By Paul Buchheit, a professor with City Colleges of Chicago, founder of fightingpoverty.org and co-founder of Global Initiative Chicago. He is the editor and main contributor to the forthcoming book, “American Wars: Illusions and Realities”Cross posted from Alternet
Senate Republicans killed a proposed $447 billion jobs bill in 2011 that would have added about 2 million jobs to the economy. They filibustered Nancy Pelosi's Prevention of Outsourcing Act, and temporarily blocked the "Small Business Jobs Act." Most recently, only one member of Congress bothered to show up for a hearing on unemployment.
Congress' unwavering support of big business donors shows a callous disregard for the needs of the millions of Americans they're supposed to be representing. Here are five of the paralyzing consequences.
1. They've stifled the growth of millions of young adults.
In the U.S., more than half of college graduates were jobless or underemployed in 2011. Over the last 12 years, according to a New York Times report, the United States has gone from having the highest share of employed 25- to 34-year-olds among large, wealthy economies to having among the lowest. The Wall Street Journal recently noted that nearly 300,000 people with at least a bachelor's degree were making the minimum wage in 2012, double the number in 2007. Not since the 1960s have so many young adults been living with their parents.
2. They've mocked the concept of a "living wage."
At the very least, one would think, workers should be able to sustain their lifestyles over the years, to keep from falling backward in earnings. But they've lost 30 percent of their purchasing power since 1968. This happened during a time of steady American productivity. It has been estimated that a minimum wage tied to productivity should now be $16.54 per hour, but the current $7.25 is less than half of that, and below poverty level. It's been getting worse in the last five years.
While 21 percent of post-recession job losses were considered low-wage positions, 58 percent of jobs added during the recovery were considered low-wage. Congress fiddles while more and more American families lose their earning power.
3. They've allowed nearly half of America to go into debt.
Our young adults are not only underemployed, but the college graduates among them are dealing with an average of $26,600 in debt, which translates, according to Demos, into $100,000 of lifetime wealth loss. Total student debt has quadrupled in just 10 years.
It goes beyond students to the population at large, many of whom survived the boom years by borrowing heavily on homes and credit cards. In 1983 the poorest 47 percent of America owned an average of $15,000 per family, 2.5 percent of the nation's wealth. By 2009 the poorest 47 percent of America, as a group, owned zero percent of the nation's wealth. Their debt exceeds their assets. Yet Congress caters to too-big-to-fail financial institutions while too-little-to-matter American homeowners don't earn enough to stay out of debt.
4. They've persisted with the trickle-down "job creator" myth.
The "low tax = job creation" argument is absurd. Congress need only look at four of its pet projects: Bank of America, Citigroup, Pfizer, and Apple. Each of the first three made much of their revenue in the U.S. over the last two years, but claimed billions of dollars of U.S. losses (big foreign gains, though). Yet with almost zero U.S. taxes among them, all three companies are among the top 10 job cutters.
Apple is a special case. Rand Paul fumed, "What we need to do is apologize to Apple and compliment them for the job creation they're doing." But Apple only has 50,000 U.S. employees, and despite earning about $400,000 per employee, they were the biggest U.S. tax avoider in 2012.
As America waits in vain for corporate job growth, Congress might look in its own backyard for the very worst job cutter, the federal government itself, which has begun to slice up a longtime model of public service, the Post Office.
5. They've aligned against the one area that would ensure jobs and a safer future.
A study at the University of Massachusetts concluded that at least 1.7 million jobs could be generated by a commitment to clean energy, about three times as many as in the fossil fuel industry. Half of them would be labor-intensive jobs requiring at most a high school education. And all these new employees would help to reduce their own home heating costs. A recent report by a Kansas energy group, which analyzed data from 19 wind projects, concluded that wind energy generation "is equivalent to, or in some cases significantly cheaper than, new natural gas peaking generation."
If Congress were really concerned about job creation, and about the cost and environmental impact of energy choices, and about the implications of falling behind China and Germany in clean technologies, they would see that a transition to wind and solar power is necessary. But oil, gas and coal received over twice the level of subsidies provided for renewable fuels from 2002 to 2008. Globally it's six times more, with U.S. post-tax fossil fuel subsidies of $502 billion leading the world. Even with their subsidy advantage, right-wing groups, funded by Koch Industries, are seeking to repeal renewable energy initiatives in individual states. Their deceitfully named "Electricity Freedom Act" will keep the money flowing to dirty energy. But not the jobs.
