1. We’re near the bottom of the developed world in children’s health and safety

According to a 2007 UNICEF report, the U.S. ranked last among 21 OECD nations in an assessment of child health and safety. The assessment measured infant mortality, immunization, and death from accidents and injuries.

A related 2009 OECD study generally agreed, placing the U.S. 24th out of 30 OECD countries for children’s health and safety. It also showed the devastating effects of inequality in our country. Despite having the second-highest average income for children among the 30 OECD countries, the U.S. ranked 27th out of 30 for child poverty (percentage of children living in households that are below 50% of the median income).

Full Story Here: Five Facts That Put America to Shame | Common Dreams.

The global economy is finally shifting away from the model that prevailed for the last three decades. Europeans are rejecting austerity. Latin Americans are nationalizing enterprises. The next head of the World Bank has actually done effective development work.

Maybe that long-heralded “end of the Washington consensus” is finally upon us.

After the near-collapse of the global financial system four years ago, obituary writers rushed to proclaim the death of the prevailing economic philosophy known as neo-liberalism. “Wall Street’s financial meltdown marks the end of an era,” wrote Michael Hudson and Jeffrey Sommers in Counterpunch at the end of 2008. “What has ended is the credibility of the Washington Consensus – open markets to foreign investors and tight money austerity programs (high interest rates and credit cutbacks) to ‘cure’ balance-of-payments deficits, domestic budget deficits and price inflation.

Full Story Here: Waiting for Copernicus: Moving Beyond Wall Street-Centric Economics.

Noam Chomsky:-:

On the History of the US Economy in Decline

The fact that the Occupy movement is unprecedented is quite appropriate. After all, it’s an unprecedented era and has been so since the 1970s, which marked a major turning point in American history. For centuries, since the country began, it had been a developing society, and not always in very pretty ways. That’s another story, but the general progress was toward wealth, industrialization, development, and hope. There was a pretty constant expectation that it was going to go on like this. That was true even in very dark times.

I’m just old enough to remember the Great Depression. After the first few years, by the mid-1930s — although the situation was objectively much harsher than it is today — nevertheless, the spirit was quite different. There was a sense that “we’re gonna get out of it,” even among unemployed people, including a lot of my relatives, a sense that “it will get better.”

Full Story Here: A Rebellious World or a New Dark Age? | Common Dreams.

Much of the focus since the news broke has been on JPMorgan’s CEO Jamie Dimon, one of the staunchest opponents of the so-called ‘Volcker rule’ which would require big banks to keep their risky investment trading separate from their commercial banking divisions.

“This puts egg on our face,” Dimon said.

Asking why average Americans should care about the news, Rolling Stone‘s Matt Taibbi, answers: “because J.P. Morgan Chase is a federally-insured depository institution that has been and will continue to be the recipient of massive amounts of public assistance. If the bank fails, someone will reach into your pocket to pay for the cleanup. So when they gamble like drunken sailors, it’s everyone’s problem.”

Full Story Here: JP Morgan’s $2 Billion Tumble Renews Call: ‘Break Up the Big Banks’ | Common Dreams.

That helps explain a seeming contradiction in the unemployment numbers — the rate keeps dropping even though job creation has been soft.

In April, the U.S. economy added a mere 115,000 jobs, according to Bureau of Labor Statistics data released Friday. In a normal month, that would not even be enough to keep up with new entrants into the labor market. But in this economy, it was enough to drive unemployment from 8.2 percent down to 8.1 percent, the lowest point since January 2009.

The explanation is a little-watched measure known as the “labor force participation rate.” That tracks the number of working-age Americans who are holding a job or looking for one. Between March and April, it dropped by 342,000. But because the official unemployment rate counts only those workers who are actively seeking work, that actually made the unemployment rate go down.

Full Story Here: The incredible shrinking labor force – The Washington Post.

Before the Great Recession, I would sometimes give public lectures in which I would talk about rising inequality, making the point that the concentration of income at the top had reached levels not seen since 1929. Often, someone in the audience would ask whether this meant that another depression was imminent.

Well, whaddya know?

Did the rise of the 1 percent (or, better yet, the 0.01 percent) cause the Lesser Depression we’re now living through? It probably contributed. But the more important point is that inequality is a major reason the economy is still so depressed and unemployment so high. For we have responded to crisis with a mix of paralysis and confusion — both of which have a lot to do with the distorting effects of great wealth on our society.

Put it this way: If something like the financial crisis of 2008 had occurred in, say, 1971 — the year Richard Nixon declared that “I am now a Keynesian in economic policy” — Washington would probably have responded fairly effectively. There would have been a broad bipartisan consensus in favor of strong action, and there would also have been wide agreement about what kind of action was needed.

