Month: September 2011

Sign of the Times
by David Atkins (“thereisnospoon”)

The middle class is disappearing, and big business is taking notice:

For generations, Procter & Gamble Co.’s growth strategy was focused on developing household staples for the vast American middle class.Now, P&G executives say many of its former middle-market shoppers are trading down to lower-priced goods—widening the pools of have and have-not consumers at the expense of the middle.

That’s forced P&G, which estimates it has at least one product in 98% of American households, to fundamentally change the way it develops and sells its goods. For the first time in 38 years, for example, the company launched a new dish soap in the U.S. at a bargain price.

P&G’s roll out of Gain dish soap says a lot about the health of the American middle class: The world’s largest maker of consumer products is now betting that the squeeze on middle America will be long lasting.

“It’s required us to think differently about our product portfolio and how to please the high-end and lower-end markets,” says Melanie Healey, group president of P&G’s North America business. “That’s frankly where a lot of the growth is happening.”

In the wake of the worst recession in 50 years, there’s little doubt that the American middle class—the 40% of households with annual incomes between $50,000 and $140,000 a year—is in distress. Even before the recession, incomes of American middle-class families weren’t keeping up with inflation, especially with the rising costs of what are considered the essential ingredients of middle-class life—college education, health care and housing. In 2009, the income of the median family, the one smack in the middle of the middle, was lower, adjusted for inflation, than in 1998, the Census Bureau says.

I’m sure the answer lies in more cuts to Medicaid, and in firing more government workers. That will solve the problem.

Assuming, of course, that our policymakers think this is a problem, as opposed to an adjustment to bring the “spoiled” American middle class more in line with the median standard of living in the BRIC countries that are all the rage with Wall Street Journal-reading MBAs.

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Doomed then and now

by digby

John Judis has written an amazing article in TNR called DOOM! Our economic nightmare is just beginning about follies past and present. I’ll just quote a little piece of it here, which puts our current situation into an important historical context:

Politicians today might not want to remember, but, in the first phase of the Great Depression, the major economies, oblivious to the paradox of thrift, took steps that made things much worse. In the United States, Hoover, who was a Republican progressive in the tradition of William Howard Taft rather than Calvin Coolidge, responded initially to the stock market crash and the drop in employment by proposing a tax cut and a modest public works program. He also tried to bring industry together to agree to invest and to maintain wages and prices. But, when firms continued to cut back, unemployment continued to rise, and tax revenues dropped—creating a budget deficit—Hoover and the Republicans turned to cutting government spending and raising taxes on the assumption that a government, like a business, should not respond to hard times by going further into debt. In a news conference in December 1930, Hoover declared, “Prosperity cannot be restored by raids upon the Public Treasury.” In fiscal year 1933 (which began in June 1932), federal spending actually decreased. By March 1933, when Franklin Roosevelt took office, the unemployment rate had climbed to 24.9 percent from 3.2 percent in 1929.

In Great Britain, the economy had begun to decline after 1925, when the Tory government, rejecting Keynes’s advice, decided to go back on the original pre-World War I gold standard. By raising the price of the pound in dollars or francs, the Tories priced British exports out of the world market. In May 1929, the Labour Party ousted the Conservative Party, whom voters blamed for the downturn. But Labour Prime Minister Ramsay MacDonald pursued many of the same policies as the conservatives. MacDonald was a socialist and blamed a “breakdown” in world capitalism for Britain’s ills, but he thought that as the head of capitalist Britain, he had to adhere to the gold standard and free trade, while cutting the budget.

Keynes’s Liberal Party, led by former Prime Minister Lloyd George, advocated massive public works, but Labour leaders branded the Liberal proposals “madcap finance.” They rejected any idea of a third way between laissez-faire capitalism and socialism. As unemployment soared in Britain, MacDonald proposed raising taxes and cutting spending on unemployment insurance in order to balance the budget. MacDonald had always been averse to partisanship and had earlier urged the parties to put their “ideas in a common pool.” When Labour’s trade union members balked at his cuts, MacDonald created a national unity government with the Tories in 1931 and passed spending cuts and tax increases. By the next year, unemployment in Britain had risen to 22.1 percent from 10.4 percent of the wage-earning workforce in 1929.

