We need an emergency jobs program now !

            We need an emergency jobs program now.

Unemployment and underemployment remain at crisis levels. We need jobs—and we need them now.  Wall Street has gotten its bailouts. Now it’s past time for Main Street to get some immediate help.

Counties, states and cities  are again cutting services; police, fire, health care.  And the state has cut k-12 education and higher education and now will cut more if Republicans continue to block  tax extension on the rich.  These cuts are a direct result of the looting of the economy by finance capital  in the economic crisis.

            At the same time,  GE, Bank of America, Exxon, etc. manages to evade taxes while off-shoring jobs.   In a struggling economy, these companies obtain tax refunds, while bringing in billions (GE earned 14.2 billion and received a tax benefit of 3.2 billion).  Offshore tax havens, tax loopholes and tax breaks (tax expenditures), allow these corporations to rake in billions while you and I   struggle to pay our  taxes. 

            And the shell game goes on –

Taxes have been progressively lowered on the upper 1%, starting with Reagan and continuing to the point where Warren Buffett famously observed that he paid taxes at a lower rate than his secretary.  The justification for these cuts, entirely unsupported by  evidence, is that jobs are created.  In this upward distribution of wealth, 1% of the population tripled their share of after-tax percentage of our nation’s total income from 1980 to 2006, and captured 75% of the economy’s growth between 2002 and 2006 (Buchheit, DePaul University). Meanwhile, the bottom 90% saw their share drop 90%.

            It is past time to tax the corporations and the rich.  We should collect fair taxes and pay for vital services first; fire, police, schools, health care, etc. 

Although the Great Recession officially ended in June 2009, the US economy has failed to provide the jobs needed for long term, sustained growth. The  tax subsidies, budget cut mania costs jobs and makes the recession worse.  At the current rate of job creation most economists believe we would not recover the 8 million jobs lost until 2016. To generate the growth required to employ both the unemployed and underemployed, we need a serious commitment to job creation such as that embedded in HR 870- -the jobs bill introduced by Rep. John Conyers, Jr. (D- MI).

             We need to  rebuild America’s schools, roads and energy systems. America still has at least $2.2 trillion in unmet infrastructure needs. This requires tax sources.  The rich and the bankers are the appropriate sources. We should put people to work to fix our nation’s broken-down school buildings and invest in transportation, green technology, energy efficiency and more.

      We need to increase aid to state and local governments to maintain vital services. State and local governments and school districts have a $178 billion budget shortfall this year alone—while the continuing  recession creates a greater need for their services. States and communities must get help to maintain critical front-line services, prevent massive job cuts and avoid deep damage to education just when our children need it most.

"Taxes are the price we pay for living in a civilized society." 
- Oliver Wendell Holmes, former US Supreme Court Justice


California has long relied on mostly short-term solutions to our budget problems, which has done us no long-term favors. The health of California's public schools depends on stable tax revenues. It is time to demand action to restore fairness to the system and make sure everyone is paying their fair share.

The bottom 20% of wage earners in California pay 11% of their income in taxes, while the top 1% of wage earners only pays 7.8%. Corporate income grew over 400% from 2001-2008 compared to 28% for personal income. And additional tax loopholes were provided to big corporations in the 2008 and 2009 budgets, worth $2 billion annually.

The cost of funding state services has shifted from corporate to personal income tax payers. When Proposition 13 was passed, responsibility for funding public schools shifted from the taxpayer to the state.  Now the state is in financial crisis and cannot foot the bill. We must reevaluate how we are funding our government and make it fair and equitable. The fact of the matter is California is a moderate tax state, ranking 15th in taxes and fees compared to other states, even though we have the 8th largest economy in the world.

Investing in public education (dollar for dollar) grows the economy more than tax cuts and corporate subsidies. Dishearteningly in 2009, California ranked 43rd in per-pupil spending. And given the drastic funding cuts of the past 3 years, we’re not moving in the right direction. Our goal is simply to have the adequate amount of per-pupil funding needed to provide all students the opportunity for a quality public education.

See the AFL-CIO jobs agenda.  http://www.aflcio.org/issues/jobseconomy/jobs/jobsagenda.cfm
and report on corporate profits at  http://blog.aflcio.org/2011/05/05/corporate-profits-soar-81-percent-but-few-jobs-created/

This is a jobs depression !