Full Story Here: Plutocracy, Paralysis, Perplexity – NYTimes.com.

The economy has stalled.

Friday’s jobs report for April was even more disappointing than March. Employers added only 115,000 new jobs, down from March’s number (the Bureau of Labor Statistics revised the March number upward to 154,000, but that’s still abysmal relative to what’s needed). We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of jobs lost in the Great Recession. At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.

With only 115,000 jobs in April, the hole is getting even deeper.

Most observers pay attention to the official rate of unemployment, which edged down to 8.1 percent in April from 8.2 percent in March. That may sound like progress, but it’s not. The unemployment rate dropped because more people dropped out of the labor force, too discouraged to look for work. The household survey, from which the rate is calculated, counts as “unemployed” only people who are actively looking for work. If you stop looking because the job scene looks hopeless for you, you’re no longer counted.

Full Story Here: Robert Reich (The Stall Has Arrived).

David Cay Johnston :-:

Which federal program took in more than it spent last year, added $95 billion to its surplus and lifted 20 million Americans of all ages out of poverty?

Why, Social Security, of course, which ended 2011 with a $2.7 trillion surplus.

That surplus is almost twice the $1.4 trillion collected in personal and corporate income taxes last year. And it is projected to go on growing until 2021, the year the youngest Baby Boomers turn 67 and qualify for full old-age benefits.

So why all the talk about Social Security “going broke?” That theme filled the news after release of the latest annual report of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, as Social Security is formally called.

Full Story Here: Social security is not going broke | David Cay Johnston.

Consumers, not the wealthy, are the key to an economic rebound, and GOP austerity is shackling them

By Joan Walsh :-:

Republicans have made it official: “The wealthy” must be called “the job creators” in any debate about tax policy. Democrats are playing their own word games: Centrists insist the 2012 campaign shouldn’t focus on “income inequality,” or whether the worst concentration of riches since the Great Depression might have to do with what Paul Krugman has taken to calling the Lesser Depression. “Income inequality” is a downer, the centrists say; better to talk about “growth” and “prosperity.”

But it’s becoming increasingly clear that growth and prosperity are threatened by the declining share of income going to the non-wealthy over the last 35 years.

Friday’s disappointing jobs report confirms that “the job creators” should be fired, since they only created 115,000 new jobs in April, which isn’t even enough to employ new entrants to the workforce. And while the unemployment rate ticked down from 8.2 to 8.1 percent, that’s only because more unemployed people gave up and left the labor market entirely. Romney advisor Eric Fehrnstrom (Mr. Etch-A-Sketch) blames President Obama, and he even pretends his candidate cares that “people are so discouraged they are dropping out of the workforce all together.”

Full Story Here: The real job creators – 2012 Elections – Salon.com.

Who would have thought that clean energy would become the source of such scorn for Mitt Romney, a candidate who called transitioning away from fossil fuels “a must” in 2007?

The Romney campaign released a new campaign ad this morning attacking clean energy jobs. Just like every other ad on the issue this election cycle, this one cherry-picks a few stories and claims that efforts to create jobs in this sector have failed.

As numerous reports have shown, the claims in this ad are completely absurd: The Brookings Institution found that the stimulus helped the clean energy sector grow 8.3 percent during the height of the recession; a report from the Department of Energy showed that the 1603 Treasury Grant Program supported 75,000 jobs and $25 billion gross economic activity; and a recent analysis from the Bureau of Labor Statistics found that the clean economy now employs 3.1 million people — with growth in the last few years happening in every geographic region of the U.S.

Full Story Here: Ignoring The 64,000 Green Jobs In His State, Romney’s Campaign Claims Clean Energy Isn’t Creating Jobs | ThinkProgress.

CEOs were paid 231 times more than workers in 2011.

New analysis from the Economic Policy Institute (EPI) details how massive compensation to CEOs is driving inequality.

“CEOs have fared far better than the typical worker, the stock market and the U.S. economy as a whole since the late-1970s,” EPI President Lawrence Mishel said. “Compensation growth for executives and for top-tier financial-sector workers has fueled the enormous growth of incomes at the top.”

According to the new analysis from EPI, on average, CEOs were paid a staggering 231 times more than workers in 2011. In contrast, in 1965, CEOs were paid 20 times more than workers.

The analysis also shows that CEO compensation increased more than 725 percent from 1978 to 2011, while worker compensation only grew by 5.7 percent during the same period.

Full Story Here: Report: How CEO Compensation Is Fueling Inequality | Common Dreams.

It’s no secret American manufacturing is in crisis, and that its problems form a significant component of our present economic mess. I’ve written before about how the Obama administration may (may!) be starting to get serious about the problem.

