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Post-election, President Obama's populism goes missing

When it comes to reviving the middle class and reducing the country’s widening income gap, President Obama in his second term has so far offered little more than a classic bait and switch from the strong promises he made during his successful reelection campaign.

While the president has provided leadership on issues that don’t challenge the economic status quo, like immigration reform and same-sex marriage, his administration is still not bucking the bankers and the austerity hucksters peddling their scams.

Meanwhile, the president pleads for patience, based on the discredited theory that if we just hold out a little longer, the recovery that’s humming along for the 1 percent will trickle down to the rest of us.

When Republicans floated that myth during the Reagan administration, Democratic officials howled. Now they fall in line, with a barely a peep as issues of longtime unemployment, falling incomes, the growth of lousy, low-income jobs and rising health care costs ? without any proposals to address them, at the same time his administration pursues a massive secret Pacific trade deal that dwarfs NAFTA – which was a disaster for jobs in the U.S.

In his inaugural address, the president proclaimed “an economic recovery has begun” and left it at that.

Back in December 2011, the president was warming up the populist theme he would use to batter his opponent, Mitt Romney, as an out-of-touch plutocrat. In Osawatamie, Kansas the president said: “I am here to say the [the supply siders] are wrong. I’m here in Kansas to reaffirm my deep conviction that we’re greater together than we are on our own. I believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share, when everyone plays by the same rules.”

When it came to the economy, Obama blew Romney away. In a Bloomberg poll, respondents were asked who they thought did a better job laying out a vision for the country’s economic future: President Obama beat Romney by 10 points.

But where are the policies that would give that vision even a fighting chance of becoming reality? Since his reelection, the president has pivoted sharply away from the populism that got him elected towards cuts that hurt the very people he said government should protect.

On a recent visit to family in Detroit, I was struck again by the painful gap between the president’s rhetoric and his actions, and the stark contrast between the recovery for the banks and corporate profits and the stock market while ordinary people continue to suffer.

Detroit was hit hard by the 2008 financial collapse, and though the Obama administration helped engineer the bailout of General Motors, the city is still struggling under the weight of years of economic decline and bad politics. Home prices have fallen 35 percent over the past three years. That the unemployment rate has dropped from a post collapse high of 16 percent in September 2009 to 10.6 percent in January, still high above the national rate of 7.9 percent, offers only small comfort.

The city, the seventh-largest in the country in 1990 with more than 1 million people, is now 18th largest, with 700,000 people, and officials have closed schools and laid off teachers. While some auto jobs have returned, they pay half of what they used to, along with scaled-back benefits.

Now the city’s residents are caught in a feud between Michigan’s Republican state government and their own Democratic politicians. While Detroit’s situation may be worse than other old urban areas, the others are not far behind.

Detroit has been particularly hard hit by absorbing the costs of bank “walkaways” – bank-owned properties that the bankers have either decided not to pay taxes on or have abandoned before foreclosure is complete. Officials estimate the cost to the city of Detroit this year at $118 million.

That’s just another example of the costs of bankers‘ irresponsible behavior getting passed on to taxpayers, in this case, the remaining residents of Detroit.

When the bankers triggered a nationwide economic collapse, the federal government stepped in to rescue them with all the resources it could muster – no questions asked. But as Detroit and the nation’s other cities have continued to struggle, there’s not even a decent debate about options to help them.

Of course Detroit’s auto workers are not alone. The majority of jobs created during the “recovery” have been low paying.

Also ignored is the plight of the millions of long-term unemployed. Four million Americans have been unemployed more than a year. That’s 30 percent of all unemployed people – triple the 10 percent before the financial collapse.

But you won’t hear the president or any of the rest of our political leaders say much about those four million people – more than the population of of Los Angeles. They’ve been tossed aside, along with the rhetoric that proved so useful just a few months ago.

Recuse Obama's 1 percent economic team

While President Obama campaigned for reelection as a candidate to fight for the 99 percent, he has assembled a second-term economic team that is extraordinarily cozy with the 1 percent.

