Is Capitalism on Trial? Or Just Big Business? Or Just Mitt Romney?

"I'm so scared of this anti-Wall Street effort. I'm frightened to death," Frank Luntz, an influential GOP pollster and strategist, warned the Republican Governors Association at a meeting in Florida last month, referring to the Occupy movement. "They're having an impact on what the American people think of capitalism."

Perhaps Luntz had already discovered this startling finding, buried in a recent Pew Research Center survey: roughly the same number of 18-to-29-year-old Americans have positive views of socialism as of capitalism. In a survey conducted in early December last year, 49 percent had a positive view of socialism, while 47 percent had a positive view of capitalism. Similarly, only 43 percent had a negative view of socialism, compared with 47 percent who had a negative view of capitalism.

The approval figure for socialism is even larger than the results of polling from May 2010, where 43 percent of eighteen-to-twenty-nine year olds registered positive feeling for socialism. (This put it in a dead heat with capitalism.)

In some ways, the Millennials are out of sync with the rest of the country. The new Pew survey found that, overall, only 31 percent of Americans had a positive reaction to the word "socialism," while 60 percent had a negative response. But, as Luntz might have predicted, capitalism didn't fare very well either. Only 50 percent of Americans had a positive view of capitalism, and 40 percent had a negative response. That's hardly a ringing endorsement.

These findings are particularly remarkable because there's been no significant socialist movement in this country for decades. After Barack Obama was elected president in 2008, the word "socialism" started making a comeback. But it wasn't because the socialists were gaining momentum. It was because Obama's opponents -- the Republican Party, the Tea Party, the right-wing blogosphere, the Chamber of Commerce, and conservative media gurus like Glenn Beck, Ann Coulter, Sean Hannity, and Rush Limbaugh -- labeled anything Obama proposed, including his modest health care reform proposal, as "socialism."

In March 2009, two months after Obama took office, the National Review put a picture of the new president on its cover over the headline, "Our Socialist Future." In 2010, Stanley Kurtz, a regular contributor to conservative publications and frequent guest on Fox News, published Radical-in-Chief: Barack Obama and the Untold Story of American Socialism. That year Newt Gingrich authored To Save America: Stopping Obama's Secular-Socialist Machine. During his presidential campaign he's continued to use that label to attack Obama.

This primary season, in fact, every GOP candidate has attacked Obama for being a socialist, or for trying to make America more like Europe, which has become a code word for socialist. In South Carolina, Mitt Romney pledged to "stuff it down [Obama's] throat and point out it is capitalism and freedom that makes America strong." At the same time, Romney's GOP rivals have attacked his business practices at Bain Capital, unwittingly turning their party primaries into a debate over -- and defense of -- capitalism.

Dick Flacks, a sociologist at the University of California at Santa Barbara who has studied the political views of America's youth, thinks that right-wing attacks on Obama may have backfired with respect to the Millennial generation. "Young people generally like Obama, even if they are somewhat disappointed in what he's accomplished so far," said Flacks, who noted that in 2008 66 percent of under-30 voters favored Obama. "So when Beck or Gingrich attack Obama as a socialist, many young people react by saying, 'Well, then maybe socialism can't be that bad,' and it makes them at least skeptical of those who demonize the word socialism."

The Pew survey doesn't provide an in-depth study of Americans' political ideologies. "We didn't ask people to define what they mean by the terms," said Carroll Doherty, Pew's Associate Director, in an interview. In addition to "capitalism" and "socialism," Pew asked respondents for their reactions to "libertarian," "liberal," "conservative," and "progressive." Among these terms, "progressive" had the biggest positive (67 percent) and smallest negative (22 percent) responses in the overall public. "Progressive" garnered an even stronger positive (88 percent) and a smaller negative reaction (12 percent) among Millennials. Among young Americans, all the other terms scored better than the word "capitalism."

"Many young people associate capitalism with inequality, big corporations, and poverty," explained Joseph Schwartz, a Temple University political scientist and national vice president of Democratic Socialists of America.

Most Americans over 50 today think of socialism in terms of the Soviet Union, according to Schwartz. "That was the Cold War view. Socialism was identified with Communism, which meant totalitarianism and dictatorship. It wasn't a very positive image," says Schwartz. "But things have changed since the Berlin Wall fell in 1989. If young people have any image of socialism at all, it is probably northern Europe, particularly Scandinavia. They know that northern Europe has less poverty, more equality, and more social mobility."

The high unemployment rate among today's youth, and the enormous increase in debt owed by college students and recent graduates, has something to do with their growing doubts about capitalism. So does their uncertainty about their own future and the country's future.

Anger, or at least lukewarm feelings, toward capitalism hasn't led to a groundswell of socialist activism. Only a handful of visible public figures -- including Senator Bernie Sanders of Vermont, writer Barbara Ehrenreich, theologian Cornel West, and sociologist Frances Fox Piven -- publicly identify themselves as socialists. Democratic Socialists of America, the nation's largest socialist organization, has 6,500 dues-paying members. The group's youth section has solid chapters on only 15 campuses and about 300 active members.

A better reflection of young people's disaffection with capitalism is the Occupy Wall Street movement, which was mainly fueled by people in their twenties and thirties, many of them political neophytes. Even many Americans who don't agree with the Occupiers' tactics or rhetoric nevertheless shared its indignation at outrageous corporate profits, widening inequality, and excessive executive compensation side-by-side with the epidemic of layoffs and foreclosures.

Another Pew Research Center survey released in December 2011 found that most Americans (77 percent) -- including a majority (53 percent) of Republicans -- agreed that "there is too much power in the hands of a few rich people and corporations." Not surprisingly, 83 percent of 18-to-29-year-olds shared that view. Pew also discovered that 61 percent of Americans believed that "the economic system in this country unfairly favors the wealthy." A significant majority (57 percent) thought that wealthy people don't pay their fair share of taxes.

The Occupy movement has changed the national conversation on these issues, among the public and in the media. For example, between October 2010 and September 2011, the number of newspaper stories with the word "greed" fluctuated between 452 and 728 per month. But in October, only weeks after the Occupiers gained a foothold in New York and elsewhere, newspapers ran 2,285 stories with that word. A similar trend occurred with the word "inequality," according to a Lexis/Nexis search.

Some politicians and pundits have suddenly changed their rhetoric to give voice to the growing anger toward Wall Street and big business. In his December 5 speech in Osawatomie, Kansas, Obama sought to channel the growing populist outrage unleashed by the Occupy movement. He criticized the "breathtaking greed" that has led to a widening income divide. "This isn't about class warfare," he said. "This is about the nation's welfare." Obama noted that the average income of the top 1 percent has increased by more than 250 percent, to $1.2 million a year. He returned to those themes in his January 24 State of the Union address, where he called on Congress to raise taxes on millionaires. "Now, you can call this class warfare all you want," he said, "Most Americans would call that common sense."