Another small but significant data point on the question of whether the administration is serious took place this last week: the government’s new National Network for Manufacturing Innovation held its first conference, designed to elicit public input on how this program will be designed and run.

The event was held at Rensselaer Polytechnic Institute, a good engineering school in Troy, NY, and while I was not there myself, the head of my organization was, and he debriefed me on what went on.  (The NNMI website is here.  RPI’s page on the conference is here. Click here for a pdf of the conference schedule.)

Now the details of NNMI haven’t yet been settled, so I can’t comment on them.  But it is possible to know, even at this early juncture, that if it is to succeed, its policies must rest upon understanding and implementing a correct vision of its economic rationale. Absent this, it is likely to either fail to generate economic benefits to the nation, or collapse outright in a flurry of Solyndra-style scandals.  There is a huge temptation to just declare manufacturing “holy,” as environmental technology was previously declared holy, and throw public money at it.

So what should NNMI do instead?

The first rule of industrial policy is that “create jobs” is not a valid strategy, despite the political appeal of this concept.  Anyone can spend $1.00 to create $.75 worth of jobs. The problem is that the $1.00 has to come from somewhere—it has to be taxed, borrowed, or cut from other spending.  And $1.00 in the public’s pockets will, other things being equal, create $1.00 worth of jobs, not $.75.  As a result, while benefits may be apparent, they will not be real.

Effective industrial policy depends upon finding uses for $1.00 that will somehow create more jobs than would have been created if the money had just been left with the public.  This can be done: the idea that it is impossible is ultimately identical with the proposition that markets are perfectly efficient: a known falsehood in other areas of economics and ultimately an ideological dogma.

Government has a number of legitimate roles to play here, and many of them are quite complex.  But most of what is fundamental boils down to solving two key problems that the private sector cannot solve on its own:

1. Appropriability, or the fact that many useful innovations are difficult for the innovator to capture the full economic value of.

2. Time horizons, or the fact that the private sector won’t invest in projects whose profits, although appropriable, are too far in the future.

So-called infratechnologies fall into the first category. These are technologies, like the Internet, which enable a huge number of profitable innovations but which are themselves, for various reasons, hard to make a direct profit off of. As a result, the free market tends to under-supply them, and there is a strong prima facie case for the government to fund their development.

To take one example, commercial nanotechnology companies depend, according to Greg Tassey of the National Institute of Standards and Technologies, upon the following key infra-technologies:

• Techniques for measuring the shapes, dimensions, and electrical characteristics of the various molecules making up nanoscale devices.

• Techniques for manipulating and measuring the spin of individual electrons.

• Scientific and engineering data for characterizing the fundamental physical behavior and long-term reliability of new nanoelectronic materials.

Mainstream neoclassical economics assumes (often tacitly and without even realizing the issue exists) that new technologies grow automatically from advances in pure science. It also assumes that new technologies automatically commercialize themselves. But both these assumptions are observably untrue, largely due to appropriability and time-horizons problems.

Historically, the U.S. solved the problems of appropriability and time horizons by indirect means.  We privileged certain oligopolistic sectors of corporate America to reap exceptionally high profits in exchange for developing technologies that would otherwise probably not have been developed.

Some of this was done by way of defense contractors, some by way of very large companies with monopoly or quasi-monopoly power over their ultimate product markets. Thus the old AT&T with its Bell Labs, the old IBM with its Watson Laboratory, the old RCA with its Sarnoff Research Center, the old Xerox with its Palo Alto Research Center, or GM in its glory days.

Because of these companies’ oligopolistic power, they were assured of a) capturing the value of whatever they discovered or invented, rather than having it swiped by a competitor, and b) bringing in enough money, over a long-enough time frame, to pay for expensive laboratories that could take many years to produce results.

Unfortunately, these companies are largely gone, or so internationalized that they confer no especial benefit upon the U.S. economy, as opposed to any of the other nations where they do business.

Worse, because the U.S. solved the problems of appropriability and time horizons indirectly, there never crystallized an explicit ideological consensus in this country about these being the key rationales for active industrial policy.  Indeed, to a huge extent, we fooled ourselves into thinking that our national economic success was caused by our (fictional) embrace of extreme laissez-faire.

Contemporary venture capitalists almost never operate beyond a seven-year time horizon.  (Thus we observe that the technology underlying Google was developed from research funded by the National Science Foundation on digital libraries.) For all its very real achievements, the venture capital system is largely a system for harvesting fundamental innovation, not creating it.

It follows that the key question that will need to be asked, whenever NNMI considers funding some project, is whether it is being asked to fund something that the private sector should be funding on its own.  (Solyndra clearly fell into this category, as there were no appropriability or time-horizons issues presented in their business model.)  Instead, NNMI should seek out projects that have the following characteristics:

1. They involve developing technologies where much of the benefit will “leak” to parties not compelled, by patent or other regulation, to help defray the cost of developing them.

