t want to throw the baby out with the bathwater. What’s important is that we reassure the American taxpayer that our government is working hard to expose the cheaters in our social programs. And to do that, let’s use the same attitudes and standards when we examine corporate welfare.

  As for those Wall Street leeches we bailed out? Damn right we have a right to oversee executive pay. Stephen Lerner, of the Service Employees International Union, was quoted in Newsweek after Goldman Sachs announced record bonuses less than a year after being bailed out by taxpayer dollars: “It’s a combination of absurd and obscene that the same guys who crashed the economy…are now giving themselves even bigger bonuses.” In June 2009, Obama appointed an executive pay czar, Kenneth Feinberg, and gave him the authority to set the pay scale for executives at any company receiving government money. Some moaned about the constitutionality of the Feinberg appointment. But I think it is a reasonable strategy. Should we regulate the pay in other businesses? Of course not. What Obama is doing is simply providing oversight of a taxpayer investment, and the American people are behind him.

  This is nowhere near as radical (or socialistic) as what Nixon did when he twice implemented national price and wage freezes in an attempt to address inflation. Nixon’s strategy failed miserably, and Jimmy Carter and Fed chairman Paul Volcker were forced to address the problem with high interest rates—which cost Carter the election against Ronald Reagan. It could be déjà vu all over again. A Democrat has been left to clean up the Republican mess and take the blame from a voting public with a ridiculously short memory.

  UNFAIR TRADE DEALS UNDERMINED AMERICA

  So greedy banks leave our economy unsound. And bad trade deals do, too. Back when the world was a bigger place, before lopsided trade agreements began flooding our shelves with foreign-made goods, unions helped organize workers, leading to fair wages and better working conditions. America bloomed.

  Now we are witness to wilting American cities. The steady attack from overseas weakened, then destroyed, industry after industry. As consumers, we have benefited, but in many ways we have sold our soul to Walmart.

  As it expands its dominance as the world’s largest retailer, Walmart continues to squeeze every penny of profit out of each sale, forcing manufacturers to move factories to countries with cheap labor (and few labor or environmental standards) or die. Any U.S. factory hoping to compete must keep wages as low as possible. Meanwhile at home, to keep the competitive edge, Walmart seems to pay the lowest wages possible.

  As long as you have a good job and can buy cheap goods, it’s great. But, industry by industry, sector by sector, we are losing good jobs to China and India and Mexico in a race to the bottom line. When your number is up, things aren’t so rosy, other than the color of the pink slip.

  Many economists were shocked to see unemployment approach double digits in the summer of 2009, but I wasn’t. For years, as I listened to my callers and traveled from city to city, I could see this coming. Good grief, unemployment in Detroit was pushing 30 percent in 2009, even as China officially became the world’s largest auto market. What are the chances China will allow Detroit the same access to its marketplace that we allowed foreign car manufacturers in America?

  One thing we have to do is to massage unfair trade agreements so that they become “more fair.” I’ve long exhausted hopes of exact fairness. I’m fine with cutting some Third World countries a little slack in trade deals to help lift them up, but we don’t need to grant favors to countries like China, countries that have feasted on whole American industries. It’s like Nadal and Federer at Wimbledon—Federer doesn’t need to spot Nadal any points at this stage of the game.

  In reworking these trade agreements with China, India, Mexico, Japan, South Korea, and others, we have to make changes in ways that don’t shock their economies too hard. But we do need to recognize that those economies have matured and should be able to compete straight-up sooner rather than later.

  It is unlikely, in my view, anyway, that the U.S. economy will be as dynamic as China’s or India’s in the coming years. Here’s why: As our economy boomed in the last century, the nation quite rightfully began to take on some legacy costs. We have slowly made progress with social programs to make sure that the very lowest on the economic ladder have some safety net. But we have not administrated wisely. As a nation we have not had the stomach to run these programs leaner or to fund them properly. Medicare, Medicaid, Social Security—these are good things, but with the baby boomers retiring, there is not nearly enough in the bank to fund those programs. And in addition, we need to move forward with health care reform. These are moral obligations—the things that must be done even though they are hard.

  Economies tend to mature and level out with modest, predictable growth until the next technical innovation creates another spurt. Our rate of consumption when measured by our income as a nation is not sustainable. And we have to ask ourselves, Is the growth rate of our population—largely through immigration—sustainable?

  As a nation we have to get these variables under control as best we can. I believe our economy will be less volatile in the future and might come to resemble those in Europe, with steady—not dramatic, but predictable—growth.