Obama also recently sent Alan Krueger, head of his Council of Economic Advisors, to make an unprecedented presentation to the Center for American Progress about the dangers of growing income inequality, declining wages, and stagnating social mobility. Many Democrats running for Congress this year will hitch their campaign to these themes, even if they don't directly give credit to the Occupiers for putting these issues on the nation's agenda.

But nowhere can the impact of the Occupy insurgency be better seen than in the fumbling efforts of Romney's GOP rivals to capture the new anti-corporate sentiment. The Republicans are trying to figure out how to tap into the national mood without sounding too anti-business and offending their corporate sponsors. They're finding that it's a difficult tightrope to walk.

From 1984 through 1999, Romney ran the Boston-based Bain Capital, which, according to a Los Angeles Times investigation, made billions by "firing workers, seeking government subsidies, and flipping companies quickly for large profits." According to the Times, "Sometimes Bain investors gained even when companies slid into bankruptcy. Romney himself became wealthy at Bain. He is now worth between $190 million and $250 million, much of it derived from his time running the investment firm."

Earlier this month, Texas Governor Rick Perry told Fox News's Sean Hannity that there's a real difference between venture capitalism and vulture capitalism. Venture capitalism we like. Vulture capitalism, no. And the fact of the matter is that [Romney's] going to have to face up to this at some time or another, and South Carolina is as good a place to draw that line in the sand as any, because those people in Gaffney, South Carolina, understand what happened to that photo album company.

(Perry was referring to the Holson Burnes factory, which made photo albums and picture frames. In 1992, just four years after the factory opened, the Bain-controlled firm fired more than 100 workers and shipped some of the operation overseas).

"I think there's a real difference between people who believed in the free market and people who go around, take financial advantage, loot companies, leave behind broken families, broken towns, people on unemployment," Gingrich said on Hannity's show. On the campaign trail, Gingrich told a crowd, "Crony capitalism, where people pay each other off at the expense of the people of this country, is not free enterprise, and raising questions about that is not wrong." Voters should know, Gingrich argued, whether businesses are "fair to the American people, or are the deals being cut on behalf of Wall Street institutions and very rich people."

At a South Carolina debate Romney turned that phrase on Obama, accusing the president of "crony capitalism." Obama, he said, "is taking our country down a path that is very dangerous. He's making us more and more like a European social welfare state. He's making us an entitlement society. He's taking away the rights of our citizens. He believes government should run this country."

The attacks on Romney have triggered a backlash by some conservatives. They don't like to hear fellow Republicans vilifying capitalism and the profit motive. Republicans and conservative pundits have recently become fond of quoting economist Joseph Schumpeter, who argued that capitalism involves "creative destruction" that can take a human toll but ultimately promotes innovation and economic growth. This has become the justification for Bain Capital's predatory practices.

The business-oriented Club for Growth called Gingrich's critique of Romney's work at Bain "disgusting" and "just beyond the pale for any purported 'Reagan conservative.'" The right-wing American Spectator magazine added that Gingrich's attack on Romney's Bain experience was an "attack on capitalism itself, something that should be anathema to a self-described 'Reagan conservative.'" On his radio show, Glenn Beck said that Bain has become the "new Halliburton--the company that has done nothing wrong yet is completely vilified merely for being a company that attempts to earn a profit." The widely read conservative blogger Roger Simon, who had earlier supported Perry and then Gingrich, wrote, "This basically anti-market propaganda from Perry would more normally come from a Norwegian socialist."

Even Romney's opponent Rick Santorum (who may want to be Romney's running mate) refused to join the pile-on against the former Massachusetts governor. "[I] just don't think as a conservative and someone who believes in business that we should be out there... saying somehow capitalism is bad," he said.

"The Republicans seem to be saying that any criticism of the rich, or of big business, is anti-capitalist," observed sociologist Flacks. "This is new in American politics. And it is dangerous for conservatives and Republicans. It provides an opening for a real debate about the nature of capitalism and about how we can bring more democracy to our economic system."

Frank Luntz agrees. He offered tips for fighting back and framing the issues that the Occupiers have raised. For example, he urged Republican politicians to avoid using the word "capitalism."

"I'm trying to get that word removed and we're replacing it with either 'economic freedom' or 'free market,'" Luntz said. "The public... still prefers capitalism to socialism, but they think capitalism is immoral. And if we're seen as defenders of quote, Wall Street, end quote, we've got a problem."

Peter Dreier teaches politics and chairs the Urban & Environmental Policy Department at Occidental College. His next book, The 100 Greatest Americans of the 20th Century: A Social Justice Hall of Fame, will be published by Nation Books in the spring. This article originally appeared on the Dissent magazine website.

Imagine OWS if the government was'nt owned by the plutocracy

Plutocratic Government Tries to Beat Down #Occupy

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Giroux on Occupy wall Street

Got Class Warfare? Occupy Wall Street Now!

Stop the War on the Middle Class

   

History will record that on September 19, 2011, the Republicans made a huge political miscalculation -- a miscalculation that could potentially doom their chances for victory next year.

If I were a Republican, the last thing I'd want to talk about is "class warfare."

For 30 years -- whenever they have been in power -- Republicans and their Wall Street/CEO allies have conducted a sustained, effective war on the American middle class.

Much of the success of their war has resulted from their insistence that it didn't exist. They have talked instead about how the economy needs to reward all those "job creators" whose beneficence will rain down economic prosperity on the rest of us.

They fund right-wing organizations that divert our attention by whipping up worry that gay marriage will somehow undermine heterosexual relationships. They start wars that help pad the bottom lines of defense contractors but do nothing to make us safer.

And all the while they quietly rig the economic game so that all of the growth in the Gross Domestic Product goes into the hands of the top two percent of the population -- while they cut our pay, destroy our unions and do their level best to cut our Social Security and Medicare.

There has been a "class war" all right -- a war on the middle class. And the middle class has been on the losing end.

Today the truly rich control a higher percent of our wealth and income than at any other time in generations. Income inequality is higher than at any time since 1928 -- right before the Great Depression.

According to the Economic Policy Institute, "the richest five percent of households obtained roughly 82 percent of all the nation's gains in wealth between 1983 and 2009. The bottom 60 percent of households actually had less wealth in 2009 than in 1983... "

Today, 400 families control more wealth than 150 million Americans -- almost half of our population.

American workers have become more and more productive -- but they haven't shared in the income generated by that increased productivity, so now they can't afford to buy the products and services they produce.

The success of the Wall Street/CEO/Republican war on the middle class rests, in part, in the old frog in boiling water story. If you put a frog in a pot of boiling water, they say, the frog will jump right out. But if you put a frog in a pot and gradually turn up the heat until it boils you end up with a cooked frog.