 We need to build the promise of California.  The government was created to promote the general welfare.  That promise is a good job for all,  the opportunity to have  a rewarding career, and the chance for a good education.  The tax and budget cut mania  does not promote good jobs, rewarding   careers.  It only digs the hole deeper.

See my post here below listed as  “An Open Letter to Governor Brown “ providing a list of revenue sources to allow California to grow needed jobs.

You can’t cut your way out of the recession. Cutting jobs makes the recession worse. Just look at the current situation of Ireland and Great Britain. You can see what a budget cut approach produces- stagnation.

Response to Gov Brown's State of the State

 SACRAMENTO PROGRESSIVE ALLIANCE

Dear Governor Brown,                                                Jan. 31, 2011

In your State of the State Address tonight you requested ideas on where revenues might come from to avoid the painful budget cuts proposed.   Here are our recommendations.

It is clear that the California budget is in crisis, and the issues are clear  in Governor Brown’s budget proposals.  There are no quick nor easy solutions. We can not simply cut our way out of the crisis; budget cuts and lay offs make the recession worse.

School funding reveals the nature of crisis.  In the last two years the k-12 budget “solutions” have cut 4.6 billion dollars from the schools. We have larger classes and fewer teachers.  School reform has stopped- except for the politicians’  speeches.  School funding makes up a total of 30% of the state budget.  Any crisis in the state budget and any cuts in the state budget will make school budgets worse.

California will need to raise taxes to fund  schools and to repair the social safety net.  Anti tax radicals and Republicans  oppose any tax increases.   The state ‘solutions’ of the last three years depended upon receiving federal stimulus money.  The stimulus monies are almost finished and with the Republican winning control  of Congress there will probably not be more funds.

The world wide economic crisis was created by  U.S. finance capital and banking, mostly on Wall Street , ie. Chase Banks, Bank of America, AIG, and others.   Finance capital produced a $ 2 trillion bailout of the financial industry, the doubling of U.S. unemployment rate and the loss of 2 million manufacturing jobs.  More than 15   million people are out of work.  At the national level almost all of the projected deficit through 2020 will be the result of three factors: the Great recession, the tax cuts of the early 2000s under George W. Bush, and the hundreds of billions of dollars of war spending.

The economic stalemate in California has produced school funding cuts far beyond reasonable levels.  At present,  the state ranks 47^th among all states in its per-pupil spending, spending $2,856 less per pupil than the national average.

  In California we need to spend more state money to improve schools, to develop roads and infrastructure, and to create jobs.  Those who are well educated are more employed and paying taxes while those with less education, those who leave school, are in a prolonged economic crisis.  It is well documented that our schools and our universities are in a finance crisis.  We need to be preparing young people for new jobs and to create new industries.  The success of students in higher education will significantly determine California’s future competitiveness and prosperity.   Improving education, including both k-12 and higher education, makes California more likely to attract investment and the creation of new jobs and new industries.

California government must protect and empower our citizens. To foster prosperity  it must prepare the young for civic participation. (BTW. This has been recognized since the first California Constitution of 1849).  Protection includes health care, social security, safe food, environmental protection, safe streets, job protection, etc. Our state  needs roads, bridges, telephone lines, communications systems, energy and quality education.  These services make freedom and prosperity possible. Conservative opposition to these services ignore the economy’s  need for infrastructure.

Specific proposals  to increase revenue:

·      Enforce the current California law taxing the sales of goods by out of state companies ( such as Amazon)  over the internet.  Gain. 1.2 billion $. There is already legislation to do this.

·      Pass the 10.1 billion dollar jobs package as proposed in the Assembly last year.  This would pay off debts to local governments and keep teachers in classrooms to avoid massive layoffs.  Pay for the Jobs package with a new oil severance tax.  California is the only oil producing state in the country that imposes no taxes on the pumping of oil. The proposed tax was to be 6% of the sales price of oil.  Alaska and Louisiana both charge 12.5%.   

·      Establish a  public state bank such as the Bank of North Dakota. Initially move 25% of all state revenue, receipts and reserves into this bank and 25% of all PERS and STRS funds. Manage the bank as a public service. Over time, finance state borrowing from our own bank.   Gain.  6% of the budget.