  Meanwhile, we’ll see China and India, and perhaps some other surprise players, make strong economic runs in the years ahead. There is great potential in South America, especially Brazil. If these nations are wise, they will apply some of their increasing largess to creating the social safety nets for their citizens that will decrease the distance between the top and bottom rungs of the economic ladder and lead to social order, which will lead to stability and peace.

  THE IMPORTANCE OF UNIONS

  On the home front, we need reen
ergized unions. I know, there are plenty of past negatives to overcome, but the principle is sound. If laborers are going to be treated like a commodity, they need to be organized. But I’d like to see a model in which union workers have real ownership and the prospect of substantial fiscal reward in years when the company is successful. A mistake some union negotiators made in the past was that while they were able to negotiate favorable contracts for the union workers, they burdened corporations with unsustainable legacy costs. However, with “skin in the game,” unions would be much more willing to work for the success of the company and not just the success of the next labor agreement. It’s the basic rule of capitalism. Incentive.

  With outsourcing, the legs have been cut from underneath labor unions. Corporations just walked away from the negotiating table and took their companies with them—to China. We see what that has done to the country and to the workingman. Nobody wins. Wages have stagnated for the common working man and woman, while the rich are getting richer and richer.

  From 2000 to 2007, according to the U.S. Census, median household income fell 0.6 percent and poverty inched up to 12.5 percent, all during an otherwise robust economy. In short, the average worker was seeing a steadily decreasing slice of the pie, even before the Great Recession.

  The American worker will not regain any sort of upward economic traction without organizing, without a fight. Post-Reagan and post–Bushes I and II, the anti-worker voices in our country are still loud and getting louder. In December 2009, Fox News anchor Juliet Huddy argued on the air that to solve unemployment the American worker just had to work cheaper. She wasn’t talking about Wall Street executives. “One school of thought says lowering the minimum wage will actually create more jobs,” she said.

  That’s the ticket! What America needs is for the working poor to sacrifice just a little bit more—for their own good, of course. Minimum wage, by the way is $7.25 an hour, $15,000 a year. The poverty line is about $21,000 for a family of four.

  That’s the conservative plan in a nutshell. If you want a job, you just have to work cheaper. Yeah! Now we can all work for Walmart. Put Grandma’s wheelchair up front. She can be a greeter. Increasingly, that is the thinking. The strength of unions has diminished through government complicity, because the government facilitated outsourcing, which is really union busting by another name; the American worker doesn’t have much protection these days.

  Meanwhile, low wages and lack of disposable income have hurt the entire marketplace. The irony of this anti-worker business model is that as corporations outsource, they are unwittingly practicing economic cannibalism by devouring the very workers they need to be consumers.

  For our economy to work, labor and corporations have to become partners instead of adversaries. Look, I understand that there will always be an adversarial undercurrent to the relationship, but lots of people keep dogs and cats under the same roof. It works out. The ownership agreement worked out between the United Auto Workers and GM (17 percent) and Chrysler (55 percent) will be a good test. One thing is sure—it’s pretty tough to go on strike against yourself.

  The Employee Free Choice Act would make it easier for workers to form unions, and the Act stands to strengthen the bargaining power of all workers—which is why big business is so set against it. As a senator, Barack Obama was one of many bipartisan cosponsors of the Senate version (S. 842) of the bill, sponsored by the late Senator Edward Kennedy (D-MA) and Senator Arlen Specter (D-PA).

  The house version (H.R. 1696) was sponsored in 2005 by Representative George Miller (D-CA), chairman of the House Committee on Education and Labor, who said during the bill’s introduction, “The current process for forming unions is badly broken and so skewed in favor of those who oppose unions that workers must literally risk their jobs in order to form a union. Although it is illegal, one quarter of employers facing an organizing drive have been found to fire at least one worker who supports a union. The employer has all the power; the employer controls the information workers can receive, can force workers to attend anti-union meetings during work hours, can force workers to meet with supervisors who deliver anti-union messages, and can even imply that the business will close if the union wins.”

  Where would we be without unions? Unions and union organizers fought and died for child labor laws, the eight-hour workday, and safer working conditions. Unions pressured companies to pay women equal wages and defended workers against age discrimination. Through the years, many organizers were murdered for their efforts. At their core, unions defend not only workers’ rights but human rights.

  As of December 2009, the Employee Free Choice Act had not yet been brought to a vote, but the passage of this bill will be an important milestone along the road to empowering workers and rebuilding the middle class. America’s economy will never be robust without a thriving middle class, and the success of unions will have much to say about that.