Republican policies have gradually shifted wealth, income and power from the middle class -- and those who aspire to be middle class -- into their own hands and for obvious reasons they haven't wanted to focus too much attention on "class warfare."

So now if the Republicans want to talk about "class warfare" -- in the words of George Bush -- "bring 'em on."

In fact, President Obama isn't proposing to start a "class war" -- he wants to end the war on the middle class.

Among other things, he has proposed that America live by the "Buffett Rule" -- by Warren Buffett's suggestion that he and his fellow billionaires should have to pay effective tax rates at least as high as their own secretary's.

Obama pointed out yesterday that requiring hedge fund managers to pay effective tax rates as high as plumbers and teachers was not "class warfare." The choice is clear: either you increase taxes on the wealthy -- or dramatically cut Medicare, Medicaid and Social Security benefits. It is, as the President said, "simple math."

Whereas Republican proposals to rein in the deficit by cutting Social Security, Medicare and Medicaid benefits are intended to continue this war on the middle class, the President's plan -- in stark contrast -- addresses the three factors that actually caused the deficit in the first place.

From 1993 until 2000, Bill Clinton had successfully pushed back much of the Republican anti-middle class agenda. When he left office, America had a prosperous, growing economy, increasing middle class incomes, and budget surpluses as far as the eye could see.

Bush changed all that. The anti-middle class warriors were back in power, and they took the offensive. They passed massive new tax breaks for the rich, and set out to break unions.

Three Bush/Republican policies led directly to today's deficit:

• Giant tax cuts for the wealthy;
• Two unpaid-for wars that will ultimately cost trillions;
• Trickle-down economic policies that did not create one net private sector job and ultimately caused the financial collapse that led to the Great Recession.

The Obama deficit proposal reduces the deficit by directly addressing these three factors -- that actually caused the deficit -- rather than demanding that the budget be balanced by taking even more out of the pockets of ordinary Americans.

A trillion dollars -- 1.2 trillion with interest -- is cut by ending the Wars in Iraq and Afghanistan. Those who argue that you shouldn't count these reductions toward deficit reduction, because Obama already planned to end these wars, are ignoring the fact that they were a big reason why we have a deficit in the first place.

Second, Obama's proposal eliminates the Bush tax cuts for the rich -- and demands that millionaires, billionaires, oil companies, and CEO's who fly around in corporate jets, pay their fair share.

Finally, the Obama plan includes a robust jobs package to jumpstart the economy and put America back to work. The Republicans have no jobs plan at all -- none whatsoever. In fact, their plan is to simply let the Wall Street bankers and CEO's continue to siphon as much as possible from the pockets of ordinary Americans.

The combination of Obama's jobs and budget plans have set the stage for a clear, sharp battle for the soul of America. They have posed a stark contrast that is not framed as a battle over conflicting policies and programs -- but as a struggle between right and wrong.

That battle will continue throughout this fall -- and into next year's elections.

These proposals, coupled with the President's urgent, passionate advocacy, have transformed the political landscape.

The major iconic fights that will dominate American politics over the next 14 months will be the President's jobs proposal, his call on millionaires and billionaires to pay their fair share, and the Democratic defense of Social Security, Medicare and Medicaid.

Democrats and Progressives have the high political ground on every one of these defining issues -- and I don't just mean slightly higher political ground -- I mean political ground like Mount Everest.

By huge margins, Americans prefer to raise taxes on millionaires and billionaires rather than cut Social Security and Medicare. The choice is not even close -- in most polls something like 8 to 1.

And who can possibly question that the number one priority of voters everywhere in America is jobs?

The Republican policies that led to the Great Recession did more damage than anyone knew. Many Republicans actually thought they would benefit politically by the long, slow economic slog that ensued in its aftermath. After all, no sitting President had won re-election in a century when the economy was not good or materially improving -- except one.

Harry Truman won re-election in the midst of a bad economy in 1948 by running against the "Do-nothing Republican Congress."

President Obama's jobs and budget proposals have set the stage for just that kind of battle.

His proposals have simultaneously energized the progressive base and appealed to middle class swing voters -- especially seniors -- who agree entirely that the government should keep its hands off the Social Security and Medicare benefits they have earned, and turn instead to taxes on millionaires and billionaires to close the budget deficit that the Republican "class warfare" policies have created.

And it won't hurt that these proposals have prompted the Republicans to turn the spotlight on the subject of "class warfare" itself. They should be careful what they wish for.

Robert Creamer is a long-time political organizer and strategist, and author of the book: Stand Up Straight: How Progressives Can Win, available on Amazon.com. He is a partner in Democracy Partners and a Strategist for Americans United for Change. Follow him on Twitter @rbcreamer.

Giroux on 9/11

excerpt:

We need to re-imagine what liberty, equality and freedom might mean as truly democratic values and practices. Even after the tenth anniversary, we need to continue the remembrance of 9/11 to ensure not only the rightful mourning of the victims of that tragic event, but also the honoring of those fallen men and women by embracing a spirit of fraternity and justice that dignifies how we remember them, their loved ones and future generations.  Clearly, any society that endorses market principles as a template for shaping all aspects of social life and cares more about the accumulation of capital than it does about the fate of young people is in trouble. Next to the needs of the market place, life has become cheap, if not irrelevant. We have lived too long with governments and institutions that make lofty claims to democracy while selectively punishing those considered expendable - in prisons, public schools, foster care institutions and urban slums. As public life is commercialized, commodified and policed, the pathology of individual entitlement and narcissism erodes those public spaces in which the conditions for conscience, decency, self-respect, and collective dignity take root. We need to liberate the discourse and spaces of freedom from the plagues of militarism and consumer narcissism and struggle to build those public spaces where democratic ideals, visions, and social relations can be nurtured and developed as part of a genuinely meaningful education and politics.

As we continue to remember the events of 9/11, we have an opportunity to recast the conversation about the value of public life, the social state, our democratic institutions and the future of young people. We can honor the lives of those killed on 9/11, as well as the heroic actions of those first responders who sought to save the lives of others, by celebrating the selflessness, common humanity and collective hospitality that emerged in the aftermath of those tragic events. This challenge is particularly urgent at such a dark time in our history as a nation. And it is not a fight we can win through individual struggles or fragmented, single-issue political movements - it demands that we reclaim the principles, values and social relations that constitute the promise of a democracy to come. For a brief moment after 9/11, we were given a glimpse of the power and dignity of those ideals that make a substantive democracy possible.

