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.

 

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.

Obama's 'Hostage' Crisis

Tonight’s state of the union speech will be the least important of President Barack Obama's political career. No doubt it will be a dazzling performance, as the president pivots from pugilistic to professorial, from left to right. We know the president comes through with the rhetoric in the clutch. But the true test of his presidency is no longer what he says he will do or how he says it.

The test is whether Obama and his team wage a credible and effective fight for financial reform and economy recovery for Main Street, with the same vigor and urgency they threw into the Wall Street bailout. That will take more than a speech or even a series of speeches. It will take a real self-critical assessment of the president's strategy up til now and a tough, savvy and sustained political battle plan in the face of significant obstacles.

Both have been lacking in the president's approach so far. That’s the real pivot he needs to make now, and it has only partly to do with oratorical skills.

Obama’s credibility is suffering because he and his team keep suggesting that they have overseen a recovery that most people aren’t enjoying. They helped engineer a bailout that they say was absolutely necessary that helped the financial sector but left out the rest of us. Obama and his team don’t have credibility because they’re working Capitol Hill as hard as they can, not to create jobs for millions of out of work Americans, but to save the job of one of the few Americans who could have helped forestall both the financial crisis and the Wall Street –friendly bailout but didn’t, Ben Bernanke, head of the Federal Reserve.

Sen. Tom Harkin summed up what many people are feeling in reacting to comments from Tim Geithner, Obama’s treasury secretary who had warned that the stock market would tumble if Bernanke were not confirmed.

Geithner was just acting as a messenger boy for Wall Street, Harkin suggested. “How long will our economic policy be held hostage to Wall Street who threaten us that there’ll be total collapse if we don’t do everything they want?  Wall Street wants Bernanke,” Harkin said. “They’re sending all these signals there’ll be this total collapse if he’s not approved. You know, I’m tired of being held hostage by Wall Street.”

Wall Street doesn’t like key planks of the president’s financial reform plan, like the Consumer Financial Protection Agency and his recently announced plan to separate some of the largest bank’s risky business from its more traditional functions. The Senate’s banking committee chair, Christopher Dodd has signaled he’s ready to surrender on the consumer protection agency. Will the president announce tonight how he and his team plan to win that fight when congressional leaders are giving up? Or will the president treat the consumer protection agency and bank size as just details that should be left up to Congress, as he did in the battle over crucial aspects of health care reform?

A different kind of hostage crisis helped bring down a previous Democratic president. All Jimmy Carter had to grapple with were a bunch of Iranian revolutionaries holding 53 Americans in an embassy in Tehran. President Obama’s challenge is much tougher – 250 million people and our entire political process held hostage by some of the world’s wealthiest corporations and individuals. Carter’s hands were tied. Are Obama’s?