In Germany, where the slump had begun in 1928, a coalition led by a Social Democratic prime minister held sway. Both the Social Democrats and their conservative coalition partners were committed to reducing Germany’s rising budget deficits, but the Socialists wanted to do so by borrowing money overseas, while the center-right parties advocated cutting the budget by slashing unemployment insurance. The government split and, in an election in 1930, a center-right coalition led by the Catholic Centre Party’s Heinrich Brüning took power. Brüning drastically cut spending and raised taxes, and, by 1932, when the next elections occurred, the German economy was in ruins. Production was at 40 percent of what it had been in 1929, and unemployment had risen to 33 percent.

In all these cases, the lesson was clear: Cutting spending and raising taxes to balance the budget had made things much worse. And, as these governments discovered, there was a political price to be paid. In the United States, Franklin Roosevelt and the Democrats turned out Hoover and his party by a landslide. The Republicans would not win the presidency again for 20 years and would remain the de facto minority party for almost 50 years. In the October 1931 elections in Britain, the Labour Party suffered its worst defeat. MacDonald would be expelled from the party, and Labour would not regain power until 1945. In Germany, Adolf Hitler’s National Socialist Party would best the other parties in the 1932 elections. And, in January 1933, Hitler would become chancellor.

Keep reading … He talks about how and why our political leaders seem to be doing the same thing all over again and how current leaders have missed their opportunities:

Charismatic leaders can reshape and even defy their nation’s political culture. Franklin Roosevelt did so during his first term. But Roosevelt inherited a situation so desperate that the public was willing to tolerate any kind of experimentation. Obama entered office with some of the preconditions for radical reform. Crisis was in the air. Wall Street was in disfavor. Voters blamed the downturn on his Republican predecessor, George W. Bush. And he had the rudiments of a political movement. But the country was not in as desperate shape as it was in 1933, and the opposition was still functioning. To have put in place a program that might have spurred at least the beginnings of a recovery, Obama would have had to be both extraordinarily bold and fiercely combative. And he was neither.

In dealing with the downturn and financial crisis, the president was cautious—as evidenced by his choice of Geithner, who had presided over the Federal Reserve Bank of New York during the crash. Like MacDonald, Obama harbored a dream of bringing the parties and interest groups together behind his program. As The Financial Times’s Martin Wolf put it, “Mr. Obama wishes to be President of a country that does not exist. In his fantasy US, politicians bury differences in bipartisan harmony.” After the bruising battle over the debt ceiling, Obama may have finally put his dream of a post-partisan politics to rest and adopted a more aggressive political style. But the narrow opening for dramatic change that existed in early 2009 has probably closed.

So what happens now? read on … This one’s going to give me some nightsweats.

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The Politics of the President’s Plan

by digby

I’ve had some time to digest the president’s deficit plan and watch his speech. As to the specifics, there are lots of wonkish articles out there breaking down the details, so I’ll leave it to you to find them. I’m just going to discuss how I think this works politically, since the likelihood of anything resembling this plan getting out of the Super Committee is highly unlikely. This is a political document not a negotiation.

My first thought is that it appears the administration has finally decided that there’s nothing to be gained with exclusively delivering post-partisan pablum. It certainly sounds as though he’s thrown down the gauntlet. Unfortunately, the President appears to want to have two fights going into this election, one over job creation and one over whose plan to cut the deficit is better, which I think is a confusing waste of time. (Focus like a laser beam on jobs and tell the Republicans they’ll have to go through you to get to the safety net and I think people would instinctively understand that he’s on their side.) But that isn’t this president’s style and perhaps it wouldn’t be believable if he did it. So, this is at least a change of tactics, more confrontational in tone, which is his best hope for reelection since it turns out people aren’t really all that impressed that he’s the most reasonable guy in the room if it appears that he gets punk’d every time.

Unfortunately, I think the decision to include Medicare cuts (even though they seem to be provider based and means tested) is a big mistake politically. The Democrats needed to run against Ryan, and it was clean and simple before, now it’s muddled and incoherent. Those provider cuts, if they were absolutely necessary, could certainly have waited until after the election. (And opening up the can of worms of military retirement benefits is daft. I don’t know why anyone would dream of doing such a thing in an election year.)But the president is in a tough position having bought into austerity a long time ago and now it’s hung around his neck, impeding his available solutions. Still, he shouldn’t have touched one of the best arguments the Democrats have. I’m fairly surprised they did it.