·      Continue efforts to eliminate waste, fraud and abuse where it exists.  There may be legitimate savings here.  Employees, particularly managers should not be able  to inflate pay in the year or two before retirement in order to receive an outsized pension benefit. While these cases  are not the major source of financial stress of pension systems, abuses are frequently publicized and undermine confidence in the administration and fairness of public employee pensions.

·      Repeal the 2009 and 2008 tax cuts for corporations passed to gain the extra Republican votes for the budget.  Savings $1 billion.

·      As a consequence of the just passed federal tax reductions, including the reduction of taxes to the wealthiest taxpayers,  Washington-based Citizens for Tax Justice estimate that  California’s richest taxpayers will be saving about $14 billion annually on their federal taxes. The next wealthiest 4 percent, with an average income of $310,000, will save another $6.5 billion.  State taxes should be increased on these two groups to secure this available 20.6 Billion dollars to fund the necessary jobs creation projects. 

·      Sell state bonds to gain funds for investment. At present we pay bond holders a market rate.  Rates are so low at present we should borrow and invest.  To achieve a   stimulus we could sell many more bonds in particular to  the public employees retirement system PERS  and STRS.  

·      Many more sources of revenue need to be developed.  We have been thinking too small and looking in the wrong directions           

Since the state can not go into debt it will need to use tax policy to raise the funds necessary for public investments.  The state has also been targeting particular industries, notably the film industry with tax subsidies and local governments have been providing tax subsidies in the form of enterprise zones.  Along with needed  tax reform, these forms of subsidies (debt) should be reformed to focus on economic growth.    Tax suggestions were in the prior section.

 The legislature could also place on the ballot a “split roll” property tax initiative to deal with the present inequities of taxation. 
 In virtually every county, commercial property is paying a far smaller share of the property tax since Proposition 13 passed in 1978.


Commercial property is able to exploit huge loopholes in the law to avoid reassessment upon change in ownership.

Alternative;

             We can follow the process of Ireland and Greece and dramatically cut services and raise taxes and impoverish the economy.  Then, since the state  is poorer and has less income you will need to raise more taxes and cut more services all in an effort to protect the excessive profits of bankers and bond holders.

California can continue the current process of cuts and reductions.  The fiscal crises of the states – all the states- has caused major cut backs and retrenchment and made the economic crisis approach a depression.  The state cut backs are greater than the federal stimulus producing a prolonging of the crisis for working people.  Continuing on the present direction produces obscene profits for billionaires along with growing poverty and hardships for the majority.

In Conclusion:

    Providing  you with these sources reveals that “another way is possible.”  We refuse to accept the severe cuts in social services, education, police and fire protection, and health care among others. Relying upon budget cuts to “balance” the budget means leaving in place the many current corporate subsidies for the well off while producing more unemployment and hardship for the majority.

   Please use your leadership position to produce a humane budget this year.  Then, if you do, we can work together to pass the proposed revenue initiatives in the June election.

Duane Campbell,

For the Sacramento Progressive Alliance. 

A committee of Progressive Democrats of America

2827 Catania Way, Sacramento, Ca. 95826

Sources

Gar Alperovitz, America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy.  (2005) John Wiley and Sons

Dean Baker,  Plunder and Blunder: The Rise and Fall of the Bubble Economy, (2009)

Campbell, Duane.  Choosing Democracy: a practical guide to multicultural education. (2010)

Justin Fox,  The Myth of the Rational Market: a History of Risk, Reward, and Delusion on Wall Street. (2009)

Jeff Faux, The Global Class War: How America’s Bipartisan Elite Lost Our Future- and What It Will Take to Win It Back. ( 2006)

William Grieder,  The Soul of Capitalism: Opening Paths to a Moral Economy. (2003).

David Harvey, The Enigma of Capital and the Crisis of Capitalism.  (2010)

Paul Krugman,  The Return of Depression Economics and the Crisis of 2008.  (2009)

Nomi Prins.  It Takes a Pillage: Behind the Bailouts, Bonuses and Backroom Deals from Washington to  Wall Street. (2009)

Joe Schwartz,  The Future of Democratic Equality; Rebuilding Social Solidarity in a Fragmented United States. (2008)

Joseph E. Stiglitz.  Free Fall, America, Free markets, and the Shrinking World Economy.  (2010

Oppose the Republican Message Machine

For this week, in response to the State of the Union,  and the Republican message machine, we urge Progressive Alliance members to write letters, post responses, and talk to their neighbors about the need to create jobs to get out of this economic crisis.   Here is a sample message.

