On TAP: Kuttner + Meyerson

March 7, 2018

How We All Pay For Trump’s Tax Cuts. Sure as night follows day, Republicans rediscover the temporarily suppressed horror of deficits once the ink is dry on tax giveaways to rich. And the cure, of course, is cutting what remains of social outlays.

The Republican tax bill increased the ten-year deficit by well over a trillion dollars. Now comes Martin Feldstein, Harvard eminence and former chair of Reagan’s Council of Economic Advisers, writing in The Wall Street Journal to sound the alarm.

But in a splendid display of selective myopia, Feldstein places primary blame neither on the tax giveaway (the corporate rate cuts, he writes, “will spur productivity and raise real wages. They are not the main driver of the debt problem.”) nor on Trump’s increased military spending (“which will contribute relatively little to the increased debt”). Actually, only if you think $800 billion over ten years is “relatively little.”

So what’s driving the debt, according to Feldstein? That would be Social Security and Medicare, of course. The good professor helpfully suggests reforms, namely cuts.

A cynic might observe that Republicans have been playing these games since Reagan: 1) increase deficits with tax cuts and military build-ups; 2) blame social spending; 3) execute cuts.

If Democrats can’t explain this to the voters come November and turn it into political pay dirt, shame on them.

March 6, 2018

Our tax dollars at work:

Four months ago, a mother and her seven-year-old daughter crossed the U.S.-Mexico border at San Ysidro, just south of San Diego. They had come from the Democratic Republic of Congo, where they had taken refuge in a Catholic church in response to threats to their safety. Somehow, they made it all the way to San Ysidro, where they immediately went to immigration authorities and asked for asylum.

Four days later, the mother was interred in a Southern California detention center, while her seven-year-old girl was sent, without explanation, to a children’s center in Chicago, where she knows nobody and repeatedly asks for her mother. The government has filed no charges against them, nor alleged that they pose any kind of danger to anyone, nor contended that the mother was in any way unfit to take care of her little girl. They have been permitted to talk on the phone several times since, though the girl is reported to have sobbed throughout each of the calls.

Our tax dollars at work.

According to the Department of Homeland Savagery—that is, Security—it is the government’s policy to discourage people who arrive unannounced at the border and ask for asylum, and one way it are endeavoring to discourage them is to separate children from their parents. There have been reports, which the government has declined either to confirm or deny, that the separation of children from their parents is now a common practice. The ACLU has filed suit to reunite the mother and daughter, to compel the government to reunite all such separated parents and children, and to enjoin it from continuing the practice.

Elsewhere on our website today, we’ve run one of my columns, in which I note the disquieting parallels between today’s ICE raids and the kidnapping journeys that slaveholders made to the Northern states between 1850 and 1861 to re-enslave African Americans who’d freed themselves by escaping. Such re-enslavements were not only legal, but under the terms of the 1850 Fugitive Slave Act, Northern states and cities—and even Northern citizen-bystanders—were legally obligated to help the kidnappers re-enslave the escapees. In essence, the hatreds of the white South were imposed on the North, and many Northern states and cities—prefiguring today’s sanctuary city and state laws—reacted by passing statutes forbidding their officials from cooperating in these kidnappings, while demonstrators and activists sought to hide the freed men and women and thwart the slavers.

Now, in forcibly separating children from the parents, federal officials have dusted off yet another slavers’ practice and put it back into use.

Why ICE offices aren’t surrounded by obstructive vigils of Americans who don’t want their tax dollars to work this way is a mystery to me.

March 5, 2018

Here Comes Big Right-Wing Money. In the months after September 1, 1939, after war was declared but before Germany mounted its blitzkrieg offensive, observers were puzzled that Hitler was temporizing. They called it a Sitzkrieg, a sit-down war. Then, in the spring of 1940, the Nazis smashed through much of Europe in a matter of weeks.

Excuse the analogy, but political observers, waiting for the full ferocity of Koch brothers money, have been puzzled that the Republicans have allowed Democrats to take back some 39 Republican-held state legislature and city council seats, and not flooded the zone with cash. Has the right-wing money machine been overrated?

We will soon find out. More likely, the high rollers were sitting out the minor races, but the Sitzkrieg is over.