Threatening a veto is good stuff. He should do more of it. But he frames it as a “shared sacrifice” so that people still believe it’s right to trade essential middle class benefits for millionaire chump change. I hate that formulation and I think it’s a mistake to perpetuate it. However, just making any threat is a good thing — sounds like he’s drawing lines in the sand and considering the political dynamics in the congress I think it makes it less likely that any of these cuts will actually happen.

Overall, I think the obvious takeaway is that the White House isn’t looking to make any more deals to please Wall Street and burnish its “post-partisan” image before the election. To that, I can only say “thank God.” The country could really use a working government right now, but since we don’t have one the best we an hope for is one that that does no harm. If this speech signals gridlock — and I think it does — breathe a sigh of relief. The country can’t take too much more of these austerity deals.

Update: Ezra Klein has a piece up about the administration’s change of course to a more confrontational approach.

As it happens this is what the much loathed, allegedly unreasonable left, knowing the opposition as it did, have been desperately begging them to do for two years. The White House’s strategic rigidity and unwillingness to pivot from their post-partisan stance and chasing a big austerity “deal” in the face of an unbending right wing(even as everybody was always jabbering about how they were pivoting when they weren’t) has been one of my pet peeves from the beginning. The quixotic pursuit of a Grand Bargain in a time of immediate economic hardship was always an inappropriate goal on both political and policy grounds.

Like I said, better late than never, but it would appear that once again the left is relegated to premature anti-fascist status instead of being granted the respect of being right. Plus ca change …

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Gitcher Vote Suppression History Right Here

by digby

I have a piece up about GOP vote suppression at Al Jazeera today:

In the 1964 presidential elections, a young political operative named Bill guarded a largely African-American polling place in South Phoenix, Arizona like a bull mastiff.

Bill was a legal whiz who knew the ins and outs of voting law and insisted that every obscure provision be applied, no matter what. He even made those who spoke accented English interpret parts of the constitution to prove that they understood it. The lines were long, people fought, got tired or had to go to work, and many of them left without voting. It was a notorious episode long remembered in Phoenix political circles.

It turned out that it was part of a Republican Party strategy known as “Operation Eagle Eye”, and “Bill” was future Supreme Court Justice William Rehnquist. He was confronted with his intimidation tactics in his confirmation hearings years later, and characterised his behaviour as simple arbitration of polling place disputes. In doing so, he set a standard for GOP dishonesty and obfuscation surrounding voting rights that continues to this day.

read on …

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The rich are different from you and me

by digby

Representative John Fleming is very much against class warfare:

Fleming is himself a businesses owner, so Jansing asked, “If you have to pay more in taxes, you would get rid of some of those employees?” Fleming responded by saying that while his businesses made $6.3 million last year, after you “pay 500 employees, you pay rent, you pay equipment, and food,” his profits “a mere fraction of that” — “by the time I feed my family, I have maybe $400,000 left over.”

And how hard does the congressman work to make the equivalent of eight median household incomes? Fleming told the Wall Street Journal that “he spends very little time on day-to-day management, though he weighs in on broad strategy decisions.” “I monitor the reports. I’m certainly in communication with the managers,” he told the paper.

But he’s worth every penny of the money he collects because well … he just is.

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Why not do this all the time?
by David Atkins (“thereisnospoon”)

One would think the Obama Administration would want to see articles like this from the New York Times frontpage every day of the year. First, the press gives Obama credit for a balanced approach to deficit reduction:

President Obama will unveil a deficit-reduction plan on Monday that uses entitlement cuts, tax increases and war savings to reduce government spending by more than $3 trillion over the next 10 years, administration officials said.

Credit for popular proposals including tax increases on the wealthy and drawdowns of unpopular wars:

Mr. Obama will call for $1.5 trillion in tax increases, primarily on the wealthy, through a combination of closing loopholes and limiting the amount that high earners can deduct…Senior administration officials who briefed reporters on some of the details of Mr. Obama’s proposal said that the plan also counts a savings of $1.1 trillion from the ending of the American combat mission in Iraq and the withdrawal of American troops from Afghanistan.

