Sen.Sherrod Brown and Richard Wolff on the economy

More GRITtv

The budget deficit and debt

The Budget Deficit and the Debt
What You Need to Know

 

1. The deficit is the gap between what the government spends and the revenues it collects each year. We didn’t always run deficits. When President Clinton left office, the federal budget was running a surplus of $236 billion, or about 2% of the U.S. economy. And that extra revenue was being used to pay down the national debt. To understand how we moved from big surpluses to a growing deficit, it’s helpful to examine each of the major factors driving our nation’s current deficits.
2. Every million additional jobs we generate reduces the deficit by $54 billion.
3. It’s misleading (and dangerous) to confuse the short-term budget shortfall with the medium-term deficit or the long-term debt. Here’s a way of understanding it:
   1. The Short-Term Recession Shortfall (1-3 years): The Great Recession wasresponsible for 61 percent of the deficit last year.
      1. Tax receipts fell as people lost jobs and income and businesses failed; federal tax revenues declined from 18.5% of GDP in 2007 to 14.8%.
      2. Spending rose with government supports such as unemployment insurance, the Recovery Act, TARP funds, payments to Fannie Mae and Freddie Mac and discretionary outlays for defense spending, from 19.6% of GDP in 2007 to 24.7%.
   2. The Medium-Term Bush Deficit (10 years):
      1. We ran a $236 billion surplus before the Bush tax cuts, but we have run deficits for the past 9 years.
      2. The ten-year projected deficit is entirely explained by the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq. Bush tax cuts and the wars made up $500 billion of the 2009 deficit and will create $6 trillion in deficits and debt service over the next decade. From the Economic Policy Institute.http://www.epi.org/publications/entry/investing_in_americas_economy

Obama's troubling economic advisors

Over at Huffington Post Steve Hilderbrand has argued that progressives should lighten up and stop criticizing Barack Obama for the centrist appointments he has been making. I, and 232 people have responded and I encourage you to do so also.
I am concerned particularly of the appointments to his economic team. On Dec. 1, Dean Baker said the following on Truthout.
“Fortunes will be made or lost depending on how this bailout money
is used. For example, Secretary Paulson just agreed to lend another
$20 billion of the Treasury's bailout money to Citigroup.

In addition, the Federal Reserve Board agreed to guarantee up to
$300 billion of presumably bad assets. This is an enormously valuable
guarantee. If Citigroup had to arrange a comparable guarantee in the
private market, it would almost certainly pay more than $30 billion a
year.

This decision sent Citigroup's stock soaring. In the week since
the bailout was announced, Citigroup's stock more than doubled, adding
more than $25 billion to the company's capitalization. (The government
could have bought the bank outright with the money it lent to Citi.)
This is great news for Citigroup's shareholders, who would be holding
almost worthless stock if Mr. Paulson had not been so generous.

Paulson's decision was also good news for Robert Rubin and other
top executives at Citigroup. If the government had not stepped in,
Citigroup would almost certainly be in bankruptcy and most of its
highly paid executives would likely be out on the street.”


William Grieder in a Nation post below explained the connections between Citigroup and the new Obama appointees.

“Events have confronted Obama with a fearful symmetry between past and present, illustrated by his choice of economic advisers. On Friday, we learned that Timothy Geithner, president of the New York Federal Reserve, would become his new treasury secretary and Larry Summers, who held the same position in the Clinton administration, would be the White House overseer of economic policy. On Monday, Geithner was busy executing the government's massive rescue of Citicorp--the very banking behemoth that Geithner and Summers helped to create back in the Clinton years, along with Federal Reserve chairman Alan Greenspan and Robert Rubin, Clinton's economics guru. Now Rubin is himself a Citicorp executive and his bank is now being saved by his old protégé (Geithner) with the taxpayers' money.
The connections go way beyond irony. They raise very serious questions about where the new president intends to lead and whether he has the nerve to break from the weak and haphazard strategy of the Bush administration. It has dumped piles of public money on the largest financial institutions and demanded little or nothing in return, hoping for the best. Geithner has been a central player in the deal-making, from Bear Stearns to AIG to Citi. The strategy has not only failed, it has arguably made things worse as savvy market players saw through the contradictions and rushed out to dump more bank stocks.
On Wall Street, Geithner is known as a highly competent technocrat, well versed in the financial complexities. But he has also been seen as a weak and compliant regulator of Wall Street firms, someone who did not seem the storm coming. Occasionally, Geithner would anguish publicly about the accumulating time bombs like credit derivatives and urge bankers to do something, but he did not use his supervisory powers to compel action. In bailout negotiations with Wall Street titans, Geithner and the Federal Reserve were spun around like a top more than once.”