How can we explain the job-defeating behavior of congressional Republicans? I suggested earlier that they're either ignorant of middle-class life or victims of free-market delusion. Perhaps it's more insidious. Thom Hartmann reports on a dinner meeting the night of Jan. 20, 2009, when "Republican conspirators vowed to bring Congress to a standstill, regardless of how badly congressional inaction would hurt the already hurting American economy and people." In short, they don't want President Obama to look good. If that's true, it goes beyond shame. It's a disgrace.
This is good rhetoric, but the only time the piece gets close to mentioning actual, specific legislation is in #2, and maybe #3. As for #5, I’m very skeptical of “green jobs” but there is nothing there about what federal legislation prevents these jobs from being created.
However, there is no mention of immigration legislation, which is defintely within the purview of the federal congress, and results in the importation of millions of workers into the United States, often for the public and specific purpose of undercutting the wages of the workers already here. Legislation to do more of this is making its way through the process now.
Nor is there any mention of companies relocating parts of their operations to other companies with lower wages, though in some cases there are federal subsidies for them to do this, and in any event this is only possible through trade legislation that allows them to do this, evading federal wage, labor relations, safety, and environmental laws, and just re-import back into the US and sell into the American consumer market.
Ed wrote: “Nor is there any mention of companies relocating parts of their operations to other companies with lower wages”
I’m guessing you meant to write: “other
companiescountries with lower wages”??? In any case, offshoring has absolutely resulted in higher unemployment and lower wages.
In #4, Congress’ failure to act to raise taxes on the top 1% and to close loopholes that allow corporations to evade paying their share of revenues has resulted in less money for government programs. That has resulted in not only the need to cut federal government jobs in order to meet budgets, but state and local governments also rely on federal funding to share the expense of many of their projects as well. Congress even cut funding for IRS tax auditors who on average recoup ten times their salary each year in additional revenue. Let’s not forget the sequester which some in Congress prefer to lay at the feet of Obama, as it was his preferred choice, versus defaulting on our debt obligations.
If the government chooses to offer significantly more generous subsidies to established fossil fuel enterprises rather than investing in start-up enterprises with newer green technologies, the less heavily subsidized new enterprises can’t possibly be expected to be competitive. Without our heavy military investments ensuring cheap Arab oil or government grants and guaranteed loans and insurance for the nuclear industry, green energy would be quite competitive.
Government spending is not dependent on tax revenue. Each time someone says it is they play right into the conservative spin machine on economics. Congress refuses to spend solely because it wants you and everyone else poor and desperate, not because it doesn’t have the means.
Exactly, Ben. The people on this board have got to read Frank N Newman’s books now and start understanding how the monetary system works.
Freedom from National Debt
Six Myths that Hold Back America: And What America Can Learn from the Growth of China’s Economy
Frank N Newman was #2, Deputy Secretary of the United States Treasury. Newman recommends in Freedom from National Debt that people read Warren Mosler, L. Randall Wray, James Galbraith, Scott Fullwiler, and Bill Mitchell, all the MMT people. He says his Six Myths… book and Mosler 7 Innocent Frauds… are saying the same thing.
Permanent high unemployment is a feature, not a bug. Real wages have stagnated for the last 35 years do to bipartisan anti-unionism, deregulation, and corporatism. In addition, Fed policy treated wage gains from the late 70s on as inherently inflationary and to be combatted, resulting in virtually all wealth gained from increases in productivity going to the rich. As Ed notes above, in the 90s, we saw the beginning of free trade agreements which undercut American workers and shipped their jobs off to all the peasant economies of the world. Immigrant workers, legal and illegal, who used to be employed (and abused) in a few low wage sectors like agriculture now show up increasingly in multiple sectors and even white collar professions. The overall effect is to put further downward pressure on American wages. The differential between male and female workers’ wages is another example of this. Rather than bringing wages up to the highest standard, the lowest wages are used to force higher wages down.
The author shows his ongoing Democratic tribalism by focusing his criticisms chiefly on the Republicans. The truth is that the Democrats and Republicans have been doing this to us for 35 years under Democratic and Republican Congresses and Presidents. If he is looking for real solutions, the first thing he should do is abandon the Democrats.
“The author shows his ongoing Democratic tribalism by focusing his criticisms chiefly on the Republicans. The truth is that the Democrats and Republicans have been doing this to us for 35 years under Democratic and Republican Congresses and Presidents. If he is looking for real solutions, the first thing he should do is abandon the Democrats.”