Now comes a higher-stakes contest—the special election on March 13 for Pennsylvania’s 18th Congressional District in greater Pittsburgh. The seat is vacant because the incumbent, a fiercely anti-abortion Republican named Tim Murphy, pressured his mistress to abort what turned out to be a false-alarm pregnancy, and resigned in disgrace. But I digress.

The Democrat, Conor Lamb, a Marine Corps captain and one-time federal prosecutor, was actually ahead of the lackluster Republican candidate, Rick Saccone, in the money derby, about $3.8 million raised to just $1 million for Saccone, according to last week’s filings.

But then the Republican money machine went into high gear. As of this week, according to a tabulation by The Wall Street Journal,

GOP-affiliated groups—including the National Republican Congressional Committee, the House GOP’s campaign arm; the Congressional Leadership Fund, a super PAC aligned with House Speaker Paul Ryan; the Republican National Committee; and two pro-Trump PACs, 45Committee and America First Action—have poured about $9.1 million into the Pittsburgh-area race.

Saccone, now flush with cash, is flooding the airwaves with negative ads, branding Lamb a tool of House Democratic leader Nancy Pelosi and of course of Hillary Clinton. Will it work?

This is steel country. Trump is coming to campaign for Saccone, and you have to wonder about the timing of his steel tariff announcement.

Trump carried the district by 19 points, but recent polls have shown Democrat Lamb narrowly ahead. The district has a slight Democratic registration, even though the disgraced Murphy regularly carried it by double digits.

If big money makes a big difference in this race, it is a warning to Democrats counting on a blue wave in November. And if the Republican loses or even notches a narrow win, it will be a sign that even Koch money can’t buy you love. 

March 2, 2018

Man of Steel. Donald Trump is imposing 25 percent tariffs on imported steel and 10 percent on aluminum. The unions, the bipartisan steel caucus in Congress, domestic steelmakers, and Trump’s nationalistic base were delighted. The usual suspects were appalled. And the stock market promptly plunged.

The Wall Street Journal, working itself into a full lather, warned that this was perverse economics, since 6.5 million Americans work in steel-using industries while only 140,000 work in steel-making.

So, how should we understand this? Are these tariffs a case of Trump doing something right for a change, or protectionist folly?

Here are two important things to understand. First, the major offender here is China. The Chinese subsidize steel, sell it below cost in world markets to grab market share and drive out other producers.

This is a flagrant violation of trade norms as well as a national security threat. According to an authoritative study by the Association for American Manufacturing, China now dwarfs every other producer, making 803 million metric tons (mmt) of steel, compared to just 78 mmt for the U.S.

Second, steel really is a vital industry. But if things continue on their present course, the American steel industry will be gone.

Here’s the problem. Raising tariffs in isolation is not a policy; it’s a stopgap. We need a much broader grand strategy to challenge China’s state-led capitalism as a strategic threat and to revise the entire structure of world trade law, which seems powerless to deal with Chinese predation. This seems well beyond Trump’s comprehension.

Today, he tweeted:

Say what?

In addition, raising tariffs is no substitute for an industrial policy. To revive American steelmaking and other manufacturing, we need targeted sectoral policies as well as a serious public infrastructure program with “buy America” provisions. That way there are made-in-America customers for made-in-America steel, and we begin rebuilding U.S. manufacturing generally.

So can we defend these tariffs? Yes, but only as a stopgap and only as part of a much larger set of policies that Trump is not capable of delivering. As the saying goes, even a stopped clock is right twice a day.

March 1, 2018

Back in the day, there was a term for Westerners who, while not communists themselves, had convinced themselves to support communist regimes—and back in the day, that meant the Soviet Union—because they believed those nations were creating workers’ states that would eventually become democracies. The term was “useful idiots,” and it was generally applied to social democrats who’d failed to notice what Stalinist Russia was actually doing.

In time—partly due to Nikita Khrushchev’s 1956 speech enumerating Stalin’s sins (some, not all)—the undismissible facts of what that regime had actually done hit those useful idiots like a two-by-four to the head. Some became more realistic and genuinely useful social democrats, some drifted elsewhere—to the right, to the Church, to anywhere and everywhere.