In the spirit of the tenth anniversary of 9/11, the nation engaged in acts of mourning and heartfelt remembrance for the nearly 3,000 victims who lost their lives. In the face of unspeakable hardship and suffering, people all over the country, not only those directly involved in rescue and recovery efforts, reaffirmed the dignity of public values, the social good and the importance of caring for the lives of others. In doing so, they offered a much needed glimpse of those principles, practices and ideals required to ensure a truly democratic future - that is, as journalist Bill Moyers has eloquently insisted, "a future in which democracy is not just the means of governance but the means of dignifying people so they become full free to claim their moral and political agency."[29] What the collective response to 9/11 signifies amid the suffering and despair is a gesture of hope, a recognition that in the behavior of those who sacrificed themselves to help others, a bittersweet beacon of the repressed spirit of democracy shone forth. The call to witnessing and counter-memory exceeds the despair of the past and speaks also to the future. It is a call that is prophetic in its insistence that the economic, political and social conditions be created for upcoming generations to decide their own future and take back their country from the dark and dangerous policies and politics that have chosen authoritarianism over democracy.

Counter-Memory and the Politics of Loss After 9/11

Is Obama pragmatic or just weak?

Giroux continues to chart our downfall

Trickle-Down Cruelty and the Politics of Austerity

Henry A. Giroux
Henry A. Giroux currently holds the Global TV Network Chair Professorship at McMaster University in the English and Cultural Studies Department. His most recent books include: Youth in a Suspect Society (Palgrave, 2009); Politics After Hope: Obama and the Crisis of Youth, Race, and Democracy (Paradigm, 2010); Hearts of Darkness: Torturing Children in the War on Terror (Paradigm, 2010); The Mouse that Roared: Disney and the End of Innocence (co-authored with Grace Pollock, Rowman and Littlefield, 2010); Zombie Politics and Culture in the Age of Casino Capitalism (Peter Lang, 2011); Henry Giroux on Critical Pedagogy (Continuum, 2011). His newest books:   Education and the Crisis of Public Values (Peter Lang) and Twilight of the Social: Resurgent Publics in the Age of Disposability (Paradigm Publishers) will be published in 2012).

More Damage to the Middle Class

Just over a week ago, in the same four-day period:

(1) Government figures confirmed that income inequality in the country remains at its most extreme since 1928, when we first began to track this statistic.

(2) Representative Eric Cantor of Virginia, the House Republican majority leader, walked out of the budget talks aimed at clearing the way for a federal debt limit increase because he wouldn't consider avoiding some of the most draconian spending cuts by instead ending tax loopholes for the very rich, like those that let them fly around on corporate jets, and for corporations, like those that go to oil and gas companies

(3) CBS's 60 Minutes ran an absolutely gut-wrenching piece on the nation's millions of children who, since the Recession began, every day live in either a vehicle or a motel room and go to bed hungry.

(4) The nation's largest multinational corporations continued to vigorously push their (mostly Republican) supporters in Congress to let them bring into their treasuries the roughly $1.5 trillion of taxable profits they've accumulated overseas but only after paying taxes thereon of just 5.25% instead of the 35% rate they currently owe the U.S. Treasury.

(5) And disappointing data about consumer behavior, factory sales and weak hiring in recent weeks prompted economists to ratchet down their 2011 economic forecasts to as little as half what they expected at the beginning of the year. According to Mokoto Rich of the Times , projections made just two months ago that the economy would grow at a 4% annual rate in the quarter ending in June have now been halved to anticipate no more than 2% growth when data for the second quarter is released in a few weeks.

In other words, with nearly 28 million workers mired in real unemployment and the nation once again in a declining economy, with 90% of American workers not having a real wage increase for well more than a decade, with more income inequality than ever before, and with the wealthiest of Americans (of which I am one) paying an effective tax rate that is less than half what the average middle class taxpayer pays, the Republican leadership in Congress -- Messrs. McConnell and Kyl in the Senate and Boehner and Cantor in the House -- absolutely refuse to consider closing egregious tax loopholes that benefit only the extremely wealthy while (much more on this later) giving a nearly $500 billion 'gift' to America's multinational corporations with no meaningful pass-through of any benefits to the middle class and no new jobs created.

What has clearly gotten lost in all of this partisan sturm und drang is any sensitivity by the Republican "budget cutters" to the day-to-day humane needs of the tens of millions of Americans who are everyday being devastated by the 30-year-long effects of the "trickle down" economic policies that were hatched by Reagan, nurtured or at least tolerated by every president since, and embraced -- enthusiastically embraced -- by the management class that on behalf of their own compensation and company profits now largely determine our country's domestic legislative actions.

As I wrote previously in this space, the winners of the ongoing deficit-versus-jobs debate and any resultant deal must be:

i. The unemployed, plagued as they are by a real unemployment rate of 18.2% -- which is exactly twice the "official" rate reported by the BLS of 9.1% -- and by the damage from an ever declining manufacturing sector.

ii. Middle class workers, with their plague of stagnant wages in real terms that has left them, on average, standing still earnings-wise.

iii. Retired workers and the sick and elderly, whose Medicare, Medicaid and Social Security are now under constant attack by the Republicans in Congress.

iv. The poor, including the at least 50 million people who are ill-fed; the 50% of homeowners whose home value is now below its mortgage balance; the 100 million people who are at or below "200% of the federal poverty line of $21,834 for a family of four", which is a needs-measure made lame by the fact that no family of four can actually comfortably live on such a low annual income; and those millions of children who go to bed hungry and under-nourished, while also lacking proper housing, needed clothing, and the basic education required to develop.

The problem with how the Republicans in Congress continue to react to the Great Recession of 2007-2008 -- this time through their cynical demand that the mandated budget reconciliation talks can resume only if Democrats agree to take needed tax reforms off the bargaining table -- is that they are completely closing their minds and eyes to the reality that after decades of wide-spread wage stagnation and thoroughly discredited trickle-down economic policies, the entire middle class needs help.

Now, let's talk about that so-called "earnings repatriation" program that the nation's multinational corporations are trying to sneak into the budget talks, under which they say that they would repatriate hundreds of billions in foreign profits and pump them into domestic investment and hiring, provided that Congress and the White House agree to cut the tax rate on these profits to 5.25% from 35%.

By far, the best journalistic perspective on this issue (and many related ones) comes from David Kocieniewski of the New York Times . My perspective as you will see is blunter than his and comes from having been CEO of a Fortune 500 company and seeing first-hand that an "earnings repatriation" is one of the greatest -- and most abusive -- tax-related bait-and-switches that could ever be perpetrated on the middle class.