Yeah, that’s an awesome paragraph!
The Permanent Recession shows not one sign of abating for the multitudes, no matter how flush the Highest of the Mighty become.
It is the policy of the government, regardless of political party, to enact measures which assure that high levels of unemployment, under employment and debt become the standard and permanent condition of the masses.
Wages and benefits for American workers will continue to be forced down.
And Americans who suffer from these policies will continue to fight one another for the few scraps tossed their way.
We should blame the political class in general for this situation, but we should also be clear that the political class is following the dictates of a tiny and diminishing class of financiers and corporatists who believe that the perpetuation of hard times for the many ensures their own permanent advantage and power.
question—why was it that Volker, or whomever it was, said 30 years ago something to the effect of “the American standard of living has to be reduced”?
other than overconsumption being the road to environmental degradation, I’ve never been able to figure out why that mindset, and the ensuing policies that have brought it about, was justified. apart from the obvious: because it enriches the owning class.
“Real wages have stagnated for the last 35 years do to bipartisan anti-unionism, deregulation, and corporatism.” (Hugh)
Well said! To be charitable, Democrats didn’t have to be openly anti-union, letting the other wing of the USA Party do the heavy lifting (note, Taft Hartley dates back 66 years). Buchheit’s FINAL paragraph was a blooper. Prior to that, I don’t think he seemed noticeably “tribalistic.”
Speaking of anti-unionism…..
CNN had a special on the bankruptcy of Stockton, CA. First they showed the reporter riding around with the mayor. He asked her what caused Stockton’s bankruptcy. She relayed that it was unions who had negotiated unsustainable wages and pensions for their police and firefighters. Later the reporter was riding with a policeman, who coincidentally was the union vp. The reporter asked the cop for his response to the many people in the town who blamed his colleagues and their union for the bankruptcy. At that point, the viewer learns that 10-12 years, the town borrowed heavily, issued bonds, to fund a massive waterfront project and $40 M new city hall. The pension fund was flush with cash so the town chose not to make contributions for 8 or 9 years preceding the collapse, as they didn’t need to. Instead, the city borrowed against the pensions. Then came 2008, and the pensions plummeted in value. The luxurious new buildings are sitting empty and their revenue base got creamed when half of the homes in some neighborhoods, new middle class homes, ended up in foreclosure. They cut the police and fire force by 25% as homeless drug addicts moved into abandoned homes driving up crime (which further fueled folks walking away from their mortgages). They drive around and show you boarded up homes, vandalized and with yards littered with trash from squatters who repeatedly break back in. They also show a weekend where they have to call in help to handle all the homicides as 43 other calls from residents for police assistance are left indefinitely waiting for somebody to get freed up to respond. Last year they captured the title for the highest homicide rate in the country.
Now they think the city workers should be willing to forgo their pensions. The story told is that it was those unions and their stranglehold that caused the demise of Stockton. Vallejo to the west, who emerged from bankruptcy after three years and cutting pensions to $300/month, is held up as a model of bankruptcy success.
The Senate immigration bill increases the H1-B visas from 60,000/year to 350,000/year. That doesn’t even include the STEM visa system they already passed.
Wrap your head around letting 350,000 foreigners a YEAR coming here to take the jobs our educated workers can do (including millions of highly skilled workers over 45 these companies refuse to hire).
An U.S. college graduated student with tens of thousands of student loan debt can not possible work for as low a salary as a foreigner with no student loan debt.
Washington is treasonous to it’s own people.
Yes, it is a lot of visas. When a foreigner on H1-B gets a job, the company is required by law to pay the “prevailing” wage for the position. At least theoretically it should be hard to pay somebody less as the visa application may not be approved for that reason.
The employer is also required to post in the office a notice that a foreigner is being hired. Should anyone of the non-foreign workers complain, the visa can be denied.
Of course, wether somebody actually enforces this law is another matter but there certainly are ways to fight the H1-Bs.
Here in NYC, in the fashion industry specifically,many companies have stopped hiring H1-Bs. I don’t know if this applies to ther industry sectors.
I’ve worked in quite a few places that hire H-1B visa people and let me tell you they were nothing special. An Amerian should have had the job.
And I’ve seen in the past 13 years lay off after lay off where the American goes and the H1-B doing the same job stays.