So, we are being asked to trust Barack Obama that appointing Geithner and Larry Summers is not a capitulation.
I think that the titans of Wall Street, including Robert Rubin and others should be arrested and prosecuted for looting the U.S. treasury and the pensions of millions of our citizens. Putting Rubin’s close allies in charge of U.S. economic policy is deeply disturbing. It means that the Obama administration is taking the reins during the Bush recession, but he is not breaking with the people who caused the problems.

Persons who read this blog know that I worked long and hard for Barack Obama. These economic appointments are deeply disappointing. To me they are endangering the new administration by linking it with the Casino Capitalism of the past.



Duane Campbell

Past and Future Economics: Greider

Past and Future

by WILLIAM GREIDER

November 24, 2008

A year ago, when Barack Obama said it was time to turn the page, his campaign declaration seemed to promise a fresh start for Washington. I, for one, failed to foresee Obama would turn the page backward. The president-elect's lineup for key governing positions has opted for continuity, not change. Virtually all of his leading appointments are restoring the Clinton presidency, only without Mr. Bill. In some important ways, Obama's selections seem designed to sustain the failing policies of George W. Bush.

This is not the last word and things are changing rapidly. But Obama's choices have begun to define him. His victory, it appears, was a triumph for the cautious center-right politics that has described the Democratic party for several decades. Those of us who expected more were duped, not so much by Obama but by our own wishful thinking.
Let us stipulate that these are all honorable people, smart and experienced veterans of Washington combat. But they represent the Democratic party that mainly sees itself as managerial--making government work better. The long era of conservative dominance has taught them to keep their distance from big reform ideas that promise fundamental change of the system. Their operating style is incremental and cautiously practical. They conscientiously avoid (or actively block) propositions that sound too liberal or radical. Alas, Obama is coming to power at a critical moment when incrementalism is irrelevant. The system is in collapse. Financial chaos won't wait for patient deliberations.

Events have confronted Obama with a fearful symmetry between past and present, illustrated by his choice of economic advisers. On Friday, we learned that Timothy Geithner, president of the New York Federal Reserve, would become his new treasury secretary and Larry Summers, who held the same position in the Clinton administration, would be the White House overseer of economic policy. On Monday, Geithner was busy executing the government's massive rescue of Citicorp--the very banking behemoth that Geithner and Summers helped to create back in the Clinton years, along with Federal Reserve chairman Alan Greenspan and Robert Rubin, Clinton's economics guru. Now Rubin is himself a Citicorp executive and his bank is now being saved by his old protégé (Geithner) with the taxpayers' money.

The connections go way beyond irony. They raise very serious questions about where the new president intends to lead and whether he has the nerve to break from the weak and haphazard strategy of the Bush administration. It has dumped piles of public money on the largest financial institutions and demanded little or nothing in return, hoping for the best. Geithner has been a central player in the deal-making, from Bear Stearns to AIG to Citi. The strategy has not only failed, it has arguably made things worse as savvy market players saw through the contradictions and rushed out to dump more bank stocks.

On Wall Street, Geithner is known as a highly competent technocrat, well versed in the financial complexities. But he has also been seen as a weak and compliant regulator of Wall Street firms, someone who did not seem the storm coming. Occasionally, Geithner would anguish publicly about the accumulating time bombs like credit derivatives and urge bankers to do something, but he did not use his supervisory powers to compel action. In bailout negotiations with Wall Street titans, Geithner and the Federal Reserve were spun around like a top more than once.

No wonder the stock markets rallied explosively when they heard Geithner would be their new boss in Washington. They think he is their guy. Summers may be a brilliant economist--everyone says so--but he, too, is a club member in good standing and now manages a huge hedge fund while he advises Obama. The president-elect needs to get a "second opinion"--someone from outside the financial club who can explain the flaws in the rescue strategy preached by Bush's treasury secretary Henry Paulson and Tim Geithner at the New York Fed.