2. They involve developing technologies whose payoff, though substantial, will occur beyond an approximately seven-year time horizon.

These two key issues are a highly abstract description of the problems involved, and they ramify enormously and interact with other issues—giving rise, for example, to the notorious “valley of death” problem in innovation. So they should not be misunderstood as exhausting the concerns here.  But getting these issues right will be fundamental to any successful active industrial policy.

Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor. He was previously Research Fellow at the U.S. Business and Industry Council, a Washington think tank, and before that, an economist in private practice serving mainly hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco. He is the author of Free Trade Doesn’t Work: What Should Replace It and Why.

Chris Christie may be fat, but he ain’t Santa Claus. In fact, he seems unable to decide if he is New Jersey’s governor or its caporegime, and it may be a comment on the coarsening of American discourse that his brash rudeness is often taken for charm. In February, while discussing New Jersey’s newly amended income-tax law, which allows the rich to pay less (proportionally) than the middle class, Christie was asked about Warren Buffett’s observation that he paid less federal income taxes than his personal secretary, and that wasn’t fair. “He should just write a check and shut up,” Christie responded, with his typical verve. “I’m tired of hearing about it. If he wants to give the government more money, he’s got the ability to write a check—go ahead and write it.”

Heard it all before. At a rally in Florida (to support collective bargaining and to express the socialist view that firing teachers with experience was sort of a bad idea), I pointed out that I was paying taxes of roughly 28 percent on my income. My question was, “How come I’m not paying 50?” The governor of New Jersey did not respond to this radical idea, possibly being too busy at the all-you-can-eat cheese buffet at Applebee’s in Jersey City, but plenty of other people of the Christie persuasion did.

Full Story Here: Stephen King: Tax Me, for F@%&’s Sake! – The Daily Beast.

1. The Rich Pay Almost All the Taxes

That’s simply not true. The percentage of total taxes paid by the very rich (the top 1%) is approximately the same as the percentage paid by middle class Americans (the 4th quintile, average income $68,700). Here are the details:

Internal Revenue Service figures show that the very rich paid 23% of their incomes in federal income taxes in 2006. The middle class paid about 8% of their incomes in federal income taxes. Based on U.S. Congressional Budget Office figures, the very rich pay just under 2% of their incomes toward social security, while the middle class pays just under 10%. According to a study by The Institute on Taxation and Economic Policy, the very rich pay about 7% of their incomes in state and sales and property and excise taxes, while the middle class pays approximately 10%. Another year of Bush tax cuts will reduce the taxes of the very rich by at least 3% more than the middle class.

So total taxes for the very rich are 29% of their incomes (23% + 2% + 7% – 3%). Total taxes for the middle class are 28% of their incomes (8% + 10% + 10%). These figures agree with CTJ’s 2011 estimate of total taxes paid.

2. Tax Rates Are Too High

Full Story Here: Five Tax Fallacies Invented by the 1% | Common Dreams.

Computerworld :-:

As unemployment among tech workers increases with the recession, the U.S. government is raising broad questions as part of a federal case over H-1Bs about the connection of visa fraud to the unemployment of IT workers.

The government’s interest in H-1B fraud-related unemployment turned up in court filings in a case in U.S. District Court in Iowa against a New Jersey IT firm, Visions Systems Group in South Plainfield, NJ, which was indicted in February on visa-related fraud charges.

Visions Systems was included in a sweep that led to arrests of some 11 people in six states. The government, in announcing its action, said the companies and people involved were “displacing qualified American workers,” but didn’t identify how many. In court papers filed last month, the U.S. indicated it may be getting ready to do just that.

Full Story Here: U.S.: H-1B workers outnumber unemployed techies – Computerworld.

Up With Chris Hayes 4.29.12

This is your Income.

This is your Income on Republican ideology.

Any questions?

Digital Domain CEO John Textor: “Free Labor Is Much Better Than Cheap Labor” – YouTube.

OPS: in other words: Slaves.

There’s some good news this month as families’ economic security is slowly improving: The labor market is adding jobs and household wealth is gradually rising. But substantial challenges remain including comparatively high unemployment rates, especially among vulnerable population groups; high poverty rates; a depressed housing market; large household debt burdens; and rising gasoline prices.

Unfortunately no single policy can quickly bring solid gains to families’ economic security. It will take comprehensive and targeted policy to secure America’s struggling middle class.