In recent decades, the useful idiots on communism have almost always been on the center-right or center-left—not, as before, on the left. Most particularly, they’ve been the pillars of American big business and its handmaiden, the U.S. foreign policy establishment. I refer, of course, to the decades of delusion that drove U.S. policy on China. Indeed, it was precisely the establishment’s belief that the spread of capitalism was indissolubly linked to the spread of democracy—a belief many of us on the left never shared—that deluded them. Since they willfully failed to notice that capitalism had existed, and their businesses had thrived, quite comfortably with authoritarian right-wing regimes, they told themselves, and us, that authoritarian Leninist capitalism was an impossibility.

For Wall Street and the U.S. corporations that saw in China endless pools of cheap labor, this delusion was particularly useful, for it enabled them to gut the industrial Midwest with a high-sounding rationale: By investing in China, we’re spreading democracy.

The Prospect didn’t fall for this. In a number of articles—most notably “America’s China Fantasy,” a cover story we ran more than a decade ago by East Asian scholar and journalist James Mann—we pointed out how dangerous this delusion would prove to be to the balance of power between democratic regimes and authoritarian ones. We ran articles by several writers, most prominently Clyde Prestowitz, who documented how China was demanding, and receiving, proprietary advanced technology from U.S. corporations as a condition of their being allowed to sell their goods there, and how China actually enlisted those corporations to lobby on its behalf in Washington.

Now that President Xi has installed himself for as long as he pleases atop the Middle Kingdom, has suppressed his domestic critics, and has anointed himself as the reasonable-sounding leader of the growing Authoritarian International, our foreign policy establishment and corporate leaders are confessing the error of their ways, as Chuck Lane notes in his column in today’s Washington Post.

Historians who document the rise of anti-Western authoritarian regimes in the early 21st century can resurrect a term to describe America’s business and foreign policy establishment: useful idiots.

February 28, 2018

Year of the Dictator. American political and financial elites make catastrophic, self-serving mistakes. Exhibit A is Xi Jinping, China’s newly announced lifetime president.

As recently as decade ago, leaders of both U.S. parties and informed commentators were convinced that China would soon converge with the West, as a capitalist democracy, and that easy terms of entry to the World Trade Organization would pave the way.

Everyone from Clinton’s economic eminence Robert Rubin to Joe Biden to George W. Bush insisted that China would soon become more like America. We just had to go easy on their economic mercantilism, turn a blind eye to their assaults on dissent, and forge economic partnerships.

Bush put it this way: “Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy. … Trade freely with China, and time is on our side.” Oops.

And the inimitable Tom Friedman wrote, “China is going to have a free press. Globalization is going to drive it.” Go, Tom.

Do these seers ever recant when they get it so wrong?

One who got it right was James Mann, writing in The American Prospect. Mann warned that the prediction that as China became more global, it would be come “more like us,” was a dangerous illusion. The greater likelihood was that we would become more like them. Mann wrote, in 2007, with eerie prescience,

The fundamental problem with this strategy of integration is that it raises the obvious question: Who's integrating whom? Is the United States now integrating China into a new international economic order based upon free-market principles? Or is China now integrating the United States into a new international political order where democracy is no longer favored, and where a government's continuing eradication of all organized political opposition is accepted or ignored?

Much of the view that China would soon become a liberal capitalist democracy wasn’t just stupid; it was self-interested, promoted by armies of lobbyists for corporations and investment bankers who were making fortunes from deals with a totalitarian, state-capitalist China; and who were part of Washington’s revolving door.

A New York Times piece Wednesday morning observed, “Gone is a widespread agreement among diplomats, scholars and businesspeople that China is gradually converging with the United States.”

Well, yes. And it would be nice—for once—to see those cocksure leaders and pundits admit what fools they were. Over to you, Tom Friedman.

February 27, 2018

With the oral arguments in Janus v. AFSCME come and gone, the five Republican justices are now circling what’s left of the union movement as vultures do carrion.

Ironically, the right’s war-to-the-death on worker organizations looks to be peaking just when labor’s favorability is the highest it’s been in decades. Over the past year, Pew and Gallup have measured organized labor’s favorability at 60 percent and 61 percent, respectively. Even a sizable minority of Republicans (42 percent in Gallup, 44 percent in Pew) think well of unions. Gallup notes that the share of Americans who would like unions to have more influence is the highest since it first asked that question 18 years ago. Pew notes that fully 76 percent of Americans under 30 approve of unions—statistical confirmation that the grad students and young journalists at digital media companies who are electing to join unions reflect a generation-wide sentiment.