His picks for Treasury, the head of the Securities and Exchange Commission and director of the Office of Management and Budget are guaranteed not to make anybody on Wall Street or the biggest corporations nervous.

First there was the prospective SEC chief, Mary Jo White, a tough former prosecutor who cashed in as a top defense attorney for big bankers post-bailout. When bankers like John Mack of Morgan Stanley needed to make insider charges go away or Jamie Dimon needed to make sure settling federal foreclosure fraud charges didn’t hurt too much, Mary Jo White was by their sides.

Then came the new Treasury secretary, Jacob Lew, the recipient of a series of lucrative favors from Citibank during his incredibly profitable trip through the Wall Street-Washington revolving door. The most galling was Citibank’s nearly $1 million bonus for Lew – after the bank was bailed out by taxpayers. The bonus was contingent upon him snagging a high-level government job.

That was not Lew’s only taste of taxpayer-funded generosity. Earlier, he got another big, highly unusual bonus on his way out the door from an executive position at state-financed New York University, after making a deal for Citibank to handle the school’s loan business. Meanwhile NYU students were seeing their tuition skyrocket. So after cutting a deal with Citibank, Lew gets a bonus from New York taxpayers to leave NYU. Then he gets hired by Citibank – no big surprise – and then gets a bonus to leave Citibank if he can become a high-ranked alumnus.

No wonder we call him “Lucky Lew.”

In the midst of all the recent furor over the sequester, the Senate confirmed Lew with little debate – and few answers to the many questions raised by his taxpayer-funded bonuses and benefits. One Republican senator spoke fiercely against Lew. Sen.Charles Grassley of Indiana said on the Senate floor, “Mr. Lew’s eagerness and skill in obtaining bonuses, severance payments, housing allowances and other perks raises concerns about whether he appreciates who pays the bills.”

Lew was confirmed with barely a peep from Republicans or Democrats. Independent Vermont Sen.Bernie Sanders, who caucuses with Democrats, voted against Lew.

Democrats fell in line with their president. But why did Republicans make so little fuss about Lew? (Only 25 voted against him.) Sen. Orrin Hatch, of Utah for example, offered a long list of reasons why choosing Lew was a bad idea, then voted for him.

This was after Republicans had mounted a robust attack on Obama’s nominee for defense secretary, Chuck Hagel, the former Republican senator from Nebraska. Hagel might have had an easier time if he was pushing Wall Street’s agenda of punishing the vast majority with of Americans with a bitter stew of unemployment, falling wages and austerity after a severe recession that Wall Street, not Main Street, caused.

Lew and White, meanwhile, have both offered comfort to the bankers. Lew told a Congressional committee that he doubted deregulation was a major cause of the financial collapse that wrecked the economy and forced taxpayers to pay for big bankers fraud and recklessness. For her part, White expressed concerns about overzealous prosecutors unfairly targeting bankers.

The latest candidate that Obama wants to put on the economic team, Sylvia Reynolds Burrell is, like Lew, an alumnus of the Clinton administration team who was mentored by then-Treasury secretary Robert Rubin. He helped big bankers’ dreams come undo true by working to end the Depression-era Glass-Steagall law before going through the revolving door himself to become Citibank’s president.

Reynolds went on to work at the Gates Foundation before taking over the Wal-Mart Foundation, the charitable arm of one the nation’s biggest and most profitable corporations, as well as one of the largest employers of low-wage workers.

She is not without ties to big financial institutions, serving on the board of directors of MetLife, the country’s biggest life insurance company. In the post Glass-Steagall world of high finance, Metlife through its subsidiaries lost big on bundled derivatives based on worthless real estate loans.

It’s quite a team the president is assembling, drawn from the country’s largest corporations and those who represent their interests. They may be very smart people. They also share this: one can scrutinize their records and find no hint of any of them questioning the impact of excessive corporate power or the big banks, or advocating policies that would empower and revive the middle-class. President Obama’s economic team exposes the wide and painful gap between his election-year rhetoric about income inequality and his willingness to do something about it.