Sustained and faster job creation should be policymakers’ top concern, especially for vulnerable groups such as African Americans, young labor-force participants, and people without a high school degree. Other priorities require income support through things like extended unemployment insurance benefits, higher minimum wages, and more opportunities for employees to join a union.

Full Story Here: Economic Snapshot for April 2012.

The GOP has been very vocal in recent years about establishing fairness in taxation. In an effort to protect the wealthy from what some conservatives have dubbed “socialism,” Republicans have argued that the only fair system is to tax every American at the same rate, regardless of their income. They claim this belief was adopted to prevent the rich from paying more than their share in taxes than the middle and lower classes. Yet unfathomably, plenty of America’s wealthiest citizens actually pay a much lower percentage of their income for Federal taxes than the rest of the nation.

President Barack Obama has stated that around 25 percent of all millionaires pay lower tax rates than many middle-class households, and some billionaires actually pay a tax rate as low as 1 percent. This means that, in addition to the deductions and earmarks the super wealthy use to reduce their taxes, they are already encountering a much lower rate to begin with. Meanwhile, the burden to increase the nation’s revenue falls squarely on the shoulders of the middle class, whose 2010 tax breaks were rejected by the Senate for renewal.

Full Story Here: The U.S. Tax Hypocrisy | Economy In Crisis.

Laws are being made that encourage foreign corporations to set up shop in the U.S. They receive huge tax benefits and various subsidies for bringing their jobs to our country. This sounds like good business on the surface, but further inspection reveals some long-term problems.

• American owned factories are going out of business in record numbers because they can’t compete.
• Thousands of other businesses are selling out to foreign ownership or moving entirely overseas to keep costs down.

Full Story Here: Our Government Has No Economic Plan | Economy In Crisis.

With the nation’s unemployment rate still above eight percent, millions of Americans are looking for work, and the country’s biggest corporations are hiring. According to a new report from the Wall Street Journal, however, many of those corporations are adding jobs overseas at a faster pace than they are at home. Even worse, others are cutting their domestic workforces while adding jobs in other countries at a rapid pace:

Those companies, which include Wal-Mart Stores Inc., WMT +2.70% International Paper Co., Honeywell International Inc. and United Parcel Service Inc., boosted their employment at home by 3.1%, or 113,000 jobs, between 2009 and 2011, the same rate of increase as the nation’s other employers. But they also added more than 333,000 jobs in their far-flung—and faster-growing— foreign operations.

The companies included in the analysis were the largest of those that disclose their U.S. and non-U.S. employment in annual securities filings. All of them have at least 50,000 employees. Collectively, they employed roughly 6.4 million workers world-wide last year, up 7.7% from two years earlier. Over the same period, the total number of U.S. jobs increased 3.1%, according to the Labor Department.

Full Story Here: Report: American Corporations Are Adding More Jobs Overseas Than They Are At Home | ThinkProgress.

The House will vote today on a bill to prevent the interest rate on government-backed student loans from doubling. Both Republicans and Democrats support the extension on the lower rate, but not the Club for Growth, the deep-pocketed political group backed by wealthy conservative donors, especially from the financial sector.

The group put out a “Key Vote Alert” this morning “urg[ing] all House members to vote “NO” on the Interest Rate Reduction Act (HR 4628)” and warning members that their vote may be used against them on the Club’s Congressional Scorecard, which they use to rate members when making considerations about endorsements and independent expenditures.

The Club explains that it thinks the government should not be subsidizing student loans and that the the Affordable Care Act should only be repealed as a whole:

Full Story Here: Conservative Group Club For Growth: Let Student Loan Rates Double.

Robert Reich :-:

With the US economy still vulnerable to shocks, Obama’s re-election prospects are fragile. He must offer a bold alternative

So far, President Obama’s election strategy can best be summed up as: “We’re on the right track, my economic policies are working, we still have a long way to go, but stick with me and you’ll be fine.”

This won’t be enough to win him the election. The US recovery is too anaemic, and the chance of an economic stall between now and election day far too high.

Even now, Mitt Romney‘s empty “I’ll do it better” refrain is attracting as many voters as Obama’s “we’re on the right track.” Each is gathering 46% of voter support, according to the latest New York Times/CBS News poll.

Only 33% of the American public thinks the economy is improving, while 39% say they’re still falling behind financially – an 11-point increase from 2008. Nearly two thirds are concerned about paying for housing, and 23% of Americans with mortgages say they’re underwater.

Full Story Here: The lesson for Obama of Europe’s failed austerity | Robert Reich | Comment is free | guardian.co.uk.

The Social Security trust fund is in strong financial standing and the overall program could be further strengthened, say experts and lawmakers, with a simple increase of the current payroll tax cap which is currently set at $110,000. The trustee’s annual financial report was released on Monday.