I completely agree with you. I am just merely pointing out that there are legal “protections” at least on paper and that if H1-B abuse continues, there should be grounds for some class action lawsuits.
It seems to me like they fast tracked it too. Chuck Schumer pushed it non-stop, pretending it was intended to help illegals from Mexico, etc. Not on your life. Schumer is the biggest bank shill in the senate, so we know the TBTFs all want to import plenty of laborers for their friends, the global traders. I’ve said it before, and it sounds crazy but I feel uneasy about this connection because the bigs like to commodify everything and do their trading in unregulated markets. Why not labor too? It won’t be a domestic market, it will be global, and under the jurisdiction of the free trade tribunals. Sounds like a slavers paradise. And it is no different than off-shoring. Post-labor capitalism? Whatever.
So many ways to get around the law. The Big importers of labor can rig a floating lab with hundreds of cabins and just park outside US waters, there to do contract work at such a bargain.
Or they can pass the Trans Pacific Partnership which makes areas of this country not under the laws of this country and just put their businesses within those boundries.
I agree, but…
the problem is the White House. Yes, Congress is ultimately responsible for not checking the President, just like we citizens are ultimately responsible for not checking Congress.
But the big 21st century barrier to Constitutional governance and a better federal budget is the President of the United States, not Congress.
Also, this isn’t really touching upon the main issues surrounding the national security state and lack of prosecutions of financial fraud and war criminals and deferred maintenance in basic infrastructure and the massive inflation of healthcare and higher ed and housing and the haphazard nature of unemployment insurance coverage.
One law that Congress is responsible for, the Fair Labor Standards Act, isn’t mentioned either. Two simple tweaks – increasing the minimum wage and increasing the salary test for exempt status from overtime – would do a tremendous amount for workers.
Also, the problem isn’t Apple. In a 10,000,000 word essay about what’s wrong with our system of political economy, perhaps Apple deserves a sentence. But in this context, it makes me highly doubt the seriousness of the author in understanding 1) what is wrong, and 2) Apple’s business model, which is one of the most consumer friendly of any major corporation in the country. In anything short of a critique of the existence of publicly traded corporations, Apple is a shining star, not a problem child.
Well, yes, but why are you only picking on congress?
Obama is the corporate shill to outdo all others. He talks like FDR but he walks like Marie Antoinette. And now he is pushing for a cheap-labor immigration bill that, after a few years delay, will greatly accelerate the rate of decline of American wages. That is deliberately designed to create poverty. And no he’s not ashamed.
The real question is how can we get someone in the executive branch that is not totally corrupt. How can we get a real Democrat in the primaries? The big money is going to push for more identity politics – vote for Hilary she’s a woman! Just like vote for Obama he’s black. How can we numerous but fragmented people get some traction when it counts, in the primaries before we end up with yet another false choice in the general election?
“How can we get a real Democrat in the primaries?”
This is like the “real Christian” excuse for murderers, crusaders, and fill in your un-Christian act of choice. The Democratic Party is largely composed of people who are either under too much stress to make great choices and subsequently make the best perceived choice available and people who do not care about Democratic behavior as the main post demonstrates.
Obama and Clinton are real Democrats, and they are supported by real Democrats. Some still linger in delusion, and they reach rock bottom every day. Look at the list of Democrats who voted for the Iraq War, the repeal of Glass-Steagall, Roberts, Alito, and every free trade agreement coming down the pipeline. The Progressive Caucus is a joke, but until there is accountability, voters need to look elsewhere.
Virginia has a gubernatorial election in November, and Terry MacAuliffe, noted Clinton confidant, is the Democratic nominee despite Virginia being the largest defeat in a primary state for Hillary Clinton back in 2008, Terry’s previous nomination loss, and the defeat of the Clinton alligned Senate candidate for the Democratic nomination in 2006. A few months ago, Terry was running the dime store politics “you run to the extreme for the primary and the center for the race.” As the only candidate, Terry’s message focused on cutting taxes and deregulation. Amazingly enough, no one was excited about this, and Republicans hate Democrats and weren’t going to change their minds. Terry’s lack of support among likely Democratic voters has led to a message change. Now he is running anti-fracking ads, coming out for late term abortions, not the weaselly words of Clintons in years past, and noting his support for gay marriage.
I wouldn’t vote for MacAuliffe ever because he has a very public life and should never be allowed to be governor or the guy who cleans up roadkill. He is far too crooked and incompetent, but by not blindly supporting Democrats, the Democratic candidate is being forced to run as one of those mythological “real Democrats” not what Democrats really are.