White has already said she will recuse herself, if she is confirmed, from cases involving her former clients – not that the SEC has shown much interest in scrutinizing the too-big-to fail banks. Lew should likewise remove himself any decision-making that would affect Citigroup, though that would leave him twiddling his thumbs for most days, since the Treasury’s main job in the Obama administration so far has been figuring out ways to prop up Citigroup and the other too-big-to-fail institutions.

Bonuses / Citibank / Income inequality / Martin Column / President Barack Obama / Too Big To Fail - 03/06/2013

Three signs that the fiscal cliff deal is malarkey

Remember the beleaguered middle class? Our political leaders don’t seem to.

Reeling from the fiscal cliff fiasco and hurtling toward the debt ceiling debacle, Washington has forgotten all of its election-year promises to focus on the best way to create jobs and enhance economic security for the 99 percent.

One of the most amazing aspects of the whole fiscal cliff/debt ceiling fiasco is the continuing ability of the political and media class to manufacture phony economic crises while ignoring the concerns that affect the majority of Americans every day.

High unemployment and rising health and elder care costs? Gnawing uncertainty about the future? Declining wages and disappearing pensions? Income inequality?

We haven’t heard much about them since Election Day.

Meanwhile our media elite cover every micro-twitch of the Washington insiders as they pose and posture their way through the debate, while smothering in ridicule anybody who dares question the prevailing deficit hysteria.

One piece of wisdom did surface briefly masquerading as a whacko proposal – having the government create a trillion-dollar platinum coin. Though this scheme was nixed by the Treasury, it did have the virtue of pointing up an important fact usually ignored in mainstream bloviating about the deficit – the government is not a family. The U.S. government can create money and does, except recently it’s been printing money only to hand it over to big banks with no strings attached, rather than using it to pay down the deficit, create jobs or fix bridges.

And how about that dramatic last-minute deal that averted the fiscal cliff? To paraphrase Vice-President Joe Biden (when he was dismissing Paul Ryan’s dismal budget plan), the whole thing is a load of malarkey.

Except this time Biden and his boss, President Obama weren’t blasting it, they were touting it as a great achievement.

If you’re not familiar with the term, Miriam-Webster defines malarkey as “insincere or foolish talk.”

The first tipoff that the deal constitutes malarkey is the whole dispute over whether it actually reduces the deficit at all.

The Congressional Budget Office contends the deal will increase the deficit nearly $4 trillion over 10 years, while the president, using a different starting for his calculation, argues that it will raise $620 billion over that time period. If you’re confused, you should be. The difference is not trivial, and makes the whole process stink. As the New York said, “How do you agree on what needs to be done going forward if you can’t agree where you are?”

When it comes to deficits, I’m from the Dick Cheney school. The former vice-president, in a rare moment of candor, said: “Deficits don’t matter.”

Except when politicians want to beat their opponents over the heads with them. Most recently, the deficit soared not primarily because of out of control government spending, but because the economy went in the toilet, and the government came to the rescue of our fellow citizens with jobless benefits, food stamps and stimulus spending.

Of course, Cheney was also trying to help out his boss, President George W. Bush, who wanted to give rich people a mammoth tax break and put two wars on the government’s tab, thereby running up the deficit.

What he meant was that Republicans don’t care about deficits when the money goes to support spending they like – like military contracts. What they oppose is spending money on social programs that they would just as soon dismantle.

The second sign that the recent fiscal cliff deal is malarkey is what the politicians did to the payroll tax cut, which was enacted in 2010 and put more than $1,000 a year back into the bank accounts of average Americans.

In spite of all President Obama’s promises not to increase the economic burdens already weighing down the middle class, our leaders allowed this relatively small but significant tax cut to expire. As a result, 125 million Americans who couldn’t afford to hire lobbyists saw their paychecks decrease in January. Since the payroll tax helps pay for Social Security, some applauded the demise of the payroll tax cut.

But the end of the payroll tax cut is just the latest example of our leaders solving budget problems on the backs of those who can afford it least.