Their approach has clearly been designed to preserve what's left of the Wall Street establishment and maintain the supremacy of the largest financial firms while the taxpayers pick up their losses. That model has failed and too many smart people know why. The bailouts have been too little too late and aimed at an impossible objective--persuading private capital investors to believe in the phony assurances proffered by the bankers. AIG, the insurance giant taken over by the feds, has turned into a bloody hemorrhage. Citigroup will be another and may soon be joined by other major banks demanding the same favorable terms. Wasting more public money on insolvent mastodons is the least of it. The real scandal is it doesn't work. It can't work because the black hole is too large even for Washington to fill. Government should take over the failing institutions or force them into bankruptcy, break them up and sell them off or mercifully relieve everyone, including the taxpayers.

Stock markets rallied again with the salvage of Citigroup. But not everyone in Wall Street was cheering. Christopher Whalen of Institutional Risk Analytics, the bank monitoring firm that has repeatedly been right about the banks when the government officials were wrong, had harsh words for the deal. "Pretending that Citi is going to be a going concern I think is silly," Whalen said. "We should be thinking about breaking this company up and redistributing the assets into stronger hands."

Will Timothy Geithner or Larry Summers advise the next president to face reality and throw in the towel? One hopes so, because Whalen warns: "By embracing Geithner, President-elect Obama is endorsing the ill-advised scheme to support AIG directed by Hank Paulson et al at Goldman Sachs and executed by Tim Geithner.... This scheme to stay AIG's resolution cannot possibly work and, when it does collapse, Barack Obama and his administration will wear the blame."

Barack Obama is too smart and perceptive to let this happen to his yet-unborn presidency. Maybe he should find out what Whalen knows.

About William Greider
National affairs correspondent William Greider has been a political journalist for more than thirty-five years. A former Rolling Stone and Washington Post editor, he is the author of the national bestsellers One World, Ready or Not, Secrets of the Temple, Who Will Tell The People, The Soul of Capitalism (Simon & Schuster) and--due out in February from Rodale--Come Home, America. more...
Copyright © 2008 The Nation

Labor's plan for the new administration

This was also posted at Steve's request on TalkingUnion at http://talkingunion.wordpress.com/2008/10/13/efca-the-economy-obama-and-labor/

David Cay Johnston: The economic crisis?

NYT Econ Journalist David Cay Johnston: It Doesn't Add Up
by: Paul Rosenberg
Tue Sep 23, 2008 at 18:15
NYT Pulitzer Prize-winning journalist David Cay Johnston, author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill, has written a letter to fellow journalists that deserves wide attention, urging a fundamentally skeptical approach to reporting on this purported crisis, warning against repeating the mistakes of the recent past, reporting on other Bush Administration panics:
Journalists, start your skepticism.
In covering the proposed $700 billion bailout of Wall Street don't repeat the failed lapdog practices that so damaged our reputations in the rush to war in Iraq and the adoption of the Patriot Act. Don't assume that Congress must act instantly, as so many news stories state as if it was an immutable fact. Don't assume there is a case just because officials say there is.

The coverage of the Paulson plan focuses on the edges, on the details. The focus should be on the premise. And be skeptical of what gullible Congressional leaders, most of them up before the voters in a few weeks, say after being given a closed-door meeting on supposed horrors.

The Administration has scared the markets and some key legislative leaders, but it has not laid out a coherent, specific and compelling need for this enormous proposal, which is the equivalent of a one-time 55 percent income tax surcharge. (Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)

He then goes on to talk about specific journalistic question-asking around the chief question of the day: is credit really about to vanish?

Economic Hypocrisy: Stiglitz

Dishonesty in the finance sector dragged us here, and
Washington looks ill-equipped to guide us out

By Joseph Stiglitz

The Guardian (UK)
September 16 2008


Houses of cards, chickens coming home to roost - pick
your cliche. The new low in the financial crisis, which
has prompted comparisons with the 1929 Wall Street
crash, is the fruit of a pattern of dishonesty on the
part of financial institutions, and incompetence on the
part of policymakers.

We had become accustomed to the hypocrisy. The banks
reject any suggestion they should face regulation,
rebuff any move towards anti-trust measures - yet when
trouble strikes, all of a sudden they demand state
intervention: they must be bailed out; they are too
big, too important to be allowed to fail.

Eventually, however, we were always going to learn how
big the safety net was. And a sign of the limits of the
US Federal Reserve and treasury's willingness to rescue
comes with the collapse of the investment bank Lehman
Brothers, one of the most famous Wall Street names.