If Democrats aren’t doing the job, don’t support them. They might act. Look at Holder with his phony end of mandatory sentencing. They are afraid, but until there is major change the Democratic Party is not the primary vehicle for the change you might wish to see. Its too broken. For Christ’s sake, Terry MacAuliffe is the Democratic nominee for Governor of Virginia. If that doesn’t cause a mass revolt, it tells you everything you need to know about Democrats. The old machine is dead, so its not a repeat of Rahm becoming mayor of Chicago.
I have been sceptical of Terry McAuliffe every since I heard that he made $20 million on Global Crossing during the dot.com era.
This has been a bipartisan effort. The Democrats in Congress have been perfectly happy to let Obama run the place like some Jack Welch lackey. Democrats don’t care about jobs, or the Senate would be discussing other than throwing money at the prison industrial complex and attacking engineering jobs through H1B1 Visas under the guise of immigration reform.
As for the Senate Democrats, they authorized a filibuster in January 2009 despite Republican assurances they would object to everything. This means the Democrats fall into one of two categories: too stupid for the job and lazy/corrupt. Yes, anyone who thought the GOP would be reasonable is too stupid for any kind of responsibility.
If the Democrats want a liberal awakening to come to their side, they need to make changes. First, it involves standing up to the fraud in the White House and removing the Democratic leadership across the board.
Until Democratic behavior changes, whining about Republicans is going to fall on deaf ears.
Jobs, jobs, jobs!
How lame. The jobs of American workers have been automated and outsourced away with their own stolen purchasing power via a government-backed credit cartel and all the victims deserve is some make-work?! And yes, working on Progressive boondoggles is still make-work.
How about we bring up Leviticus 25 and demand debt-relief AND LAND REFORM. Can the Christian Right possibly oppose that? No, they can’t. And the much neglected Old Testament also commands restitution for theft so Steve Keen’s “A Modern Debt Jubilee” should find traction too with Christians of all political leanings.
‘Congress should be deeply ashamed’
That’s the anthropomorphic error: ‘Congress’ as a collective body is not capable of feeling shame. Nor, in most cases, are its members as individuals.
If they were capable of shame, they wouldn’t be there, serving as compliant rubber stamps to the Drone Laureate’s bloody slaughter.
Congress feels no more remorse than a lion gobbling a zookeeper: it’s just their nature! :-)
Why is this rubbish posted on NC?
The thrust of the reasons are ok but the author is a bit confused (deluded?) on how our world works currently.
It is almost like the author never reads NC and doesn’t believe that plutocrats exist outside of the Republican party
The plutocrats own both parties and their efforts against the public is evidence of that control.
I place the blame nearly all on President Obama because Congress is comprised of fools who know next to nothing about economics. He should be able to take advantage of that.
The president could easily propose a tax cut for incomes under $100k and then publicly pressure the GOP to support it.
I gotta laugh, what makes you think Obama understands economics??? His past and present advisors??? Yo’ Larry what ‘dya think about being Fed chair, Bobby Rubin gave me a call and thinks yo’ the man. Obama is still counting on his fingers and toes
“Obama is still counting on his fingers and toes”
Haw, haw, good one.
Yeah, Barry and Michelle are counting their “magic beans” on both their fingers and toes. According to Michelle, magic beans are the dough that started rolling in after his phoney speech at the 2004 convention and that horrid book of his, speaking fees, etc. She was gleeful they were flush with cash and could pay off their condo mortgage, right before the crash, or they might have ended up like the mortgage scam victims they’ve screwed ever since.
Obama, Booker, Deval Patrick, and that putrid Harold Ford, it’s sickening what going to Ivy League schools has done to them, and us.
Articles like this one throw around a lot of accusations about the whys of wealth inequality without presenting much proof. In my opinion, the 1% is going to do worse than they have been over the next five years because when QE stops, asset prices are coming down. ALL asset prices. So far, housing is the only thing that has come down and more or less stayed down, despite some recent signs of recovery.
There are not enough jobs, certainly. But we can correct that not by taking money from the entrepreneural part of the economy to create make work jobs, but by breaking down the regulatory nightmare that makes starting companies so difficult. This may mean throwing out ancient legislation lock, stock, and barrel. Call me a neo-lib if you want. The government doesn’t create real jobs, entrepreneurs do.