In addition, the president had insisted, going in to the fiscal cliff negotiations, that he would get $50 billion in new stimulus money in the deal. But those funds never materialized.

The third red flag buried in the fiscal cliff deal is an item that neither of the parties mentioned in their press conferences announcing it. But it’s the surest way to tell that the fiscal cliff and debt ceiling, which are supposed to be about this massive crisis, are just the latest chapter in Washington business as usual: major corporations using the cover of a manufactured crisis to get their hands on more goodies.

As reported by Matt Stoller, the deal contains eight separate giveaways to individual businesses or industries, including Goldman-Sachs, Hollywood movie studios, NASCAR, coal mine operators and asparagus growers.

Of particular interest was the extension of the tax exempt financing of something called Liberty Zone in New York, funds which were supposed to be designated to help business in the city recover from 9/11. But rather than going to small businesses, big corporations like Goldman-Sachs got the breaks. Goldman-Sachs has gotten $1.6 billion in tax-empt bonds to help defray the costs of building? its new $2.1 billion headquarters.

So while the politicians have been posturing in public vowing to protect the middle-crisis and wringing their hands over the dire state of the government’s finances, they’ve been working overtime in private doling out expensive favors to their corporate donors.

The biggest threat to our future is not the deficit, not by a long shot. The far greater danger remains the largely unchecked and hidden power of corporations to control our government.

Congress / Fiscal clitt / Goldman-Sachs / Income inequality / Martin Column / Mitt Romney / President Barack Obama - 01/17/2013

Three Major Issues The Presidential Candidates Are Ignoring

What if they held an election but didn’t discuss the most important economic issues?

That’s what’s happening here in 2012.

Yes, taxes and the deficit are significant. But there are even more crucial issues that will determine whether the country continues to slide into wider income inequality and destroys what’s left of the middle class.

And these three crucial issues have been barely mentioned during a campaign obsessed with who pays what in taxes and who doesn’t.

Dean Baker, of the Center on Economic Policy Research, neatly summed up several of the left-out issues recently.

On one of the most critical economic issues, the so-called free trade pacts such as NAFTA and the more recent Korean trade agreement, both parties agree: they favor them.

The media cooperates in keeping this issue off the table by repeating the misleading claims of proponents of the agreements while omitting or marginalizing critics.

“Free trade” is really the big lie of our economy and our politics. As the critics point out, these agreements should be accurately labeled “corporate rights agreements” since they are much more concerned with that issue than with trade. Not only do they result in lower wages in the U.S. and devastated small farming in other countries, these agreements allow corporations to challenge environmental and labor protections in special courts in which the public has no voice.

Both parties crank up the rhetoric to promote the notion that the “free trade” is the road to economic prosperity for everybody. But as Baker points out, the reality of “free trade” is far grimmer for those that work for wages to earn a living because it puts “downward pressure on the wages of manufacturing workers by putting them in direct competition with low-wage workers in the developing world.”

The absence of any discussion of these agreements in the political debate exposes a major fraud on the part of both parties. While the Democrats tout themselves as the party of the little guy, their support for “free trade” shows how closely they hew to the corporate agenda on issues that matter most. For the Republicans, their support for “free trade” agreements which, in the real world, prop up some corporations while punishing others shows they’re less interested in picking economic winners and losers than their free market rhetoric lets on.

And there’s a huge trade deal being secretly negotiated right now, the Trans-Pacific Partnership (TPP), which I previously wrote about here, calling it a Free Trade Frankenstein. Others have called it “NAFTA on steroids.” As with other trade negotiations, the public has been kept out while the corporate lobbyists have full access.

The only TPP issue on which the president and his challenger disagree is who could whip out his pen faster and sign the TPP once the secret negotiations are concluded.

The second major economic issue left out of this election is the deeply unpopular 2008 bailout of the financial sector and corporate America, including the $700 billion Troubled Asset Relief Program and the $16 trillion in cheap or free loans the Federal Reserve provided to corporate America in the wake of the financial collapse.