The big question always centres on systemic risk: to
what extent does the collapse of an institution imperil
the financial system as a whole? Wall Street has always
been quick to overstate systemic risk - take, for
example, the 1994 Mexican financial crisis - but loth
to allow examination of their own dealings. Last week
the US treasury secretary, Henry Paulson, judged there
was sufficient systemic risk to warrant a government
rescue of mortgage giants Fannie Mae and Freddie Mac;
but there was not sufficient systemic risk seen in
Lehman.

The present financial crisis springs from a
catastrophic collapse in confidence. The banks were
laying huge bets with each other over loans and assets.
Complex transactions were designed to move risk and
disguise the sliding value of assets. In this game
there are winners and losers. And it's not a zero-sum
game, it's a negative-sum game: as people wake up to
the smoke and mirrors in the financial system, as
people grow averse to risk, losses occur; the market as
a whole plummets and everyone loses.

Financial markets hinge on trust, and that trust has
eroded. Lehman's collapse marks at the very least a
powerful symbol of a new low in confidence, and the
reverberations will continue.

The crisis in trust extends beyond banks. In the global
context, there is dwindling confidence in US
policymakers. At July's G8 meeting in Hokkaido the US
delivered assurances that things were turning around at
last. The weeks since have done nothing but confirm any
global mistrust of government experts.

How seriously, then, should we take comparisons with
the crash of 1929? Most economists believe we have the
monetary and fiscal instruments and understanding to
avoid collapse on that scale. And yet the IMF and the
US treasury, together with central banks and finance
ministers from many other countries, are capable of
supporting the sort of "rescue" policies that led
Indonesia to economic disaster in 1998. Moreover, it is
difficult to have faith in the policy wherewithal of a
government that oversaw the utter mismanagement of the
war in Iraq and the response to Hurricane Katrina. If
any administration can turn this crisis into another
depression, it is the Bush administration.

America's financial system failed in its two crucial
responsibilities: managing risk and allocating capital.
The industry as a whole has not been doing what it
should be doing - for instance creating products that
help Americans manage critical risks, such as staying
in their homes when interest rates rise or house prices
fall - and it must now face change in its regulatory
structures. Regrettably, many of the worst elements of
the US financial system - toxic mortgages and the
practices that led to them - were exported to the rest
of the world.

It was all done in the name of innovation, and any
regulatory initiative was fought away with claims that
it would suppress that innovation. They were
innovating, all right, but not in ways that made the
economy stronger. Some of America's best and brightest
were devoting their talents to getting around standards
and regulations designed to ensure the efficiency of
the economy and the safety of the banking system.
Unfortunately, they were far too successful, and we are
all - homeowners, workers, investors, taxpayers -
paying the price.
_____

Joseph E Stiglitz is university professor at Columbia
University and recipient of the 2001 Nobel prize in
economics josephstiglitz.com

________________

If the President, or someone, would tell the truth

Wall Street's Great Deflation

by William Greider

The Nation.com blogs - July 14, 2008 @ 12:38pm

http://www.thenation.com/blogs/notion/336722/print

Phil Gramm, the senator-banker who until recently
advised John McCain's campaign, did get it right about
a "nation of whiners," but he misidentified the faint-
hearted. It's not the people or even the politicians.
It is Wall Street--the financial titans and big-money
bankers, the most important investors and worldwide
creditors who are scared witless by events. These folks
are in full-flight panic and screaming for mercy from
Washington, Their cries were answered by the massive
federal bailout of Fannie Mae and Freddy Mac, the
endangered mortgage companies.

When the monied interests whined, they made themselves
heard by dumping the stocks of these two quasi-public
private corporations, threatening to collapse the two
financial firms like the investor "run" that wiped out
Bear Stearns in March. The real distress of the banks
and brokerages and major investors is that they cannot
unload the rotten mortgage securities packaged by
Fannie Mae and banks sold worldwide. Wall Street's
preferred solution: dump the bad paper on the rest of
us, the unwitting American taxpayers.

The Bush crowd, always so reluctant to support federal
aid for mere people, stepped up to the challenge and
did as it was told. Treasury Secretary Paulson (ex-
Goldman Sachs) and his sidekick, Federal Reserve
Chairman Ben Bernanke, announced their bailout plan on
Sunday to prevent another disastrous selloff on Monday
when markets opened. Like the first-stage rescue of
Wall Street's largest investment firms in March, this
bold stroke was said to benefit all of us. The whole
kingdom of American high finance would tumble down if
government failed to act or made the financial guys pay
for their own reckless delusions. Instead, dump the
losses on the people.