            We need to build the promise of America. ( or of California, New York, Illinois, etc)

  That promise is a good job for all,  the opportunity to have  a rewarding career, and the chance for a life that is more than simply the workplace.  The austerity paradigm underlying the tax and budget cut mania  does not promote good jobs, rewarding   careers. 

            You can post this on blogs, use it as a message in responses, respond to letters in the newspapers, etc.

Why so limited?  Because our goal for this week is to keep jobs on the agenda.  In this we are working alongside the AFL-CIO and others. Here is their work. http://www.aflcio.org/issues/jobseconomy/jobs/americaneedsjobsnow.cfm

Starting next week we will have a more developed campaign.  The entire campaign is described here.  https://sites.google.com/site/sacramentodsa/Home/media-strategy

Create 6 million jobs!

How to Create 6 Million Jobs and Save 3.4 Million Homeowners with a Payroll Tax Increase:  see the Talking Union post to the left.

Dangerous and misguided deficit recommendations

A dangerous approach to deficit reduction

Last week, the co-chairs of the National Commission on Fiscal Responsibility and Reform and the Peterson-Pew Commission on Budget Reform released proposals for reducing the federal deficit. EPI’s analysis shows both are seriously misguided plans that could undermine badly needed job creation, prolong the jobs crisis, and ultimately further weaken the country’s fiscal health.

In response, EPI’s Research and Policy Director John Irons issued a statement that the National Commission on Fiscal Responsibility and Reform “is running seriously off track.” Irons noted that almost half of the adjustments suggested in the Commission’s co-chairs proposal would come from cuts to discretionary spending, a portion of the budget that is not responsible for long-term deficits. At the same time, it proposes little to increase tax revenue and gives barely a nod to the prime driver of longer-term deficits, rising health care costs, suggesting only that lawmakers establish a process to control health care cost growth. The plan’s proposed changes to Social Security would result in reduced benefits for most people, Irons stressed. This initial proposal was drafted by co-chairs Alan Simpson and Erskine Bowles to stimulate discussion. It will be followed on December 1 by a final report.

In a separate response, Irons and Policy Analyst Andrew Fieldhouse called the Peterson-Pew deficit reduction target dangerous and misguided. They stressed that the Peterson-Pew plan, which calls for immediate deficit reduction aimed at reducing public debt to 60% of gross domestic product by the year 2018, “would slow the economic recovery enough to possibly risk a double dip recession.”

EPI believes that the current economic downturn is not a reason to adopt fiscal austerity. Rather it is time to invest in the middle class, create jobs, and spur economic growth. In the coming weeks, EPI, together with Demos and The Century Foundation, will release a Fiscal Blueprint that details the policies we believe will create jobs now and achieve long-run fiscal sustainability.

20 more years of high unemployment?
The Labor Department's November 5 employment report showed a nationwide unemployment rate of 9.6%. Although that report contained the welcome news that 159,000 private-sector jobs were created in October, even that level of job creation is not sufficient to reverse a backlog of 14.8 million unemployed workers anytime soon. Economist Heidi Shierholz, in her analysis of the latest jobs data, said that if the pace of job growth seen in October were to continue going forward, it would take a staggering 20 years to return the country to its pre-recession rate of unemployment.

Two million unemployed workers are at risk of losing their unemployment insurance benefits before the end of the year if Congress fails to continue benefits for the long-term unemployed. EPI’s research shows not only that extended benefits are needed, but that they are an effective policy for creating jobs. EPI’s analysis of new Labor Department data on job openings released November 9 shows there were five unemployed workers for every one job opening in September, a ratio that has actually widened since the summer. This means that for four out of five unemployed workers, there are still no jobs.

Shierholz and EPI President Lawrence Mishel outlined the benefits of emergency unemployment insurance in the Issue Brief A Good Deal For All, where they showed that maintaining these extended unemployment benefits for the long-term unemployed will create about 700,000 full-time equivalent jobs and save millions of people from poverty. The authors also note that because unemployment insurance benefits are quickly invested in local communities, thereby stimulating economies and creating jobs, the “sticker price” of these benefits is considerably less than advertised. “The government will bring in more revenue from the taxes paid on the wages earned by those who otherwise would not have jobs,” they state.