Most mainstream news and media outlets reported the trustee’s report as a ‘doomsday’ scenario for the benefit program, which was created in 1935 and today supports 55 million Americans, including 38 million retired workers, 6 million widows, widowers and orphans, and 11 million disabled workers. But those reports belie a simple solution to improve the longevity and solvency of the program, and speak to a trend of poor-quality reporting when it comes to the issue of Social Security.

Full Story Here: Experts: Contrary to Mainstream Myth, ‘Social Security is Strong’ and Could Be Made Stronger | Common Dreams.

Ian Fletcher :-:

 America has been waiting a long time for the Obama administration to get serious about the problems of our manufacturing sector.

Finally, there has been a small sign that the corner may – may – be turning.  Let’s take a look at a speech recently given by Gene Sperling, Director of the National Economic Council.

I’ve edited it a bit for length.  But it’s still a good metric of whether the administration “gets it” on manufacturing, and gives a fairly clear picture of the evolution of its thinking.

Ignoring the introductory material, here’s where Sperling cuts to the chase, i.e. the fact that mainstream economists generally believe that it’s a waste to time to pay any special attention to manufacturing—a sector they see as in inevitable and well-deserved decline as America’s economy shifts to better things:

Many economists raise the concern that any focus on manufacturing is distortionary industrial policy or misguided because they believe that manufacturing is in an inevitable and irreversible decline due to decades-long productivity and technology gains that will mean a continual loss of jobs.

This is precisely the myth Americans concerned about manufacturing are fighting, whenever they try to persuade Washington that something needs to be done to help the sector.

But it is a myth, as the number of U.S. manufacturing jobs was actually fairly stable from 1965 to about 2000, and productivity was growing all that time.  Productivity on its own doesn’t kill jobs, because while it may reduce the number of workers needed to make any one product, it also makes it possible to produce more products at a saleable price. Which makes it more profitable to employ manufacturing workers, so jobs are (as they were for decades) created to replace those that are lost.

So no, it’s not productivity that’s been killing American manufacturing jobs.  It’s something else, some factor that suddenly got a lot stronger after about 2000.  The right answer here is “a $500 billion a year trade deficit and unfair international competition, due to currency manipulation, foreign trade barriers, intellectual property theft, and related factors.”

Sperling continues…

Yet, we do believe that even if today only 12 percent of the U.S. private-sector workforce is employed in manufacturing, it is a sector that punches above its weight.   When you take into account the outsized role that manufacturing plays in innovation through:

• R&D investment and patents

• The tight linkage between innovation and manufacturing production

• The higher-wage jobs it produces

• Its importance for exports

• The spillover benefits that manufacturing facilities have on firms and communities around them

• The deeper economic harm that comes from allowing our manufacturing production capacity to be hollowed out

Aha!  This is what we need to be hearing from the White House.  Yes, manufacturing really is a uniquely important sector.  It is false that, from a economic point of view, “Computer chips, potato chips, what’s the difference?” in the words of Michael Boskin, one of George H.W. Bush’s economists.

Sperling goes on to successfully hit all the key points of this problem. Manufacturing, contrary to its image as an outdated sector, is responsible for 70 percent of America’s R&D, despite being only 12 percent of our economy.  And it’s very hard to innovate, or learn to make things better, when you don’t know how to make them in the first place. Manufacturing jobs average about 25 percent higher pay than non-manufacturing jobs.  Manufacturing is also the key to America’s trade deficit, as we can’t balance our trade by exporting more soybeans or movies: the numbers just don’t add up.

The economic evidence is increasingly clear that a strong manufacturing sector creates spillover benefits to the broader economy, making manufacturing an essential component of a competitive and innovative economy.

Correct. America can’t be a serious country – let alone a superpower – without a world-class manufacturing sector.

When an economic activity has positive spillover effects that an individual firm cannot capture, there is a risk we as a nation under-invest in areas that can be beneficial to the economy at large.

Correct.  The free market—which doesn’t exist in foreign trade, anyway—won’t solve all our problems. Contrary to laissez-faire mythology which would have appalled Republicans like Teddy Roosevelt and Abraham Lincoln, there is a public-sector component of economic growth. This is not a liberal or a conservative idea, it is just true, though liberals and conservatives can (and should) argue about the right way to implement it.

If we care about the location of the innovation, we should also care about the location of the manufacturing production… The ecosystems that grow up around these intersections of innovation and production tend to be complex.  They are the result of evolutions that occur over periods of years and decades. Once the virtuous, reinforcing cycles are broken they are difficult to recreate, and they can turn to a vicious cycle… That’s why losing pieces of our manufacturing base should be such a serious concern.