  PAYING YOUR FAIR SHARE

  Any time you have a fiscal policy that causes the richest 1 percent of American households to own more wealth than the bottom 90 percent, you’ve got a problem. The last time America had such a drastic difference between the haves and the have-nots was before the Great Depression. This more recent handout to the wealthy picked up warp speed with tax cuts for fat cats under Ronald Reagan, who lowered the top tax rate from 70 to 28 percent (it was 35 percent in 2009), and culminated with tax cuts for the rich under Bush II in the midst of two wars—something unprecedented in American history. (Taxes have increased in every previous U.S. war, except when they stayed level during the war against Mexico in the 1840s.)

  Where was the sacrifice for the wars in Iraq and Afghanistan? Bush and Cheney fought these wars with credit cards, and now that they are out of office, the statement has come in the mail.

  Meanwhile, überconservatives, having slept through straight talk about fiscal matters for eight years, are now hypocritically concerned about the national debt. These Rip Van Republicans want to use the Bush-Cheney national debt to squelch everything from health care to stimulus programs, seemingly clueless that the way to kick-start the economy is to get more disposable income back in the hands of consumers.

  Any student of Business 101 understands that when expenditures exceed income, it’s a good idea to increase income. In this case, we need to tighten our belts and do what Bush I and Bill Clinton did, and that is to raise taxes on the top bracket. Bush I went from 28 to 31 percent and Clinton, during the largest economic boom ever in America, made it 39.6 percent. The nation thrived! Clinton was balancing the budget! He also tightened up welfare.

  When it comes to Social Security and Medicare, I believe in means testing. I know, I know, we all paid in, but does Bill Gates really need Social Security? If you have the means to do without the programs, you should. We all contribute to aspects of the infrastructure that we may not use but that are there for the greater good. Childless couples pay property taxes, and most of that goes to education. We have to consider the greater good if we are to be a greater country.

  I see the logic of a progressive tax. But I sure as heck don’t support a punitive tax code. I don’t think Americans making $250,000 are necessarily rich, but most of us can afford to pay a little more per earned dollar than those making $21,000 a year, and if paying a little more is what it takes to keep the country safe and strong, sign me up.

  Republicans have successfully made the word “taxes” a dirty word for thirty years, but taxes are a necessity. It’s a matter of paying your dues as a member of this club we call America. You bet we ought to look for efficiencies where we can, and we ought to fight tooth and nail against increasing taxes, but in the end, we must accept that a certain level of taxation is the price of being an American.

  The estate tax is a good idea. It keeps the playing field level. What’s wrong with the Gateses and Buffetts and the Oprahs and the Waltons (and I don’t mean John-Boy) giving back to the country that gave them the opportunities to succeed? What’s healthy about a pubesce
nt billionaire who was born into it? Hey, I want my kids to have a little something when I’m gone, but not an empire. Working, not inheriting, builds character.

  My father was a member of the Greatest Generation. I am ashamed to be a member of the Greediest Generation, and selfishness has been my generation’s legacy to this point. Bush and Cheney left us with one hell of a mess and one hell of a bill. Do we have the moral character to clean up the mess and pay the bill, or are we going to pass it on to our children? It’s not too late to redeem ourselves.

  Pillar #3: Feed the Country

  I live in two worlds. One is on the streets of Manhattan. The other is the lake and farm country on the Minnesota–North Dakota border. I see both of these worlds up close and personal, and I wish everyone could, because if there is a disconnect in America, it is between these worlds.

  I can barely begin to express the frustration I have when I hear the East Coast intelligentsia editorialize in such an uninformed manner against farm subsidies. I want to grab them by the collar and say, “Do you realize it is your grocery bill that is being subsidized?”

  Don’t any of them know what it is like to have a little cowshit on your boots, live in a small town, or have a cup of coffee with a rancher? I have a small home in Mott, out in western North Dakota, where I go to hunt pheasants. Living in Mott part-time also keeps me in touch with the farming and ranching communities, and let me tell you, these good folks bear no relation to the people castigated on the editorial pages of the eastern press.

  THE FARM BILL ALLOWS YOU TO EAT CHEAP!

  We have a cheap food philosophy in this country that was born out of the Great Depression and a society whose European immigrants remembered all too well the great famines of Europe. According to U.S. Department of Agriculture statistics, in 1929, 23 percent of family income went to food. In 2008, that percentage was 9.6.