Democrats who imagine they may find some partisan
advantage in these events are deeply mistaken. The
Democratic party was co-author of the disaster we are
experiencing and its leaders fell in line swiftly.
House banking chair, Rep. Barney Frank, announced he
could have the bailout bill on President Bush's desk
next week. No need to confuse citizens by dwelling on
the details. Save Wall Street first. Maybe lowbrow
citizens won't notice it's their money.

We are witnessing a momentous event--the great
deflation of Wall Street--and it is far from over. The
crash of IndyMac is just the beginning. More banks will
fail, so will many more debtors. The crisis has the
potential to transform American politics because, first
it destroys a generation of ideological bromides about
free markets, and, second, because it makes visible the
ugly power realities of our deformed democracy.
Democrats and Republicans are bipartisan in this crisis
because they have colluded all along over thirty years
in creating the unregulated financial system and
mammoth mega-banks that produced the phony valuations
and deceitful assurances. The federal government
protects the most powerful interests from the
consequences of their plundering. It prescribes "market
justice" for everyone else.

Of course, the federal government has to step up to the
crisis, but the crucial question is how government can
respond in the broad public interest. Bernanke knows
the history of the last great deflation in the 1930s--
better known as the Great Depression--and so he is
determined to intervene swiftly, as the Federal Reserve
failed to do in that earlier crisis. By pumping
generous loans and liquidity into the system, the Fed
chairman hopes to calm the market fears and reverse the
panic. So far, he has failed. I think he will continue
to fail because he has not gone far enough.

If Washington wants real results, it has to abandon the
wishful posture that is simply helping the private
firms get over their fright. The government must
instead act decisively to take charge in more
convincing ways. That means acknowledging to the
general public the depth of the national crisis and the
need for more dramatic interventions.

Instead of propping up Fannie Mae or others, the
threatened firm should be formally nationalized as a
nonprofit federal agency performing valuable services
for the housing market. That is the real consequence
anyway if the taxpayers have to buy up $300 billion in
stock.

The private shareholders "are walking dead men,
muerto," Institutional Risk Analytics, a private
banking monitor, observed. Make them eat their losses,
the sooner the better. The real national concern should
be focused on the major creditors who lend to Fannie
Mae and other US agencies as well as private financial
firms. They include China, Japan and other foreign
central banks. Foreign investors hold about 21 percent
of the long-term debt paper issued by US government
agencies--$376 billion in China, $229 billion in Japan.

It is not in our national interest to burn these
nations with heavy losses. On the contrary, we need to
sustain their good regard because they can help us
recover by bailing out the US economy with more
lending. If these foreign creditors turn away and stop
their lending now, the US economy is toast and won't
soon recover.

Americans should forget about whining; it's too late
for that. People need to get angry--really, really
angry--and take it out on both parties. What the
country needs right now is a few more politicians in
Washington with the guts to stand up and tell us the
hard truth about out situation. It will be painful to
hear. They will be denounced as "whiners." But truth
might be our only way out.

[National affairs correspondent William Greider has
been a political journalist for more than thirty-five
years. A former Rolling Stone and Washington Post
editor, he is the author of the national bestsellers
One World, Ready or Not, Secrets of the Temple, Who
Will Tell The People and, most recently, The Soul of
Capitalism (Simon & Schuster).]

David Kay Johnson: Free Lunch ?

California School crisis and the economy

The school reforms initiated in the 1980s and currently in vogue in California suppress the ideological issue of equality of opportunity. Conservative school reform advocates portrayed bilingual and multicultural education as divisive and as a “distraction” from important issues (Bloom, 1987; Hirsch, 1987). Not surprisingly, the important equity goals embodied in the reforms of the 1960s and 1970s were ignored. Neo liberal efforts focused more on school management than on the actual dynamics of teaching and learning in classrooms. Moreover, few conservative reform efforts attended specifically to schools that were failing to meet the needs of poor and cultural minority students.
The ideology of neo liberalism in school reform remained dominant until late 2008 , but it is weakening. It lost dominance because it did not produce the results promised, a well functioning education system for all. And, the problems of neo-liberalism, an over reliance on tests, increasing drop out rates, fraud and corruption in accountability, and the persistent failure of achievement in low income schools, became more visible. The promises of neo-liberal reforms did not materialize.
The problems of neo-liberal reforms were not only those of the U.S. education system. Between 1980 and 2008, free market capitalism, or free trade, or neo-liberalism, produced wealth for the wealthy and economic stagnation for the great majority in the U.S. and destitution for vast millions in the world. Life did not get better for the average U.S. citizen. Education – long the hope of the majority of working people - did not produce advantages in the global economy. The U.S. economy stagnated while newly industrializing countries of China, Brazil, India, and to a lesser extent, Korea, Mexico, Singapore, and others grew – and inequality grew in these countries.

