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Yes Virginia, SS can be cut

2010 September 14
by Ian Welsh

Sorry, it doesn’t work like this:

Nevertheless, Grijalva is right. Social Security will most likely be left intact. Not because of any efforts of the CPC. Not because Progressives will stand up to block cuts. Not because Social Security is popular with the people. Social Security “reform” will fail because it is remarkably stupid and will result in devestating shame on the Administration and cause DLC-type Democrats to lose their seats. Whereas Democrats thought they could sell a crappy Healthcare bill as a success, there is no way Americans will watch seniors eat catfood and thank the Democrats for the priviledge.

No.  It doesn’t work like that. The bailouts passed with more opposition even than SS cuts.  If both parties agree on something, it is irrelevant what the public thinks because DLC-style Dems won’t lose their seats over it if it’s bipartisan.  Furthermore, even if they do lose their seats, they are willing to lose their seats in order to do the bidding of their large donors since if they don’t do that bidding, they not only stand a good chance of losing their seats due to a funding cut off, but once they’re out of office, they won’t be taken care of.

Public opinion is not relevant to the overall direction of what Village elites do.  It DOES NOT MATTER.  Calls about the bailout ran 100:1 to 1200:1 against, they passed it anyway.  Village elites are generally unified in their preferences for policy, and when they are, all you’re arguing is fairly trivial details, not the essence of the policy.  The question about SS in the Villagers minds is not whether it should be cut, but how.

That’s not to say it’s hopeless.  The last attempt to cut SS failed, after all.  But there wasn’t a Democratic president pushing for it that time.  Obama has proven very adept at arm-twisting Democrats.  The real question, however, is if Republicans will cooperate.  Cutting SS is something they want, but the tax cuts and pork they can offer if they get back Congress and the Presidency may outweigh that and the Tea Party types are generally folks who need SS badly.

We’ll see.  But I wouldn’t be complacent on this.  At all.

When Labor Is Strong Democrats Win…

2010 September 6
by Ian Welsh
union membership by state map

union membership by state map

Given that it’s Labor Day weekend let’s chat about labor—organized labor.  This post from 2007 is still relevant.  If you take a look at the map on your left something may jump out at you, as it did me. Where Labor is strong – Democrats tend to win. Where Labor is weak, they don’t. In the last election the electorate split fairly evenly, but amongst the groups that stand out as having gone Democratic, one is Labor. The general election was 49/49, but union members went 64/36 Democratic/Republican.

But it isn’t just about union members voting for Dems – that’d just make unions an identity group. As Matt Stoller pointed out back in 05 Unions actively help Democratic candidates. They give money, and they give it early. They do field and GOTV, and indeed, they probably have the best field organizations in America. Kerry ate Dean’s lunch in large part because of the International Association of Fire Fighter’s (IAFF) organizers out organizing (sometimes rather brutally) the Dean machine. (More on the IAFF and their endorsement of Dodd this time around later in the article).

Unions provide organizing space, they provide media surrogates, they conduct training, they support think tanks and so on. They provide a lot of the infrastructure that keeps the party going – and that pushes the party to pursue liberal and populist policies when in office.

historical union membership

historical union membership

As union membership has declined, so have Democratic electoral results. This isn’t an accident and it isn’t something that Republicans want to see stop. Unions have been under constant assault for decades – starting with Taft-Hartley in 47 (a bill Truman, his veto overruled, called a “slave labor bill”.) Recently, and egregiously, the NLRB has moved to classify nurses as supervisory workers, which would make most of them unable to be union members and basically de-unionize hospitals. (This is a loophole from Taft-Hartley, which made supervisory workers ineligible for unionization as a way of destroying the extremely powerful foreman’s unions that existed at the time.)

Democrats have often disrespected unions, even while paying them court. NAFTA was pushed through by Bill Clinton even though labor was largely against it. Indeed, I have been told that the unions went to Clinton and said “we have a war chest of many millions. We can spend it fighting NAFTA or pushing for universal health care. Your choice.” Clinton choice NAFTA over universal health care. Time and time again so-called free trade bills (which are usually more about free flow of money, than of trade, in any case) have been pushed over the objections of labor.

Meanwhile, the presumptive next nominee, Hilary Clinton, has as her chief strategist, Mark Penn, the CEO of Burson-Marsteller, a PR firm which is noted for its vicious anti-unionization campaigns. After receiving some complaints, Penn’s response? To stop doing anti-union work, which he claimed he’d never been doing in the first place (just getting the paychecks for). Did he tell his firm to stop doing anti-union work? No. Did Clinton demote him or get rid of him? No.