EPI’s latest research on the benefits of unemployment insurance builds on earlier work, including the May 2010 panel discussion, Long-term Unemployment: Causes, Consequences, and Solutions, where a group of leading economists agreed that extending unemployment insurance during periods of high unemployment was smart fiscal policy. A short video of some of the panelists from that event explaining how unemployment insurance creates jobs is available on EPI.org.

Out Sourcing jobs

Report on job growth- the reality

Fiorina outsourced jobs, bought a yacht !

Unemployment and Meg Whitman

Grand Hotel in Sacramento. October 14,2010.

Greenhagen and Escalera joined more than 100 other union members and community allies to protest Whitman’s opposition to high-speed rail and the hundreds of thousands of jobs it would create.

Greenhagen:

I know what it feels like to be unemployed. It hurts. Meg Whitman doesn’t know the first thing about us, and she doesn’t care what we’re going through. I came on this tour to raise awareness about this election and where the candidates stand on jobs. The more I talked with my brothers and sisters about the situation across the state, the more I came to understand that none of us is alone in this struggle for jobs. We need leaders who will stand up for us and help get us back to work. Meg Whitman says she’ll kill this project and the hope of jobs it brings. Jerry Brown will put us back to work. We all need to get out and vote because our jobs depend on the outcome of this election.

The Sacramento protest was the final stop on the Good Jobs Express Tour, which rallied construction trades members and working families in the cities of Anaheim, Bakersfield, Fresno, Modesto and Sacramento. Greenhagen and Escalera were joined at each stop by elected officials, labor leaders, environmental advocates and community allies to make the case for high-speed rail and candidates who support it.

From Steve Smith. AFL-CIO, posted on the California Progress Report.

Whitman V. Brown. The California Economy

Reviving California's economy: Meg Whitman versus Jerry Brown

Both have put forth plans to address the state's loss of industrial manufacturing. Neither goes far enough.

Harold Meyerson

For all their differences, Meg Whitman and Jerry Brown agree on one thing: California needs an industrial policy.

For half a century, aerospace was California's dominant economic engine. But then the end of the Cold War led to a radical contraction of the aerospace industry. Since then, the state has subsisted on bubbles, and it has wilted each time they popped. Neither the dot-com industry nor housing — the two chief sources of economic activity in this state for the past 15 years — offered the kind of sustainable and broadly shared prosperity that Californians took for granted in the years between 1940 and 1990. The high-tech companies that have flourished in this state over the past 20 years have created great wealth, but with much of their manufacturing done offshore, that wealth has not been shared with California production workers.

Both Whitman and Brown understand that loss of manufacturing is a key factor in the state's economic decline, and they have put forth economic plans to address it. But neither of their strategies does enough to restore the state to its onetime industrial preeminence.

Whitman seeks to remedy the problem through classic Republican policies: reducing taxes and regulations on businesses. Some of her targeted tax cuts make sense, like increasing the R&D tax credit and creating a tax credit for factory equipment. But the massive cuts she proposes to state services will only further the decline of California's aging infrastructure and harm a public education system that badly needs improvement.

Brown also favors tax reductions for factory equipment, and outlines other incentives to boost manufacturing. He also commits himself to major infrastructure upgrades, and he singles out the clean-energy sector as the industry the state should do most to help. Unlike Whitman's plan, his clean-energy program has a demand as well as a supply side: By mandating that 33% of the state's electricity come from renewable sources, his plan would create a larger market for the industry it seeks to boost.

Brown's ideas are good as far as they go, but they don't go far enough in one key particular: identifying the revenue sources for the improvement of our infrastructure and the rebirth of our manufacturing. History here may provide a guide.

Contrary to libertarian myth, California's economic ascent was largely funded and devised by its governments. To obtain the water that enabled the state to grow during the early 20th century, California historian Kevin Starr wrote, "Los Angeles, and, to a lesser extent, San Francisco, functioned more like entrepreneurial corporations … than passive municipalities concerned narrowly with public safety and the delivery of local governmental services." In the years following World War II, government spending on defense was the primary fuel for California's growth. And it was investments by Pat Brown, California's greatest governor, in the state's universities, roads and water systems that made the state's economy the marvel of the world for much of the second half of the 20th century.