All this financial assistance was provided with little public debate and without any conditions imposed on the recipients.

The Obama administration dismisses all questions about the bailout by insisting that all the TARP money has been paid back. Case closed, the administration contends.

But could a different kind of bailout, one which imposed specific conditions on banks and corporations, helped more struggling Americans than the one we got, which propped up bank and corporate executives? Why did those portions of TARP that were targeted at ordinary Americans facing foreclosure fail so badly?

And how does this bailout, which picked winners and losers, jibe with the Republicans’ free market rhetoric? What about a belated bailout for the rest of us? Plenty of fodder for tough questions for the president and his challenger, if anybody cared to ask.

The third issue is one that the two parties have disagreed on: increasing the minimum wage.

As a candidate in 2008, President Obama promised to raise the federal minimum wage from $7.25 an hour to $9.50 by 2011 but has taken no action to do so. For his part, Republican challenger Mitt Romney has said he favors tying the minimum wage to inflation, until the right wing of his party objected.

According to a recent paper by the Economic Policy Institute, phasing in the $9.80 minimum wage would raise the wages for 28 million workers, who would earn an additional $40 billion during the phase-in, while gross domestic product would increase by $25 billion and 100,000 new jobs would be created.

We need a robust debate on these issues in the remaining weeks of the presidential campaign that challenges the president and Mr. Romney on where they stand and what actions they’ll take, not just a stale rehash of the same old arguments on taxes. But we won’t get that debate unless we demand it.

Federal Reserve / Income inequality / Martin Column / Mitt Romney / TARP / TPP - 09/25/2012

Doing the minimum for the 99 percent

From both left and right, commentators have been heating up the Internet with proposals to raise the minimum wage from $7.25 an hour.

It’s not just Ralph Nader beating the drum for the Occupy movement to spearhead a movement to raise the wage, which hasn’t been increased since 2009.

Ron Unz, commentator at the American Conservative, has proposed an increase as part of a new Republican immigration strategy, and he’s has been pleading for Mitt Romney to adopt an increase in the minimum wage as part of his campaign.

Romney has yet to heed Unz’s plea, which force the candidate to fight some ingrained Republican dogma that preaches against the minimum wage, let alone increasing it. According to this old dogma, the minimum wage discourages small business from hiring.

It was President Obama’s chairman of his council advisers, Alan Kreuger, wrote a study, back when he was a Princeton economics professor, who debunked that notion.

In the past, Romney has shown some willingness to discard the customary Republican disdain for the minimum wage, speaking in favor of increases pegged to increases in the consumer price index.

Then last month, after the Wall Street Journal and others beat up on Romney’s minimum wage position, the leading Republican contender backed down. “There’s probably not a need to raise the minimum wage,” Romney told CNBC.

On this issue, the Wall Street Journal and the Republican base is way out of step with voters across the country, who consistently support an increase. According to one recent poll, 67 percent of voters favor an increase.

Which brings us to the other candidate: the president. He’s always said he favors an increase.

Back in 2007, when he was just a contender in Bettendorf, Iowa, Barack Obama gave a speech on “Reclaiming the American Dream,” in which he promised: “I won’t wait 10 years to raise the minimum wage, I’ll raise it every single year. That’s the change we need.”

After Obama was elected, during his transition to the presidency, Obama’s team promised to raise the minimum wage to $9.50 an hour by 2011, with future raises pegged to inflation “to make sure that full-time workers can earn a living wage.”

But the only increase during Obama’s administration was the one in 2009 from $6.55 to $7.25, which was mandated by a law passed during a previous administration.

The president had nothing to do with it.

Last year, when his labor secretary, Hilda Solis, was asked about the need for a minimum wage hike, Huffington Post reported that she “largely ducked the questions.”

Maybe keeping his campaign promise and improving the economy are not good enough reasons to recharge the president’s enthusiasm for launching a campaign to boost wages for the lowest paid workers.

Fortunately, there are plenty of other reasons that should convince him to do what he said he would.