In joining unions, however, the grad students and journalists are nonetheless exceptions to their generation’s experience. On the whole, unlike their fellow millennials, they can join a union without fear of being fired. (Of course, such was not the case for the journalists at Gothamist, LAist, and DCist, who saw their papers shuttered by their Republican billionaire owner the moment they voted to go union—though, happily, those papers have now been bought by new owners who apparently believe that journalists are people with certain inalienable rights.) For their part, university administrators, while so far refraining from gunning down their grad students in the grand tradition of Henry Clay Frick at Homestead, refuse to grant their teaching and research assistant the right to a union. But unlike millennials elsewhere in the economy, the grad students are too important to the universities (they are, after all, a grand source of underpaid labor) to be fired.

The disjuncture between the level of support for unions and the actual rate of unionization—which, in the private sector, is just one-tenth of the union favorability number in Gallup and Pew—is one of those flashing lights indicating a system shutdown—in this case, an abridgement of fundamental rights. By virtue of decades of court decisions and the Taft-Hartley Act, which encourage management to intimidate workers during unionization campaigns, union elections seldom allow workers to freely choose to unionize. Majority rule in the workplace is blocked in much the same way that gerrymandering, voter suppression, the Electoral College, and the non-representative nature of the Senate have suppressed majority rule in our government. Sixty percent of Americans favor unions; just 6.5 percent of private sector workers now belong to them. Democrats (Al Gore, Hillary Clinton) win pluralities in the presidential popular vote but lose the election nonetheless. In both the workplace and the republic, our laws don’t look all that kindly on majority rule.

And now, with support for unions nearly double the level of opposition, the Republicans on the Court are on the verge of crippling the one part of the labor movement—the public employee unions—that is still large and thriving. The same goons who removed the safeguards that enabled minorities to go unimpeded to the polls now take aim at what’s left of workplace rights as well. We’re fighting again for the very rudiments of democracy—unencumbered access to the franchise and majority rule, at the polls, in the workplace, in our country.

February 26, 2018

In Proximity of Sin versus #metoo. There is a sexual misconduct/rape case going forward at Yale, which sheds some light on several thorny issues. In this case, a woman wound up very drunk in a fellow student’s dorm room, reported waking up briefly to find him on top of her, tried to push him off to no avail, and in the morning woke up to find herself naked. She decided to go to the authorities with a formal rape complaint rather than just relying on Yale’s Title IX process.

Here’s the complication. The standard to convict is higher in a criminal case than in a university’s sexual misconduct process. Suppose a jury wonders what she was doing drunk in a man’s room, and refuses to convict?

Clearly, if the facts are as they appear, the male student is in line for very serious punishment by the university. A woman being imprudent enough to get very drunk and pass out in a male student’s room is not an invitation to be raped. Somehow, men need to get that message.

Yet, do potential victims bear any responsibility at all? My Catholic friends recall the nuns warning them not to put themselves “in proximity to sin.” In more modern feminist language, this is an era when women are supposed to be respected for their “agency”—they are responsible for their own conduct.

There is the further complication that we are not sure about how much paternalism we want on the part of universities. My generation spent great effort fighting what was then called the doctrine of in loco parentis—the university was supposedly in the role of parent—and it spent great effort at preventing even fully consensual sex. We don’t want to go back to that.

Yet it would not be bad if universities did crack down on underage drinking and binge drinking, especially of the fraternity sort, which often seems a ploy to get women very drunk. In an ideal world, consequences would be perfectly fine-tuned. A man who took sexual advantage of a very drunk, unconscious undergraduate in his room would be severely punished. But should there be some lesser consequence for high-risk female enabling behavior, too?

Alas, we are far from a world of finely calibrated consequences fitting gradations of misconduct. It’s all the more complicated, given that the essence of flirtation is mixed signals (often further mixed with genuine ambivalence), and further complicated by regret after the fact.

Somehow, we need to stumble through this legal and ethical thicket to a clearing, where people behave with more sexual respect.

Back to economics.