Schooling for Working-Class and Marginalized Students
Bob Chase, then president of the National Education Association, notes that “the richest nation in the world has yet to muster the political willpower to provide every child with a decent chance at quality education. At least 15 million children in America attend substandard schools…. That’s why the states must level up funding for the poorest public schools, especially inner city and rural schools” (Chase, 1997, p. 2). He says further, “To set high academic standards for all students nationally, without providing the resources to meet them, would be a cruel joke. As cruel a joke as promising to treat each child equally and never living up to that promise” (p. 2).
We spend less per student than 16 other modern industrialized countries (Slavin, 1998). Moreover, of these, we are the only country that does not actively promote equality of educational opportunity. In the Netherlands, for example, schools receive 25 percent more funding for each lower-income child and 90 percent more funding for each minority child than in the United States (Slavin, 1998). Clearly, schools serving working-class students and cultural minorities fail in large part because our nation refuses to invest in its children.
While we have now spent trillion dollars on a war in Iraq, the nation could have invested that money in South Central Los Angeles, or the south side of Chicago, in jobs and infrastructure and hospitals and schools. It is a political and economic question of great importance of why we can quickly find money for war after war, even when the U.S. is not attacked, but we can not find money for schools and teachers. ( Overthrow, 2006)


Our economy needs well-educated workers. We cannot permit schools to continue to fail. When schools succeed for the middle class and fail for working-class students and students of color, schools contribute to a crippling division along economic and racial lines in our society. Schools, as public institutions, must find ways to offer all children equal educational opportunity. Yet reformed schools are more exceptions than the common pattern, particularly in our urban areas.
Let us be clear about the reality of schools in our nation. Some middle-class schools could benefit from reform, but most middle-class schools work. Most schools in urban areas, however, are unable to provide the equal educational opportunity called for by our national ideals and by constitutional law. There will be no significant change in the quality of urban education without substantial new funds allocated to these schools. As the NEA’s Chase has noted, children in these schools need and deserve the same quality of buildings, teachers, materials, and resources as do students from affluent neighborhoods. Recently, legislation in the state of Maryland was introduced to bring all schools up to “adequate” levels of funding. This is a significant step toward equitable funding across districts ( Montgomery 2002) Important adequacy of funding decisions have been made in courts serving New Jersey (Abbot), California (Williams) and New York. Only in New Jersey has even modest efforts been made to respond to the constitutionally required equal protection of the students. (Karp, 2007) If even state constitution and courts can not or will not order adequate funding, what more can we expect? For example California is regularly noted as the richest state in the nation- and yet it ranks 47th in per pupil expenditures, California’s students rank 48th. out of the states in 4th. grade reading, 47th. in 4th. grade math, and 43rd. in 4th. grade science. California ranks 48th. in 8th. grade reading, 45th. in 8th. grade math, and 42nd in 8th. grade science. (Students First, 2007). California regularly scores at the lowest levels in the nation while expecting to retain its dynamic, growth oriented economic prosperity.
While major neo liberal organizations regularly issue reports claiming that reform of public education is necessary for economic progress, these groups are opposed to the one reform most likely to work; adequate funding of schools in low income areas. (Karp,2007)
The U.S. and most states need a substantive change to provide excellent schools for all children- and the political leadership of both parties refuses to provide the money for such change, instead they propose tests, standards, and blaming the teachers. This is the current status in California dealing with the budget. We can only conclude that legislative and political leadership, perhaps as a consequence of lack of democracy, wants to keep on talking and talking and do not wish to improve the schools to provide democratic opportunity.

Congress: Help the rich

Housing Policy: Free Market Vs. Help the Rich

By Dean Baker - April 3, 2008, 8:46PM
As we all know there is an ongoing debate in politics between those who favor market solutions and those who believe that the government must intervene to protect the rich.