Props for not increasing the Medicare eligibility age:

Administration officials said that the Medicare cuts would not come from an increase in the Medicare eligibility age.

A show of strength by the President; no “weakness” or “capitulation” talk:

In laying out his proposal, aides said, Mr. Obama will expressly promise to veto any legislation that seeks to cut the deficit through spending cuts alone and does not include revenue increases in the form of tax increases on the wealthy.

After positive discussion of the Buffett Rule, hilarious defensive whining from Republicans that voters will see right through:

Representative Paul D. Ryan, chairman of the House Budget Committee and a leading proponent of cutting spending on benefit programs like Medicare, said the proposal would weigh heavily on a stagnating economy.

On “Fox News Sunday,” Mr. Ryan said it would add “further instability to our system, more uncertainty, and it punishes job creation.”

“Class warfare,” he said, “may make for really good politics, but it makes for rotten economics.”

And go figure: actual full-throated support from progressive groups, too:

Liberal-leaning organizations were rallying behind Mr. Obama’s proposals on Sunday.

“The report that the president is planning to ask millionaires and billionaires to pay taxes at a higher rate than their secretaries pay is welcome news that will be wildly popular with voters,” said Roger Hickey, co-director of the Campaign for America’s Future, a progressive center, in a statement. “We applaud the president for heeding the advice from progressives that he go big on his jobs plan.”

One wonders why the Administration ever did business any other way. Isn’t this sort of coverage much better than what they’ve been getting for the last 18 months?

Oh, and one last bit: it appears progressives aren’t so powerless after all, and that Administration critics have had a positive effect not only on policy, but on the Administration’s approach to politics:

The Obama proposal has little chance of becoming law unless Republican lawmakers bend. But by focusing on the wealthiest Americans, the president is sharpening the contrast between Republicans and Democrats with a theme he can carry into his bid for re-election in 2012.

Mr. Obama’s proposal is also an effort to reassure Democrats who had feared that he would agree to changes in programs like Medicare without forcing Republicans to compromise on taxes. Indeed, Mr. Hickey warned in his statement that the president should not raise the Medicare eligibility age, advice that Mr. Obama, so far, seems to have heeded.

Let’s be clear: the President’s approach to politics over the previous 18 months has been just short of disastrous. If negative pressure from progressive groups was responsible for the President’s spine, then progressive critics will have saved the day and perhaps the 2012 election.

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On the perils of wingnut logic and negotiating with yourself

by digby

This negotiatin’ stuff is hard. I suspect it’s largely a matter of instinct. And it’s always interesting to see how people on all sides of a deal see it after the fact.

Here’s an example from the comments to this post by Elias Isquith. This was a conservative commenter’s response. The subject he’s addressing is the debt deal.

A RANDOM CONSERVATIVE COMMENTER:

For months and months none of the Demo’s who matter would agree to any spending cuts at all without tax increases, which the GOP had made clear for some time were not on the table. Ie, they were in favor of the “balanced approach,” fetishizing tax hikes in spite of the fact that there was already $1T in cuts relative to the President’s February budget that was agreed to and more or less not controversial.

The reason this fetish exists because the Demo mentality has really strong hangups toward budget cuts. And psychologically, if they’re going to do budget cuts, they feel like they have to get something in return. This was the foundation of the stalemate, until one week before D-day, Harry Reid came out in favor of the Reid plan and that’s more or less what got done.

THE REPLY:

Yes, shockingly, in compromise, both sides give up something.

THE RANDOM CONSERVATIVE COMMENTER AGAIN:

This doesn’t fly. You don’t have to compromise if both parties want the same thing. The Dems represented that they wanted, or at least were willing to accept budget cuts. Great, our team wanted budget cuts too.

The Dems wanted the GOP to unpack their layers of denial around the welfare state ratchet. But that at least isn’t the GOP’s issue. Demo’s got to walk that lonesome valley by themselves.

I assume this person is a lawyer. Or, at least, he or she should be.

Yes, it’s convoluted. But you can see the twisted logic in it, right?

Tonight we’re getting some details on the White House’s new deficit reduction plan. Ezra Klein Tweets:

GOP reaction to Obama’s plan is that it is not a compromise plan, and that’s true. But where’s their compromise plan?