Mr. Kocieniewski writes that Congress and the Bush administration offered companies a similar tax incentive program in 2005 as part of the "American Jobs Creation Act," in hopes of spurring domestic hiring and investment. Eight hundred companies took immediate advantage of this 'opportunity' and though the tax break lured them into bringing $312 billion back to the U.S., fully 92% of that money was not used for investment or hiring, but instead was returned to shareholders in the form of dividends and stock buybacks, according to a study by the nonpartisan National Bureau of Economic Research. In return for this measly "reinvestment" in America, the federal government reduced the combined tax bill from $109 billion to a mere $16 billion. But, most disturbing, according to Kristin J. Forbes who was a member of President Bush's Council of Economic Advisers and who led the study for NBER, "For every dollar that was brought back, there were zero cents used for additional capital expenditures, research and development, or hiring and employees wages."

More specifically, back in 2005 60% of the benefits went to just 15 of the largest U.S. multinational companies, many of which, as the authors noted, actually laid off domestic workers, closed plants and shifted even more of their profits and resources abroad in hopes of cashing in on yet another repatriation holiday. In 2005, however, the earnings stashed overseas aggregated $312 billion - now just six years later, in 2011, the figure which they would like to repatriate almost free of taxes is $1.5 trillion or five-times more. That's some recession you had, guys!

I would note, more bluntly as I said than would Mr. Kocieniewski, that overseas 'earnings', which are substantially the result of slick accounting maneuvers that have shifted proper domestic U.S. profits to low-tax countries, will, once repatriated, almost never be used to create jobs back home. This is so especially in a post-recession environment of the sort we have now when big corporations have already materially 'battened down their hatches' and, according to Federal Reserve data as reported by Mr. Kocieniewski, already accumulated domestic cash reserves of $2 trillion which they are pretty obviously not spending creating jobs.

These big corporations and their lobbyists say that this tax break would 'resuscitate the gasping recovery by inducing multinational corporations to inject $1 trillion or more into the economy', as sort of the "the next stimulus". Quite simply, they're lying.

While there may be mechanisms that could be attached to an earnings repatriation program to demand that earnings so brought home be used to create U.S. jobs and for productive domestic investment in new plant and equipment, they would be largely unenforceable given the byzantine nuances of major-corporation hiring and investing. But there is no sense in even trying to design them, since the multinational corporations and their Republican spear carriers will never accept such conditions. (As an aside, what in the world are the organization Third Way and my dear friend (and former SEIU President) Andy Stern thinking in endorsing this initiative? Sorry friends, you're very, very wrong on this.)

Let me use one example of the perfidy of this initiative. The company Apple right now has $12 billion of U.S.-taxable earnings waiting offshore, which of course it would love to 'bring home' and pay just $630 million of taxes on, rather than $4.2 billion it now owes.

Despite its enormous sales here in the U.S., Apple has only 25,000 employees in America, plus another 25,000 direct employees globally and 250,000 indirect employees in China (at a company called Foxconn). I totally hate Apple's irresponsibility toward American workers -- virtually all of those 250,000 jobs in China could be in northern California or northwest Oregon with only pennies of impact on the price of an iPad or iPhone -- but this said, Apple is a brilliantly and tightly run company. I assure you that not one cent of the $3.6 billion in taxes Apple would save from the 2011 version of the repatriation program would go toward job creation in America -- maybe toward another G5 executive airplane for Steve Jobs, but not toward new manufacturing jobs.

So there you have it. The most insensitive proposed solution to a real budget crisis in memory, coupled, if the Republicans also have their way, with the biggest non-productive corporate giveaway ever. The right answer of course is for the Congress -- the whole of the Congress -- to acknowledge that we can't straighten out our economy on the backs of the poor and middle class, and that the only way we will ever get a handle on our deficit in the longer term is to put people back to work in productive jobs so that consumer demand and tax revenues go up broadly.

Let's, along with your colleagues, have this conversation, Congressman Cantor and Senator Kyl.

Leo Hindery, Jr. is Chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband.

Is there a Democratic party?

Why Washington is Talking about Deficits While the Rest of the Country is Talking About Jobs and the Shrinking Middle Class

Today's Republican Party has three wings: the psychiatric wing, the corporate wing, and the Democrats.

The first wing, the psychiatric wing, is defined by severe psychological and intellectual impairments, exemplified by the inability to read a birth certificate. Sarah Palin's recent foray into American history, replete with her description of Paul Revere as the man who rang alarms, bells, and buzzers to signal his support for the Second Amendment years before there was either a United States or a Bill of Rights, provides an example of the kind of "gaffe" that is, in fact, psychologically meaningful. This level of intellectual dysfunction, equally common in the pronouncements of Michelle Bachmann, once disqualified a candidate for high office. That was until the "lamestream media" decided to turn elections into reality shows, where the only real criterion is celebrity (defined as the state of being or becoming famous), and where commentators may poke occasional fun but no longer communicate to the public the seriousness of intellectual deficits in someone running for high office who would actually have to make decisions in which "facts" occasionally matter. (The dangerousness of that level of media indifference to reality should have been a lesson of George W. Bush's tenure in office, but things have sadly only gotten worse since then.)

This is the wing of the Republican Party that most endangers the party's chances to turn a dismal economy into an electoral victory in 2012, because it is so far to the right of mainstream America that you can see Russia from its porch (even if it locates that porch in Minnesota). The problem for the Republicans is that this wing of the party constitutes such a large percentage of GOP primary voters that it is hard to imagine any nominee emerging from the primaries without having had to produce so many general election campaign ads for the Democrats that President Obama may well defy political gravity and get re-elected no matter how high the unemployment rate drifts.

The second wing is the corporate wing, also known as the wing-tip wing. Once the home of moderate Republicans such as Bob Dole, this wing used to be slightly to the right of the American center. Its advocates held beliefs now seen as "quaint" by modern-day wing-tips (e.g., that humans evolved the same way other animals did, that a fertilized egg does not hold property rights any more than an omelet does, and that cutting the jobs of hundreds of thousands of teachers, police, and firefighters does not reduce unemployment).

Today's wing-tips, in contrast, are defined by three articles of faith.

The first is that whatever ails you (whether budget deficits, unemployment, or kidney failure), the solution is tax cuts for the rich.

The second is the belief (this one true) that whatever ails them can be fixed within any two-year election cycle by an infusion of venture capital from the Chamber of Commerce, Wall Street, Big Oil, the Pharmaceutical lobby, or whosever interests could be served or threatened by some piece of legislation. These venture firms now require a controlling interest of 51 percent of an elected official (whether Republican or Democrat), but the futures market for political votes seems to be the only market that is working efficiently in America today. (Word has it that Larry Summers considers the deregulation of the commodities market for politicians one of his signal achievements, although to give credit where credit is due, he had an assist from the Roberts Court in its Citizens United ruling, which held that money need no longer be exchanged under the table, and reaffirmed that money is speech, making political payoffs a high form of rhetoric.)