February 23, 2018

And a Little Child Shall Lead Them. Have you noticed that all the great social movements of the past half-century have been led by the young? The sit-ins and freedom rides, Mississippi Freedom Summer, the antiwar movement, the Dump Johnson children’s crusade.

Now comes the long-deferred backlash against the lunacy of the NRA, which has held too many Democrats as well as Republicans hostage. And it’s being led by outraged high school students.

Once the NRA got captured by absolutists, the gun lobby became adamantly opposed to any compromise, as a slippery slope towards “taking away our guns.” Too many liberals and moderates, characteristically, tried seeking common ground.

Suppose we redefine the issue as gun safety rather than gun control? Nope. Suppose we just ban assault weapons? Sorry, the Second Amendment gives everyone a right to an AK-47. The NRA even opposes the pathetic “reform” of age limits for purchases of military-style weapons.

Let’s face it—there is no common ground. And now, thanks to high school students calling BS where their adult leaders were too quick to flinch, we have a chance at putting serious gun control back on the agenda.

We could be at a tipping point. If you need a license to drive, to fish, to marry, to hunt, with databases to match, we need strict licensing for guns. And strict limits on what kinds of firearms are permitted at all. If you want to fire machine guns, the army will welcome you.

Could a groundswell of political revulsion of one mass killing of children too many turn the tide? Our leaders just need to catch up with the kids.

My friend Drew Westen, author of the brilliant book on political language, The Political Brain, proposed a TV spot, back in 2007. It has a political candidate with a hunting rifle in one hand and an AK-47 in the other. The candidate says:

This [pointing to the gun on his left] is a rifle. This [the gun on his right] is an assault weapon. People like you and me use this one to hunt. Criminals, terrorists, and deranged teenagers use this one to hunt police officers and our children. Law-abiding citizens have the right to own one of these. Nobody has the right to threaten our kids' safety with one of these. Any questions?

February 22, 2018

It took forever (nearly eight years), but a key provision of Dodd-Frank is finally being implemented. Public corporations have finally begun to report the ratio between their CEO’s pay and the pay of their median worker.

Dodd-Frank mandated that these companies calculate and release these numbers in their annual filings to the SEC. Honeywell (a company whose CEO, before he became W’s vice president, was Dick Cheney) has gone first, reporting that its current CEO makes a modest 333 times what it’s median employee pulls down.

Fifty years ago, when unions were strong and America was notably less plutocratic, the average CEO made roughly 20 times what his (then as now, CEOs tended to be male) average worker made. Indeed, the great management consultant Peter Drucker prescribed that multiple of 20 as the proper ceiling, not to be exceeded, of the CEO-median ratio.

But that was then. Ronald Reagan’s epochal reduction of the taxes on the highest incomes, his SEC’s rule-change allowing CEOs to manipulate share buybacks, Milton Friedman’s very popular (among CEOs) doctrine that the sole purpose of corporations was to reward shareholders, and his emphasis of the power of CEO unions (that is, corporate boards of directors, on which CEOs of other corporations sit and happily approve astronomical pay deals for that company’s CEO, creating a standard that the CEOs who sit on their own corporations’ boards will obligingly meet)—all these have combined to raise CEO pay to dizzying, not to say nauseating, heights. Simultaneously, the weakening of unions was one among many factors that kept median worker pay from rising very much.

Honeywell’s 333-to-1 ratio is within the range of the ratios for all corporations that organizations that have sought to measure this have come up with in recent years: Most of the averages have ranged from 200-to-1 to 350-to-1. As the Institute for Policy Studies (IPS) has noted, Honeywell actually didn’t include the pay of its employees in nations with developing economies in calculating its ratio, presumably because it didn’t want a ratio that could have topped, say, 500-to-1. IPS has cautioned that other corporations are likely to do the same.

One question that CEOs seldom address, partly because it’s too seldom asked, is why they deserve so much more than the CEOs who ran their companies 50 years ago, when the U.S. economy enjoyed a much more broadly shared prosperity than it does today. As the ratio of their pay to their employees’ has grown from 20-to-1 to 300-to-1, why are they worth, on a ratio basis, 15 times more than their mid-century predecessors? Is the American economy doing 15 times better than it was in 1968? Hardly.