Except it is a compromise plan. It’s 50% tax increases and 50% spending cuts (which the president’s aide unironically characterizes as “fair and balanced.”)I think that to most Democrats that represents a big compromise especially since it comes on top of 1.2 trillion in cuts in the debt deal. And most of them just don’t think it’s a good idea to cut government so radically in a time of such slow growth.

Of course, according to right wing logic, that means that only the spending cuts should be passed since that’s what both parties agree on.

More tomorrow on the president’s deficit plan. Since it’s highly unlikely to be implemented, I think it’s a political document and is best judged in those terms.

Update: Roy Edroso says, Rightbloggers Defend Rich Bastards from Obama’s Tax Plan. Figures.

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Yearrrrgh!

by digby

Here’s a little inspiration instead of desperation on this Sunday evening:

Men and women of Steel

If you want to know who the real badass, progressive union is, look no further than the Steelworkers. Their leadership is smart and gets this political moment better than just about anyone.

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Carrots and Sticks
by David Atkins (“thereisnospoon”)

Digby is right, of course, about the fact that a fairly meager tax on millionaires isn’t a good trade for big cuts to Social Security and Medicare. In fact, it’s a pretty terrible trade.

It’s also fairly clear that President Obama’s chances of passing the “Buffett Rule” tax on millionaires through the GOP House and corrupted Senate are less likely than his chances of becoming a professional hockey player. It’s a political maneuver for election season–but that’s a good thing. It’s important to put these sorts of “message bills” out there, so that the opposition is forced to vote on them and so that Democrats can say “This is what we want to do if you elect enough of us.”

So what is a smart progressive to do in this circumstance? Reading over various blogs and comments, the progressive community seems to be divided into two camps: the defenders pooh-pooh the horrible realities that Medicare and Medicaid cuts would present while arguing that the President is and has always been a a progressive, and that everyone should get behind the Grand Bargain to give the President a political victory lest the GOP take the White House in 2012. The critics argue that Buffett Rule is a cynical ploy to quell progressive anger so that Democrats can make more cuts to the safety net while minimizing damage from core Democratic activists, and that what progressives need to do is spew more fire and anger at the President.

Both approaches to the situation are misguided. The reality is that effective players in politics use a “carrot and stick” approach to policy, essentially creating a Pavlovian response from politicians. This is how effective conservative outfits like Club for Growth operate, and have done so for years. Effective advocates reward good behavior–even a show of good behavior–and attack bad behavior.

If the Administration fails to receive an overtly positive reaction from the progressive community in response to the Buffett Rule, it will rightly conclude that there is no sense even pushing progressive policy agendas for a group of petulant children who will attack them regardless. (This is the same calculation, of course, that the Administration should have been making about Republican politicians and advocacy groups, but that’s partly because conservative groups have moved beyond behavioral rewards to all-out war against any Democrat. That’s a situation we should as progressives be able to take advantage of to secure policy victories.)

But for the defenders, if on the other hand we all defend the Administration even if the final deal includes no Buffett Rule (as it almost certainly will not) but includes Medicare and Medicaid cuts anyway, then there’s little point in supporting the Administration or even being involved in politics at all, outside of setting up a permanent defense against a Republican ever taking the White House. And that’s a fool’s errand in America’s binary political system because a Republican will be President sooner or later.

The smart move is to cheer like crazy for the Buffett Rule. Urge your congressmembers to support it, and refuse a budget deal that doesn’t contain it. Let them know that you won’t vote for them or support them if they don’t insist on the Buffett Rule’s inclusion in the final budget. At the same time, rage and fight like heck against Medicare and Medicaid cuts, and urge your congressmembers that you won’t vote for them or support them if they allow cuts to Medicare and Medicaid.

Because in the end, the likelihood of getting Medicare cuts through a Democratic Senate should be as hopeless as the likelihood of getting a Buffett Rule through the GOP House. Much as the bipartisan compromise fetishists claim that sort of divided government would be a horrible thing, that’s actually a good thing. It has to get worse before it can get better, because right now only the conservative side is playing for keeps.

But more importantly, Obama Administration critics and defenders need to realize that this shouldn’t be about supporting or attacking the President. It should be about engendering a twitch response in our politicians that we’ll support them for doing the right thing–even saying they’ll do the right thing–and not support them when they don’t.