The third belief that defines the wing-tips is that deficits present a grave threat to our way of life -- except when Republicans are in power, at which point deficits are deficit-neutral. This deep and abiding concern with deficits (under Democratic administrations) stands in sharp contrast to their relative indifference to unemployment, which they consider a luxury good consumed by people with too much time on their hands (after all, they're unemployed), whose "whining" is really annoying to lawmakers, lobbyists, and Washington pundits who want to get on with the real business of cutting budgets, and who have more important things to worry about than people who, for God's sake, can't even keep a job now, can they.

These are the Paul Ryan and John Boehner Republicans, whose virtue is that they seem genuinely to believe what they are paid to say. Some of them, like Ryan, can even do so with earnest looks on their faces (something Boehner has not mastered, even while smearing his mascara). This is an impressive feat, given that what they have been saying lately is that they would happily throw their own grandmothers under the bus, although they know this will never come to pass because they don't believe in public transportation (hence the absence of buses, ergo the safety of grandmothers).

The Wing of Icarus

And that brings us to the third wing of the Republican Party, the Democrats. Their standard-bearer, President Obama, has proven himself perhaps the strongest potential challenger to Mitt Romney for the Republican nomination if he decides to join the debates, having established his conservative bona fides on a wide range of social and economic issues:

• Deporting more immigrants and breaking up more families than George W. Bush (or to put it in more business-friendly language, increasing U.S. "exports" of poorly documented human capital).
• Coming out in support of expanded off-shoring drilling just before the BP catastrophe in the Gulf; repeatedly touting production of a mythical substance (seen only, legend has it, by industry executives) as "clean coal" (widely believed to be found in the Fountain of Youth); and calling for the building of more nuclear plants, which the Japanese have shown to be a safe complement to offshore drilling (perhaps with the hope that water contaminated with radioactive materials discharged into the ocean might prove useful as a dispersant for oil).
• Extending the "Hyde Amendment" to allow GOP lawmakers to exclude abortion coverage from even private health insurance.
• Cutting 120 billion in taxes for the rich while proposing billions in cuts to "entitlements," such as home heating subsidies to people who are poor or elderly.
• Making sure the nation's largest banks remained solvent so they could continue to foreclose on the homes of millions of Americans, whose tax dollars supported the multi-million-dollar bonuses of the executives who continue to refuse to renegotiate their mortgages.
• Saying virtually nothing as Republican governors and state legislators around the country attack organized labor (e.g., remaining almost entirely mum on the Wisconsin law stripping workers of the right to negotiate their contracts).

But that's just the president. We can't blame the party whose name he never utters for the actions or inactions of its titular leader, who prefers to remain "post-partisan."

So with nearly 15 million Americans unemployed and millions more working two and three jobs just to get by to feed their family, how are the Democrats saying they're going to solve the problems of ordinary people?

Consider the following five-point statement of conservative economic principles from ABC's This Week a couple of Sundays ago, which concisely describes what conservatives believe the Obama administration should do to solve our nation's economic ills, and how the Democrats responded to it:

• Our effort now ... should be to get the private sector, to help them stand up and lead the recovery. [T]he government is not the central driver of recovery.
• Now, we must live within our means.
• We've got to rely on government policies that are trying to leverage the private sector and give incentives to the private sector to be doing the growth. And ... so ... these tax cuts ... will continue over the rest of this year.
• Put in place this regulatory review in which all of the major agencies are going to go through, find any outmoded regulations, ones that are excessively costly for their benefits, find ways to streamline.
• The free-trade agreements, trying to increase exports, which are rising at 15 percent annual rates.

So there you have all the elements of the ineffectual conservative Republican response to a severe recession bordering on a Depression: let the private sector lead and the government step out of the way; cut the budget, exercise austerity, and "live within our means;" use tax cuts as the primary stimulus to get the economy moving again (because they worked so well under the Bush administration); eliminate excessive regulations on businesses, because we all know that excessive regulations are what threw us into the Great Recession and are what are hindering the business community's ability to create economic growth; and implement free-trade agreements so the sticky fingers of the invisible hand of capitalism can work its wonders across international borders, just as it has done for the millions of Americans who once had manufacturing jobs, but just don't understand the fine points of the theory of comparative advantage in economics (by which countries with the "comparative advantage" of having the 2/3 of the world's workers who are willing to work for less than $2/day get jobs as factories in the U.S. shut their doors).

Surely this was an easy target for a Democratic counter-attack. After all, this is Hoover economics, all of which has been thoroughly discredited, if not by the Great Depression, more recently by the Bush administration and the Great Recession that capped off that glorious eight-year period of economic growth during which we managed to double the national debt and crash the economy at the same time.

So what was the Democrats' response?

Actually, that was the Democrats' response. This statement of conservative economic principles was actually from the Chairman of the president's Council of Economic Advisors, Austan Goolsby.

To his credit, Goolsby, one of the smartest, clearest-headed, plainest-speaking progressive economists around, looked very uncomfortable having to recite Hoover's plan for economic recovery (actually, Hoover was substantially more proactive and progressive in his vision as the economy sank into the abyss), and he announced his decision to resign the next day, I suspect out of a sense of futility and disgust that there's not much he can do with both of Uncle Sam's hands tied behind his back.

Who Misplaced the Democratic Party?

So how did we get to this point, where Democrats in Washington are looking increasingly difficult for the average American to distinguish from Republicans, as the two parties focus with equal fervor on how to find $50-60 billion in budget cuts after passing twice that amount in tax cuts for millionaires and billionaires and then wring their hands that the deficit is out of control ("there's gambling in this establishment!")?

At first it looked as if the Democrats were graciously going to accept Paul Ryan's gift (Medicare cuts that poll about as well as Wall Street bankers, particularly with a voting public of which 40 percent are age 55 and older, who punished the Democrats in large numbers in 2010 for helping finance health care reform with promises of cutting hundreds of billions of cuts in Medicare "waste." Ryan and his party's insistence on a draconian form of "austerity" for older voters, the majority of whom live on less than $20,000 a year, would have placed the differences between the parties in stark relief -- and might well have won the Democrats back the House. Now, however, for reasons that are impossible to fathom, Democrats are unilaterally disarming in advance of negotiations again, making clear that they plan to let the Republicans off the hook by "putting Medicare on the table," as if seniors will either understand or care which party seems to be selling them out more (or more efficiently) in what will become a he said-she said that is completely avoidable.

One could point to many factors that have led the Democrats to occupy the center-right wing of the GOP, but three are among the most important.

First, apologists for the president and the Democrats rightly claim that their hands are tied: the Republicans just won't let them pass any legislation that might move the economy forward, so their only tools are ineffectual ones such as tax cuts and exhortations to the business community to invest.

But what this account leaves out is that this state of affairs is entirely of the Democrats' creation. Had the White House and the supermajorities the president started out with for two years simply done what the voters asked them to do -- and what the House actually did do with remarkable speed in 2009 -- the Democrats' hands would not be tied today.