Okay, the first group may not exactly be market fundamentalists, but the government intervention help-the-rich faction is definitely calling the shots these days, especially when it comes to housing policy.

The economy is in recession and job loss is soaring. The banking system is on life support, with the Fed handing tens of billions of dollars to the country’s biggest banks at below market interest rates. Millions of homeowners are facing foreclosure, and more than ten million are now underwater in their mortgages, owing more than the value of their house.

In such dire circumstances, Congress did the only thing it could; it gave more tax breaks to banks and homebuilders.
Yes, that is really what Congress, or least the Senate, proposes as the answer to the crisis facing the country’s homeowners. The Senate has approved a bill that would give a tax break worth more than $6 billion to homebuilders facing losses due to unsold homes and banks facing losses due to bad mortgages. That should make troubled homeowners sleep more securely.
Read more at Talking Points Memo

LAT Devolves: Labor and Economic Justice Go Uncovered

LAT Devolves: Labor and Economic Justice Go Uncovered

posted by Julia Rosen | 05.29.07
The LA Times is buying out 56 reporters contracts, including that of Nancy Cleeland, the paper's labor writer. She is leaving in "frustration with the paper's coverage of working people and organized labor, and a sad realization that the situation won't change anytime soon." Thankfully, the Huffington Post provided a platform for her to explain her decision and the massive failure of the LA Times to address issues of great concern to regional residents, their target market.

It's awkward to criticize an old friend, which I still consider the Times to be, but I think the question of how mainstream journalists deal with the working class is important and deserves debate. There may be no better setting in which to examine the issue: The Los Angeles region is defined by gaping income disparities and an enormous pool of low-wage immigrant workers, many of whom are pulled north by lousy, unstable jobs. It's also home to one of the most active and creative labor federations in the country. But you wouldn't know any of that from reading a typical issue of the L.A. Times, in print or online. Increasingly anti-union in its editorial policy, and celebrity -- and crime-focused in its news coverage, it ignores the economic discontent that is clearly reflected in ethnic publications such as La Opinion.

The city deserves and needs coverage of these issues, the vibrant LA County Labor Federation, and the impact of public policy on labor. The focus on crime and celebrities marks a shift away from real journalism. They are seeking quick profitability, not a quality product.

The editorial room has taken a hard rightward shift in recent years. This has had a profound impact on the op-ed columns they publish and their ability to retain writers like Cleeland. Too often the editorial page is in direct conflict with the items published in other sections of the newspaper.

Of course, I realize that revenues are plummeting and newsroom staffs are being cut across the country. But even in these tough financial times, it's possible to shift priorities to make Southern California's largest newspaper more relevant to the bulk of people who live here. Here's one idea: Instead of hiring a "celebrity justice reporter," now being sought for the Times website, why not develop a beat on economic justice? It might interest some of the millions of workers who draw hourly wages and are being squeezed by soaring rents, health care costs and debt loads.

In Los Angeles, the underground economy is growing faster than the legitimate one, which means more exploited workers, greater economic polarization, and a diminishing quality of life for everyone who lives here. True, it's harder to capture those kinds of stories than to scan divorce files and lawsuits. But over time, solid reporting on the economic life of Los Angeles could bring distinction and credibility to the Times. It also holds tremendous potential for interacting with readers. And, above all, it's important.

The answer to Cleeland's question is yes: writing on economic justice would be of great interest to tens of thousands of local residents, but they are not the current target demographic for the LAT right now. That is abundantly clear in these moves. The Times is eliminating hard journalism positions and hiring people for "celebrity justice". What a joke. What the heck does that mean anyways? One hopes that the reference to justice merely indicates coverage of legal proceeding rather than any advocacy angle.

There is and there will be a market for the type of journalism that Cleeland knows and loves, but it will not be with the LAT. The paper will sponsor less investigatory journalism of the type that brings Pulitzer Prizes and move towards blog style breaking news and celebrity fluff pieces. All major newspapers are dealing with declining subscription rates and the impact of the Internet. The LAT is taking a decidedly low-brow approach to solving their profitability problems.

For Cleeland's part, she has found another outlet for her writings.

I couldn't stop seeing them. I remembered the workers who killed chickens, made bagged salads, packed frozen seafood, installed closet organizers, picked through recycled garbage, and manufactured foam cups and containers. They were injured from working too fast, fired for speaking up, powerless, invisible. I saw that their impact on all of us who live in the region is huge.