But, then, why should the Clinton campaign care what labor thinks? Sure, they complained, but when neither Penn nor Clinton really did anything to deal with the underlying problem (he’s the BOSS, and he should either make the anti-union work stop entirely, or if he can’t, quit the firm, if he doesn’t believe in it), labor really did nothing.

And in most cases, that’s labor’s pattern. They, like many Democratic constituencies, seem to be suffering from a certain learned helplessness. Take the IAFF, whom I promised to come back to. They endorsed Dodd last week. Now there are two possibilities here – one is that they are endorsing Dodd just based on his stellar record of getting behind their concerns. Hey, they backed Kerry when he was at his lowest (but remember that before that he had been the presumptive front-runner, a status Dodd has never had). The less charitable possibility was suggested in a Steve Clemons post:

My theory [on the Dodd endorsement]? It’s a case of the Althusserian “absent center” with Dodd as the donut hole.

The Firefighters don’t want to make the “wrong” choice between the three candidate that can win — Clinton, Obama, and Edwards.

They like Edwards like the rest of the movement but don’t think he’s going to win, and don’t want to piss off the Hillary machine. But they also don’t want to seem paralyzed and ineffectual. They want to be players. So they pseudo-aggressively endorse someone, but don’t piss off any of the big three by picking one of them against the other two.

After Dodd drops out following Iowa or New Hampshire, they see the lay of the land and jump to the likely winner.

I’m wondering how many endorsements by the unions we’re going to see for Edwards. Of the front-runners Edwards has the most union-friendly campaign and has promised the most union friendly policies. He’s been working hard for their support since the end of the last campaign. More to the point, to win, Edwards pretty much requires union support. Edwards’ strategy has always clearly been to do well in the early states and to get the union endorsements to supplement his ground machine, since he is well aware (having witnessed it personally in ‘04) that they have the best ground machine available.

If unions really are frightened of the Hilary machine holding grudges in 09 if they win, and unions won’t endors another viable candidate as a result, then the unions have made themselves into political eunuchs. If they won’t play, they don’t need to be taken into account. Hilary will throw them the occasional bone, sure, but is unlikely, as was Bill, to pursue policies that will do more than slow the long-term decline in union membership (look at the graph above and see how unions did under Bill). And unions need a reversal of that trend, not just a few years of slower bleeding, or even a halt.

Meanwhile the deeper reason that unions don’t get the respect they should in Democratic circles (and by “should” I mean on totally pragmatic “they make us win” terms) is probably because unions get little respect from white collar workers. Two episodes stand out for me on this – the first was that long period the 90’s where techies used to disrespect unions and resist unionization because they were being paid so well because “they were smart, and, like, knowledge workers” and therefore didn’t need unions. What they didn’t realize, because everyone who gets paid well always wants to think its because they, personally, are so wonderful, is that it was just a tight labor market for people with specific skills and that as soon as that skill set became common enough, the gravy train would stall. Sure enough, in the 00’s techies took it on the chin, and companies outsourced and offshored as much of their technical functions as they could. Suddenly a Bachelors in Comp.Sci wasn’t a ticket to the gravy train any more. Techies had made the classic error of attributing to themselves (genius knowledge workers who are each individually unique flowers with a skill set that can’t easily be replicated) what was a property of the situation (new technology, moving fast, not enough early adopters with the necessary technical skill set, therefore a labor crunch in the field).

And then, of course, there was the New York City Transit Strike – and the comments, I, as a blogger defending them, received from my commenters about how they should just be grateful to have decent jobs, shut up and go back to work, because my readers didn’t have half the benefits those blue-collar transit workers did and they didn’t deserve them anyway. No one seemed to make the connection that if the transit workers were costing the economy billions of dollars every day, then the economic value of what the transit workers did must be, ummm, rather larger than they were being compensated for. What was revealed then was a lot of ugly class hatred and envy – people with BA’s who felt that if they weren’t making it, neither should be blue collar workers without a degree. Fortunately, the majority of citizens of NYC actually backed the union (despite a full court press offensive against the union) and things worked out reasonably well.