Voters were terrified when the president took office, and they were looking for him to do something dramatic -- anything -- that might turn things around, just as voters had done with FDR 75 years earlier. The economy was hemorrhaging ¾ of a million jobs a month, the Dow had dropped by over half, and credit was impossible to obtain.

Had the White House not chosen to cut the stimulus package almost in half from the size suggested by virtually all competent economists and then larded it up with $300 billion in tax cuts they already knew were inert because they had been the staple of Bush economics for the last eight years, and had the president simply foreshadowed to the American people that it might take two or three more shocks from the paddles of deficit spending to get the blood circulating again in an economy whose heart had stopped, the president and his party might not have led the average American to conclude (with a little help from some unanswered creative story-telling from the other side) that the stimulus was a failure (instead of having to argue the counterfactual that had they not half-stimulated the economy with their half-stimulus we would likely have gone into a second Great Depression).

Second, by running scared and adopting Republican talking points on economics, Democrats have created a self-fulfilling prophecy. Listening to the same pollster-industrial complex that advised them in 2002 to support George W. Bush's trillion-dollar unfunded bloodbath in Iraq, Democrats have joined with Republicans in offering massive giveaways to millionaires and billionaires and then telling working and middle class Americans that the sky is falling and we (they) have to tighten our (their) belts. Democrats inside the tightened beltway (with the exception of a strong contingent in the House and a dozen or two Senators) appear to have become convinced by the new conventional wisdom in Washington, that Americans aren't really concerned as much about jobs as they are about the deficit.

If you stop and think about it for a moment, that notion is absurd on the face of it. Is it really possible that Americans who have lost their jobs or fear losing them are more worried about an abstraction -- the budget deficit in Washington -- than about the realities of their lives -- that they face a budget deficit around their own kitchen table at the end of every month when they're trying to pay their rent or make their mortgage payment on their rapidly depreciating home?

And as it turns out, this view is as mistaken empirically as it is intuitively.

Can a pollster who believes or wants to show that Americans are as or more concerned about the national debt than jobs or the economic insecurity they face every day write questions in such a way as to get what he or she is looking for? Sure. Does this reflect what working and middle class Americans feel as they watch their economic security disappear? Not in a million years.

Consider the following statement about budget deficits, which began a message that beat a tough deficit-focused, budget-cutting message taken straight from the mouth of John Boehner with a large national sample by over 30 points with the general electorate and by an even larger margin with swing voters: "The best way to reduce the deficit is to put Americans back to work. There are 14 million Americans who've lost their jobs through no fault of their own, and they'd be happy to be paying taxes again instead of drawing unemployment insurance."

Put this way, there is nothing the other side can say that can beat this message. And that's on an issue -- budget deficits -- that's supposed to be the Achilles heel of Democrats and progressives.

What we have witnessed in the last several months is a phenomenon described in a classic book nearly 20 years ago by the political scientist John Zaller. What Zaller discovered is that public opinion tends to follow the lead of party leaders and pundits, as partisans turn to their own leaders and trusted sources for cues on what they should think and feel about the central questions of the day. Normally, when the two sides offer competing views, the 40-45 percent of voters on each side follow the lead of the "opinion leaders" on their side of the aisle.

But when leaders on one side are voicing a strong opinion -- in this case, the Republicans arguing that the sky is falling on the economy because of deficits, tax and spend liberalism, and over-regulation of business -- and the other side is either silent or echoing GOP talking points -- the average voter hears what sounds like a consensus and starts to mouth it.

Then pollsters start to pick up in their polls precisely the view they have been promulgating and elites have been putting into the minds and mouths of ordinary citizens, rendering elected officials all the more afraid of bucking what is now the conventional wisdom. And the result is a self-fulfilling prophecy.

So now both the president and Congressional Democrats are making the same mistake Democrats chronically make: When the going gets rough, adopt GOP talking points. Unfortunately, that's bad politics and bad policy. It's bad politics because no one is going to believe that a Democrat is as serious as a Republican about cutting spending, especially the kind of "discretionary spending" (a term that if Frank Luntz didn't make it up, he should have) that disproportionately hits working and middle class people and the most vulnerable. It's bad policy because, as Nobel-Prize-winning economist after economist has told us, GOP plans for "economic growth" will kill hundreds of thousands of jobs, and if you really want to restore "business confidence," the best place to start is by putting Americans back to work and restoring consumer confidence.

You can't create robust growth by frightening or impoverishing everyone but the upper 1 percent, who spend the smallest percent of their income, if you want to sustain demand.

Americans need a choice again between two parties, not between two strains of Hoover Republicanism. The more Democrats offer them the latter, the more they will both sink the economy and blur any distinctions left between the parties. Frankly, if the question is, "Who can do the better job slashing programs to finance tax breaks for the rich?" I would vote Republican. If you want trickle down, vote for people who really believe in it, not the ones who say they believe in it when they are too frightened to say what they really believe.

Three Wings, One Air Supply

That brings us to the third reason so many Democrats have created a third wing of the Republican Party: because they're competing for the same corporate money, which leads them to support the same policies. The major difference between Republicans and Democrats is that virtually all of the Republicans are quite comfortable being bought because it fits their ideology, whereas most of the Democrats who are beholden to one industry or another are conflicted about it -- but not conflicted enough to pass a fair elections bill when they had the chance last year that might have taken away some of the advantages of incumbency but restored integrity to our electoral system.

From the standpoint of voters across the political spectrum, who overwhelmingly endorse statements such as, "It's time we returned to government of, by, and for the people, not government of, bought, and paid for by big corporations," or (in reference to the tax cuts to the rich), "In tough times like these, rich people ought to be giving to charity, not getting it," they have no idea where to turn, because neither party seems to be standing up anymore for working and middle class Americans, let alone for least fortunate among us. What they hear from Democrats are talking points like the following from a Senate press release, which is indistinguishable from the disingenuous pabulum coming from the other side, and does little more than reinforce the conservative economic message: "It's time for Republicans to join Democrats to cut spending in a smart, responsible way that reduces our deficit while creating American jobs, not destroying them."

In other words, let's cut our way to growth.

Somewhere Ronald Reagan is smiling.

The Democrats are at a crossroads. They can continue to populate the third wing of the Republican Party, fundamentally accepting the premises of Reagan's narrative about government the way Republicans from Eisenhower through Ford accepted the premises of Roosevelt's New Deal. If they choose that course, they will continue to marginalize, antagonize, and demoralize not only their base but the vast majority of swing voters, who don't give one whit about ideology but simply want someone to represent their interests and values -- most importantly, the idea that America ought to work again for people who work for a living.