For one, it’s simply the right thing to do.

As the president himself pointed out just four months ago in a speech with a broad populist message in Osawatomie, Kansas, income inequality is the “defining issue of our time.”

In 1968, the federal minimum wage was $1.60 an hour. Gasoline was 34 cents a gallon and an average new car cost $2,800 dollars.

So the worker on minimum wage could buy nearly 5 gallons of gas for an hour’s wage. Now that minimum wage worker can buy less than 2 gallons of gas for an hour’s wage.

If you adjust that 1968 wage for inflation, it would be $10 an hour – far more than today’s $7.25 minimum wage.

As the New York Times pointed out Sunday, the average corporate CEO made $14.4 million last year, compared to the average annual U.S. salary of $45,230. A fulltime worker paid the minimum wage makes far less – $15,080 a year.

Correcting for inflation, those with the least income have seen their incomes reduced over the past decade.

Another good reason for Obama to get with it– his base, which has been frustrated with his compromises with Republicans and cave-ins to bailed-out bankers, strongly supports an increase. And so do independent voters. Obama needs both of those groups to win re-election. So doing the right thing is also smart politics.

Income inequality / Martin Column / Mitt Romney / President Barack Obama - 04/11/2012

Nice recovery, if you can afford it

According to economists and the media, in June 2009 we came out of the deepest recession since the Great Depression and we’ve been on the upswing since. Unemployment’s down, with corporate profits recouping their losses from the recession and hitting new highs along with the stock market.

But it really continues to be a tale of two economies: one that works for the 1 percent and another, in which the 99 percent are increasingly falling behind.

For some striking evidence, look at the recent study by a prominent economist reported in the New York Times.

As the recovery took hold in 2010, UC Berkeley economist Emmanuel Saenz reported, the top 1 percent captured 93 percent of the income gains.

Top incomes grew 11.6 percent in 2010, while the incomes of the 99 percent increased only 0.2 percent. That tiny gain followed a drop of nearly 12 percent over the previous two years – the largest two-year drop since the Depression.

Other signs on the economic landscape also show the wreckage for those not protected by wealth.

Despite a dip in unemployment and the most the most recent more optimistic job creation numbers, the economy isn’t producing enough jobs on a sustained basis to permanently reduce unemployment. And many of the jobs that have been created pay severely reduced wages. Under the two-tiered wage systems increasingly favored by U.S. corporations, new blue-collar jobs pay start at a steeply lower hourly wage than they did in the past – $12 to $19 an hour as opposed to $21 to $32.

One in seven Americans are on food stamps, while high gas prices put the squeeze on low-income and working people alike. Meanwhile, foreclosures are on the rise in the wake of the state attorneys general announcement of a settlement over foreclosure fraud charges with the biggest banks, though the details of the settlement still haven’t been released.

The Occupy movement has put the great divide between the 1 percent and the 99 percent on the political map, forcing President Obama to acknowledge income inequality in his state of the union speech as the “defining issue” of our time, while the Republican’s front-running presidential candidate, Mitt Romney has dismissed such concerns as “envy.”

Obama’s concern about inequality has yet to translate itself into effective action, and it’s unclear, given the strong ties he’s had to the big banks and corporate titans, whether he’s capable of delivering.

Occupy, after delivering a much-needed jolt to the public discourse, likewise, has also yet to show that it can go beyond influencing the debate to actually winning gains for the 99 percent and reducing the widening inequality gap.

It’s no coincidence that income inequality has accelerated as large corporations have grown more influential in our political system through the clout of their cash, encouraging deregulation, tax cuts, trade deals and a host of other policies that benefit the 1 percent and disadvantage the rest of us. The fight against income inequality and for a more fair economy inevitably leads to the fight to rid our government of toxic corporate donations. Find out about WheresOurMoney’s constitutional amendment to undo Citizens United, the U.S. Supreme Court’s terrible decision that unleashes unlimited, anonymous corporate political donations, here.

Income inequality / Jobs crisis / Martin Column / Occupy - 03/09/2012