A strong manufacturing sector is not the work of a day, or of any one single government policy.  It is something that takes decades to build up.  It is therefore something that we should not allow to be torn down by the mercantilism of foreign nations.  We can’t afford to wait until all the damage is done, as then it will be too late.

Without these capabilities, companies do not create the process technologies that allow firms to create and scale new products.  So when we remain indifferent to the decision to compete for the manufacturing products of the present, we have to understand that if it leads to a more serious loss of our manufacturing capacity, it can trigger the loss by our nation of the ability to compete for and create the next generation of technologies.  It’s a story we’re already all too familiar with in the United States. In consumer electronics. In metal castings. In machine tools and others. In each industry, firms shifted production out of the U.S., sometimes as products became commoditized.  The subsequent loss of manufacturing capabilities led to leadership in other industries being developed elsewhere.

All sadly true. Losing manufacturing abilities doesn’t just cost us today; it shuts us out of the industries of the future.  GM was forced to import the batteries for the Chevy Volt from South Korea because nobody in the U.S. had the know-how to make them anymore. China is systematically targeting and killing off America’s solar-cell industry.

Now we get to the administration’s proposed solutions, and things start to sour.

The President’s plan for business tax reform is focused on eliminating loopholes and simplifying tax rates to make the U.S. a more attractive location for firms to invest to spur growth.  Recognizing the intense international competition for manufacturing and the benefits manufacturers provide to the rest of the economy, our plan would lower rates for manufacturers to 25% and even lower for advanced manufacturing.

Uh oh.  This proposal falls squarely into the category of “favors the recipient never asked for.” I don’t ever recall any major organization in this field ever suggesting that manufacturers deserve a special favor on taxes. That would be the kind of naked special pleading that our opponents seem to assume, as a matter of course, that we do. I’m not aware of any. (My apologies if I am mistaken; feel free to write me if you know otherwise.)

American manufacturers don’t need special favors from the government.  They do need to be not especially harmed by unfair foreign competition. The aggressive, cheating economic strategies of foreign nations—starting with China but not ending there—hit the manufacturing sector much harder than the service sectors which make up 75 percent of our economy.  The manufacturing sector is structurally vulnerable to trade problems because most manufactured goods, as opposed to most services, are tradable.

That’s why the Administration is investing in innovation to support manufacturing, increasing our support for advanced manufacturing technologies by 19% to $2.2 billion in FY13.  We recognize investing in basic research isn’t enough to make sure that a new technology crosses the bridge from invention to product development to manufacturing at scale, The President proposed a National Network for Manufacturing Innovation, the creation of up to fifteen manufacturing institutes to fill this gap in our innovation infrastructure by letting companies collaborate and access the capabilities of our research universities to support scaling up manufacturing production.

Now this bit is actually good.  One of the few special favors the manufacturing sector may legitimately lay claim to is government support of technological research. Why? Because scientific discovery, and its cousin infratechnology, tends to benefit everyone who eventually commercializes it—not just whoever paid for it.  So the profit motive isn’t enough, and there’s a legitimate public-sector role.

America used to understand all this. (Funny how we used to be the world’s unquestioned number one economy.)

Unfortunately, the specifics mentioned here stuff are mostly in the proposal stage.  We’ll have to see if they really mean it.  The past  three years of this administration don’t exactly fill one with hope here.

And finally, that’s why the President has built on a strong record of trade enforcement with new measures to enhance our ability to go after unfair trade practices, including those of China. In September 2009, President Obama ordered safeguards applied to tire imports from China, a move that addressed a surge of tires from China, adding over 1,000 workers in the process. In so doing, the President applied the “Section 421” safeguard law for the first time since China joined the WTO in 2001 – an action that President Bush never took. In fact, the President has nearly doubled the rate of WTO cases against China from the previous Administration.

Now we’re getting downright disingenuous.  Anyone who deals with these issues knows three things, none of which is reflected in the above paragraph:

1) The U.S. already has all the bureaucratic institutions in place to enforce our trade laws, with China as with every other country.  We just don’t use them.  Until the political decision is made to offend the multinational corporations and get serious about trade enforcement, new laws and new institutions will mean nothing.  It’s just posturing to convince people the administration is “doing something.”

2) China’s currency manipulation is the elephant in the room here.  Any administration that wants to “help” American victims of unfair foreign trade practices, but isn’t doing anything about currency manipulation, simply isn’t serious. It’s a 30-40 percent subsidy to Chinese exports plus an equivalent tariff on American imports. And it drags along third countries whose own currencies are affected by the dollar-renminbi exchange rate.

3) The “rate” of bringing WTO cases is irrelevant, because the dollar amounts of different cases vary so widely that one big case may make more difference to the American economy than ten small ones.