But this middle class contempt for unions, and for the sort of people that make them up, boils up so frequently that I’ve come to believe it’s a deep malaise in the American middle class psyche. I’m not entirely sure why it exists, other than as manifestation of the very human emotion of envy, but it definitely exists. And as the middle and upper classes (who never liked unions to begin with) have become the powers in the Democratic party (try and get started in politics and you will quickly find that the easy route – internships – is mostly only available to you if mommy and daddy can afford to support you while you work for nothing) a fundamental misunderstanding, and often, outright contempt, for working people has taken hold (again, at the end of the day… remember all those “free” trade bills, passed by Democrats despite Labor’s strenuous objections).

Where unions are strong, Democrats win. But Democrats seem to have forgotten that at a very fundamental level and have allowed unions to sicken till they are but a pale shadow of what they once were. If Democrats want to win, they need to rectify that. If unions want their strength back, they need to hold Democrats to policies that aid unions, knowing that in so doing they are serving both sides. And the middle and upper classes that run the Democratic party need to get over their disdain for unions and recognize who their real friends are – even if only for hard-headed pragmatic reasons. There will be no new permanent Democratic majority like the one that ruled most of the post-war period, until the unions recover.

So this Labor Day Weekend I wish Labor nothing but the best. May a thousand unions certify and in so doing may Democrats sweep into office across the land.

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Jan 19th: “In 2010 Democrats will be slaughtered”

2010 September 3
by Ian Welsh

Yup.

In 2010 Democrats will be slaughtered, absolutely slaughtered, because Obama and the senior Democratic leadership does not learn.

In 2012 Obama will become a 1 term president, and a right wing populist will get into power.  That populist will turn out not to be a populist, and will do even stupider things than Obama economically (and may start a war, too).

The job is to prepare for this, to get new members and leadership in in 2014.  Start working on it now.

Because 2014 and 2016 are going to be your last chance.  If the US doesn’t elect people who are willing to do what it takes in those two election years, then the US economy is going to be a smoking ruin, far worse even than it is now.

This group of Dems have proved they can’t learn.  Fortunately, and yes, I do mean fortunately, they are going to be swept out of power.  Yes, they’ll be replaced by Republicans who are marginally worse, but that will give you your one chance to fix America.

Up to you if you’re up for it.  Good luck.

And yeah, it’s really looking like I’m not going to be eating crow on this one.

With stupid like this, who needs Republicans

2010 September 3
by Ian Welsh

Seriously, could they be bigger idiots?

With just two months until the November elections, the White House is seriously weighing a package of business tax breaks – potentially worth hundreds of billions of dollars – to spur hiring and combat Republican charges that Democratic tax policies hurt small businesses, according to people with knowledge of the deliberations.

hahahahaha

The very idea that this will do anything worthwhile, either politically or economically is beyond laughable.  40 years of tax  cuts have done what, exactly?

Businesses will take the money, and the still won’t hire till it’s clear that hiring will, y’know, be worth it to them.  The problem isn’t taxes, the problem is that they can make record profits already without hiring people.  They have more than enough money to hire if they wanted to, they aren’t because it isn’t worth it.

The stupid in the White House, it burns.

Oh, and if they pass this, it will increase the deficit.  But I guess they can “fix” that by cutting money for old folks.

Sean-Paul Lays it out: the Truth baby

2010 September 3
by Ian Welsh

Go read.

Excerpt:

Meanwhile, I get called on the carpet for shooting off one liners and not providing enough analysis. So, here is some analysis for you: name me one big policy that the listed think tanks have proposed and has been enacted that wasn’t a total and complete fucking disaster of a policy?

The burden of proof isn’t on me. I’ve been blogging and analyzing for almost eight years now. And almost everything I have blogged about I have gotten right. My policy chops are pretty damn good. What’s my guiding policy? Be decent: do the right thing. Who fucking knew?

I also get told on a regular basis that if I don’t shut my pie hole about all this and vote Democratic that it will all be my fault when tEh crazies get elected. Please explain to me in simple, clear, elementary language how the above seven highlights are my fault. To wit: I voted for a candidate who promised to close GITMO within a year. I voted for a candidate who promised to end DADT and provide equal rights for all Americans. I voted for a candidate who promised immigration reform. I voted for a candidate who promised to put Americans, all Americans, back to work. I voted for a candidate who promised to protect our social contract and expand the economic safety net.

Obama has not only not done any of it, he’s made shit worse.

Now, tell me why I should vote for the Democrats in 2010? Because tEh crazies are coming? Fuck that: tEh crazies are here.