How can the state, in its sadly depleted condition, make that kind of investment now? One possibility might be a state infrastructure bank of the type proposed on a national level by Connecticut Democratic Rep. Rosa L. DeLauro. As DeLauro has sketched it out, such a bank, by committing $25 billion in public funds, could generate close to $600 billion in public-private funds going to build or improve rails, roads, bridges, airports and the like. Another possibility could be a state innovations bank, which could fund some of the clean-energy activities that Brown has proposed, and could help innovative new companies scale up to mass production here rather than go abroad. Former Intel CEO Andy Grove has identified this stateside scaling-up issue as crucial to America's economic future. If California has any of the ingenuity and gumption it used to have, surely the state can play a role in helping innovative companies thrive here.

During Jerry Brown's first term as governor, a number of California economists argued for establishing a state bank, but the idea never took off. California needs one now a lot more than it did in 1975. Brown's current ideas are, on balance, better than Whitman's when it comes to rebuilding the state's economy, but they too will fall short without a plausible source of funding. The question will be whether Californians can summon the will, as they did throughout much of their history, to create the policies and commit the funds to reconstruct their state.

Harold Meyerson is editor at large of the American Prospect and a columnist for the Washington Post. He is doing a six-week guest columnist stint on our Op-Ed page on Tuesdays.

Los Angeles Times

Galbraith: The issue is jobs

Don't be fooled by hawks who warn of a "long-term deficit crisis," says the celebrated economist—expanding entitlement programs will save money and free up jobs for those who really need them: young people. Plus, read the manifesto here.

In the Great Crisis, the United States lost about eight million private jobs. The unemployment rate rose above ten percent. And the ratio of employment to population fell almost five percentage points. Very few lost jobs have been replaced: private employment has risen only about a million since the worst days. In the public sector the effect of the American Recovery and Reinvestment Act was only to offset large layoffs being made by state and local governments, so public employment has hardly risen at all.

Two million of the lost jobs are in construction, which faces a long slump. Three million were lost in manufacturing, which is down 40 percent since 2000, and those jobs likely won't ever return. Unemployment rates for Black, Asian, and Latino workers have all doubled. The average duration of unemployment has risen to an astonishing 35 weeks, with nearly half of all unemployed out of work for almost a year.

So: Jobs are Priority One. But very little is being done. And what little is done is hotly contested. Even extending unemployment insurance proved difficult—and UI, while necessary, is not a jobs program.

Sir Harold Evans and the economists who signed his letter thus rightly argued for stronger action—action that would increase public budget deficits now. That action could include jobs programs, it could include revenue sharing for states and localities, it could include a national infrastructure/energy/climate bank, and it could include tax cuts to boost the spending power of private households.

• Read the full manifestoBut as this debate gets going, there are two traps. The first is the idea that we need another "stimulus package." How I hate that phrase! The message it conveys—of something fast, temporary, quickly withdrawn—is wrong. We're not in an ordinary postwar recession. We've suffered a major collapse of the financial system. Repairing this, and working off household debt loads and the housing glut, will take years. Yes, the economy can recover without strong private credit, but the recovery will be slow and unemployment will not be cured.

The second trap is the idea that we should undo it all later on. Even worse, many argue that we must make cuts today, effective at a later time, to offset the "stimulus." Since the major programs which are authorized today for later effect are Social Security and Medicare, this translates to "cutting entitlements" in order to bring "long-term budget deficits under control."

This is a pernicious idea, with two major foundations. One is the simple political appeal of a balanced argument—the same as Obama's decision to stay in Afghanistan while leaving Iraq. It's nice to have things both ways, to be for stimulus now and austerity later. The problems come, in war and economics, when you have to deal with the consequences, for real people, of actions taken largely for rhetorical effect.

The second foundation of the "long-term deficit crisis" argument is the work of the Congressional Budget Office. CBO creates its long-term deficit projections with a bizarre two-step operation. First, it wipes out the deficits caused by unemployment, simply by assuming that high unemployment will go away soon. And then CBO recreates the projected deficit by assuming (a) continued rapidly rising health care costs, and (b) much higher interest rates, while (c) overall inflation remains extremely low.