Now, like hundreds of other mid-career journalists who are walking away from media institutions across the country, I'm looking for other ways to tell the stories I care about. At the same time, the world of online news is maturing, looking for depth and context. I think the timing couldn't be better.

With the Los Angeles Economic Roundtable, a source of economic research for 15 years, I'm exploring the development of a nonprofit online site to chronicle the regional economy from a full range of perspectives. We want to tap into the wealth of economic research being generated by academic institutions, business groups, labor unions and others, as well as the vast experience of ordinary Angelenos. After all, the economy is nothing more than how we live, work and consume, all drawn together.

I look forward to the development of such a website. It will be extraordinarily useful for my writings here at Working Californians. The blogs should be a natural outlet for the work being produced by the Roundtable. Hopefully, Cleeland will continue to write at HuffPo and other blogs. The story needs to be told and I glad the LAT's devolution will not silence her voice, for she speaks for millions without a voice in the public sphere.

Globalization works for the bosses

Democracy : A Journal of Ideas
Issue #3, Winter 2007

Crashing the Party of Davos
Globalization works for the bosses. Can we make it work for workers too?

Jeff Faux

A ll markets have a politics, reflecting conflict among economic interests over the rules and policies that determine–as the American political scientist Harold Lasswell once famously put it–"who gets what." And when markets expand, so do their politics. Thus, in the nineteenth century, driven by improvements in transportation and communication technologies, commerce spilled across state borders beyond the capacity of states to regulate them. The power of large corporations went unchecked, generating bitter and violent class conflict. Fortunately, the democratic framework of the U.S. Constitution permitted popular challenges to the excessive concentration of wealth and influence. Ultimately, through the Progressive and New Deal eras, the United States developed a national politics that imposed a social contract–a New Deal that provided workers, as well as business, with enforceable economic rights. Over time, the contract was extended to racial minorities, women, and others who had been previously excluded from expanding economic opportunities.

Today, markets have expanded again, beyond national borders–and beyond the capacity of the world’s nation-based political institutions to manage them. As a result, the global economy is sputtering. Witness the collapse of the Doha Round of trade negotiations, popular hostility to the "Washington Consensus" of development in Latin America and other underdeveloped regions, and the spread of social tensions over immigration and foreign-wage competition in both rich and poor countries. The current pattern of globalization is undercut- ting the social contract that national governments, in developed and in many less-developed countries, had imposed over the last century in order to stabilize their economies and protect their citizens from laissez-faire’s brutal insecurities. Even as the world grows more tightly knit, it still lacks a common politics for managing its integration.

Just as bringing stability to the American economy in the last century required stronger national institutions, bringing social balance to the global economy in this century will require stronger global political institutions to regulate global markets. Already, many such institutions exist–such as the World Bank, World Trade Organization (WTO), and International Monetary Fund (IMF). But in make-up and in culture, they are dominated by those who own and manage large concentrations of internationally mobile capital, whose goal is to escape market regulation and break free of obligations to stakeholders other than the global corporate investor. In the politics of the global market, these institutions are dominated by a single party: Call it the Party of Davos, after the Swiss resort where several thousand global corporate CEOs, government leaders, and their assorted clientele of journalists, academics, and an occasional nongovernmental organization (NGO) or trade union head have the equivalent of their party convention every winter.

We are therefore faced with a catch-22: a global economy that is both prosperous and fair requires strong global institutions, but given the lack of a constitutional framework for democracy on that scale, strengthening existing global institutions is unlikely to generate a better distribution of global income and wealth. Indeed, under the present structure, as the world’s markets become more integrated, world inequality grows.

This fundamental contradiction cannot be resolved by unruly demonstrators at the entrance to the World Bank or the IMF. Nor will it be resolved in polite public policy seminars with proposals for globalization’s winners to share their gains with the losers; that is not what winners voluntarily do. Serious reform will only come from the development of a cross-border politics that challenges the cross-border power of the Party of Davos. Pulling together a worldwide movement is a utopian goal, but doing this in a region-by-region process is not. In fact, American progressives could begin the process right here in North America by transforming the North American Free Trade Agreement (NAFTA) into an instrument for continent-wide social progress. A redesigned NAFTA, in turn, could serve as a critical building block in constructing a global economy that is more equitable, more stable, and more democratic.