Ian on Blog Talk Radio

2010 September 3
by Ian Welsh

If you missed the live session last night, you can listen to the interview here. Discussed Obama and policy, unregulated oligopolies and their political and economic effect, and even, at the end, made the case for Obama as I think he’d make it for himself if he were brutally frank.

Ian Welsh on Virtually Speaking Tonight at 9pm EST

2010 September 2
by Ian Welsh

I’ll be talking about oligopolies, the economy in general, what Obama could have done and could do, and where we go from here, among other things.  You can listen to me and Jay Ackroyd here.

What Can Obama Really Do?

2010 August 29
by Ian Welsh

A zombie argument is going around about why Obama hasn’t accomplished liberal and progressive ends to the extent many would have liked him to:

Obama can’t do anything because he needs 60 votes in Congress and he doesn’t have them because Republicans and Dems like Lieberman and Nelson won’t vote for his programs.

This argument is misleading in one sense and incorrect in another.  It is misleading in that it misrepresents how things get done in Congress.  It is incorrect in that many liberal policies do not require the consent of Congress.

Let’s examine the misconceptions this zombie argument is built on.

Negotiation 101

Let’s look at how things get done in Congress. Obama apologists make the excuse that Obama couldn’t have passed a larger stimulus because he was forced to reduce the stimulus by $100 billion as it was.  This line of reasoning demonstrates a misunderstanding of how negotiation (or Congress) works.

If Obama had wanted a $1.2 trillion stimulus, say, he should have asked for a $1.6 trillion stimulus.  Then “moderate” Republicans and Dems could have negotiated him down $400K.  This is basic negotiation, which anyone who has ever negotiated in a third world bazaar knows—you start off with an offer far higher (or lower) than what you’re willing to accept, and leave room for the inevitable haggling.

The same is true of health care reform.  If you’re negotiating for a public option—if you actually want one, then you don’t throw single payer advocates out. You act as if that’s something you’re seriously considering, you talk about polls showing it has majority support, and you then “compromise” to a public option.

This sort of self-defeating, pre-negotation concession has been a repeated pattern for the Obama administration (assuming that Obama does seek Liberal ends).

Force It Through

Many liberal policies do not require the consent of congress.

The Bush tax cuts were pushed through under reconciliation.  Most of health care reform, including a public option could have been accomplished the same way.  The tactical choice was entirely at the discretion of the Democratic leadership.

If Obama and Reid can’t hold 50 votes, then the problem is them, not the policies themselves, or “how congress works”.

Congress: Who Cares about Congress?

Now, let’s talk about other issues.  There are many areas where Obama does not need Congress’s approval.

Don’t Ask, Don’t Tell: Obama can issue a stop loss for any soldiers any time he wants. Bang, that’s it, at least for as long as he’s President.

HAMP (the program supposedly intended to help homeowners, which hasn’t):  This program is totally under administrative control.  If Obama wanted it to work, there’s nothing to stop him.

Habeas Corpus: Obama can give everyone in Gitmo their day in court.  Restoring habeas corpus is totally at his discretion, and he has chosen not to.

Social Security: After Congress voted down a debt and deficit commission, Obama went ahead and created one anyway–and stacked it with people with track records of wanting to slash Social Security.

In short, Obama has managed to side-step Congress in order to work against Democratic policy positions (e.g., Social Security), but otherwise has ignored executive privilege when he wanted to continue Bush-era policies (e.g., detention without trial at Gitmo) or to ignore the rights and needs of everyday Americans (e.g., HAMP and DADT). To the Obama administration, Congress is a very selective obstacle.

Going Forward: What Obama Can Still Do

Not only could Obama rectify DADT, HAMP, Habeus Corpus, and his Social Security commission with a stroke of his pen, he can still do a great deal to help the economy. If he wants to.

TARP: Obama has complete control of the TARP funds, the majority of which have not been spent. (We’re talking over $500 billion in slush funds.) $ 500 billion is a lot of stimulus, if it’s done right.  Cash for Clunkers, representing a tiny fraction of the total stimulus funds, massively goosed GDP while it was in effect.