These assumptions are a mess. They are implausible and internally inconsistent. I know of no economist who defends them on their merits. They are accepted only because most people have never looked at them critically, and because they are politically convenient to some. But in the real world, you cannot make good policy on the basis of forecasts as bad as these.

In the real world, unemployment isn't going to go away soon. And the only risk of fighting it too vigorously now is that there might be some more inflation or a decline in the value of the dollar much later on. Except for energy prices, these risks are very, very remote. World inflation disappeared 30 years ago with the collapse of union power, global commodity gluts, and the rise of low-wage manufacturing in (especially) China. The dollar is, in fact, too strong right now, because of the problems in Europe. And while energy prices are a risk, the way you deal with that is with an energy policy, not by deficit-cutting.

While seers from Wall Street proclaim a "deficit crisis," obviously the capital markets don't take that talk seriously. If they did, they wouldn't be willing to lend to Uncle Sam for thirty years at four percent! But in fact they are doing this every week. Yes, long-term interest rates could change, but supposedly everything we need to know about future deficits is known right now. There simply is no funding problem for the U.S. government, and in the real world of financial markets, none is foreseen.

So what are the real effects of cutting Social Security and Medicare?

Medicare pays doctors' bills for the old. It pays out at lower rates than does private insurance for working people. Cutting Medicare would mean two things: less health care for the elderly, and therefore more financial stress on their families. And more health care costs overall, as people substitute with private insurance for the public cuts. Both of these are very bad ideas.

Social Security pays to keep working people (and their dependents and survivors) out of poverty when they are old. It spreads its benefits to all who have worked, whether they have children who would otherwise support them or not. The payroll tax spreads the burden to all working people, whether they would otherwise be supporting elderly parents or not. Both of these transfers are fair, modest, and sustainable. Cutting Social Security would simply create more poor elderly—those who could not turn to their children—and more stressed working families—those with parents in need. Both of these are very also bad ideas.

In fact, the right response to the crisis is to expand, not cut, both Social Security and Medicare.

The reality is, we are never going to make up good new jobs for everyone who has been hit. (I'd love to be the next Harry-Hopkins-and-Harold-Ickes-combined, but I'm not going to get the job.) So let's face reality, and make some tough decisions about who we want to be jobless: the relatively old or the very young. Seen this way, it's an easy choice.

There are many older workers who've already worked hard jobs for many years. They would love to retire. But they don't, because early retirement on Social Security is very costly: you lose benefits every month over your entire future life, unless you hang on to the regular retirement age. We should give these people a break, and lower, not raise, the full-benefit Social Security retirement age—say, to 62 for the next three years. This would give millions a chance to get out, if they want to.

Similarly for Medicare. There are many older workers who have health needs, and who work on only because they can't afford to lose their employer-based insurance. Let them out! In the crisis, I proposed cutting the Medicare-eligibility age to 55 (and the Senate almost included this in the health care reform bill). It's still a good idea, but something more moderate, such as opening a three-year window for early exits, would be better than nothing.

Encouraging early retirements would mean that young people—just out of school, with fresh skills, good health, and high energy—would get the jobs they need now. They would not be stuck waiting, or spinning their wheels in school, for years and years. Meanwhile, the retirees, supported by Social Security and Medicare, would provide a continuing stable support to total demand, creating jobs for others as they get older.

This is the way the economy should work. When we have older people, we must care for them, and the best way to do that is to give them the resources to support themselves. There is no "burden problem" as our economy is plenty productive for the working population to support the elderly in modest comfort, particularly if we include some of our truly wealthy in the tax base.

Care for the elderly, energy, climate change, the Gulf of Mexico catastrophe, our decayed infrastructure, public health—these are real issues. Let's deal with them. The "long-term budget deficit" is a phony problem, ginned up by politicians, some economists, and the historic enemies of Social Security and Medicare on Wall Street. For God's sake, let's not sacrifice our most successful social programs to the hysteria we're hearing from them.

Click here to read the original manifesto

James K. Galbraith teaches at The University of Texas at Austin. He is the author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too.