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Help Wanted: Bold progressives

by digby

My friend Adam Green of the PCCC sent this over. We hear lots of jibber jabber about how we need to stop complaining and start building progressive institutions and this is one of the groups that’s walking that walk. I hope some of you apply.

The Progressive Change Campaign Committee (BoldProgressives.org) knows for a fact that Hullabaloo readers are some of the most well-informed folks out there when it comes to the progressive movement and our critique of today’s politics. We also know there are some incredibly talented readers who want to put their skills to work. And the progressive movement definitely needs those skills!

That’s why we would like to extend a formal invitation to Hullabaloo readers to apply for a number of positions:

• A paid PCCC fellowship — done from wherever you live, with job responsibilities matched to fit your skill set. You’ll help mobilize our 800,000 members on behalf of progressive candidates and issues, including pushing Democrats to be more progressive. Click here to apply for a fall, spring, or summer fellowship.
• Working on a 2012 progressive campaign — done from the election’s location, with a range of positions available (ie manager, finance, field, new media, communications). Click here to apply.
• The PCCC’s “Next Generation Of Talent” initiative — for those not necessarily looking for a full-time job, but who have awesome skills like video editing, graphic design, computer coding, Spanish translation, music, art, etc. that you’d like to lend to the progressive cause. Click here to see full list and sign up.

Part of what the Progressive Change Campaign Committee is trying to achieve in our politics is culture shift.

This includes placing smart, competent, progressive-movement people onto congressional races who will encourage candidates to not just win, but win progressively — working with movement allies to do that. This is a contrast to staffers who may be great at the nuts and bolts of campaigning, but who have only been exposed to the conventional wisdom about how to win. Any Hullaballoo reader knows that opposing the public option, sucking up to Wall Street, and cutting Medicare benefits is not “moderate.” It’s extreme and politically stupid. It certainly isn’t the way to attract people-powered volunteer help or donations. If you have campaign skills (including new media skills) and want to apply to work on a progressive campaign this cycle, click here.

Culture shift also includes replacing DC consultants — who often charge candidates and organizations too much money for stale, cookie-cutter work — with a new crop of talent whose work is better, more authentic, more affordable, and rooted in progressive values. Through our Next Generation Of Talent initiative, we found a 24 year-old grad student to make this New York Times ad featuring the names of 400 Obama campaign staffers pushing him to be stronger on the public option. Not only did Keith Olbermann feature this ad on TV, but it won the American Association of Political Consultants’ annual award for best full-page ad of 2009. In other words, a regular person’s talent actually beat the consultants. If you have skills, even if not much time to spare, the PCCC wants to work with you and/or connect you with progressive campaigns who desperately need your help. Click here to see a full list of skills and sign up for the Next Generation of Talent Initiative.

And finally, culture shift includes building progressive movement infrastructure — both to grow long-term progressive power separate from any Party and to show the Democratic establishment that being progressive equals political success. That’s what the PCCC does.

For the last two months, we led a Draft Elizabeth Warren for Senate campaign — which organized local grassroots councils throughout Massachusetts, generated lots of positive news coverage, and has now raised over $300,000 for Warren. Many PCCC fellows worked on this effort, with one former fellow (now promoted to PCCC Organizer) from Massachusetts taking the lead locally. During the Wisconsin fight, we made some of the most innovative TV ads out there — rooted not in scary narrators but instead in telling the real stories of real people. The people in this ad, this ad, and this adwere all found from among our membership by PCCC fellows — and we showed the establishment that people will donate to air TV ads that are actually persuasive and emotionally compelling. Other fellows who have tech experience, Capitol Hill experience, or online-organizing experience are plugged into projects where they can do the most good. The bottom line is that we’re a scrappy team, we try to do innovative work, we think long term in addition to engaging in the short term, and there is plenty of responsibility to go around — so we need your help! Click here to apply for a paid fall, spring, or summer fellowship.

If I recall correctly, Hullabaloo was the first blog ever to link to BoldProgressives.org when we were first getting off the ground. Thanks to Digby — and the Hullaloo community — for being so supportive of our work. And we hope to work with many of you soon.