Leaving aside direct stimulus, there are plenty of other helpful things Obama could do.  For example, as a friend of mine noted, most distressed debt today is selling to collection agencies for less than 10 cents on the dollar (often under 5 cents).  The Treasury could buy up $100 billion of that distressed debt at 10 cents on the dollar.  Reclaim the money at 15 cents on the dollar through the IRS, and otherwise just write it off.  You won’t make 50% profit, because some people can’t pay even 10%, but you’ll almost certainly make some profit.  Roll the money over and buy up more debt.  Keep doing it.  (N.B. In the past such debt didn’t sell so cheap, mainly because in the past, pre-Bankruptcy “reform”, people who really couldn’t pay would declare bankruptcy, but now they can’t.  Obama never made fixing that horrible bankruptcy bill a priority at all.) Folks would be absolutely thrilled by a way to deal with distressed debt.  With the debt off their backs, they could spend again, so it would also be stimulative.  There are plenty of other things that could be done with over 500 billion dollars to help ordinary people and goose the economy.

Breaking the Banks (and getting lending going again): The banks have been pretty ungrateful for the massive bailout they received.  They have unilaterally increased credit card rates to gouge customers, have been gaming the market (so much so that one quarter many banks didn’t lose money on their trading operations even one day of the quarter), have fought against financial reform, and have generally acted against the interests of the majority of Americans.  One might say “well, now that they’re bailed out, there is nothing we can do about it.”

Wrong.

The Fed still holds over $2 trillion in toxic waste from the banks.  The banks still hold trillions of dollars of toxic waste.  If sold on the open market this stuff would sell for, oh, about 5 cents on the dollar.  If forced to mark the assets they are keeping on their books at inflated prices to their actual market value, I doubt there is a single major bank in the country which wouldn’t go bankrupt.  Including Goldman Sachs.

So here’s what you do.   As the Federal Reserve you sell $100 billion of the toxic waste on the open market.  Set an actual price for it.  Then you make the banks mark their assets to market value.  They go bankrupt. You nationalize them. (Why not?–They are actually bankrupt after all, and they haven’t increased lending like they were supposed to;  in fact, they have decreased it.)  You make the stockholders take their losses and the bondholders too, then you reinflate the banks. (If the Fed can print trillions to keep zombie banks “alive” it can print money to reinflate nationalized banks.)  The banks lend under FDIC and Fed direction, at the interest rates the Fed directs.  The FDIC and Fed eventually break the banks up into a reasonable size.  And while they’re at it, they get rid of the entire executive class which caused the financial crisis, and have the DOJ go over all the internal memos and start charging everyone who committed fraud. (Hint: that’s virtually every executive at a major bank.)  Again, this is completely up to Obama–the DOJ answers to him.

Think Obama can’t do this without Bernanke?  Wrong.  Obama can fire any Fed Governor for cause and replace them during a Congressional recess with no oversight.* (“Cause” is never defined, but Obama can note that the Fed’s mandate includes maximum employment and not stopping the financial crisis in the first place is certainly plausible as cause as well.)

Obama had the power. Obama had the money. Obama has the power–and the money.

The idea that Obama, or any President, is a powerless shrinking violet, helpless in the face of Congress is just an excuse.  Presidents have immense amounts of power: the question is whether or not they use that power, and if they do, what they use it for.

Obama has a huge slush fund with hundreds of billions of dollars and all the executive authority he needs to turn things around.

If Obama is not using that money and authority, the bottom line is it’s because he doesn’t want to.

Putting aside the question of what Obama could have accomplished already, if he wants to help everyday Americans, turn around Democratic approval ratings in time for the midterm elections, and leave behind him a legacy of achievemant, he can still do it. If he wants to.

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Liberals aren’t real people—or crazy

2010 August 29
by Ian Welsh

As Bill Scher points out, Beck’s rally was pathetic:

Glenn Beck: 87,000Louis Farrakhan 837,000 ’03 anti-war protests 1,000,000

But the media chooses to massively highlight Beck’s pathetic numbers.  Why is that?

The two answers I see are as follows.  The media has a right wing bias and Beck’s followers include a number of crazies, his movement has the implicit cloud of violence hanging over it, and it’s smart to pay attention to idiot ideologues with guns.

No, the Fed doesn’t need to “press” Credit Card companies to live up to the law

2010 August 25
by Ian Welsh

This is exactly wrong mindset:

Time and again, the credit card industry has demonstrated its disdain for its customers. The Fed needs to press these companies to live up to the law.

No, they need to FORCE them.  And if they don’t, it needs to PUNISH them enough that it’s not worth their while.

Which comes down to this: in most cases, paying fines is fine by such businesses, it’s worth it, they make more money breaking the law than the price of the fines.  So you either have to change the law to allow for executive prison time, or you need to get passive-aggressive, which is to say the Fed starts making their lives really unpleasant in other ways and so does the DOJ.  The Fed can make any financial firm buckle.

If it wants to.