US Senate Fails jobs bill

Earlier this afternoon, the US Senate failed to pass its version of jobs legislation. In response, Jean Ross, executive director of the California Budget Project, a nonpartisan public policy research group, issued this statement: "Nearly 1.5 million unemployed California workers won't receive unemployment insurance (UI) benefits that they would spend quickly and close to home, boosting the local economy and helping local businesses avoid layoffs. More than 2 million people nationwide will lose these benefits if Congress fails to act before leaving for the July 4 recess. California won't receive $1.8 billion in federal assistance - funds assumed in the Governor's May Revision, as well as the Senate and Assembly budget plans - forcing even deeper spending cuts than those enacted in recent budgets and already on the table as a result of the unprecedented drop in revenues brought on by the recession. These actions will cause private- and public-sector job losses and raise the risk of a double-dip recession as the loss of spending power ripples through the economy. Without more federal aid, state budget-cutting actions nationwide place at risk as many as 900,000 jobs over the next year. California will have to end its TANF Emergency Fund, which has enabled counties across the state to create 20,000 jobs, putting people back to work and keeping dollars flowing through local economies. Congress should not leave for the July 4 holiday until it extends unemployment benefits, provides additional aid to cash-strapped states, and extends funding for the TANF emergency jobs programs."  Jean Ross. California Budget Project

Senate Republicans kill jobs bill, unemployment

AFL-CIO President Richard Trumka said the Republican’s action toSenate Republicans last night blocked a jobs bill that would have extended unemployment insurance (UI) for long-term jobless workers. Some 250,000 unemployed workers a week are losing their unemployment benefits because they can’t find jobs.

block unemployment benefits for the hardest-hit jobless Americans is an outrage–sadly, it’s simply the latest shame. All members, both Republicans and Democrats, must remember that come November, voters will be thinking about one thing—jobs.

Senate leaders scaled back the bill to win the 60 votes needed to end the Republican filibuster against the bill. The 56-40 vote included all Republicans present and Sen. Joe Lieberman (I-Conn.) and Sen. Ben Nelson (D-Neb.)

The extended UI program expired May 31 after the Senate left town for the Memorial Day recess without acting on a House-passed jobs bill that would have kept the long-term unemployment benefits program alive. The U.S. unemployment rate is near 10 percent, at least 15 million people are out of work and 6.8 million people have been out of work for 27 weeks or more.

Not only did Senate Republicans turn their backs on jobless workers–they also protected Wall Street investors and big oil companies like BP. The bill would have closed tax loopholes that allow hedge fund and other investments managers to shelter income at lower tax rates than working families pay on their income. It also increased the liability taxes on oil companies. Sen. Richard  Durbin (D-Ill.) said Republicans

said “Yes” to the special interest groups they always stand by.

Further Senate action on the bill is not expected until next week

From AFL-CIO blog..

We need Jobs! Jobs! Jobs!

 

A Jobs Crisis Without Outrage?

 

It is simply amazing that hardly anyone in Washington is fully engaged in pushing for job creating legislation.  At least 8,000,000 jobs have been lost since the recession began. Hundreds of thousands, perhaps a million, public employees in state and local government face layoffs as a result of budget cuts caused by reduced tax revenues as a consequence of all the lost jobs. Unless something is done it is entirely possible, even likely that we will face a double dip recession resulting in even more job losses.

 

The fact is that we are losing an ideological struggle in Washington. The deficit hawks in both parties argue that too much is being spent. They have prevented extensions of unemployment and subsidized COBRA for the unemployed. They have blocked extending unemployment to distressed workers beyond 99 weeks in states with high unemployment. And they have discourage the passage of new job creating legislation that would provide localities with new funds to prevent public employee layoffs and generate job growth in the private sector. 

New York Times Columnist Bob Herbert described the problem well in his June 14th column. The deficit hawks are a problem in the House and Senate. Although because of senate rules they are more of a problem in the Senate.

 

We must act now to counter the deficit hawks and push for job creating legislation and other measures that would help restore the economy.

 

The American Jobs and Closing Tax Loopholes Act is a jobs bill our economy needs. It is not enough, but it is something the Senate should pass. Today the Senate is scheduled to vote on a key procedural motion--an up or down vote on the legislation. Please call or email your senators to urge them to support an up or down vote on theAmerican Jobs and Closing Tax Loopholes Act. To contact your senators you can call the congressional switchboard 202-224-3121 and ask for your senator by name or you can email them through the Senate web site.

 

Jobs legislation and community action in support of job creation and against budget cuts should be a priority for every DSAer. We will do our best to keep you posted on legislation and action.