Alternatively, they can return to progressive principles, starting by articulating for themselves as well as the American people what those principles are. (Personally, I have no idea what it means to be a Democrat anymore, other than to "talk about jobs," as if talking about them will somehow magically create them, while searching for compromises with Republicans at each successive "budget crisis" -- this time the debt ceiling -- that will endanger even more jobs.)

If they choose to endorse progressive principles again, they will need to hammer home the distinction between the party that cares first and foremost about working and middle class Americans, those who want to join the ranks of the shrinking middle class, and the small businesses that create two-thirds of all new private sector jobs for working Americans; and the party that cares first and foremost about the rich and well-connected, the big corporations that ship American jobs overseas and rake in massive profits without sharing that prosperity with their workers, and CEOs, Wall Street bankers, and their bloated bonuses.

That would be a change we can believe in. But the Democrats would have to mean it this time.

Economic Wisdom from my Fave Economist

Galbraith on the Irrationality of Regressive Budget Cuts

Thursday, 05/19/2011 - 12:07 pm by James K. Galbraith | One Comment

The following is a transcript of James K. Galbraith’s opening remarks at the Economists for Peace and Security Symposium on the Crisis in the States and Cities, delivered April 12th, 2011, in Washington, D.C.

We meet today at a moment when the normally useful distinction between sense and nonsense seems to have disappeared on a bipartisan basis. All around us key points of principle have been given up. The political struggle is over what to cut and what to save, over how to bargain, and not over what to do.

In economic policy, magicians and necromancers have taken charge, brewing a toxic vat of program cuts and deregulation, from which they promise that, somehow, jobs will emerge. Serious people cite serious people on the subject of what serious people permit themselves to think. Meanwhile, the crisis in the country deepens, and hopes for a coherent strategic response to it recede.

You can see this in the content just revealed of the latest budget deal, which – as we increasingly face an environmental challenge and an energy crisis – targets the Environmental Protection Agency and the transportation system. And in the service of what? Deficit control and debt reduction. On this subtle, technical and deservedly obscure topic, today everyone is an expert because everyone adheres to the one true thought. We are witnessing one of the greatest waves of mass hysteria of all time, the fruits of one of history’s most intense and successful propaganda campaigns.

As a professional economist and one with a background in political work – I was here on Capitol Hill for many years, worked for the Congress – I am impressed. I am even in awe. Practically every avenue of debate has been closed off. And not by argument. Not even, as was the case thirty years ago when a few of us tried to stand in the way of the juggernaut of the Reagan economic policies, not even by the convinced philosophical positions of effective public intellectuals. But rather by endless repetition of the same slogans, repeated and barely detectable changes in the foundation of the argument, and silence in the face of criticism. That there are many economists, experienced people, impeccable credentials, who don’t buy the line, that history and comparative experience contradict it, is a secret to most people. We are hidden in this discussion behind a wall of invisibility.

Now I am not excessively worried at the moment, to be frank, as an economist by the recent rounds of short-term budget cuts. The lost income, after all, will be offset by falling tax revenues and increasing unemployment insurance, applications for disability, and so forth. And so the overall effect on total income will not be that large, just as the effect of the financial crisis was not that large. The deficit will not decline very much, and things will go on much as before. The regret here is that in most cases, we needed to do what we are not going to do. The environment and transportation are good things, even if an extra engine for a fighter aircraft can be dispensed with. It’s merely foolish to give these things up on the pretense that you are accomplishing something, when you’re not.

What worries me more is the prospect – which I think hangs over us all – that there will be a bi-partisan compromise on so-called “long-term deficit reduction,” the issue which even people who think themselves to be sensible and progressive concede must be dealt with, and that this compromise will do irreparable damage to the well-being of large parts of the American population, to what remains of the basic social infrastructure supporting what remains of the American middle class – Social Security, Medicare and Medicaid.

And for what?

The idea that there is an economic rationale for dismantling these most successful and effective social insurance programs, that have performed well and efficiently, with very low administrative costs, for many decades – close on to 70 years in the case of Social Security; since 1965 in the case of Medicare… the idea that the capital markets, for example, demand such an overthrow of these institutions is plainly absurd. The capital markets tell you every morning at what rate they are prepared to lend to the government of the United States for ten, twenty and thirty years into the future. And if people who have money, have their own money on the line, were seriously worried about the prospect that the United States government could not service its debts, or the prospect that the United States dollar will fall victim to a massive inflation, they would not be willing to lend to the United States government on the extremely favorable terms that everybody can see are now available. There is something wrong with this story.

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And the idea that we should frame policy around a set of computer forecasts, produced even by so lofty and irreproachable an organization as the Congressional Budget Office when the capital markets don’t take these forecasts seriously, and when anybody examines them, as very few people do, can see they are internally inconsistent and not reflective of any history of our economy, is even more absurd.

Meanwhile, it’s out in the country, and out in our states and our cities, that the immediate consequences of this policy environment are being felt. I live in Texas, and in my home state – which is far from being the worst affected by the financial crisis and the recession – my daughters bring home from school reports of the teachers in their public schools who will not be there next year, who have been laid off because the school district is facing a massive budget shortfall.

What will that do? Of course, it will degrade the quality of the public programs that my children, many children, are in. What will the teachers do? Well, they will apply for jobs in the private schools to which middle class parents will feel forced to flee. And they will be hired and they will teach what they taught before, but for lower pay and at higher cost. This is supposed to be an economic improvement? Someone should explain to me where it comes from.

We are seeing cuts in Medicaid which I am told by nurses will produce closures of nursing homes. And what will people in those homes do? Many of them don’t have another place to go. So, of course, they will go to the emergency rooms and they will end up filling hospital beds. And guess what? This will be very good for the economy, because the hospital beds are much more expensive than the nursing beds. Hmm?

And I ask you, Where is the rationality in this? Where is the sense of organized purpose? Where is the goal of improving the performance of our economy? Or the living standards of our people? It is nowhere to be seen. In the rush to achieve things which are driven by some metaphysical notions that have become attached to accounting concepts.

And of course, looming over these issues, is the ugly question of power. The question really, which we have so vividly seen played out in the state of Wisconsin recently, but present many places in the country, of whether public servants – public employees – in this country have any rights to negotiate the terms of their employment.

Is there hope? I suggest that there is hope only if some of the people who we have assembled today are finally heard from, and if the proposals that they will be offering at this symposium are able to reach out and find a base of support in the country, if their voices can cut through the fog of propaganda and, really, of indifference to what is happening in the country that clouds so much of our policy dialog today. It is not an easy task.

.. but as was said fifty years ago, Let us begin.

James K. Galbraith is a Vice President of Americans for Democratic Action. He is General Editor of “Galbraith: The Affluent Society and Other Writings, 1952-1967,” published by Library of America. He teaches at the University of Texas at Austin.