Just two weeks ago, the Administration brought a new trade case against China on rare earth materials¸ which are key ingredients making many high-tech products like advanced batteries and high-tech magnets.  And in February, the President launched an Interagency Trade Enforcement Center (ITEC) which will enhance our capacity even further, representing a “whole-of-government” approach to addressing unfair trade practices.  The President’s fiscal year 2013 Budget includes $26 million in funding and 50-60 dedicated staff.

More nice little bits of posturing.  Which on their own aren’t bad, but do rather smell of panic in the West Wing of the White House over losing manufacturing states in the next election, rather than a serious policy change.

So where is Obama now on trade and manufacturing?  I can’t really tell.

Ironically, this is also how I feel about presumptive Republican nominee Mitt Romney.  As I’ve written before, his policy on these issues, though he promises to designate China a currency manipulator on day one in office, leaves one in a state of uncertainty as to whether he really means it.  Attacking Obama on China seems to be an emerging element of his strategy to win, but he has a lot of rich friends who’ll be seriously offended if he ever does fix the currency problem.

Somebody is going to have to fix America’s trade mess—the key but not sole requirement for restoring American manufacturing to health.  But whether it will be a Democrat or a Republican is still up for grabs at this moment.

Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor. He was previously Research Fellow at the U.S. Business and Industry Council, a Washington think tank, and before that, an economist in private practice serving mainly hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco. He is the author of Free Trade Doesn’t Work: What Should Replace It and Why.

The disappearance of mid-level jobs during the Great Recession, along with overall high unemployment, have made it hard for recent college graduates to find good jobs upon leaving school. More than 50 percent of college graduates under age 25 are either jobless or underemployed, according to an analysis from Drexel University and the Economic Policy Institute:

While there’s strong demand in science, education and health fields, arts and humanities flounder. Median wages for those with bachelor’s degrees are down from 2000, hit by technological changes that are eliminating midlevel jobs such as bank tellers. Most future job openings are projected to be in lower-skilled positions such as home health aides, who can provide personalized attention as the U.S. population ages.

Taking underemployment into consideration, the job prospects for bachelor’s degree holders fell last year to the lowest level in more than a decade.

Full Story Here: Half Of Recent College Graduates Are Jobless Or Underemployed | ThinkProgress.

During an interview last week on The Fernando Espuelas Show, Alexandra Franceschi, Specialty Media Press Secretary of the Republican National Committee, said that the Republican party’s economic platform in 2012 is going to be the same as it was during the Bush years, “just updated”:

ESPUELAS: What do you mean by economic security? Regardless of who the ultimate nominee is, what’s the general idea that the RNC, or the Republican party in general, has in terms of this message?

FRANCESCHI: Well, it’s a message of being able to attain the American dream. It’s less government spending, which a Tarrance Group poll, came out last week actually, shows that the majority of Hispanics believe that less government spending is the way out of this deficit crisis. It’s lowering taxes so small businesses can grow and they can employ more people, because we understand that the private sector is the engine of the economy. It’s not the government. [...]

Full Story Here: RNC Spokeswoman: Republican Economic Platform Will Be The Bush Program, ‘Just Updated’ | ThinkProgress.

OPS: ….because that worked out so well for average America?

Any one of these five reasons should reinforce the belief that the rich should be paying a LOT more in taxes.

1. They’ve Taken All the Middle Class Wage Increases

In 1980 the richest 1% of America took one of every fifteen post-tax income dollars. Now, according to IRS figures, they take THREE of every fifteen (doc) post-tax income dollars. They’ve tripled their cut of America’s income pie. That’s a trillion extra dollars a year.

Full Story Here: Five Reasons Why The Very Rich Have NOT Earned Their Money | Common Dreams.

But Romney’s implication that the plant’s closing is a result of Obama’s economic policies is undercut by the fact that the plant closed before Obama took office.

The factory closed in June 2008, when George W. Bush was still president.

Full Story Here: Romney Blames Obama For Bad Economy At Factory Shuttered Under Bush.

But the truth of the matter is that “foreign investment” in the United States today consists of Asian central banks, mainly from Japan and China. These banks use earnings from massive trade surpluses to prop up the U.S. dollar by purchasing U.S. government bonds.

By doing so, Asia keeps its goods and services cheap, thus worsening the U.S. trade deficit. Washington allows this because these countries use their export surpluses to finance the U.S. budget deficit.

Full Story Here: The Truth about the American Condition | Economy In Crisis.

Full Story Here: How the Goldman Vampire Squid Captured Europe | Common Dreams.

Credit card companies win battle over introductory fees

The Consumer Financial Protection Bureau has decided not to challenge credit card companies on introductory fees. Credit card companies had been more aggressive in charging fees to users before they use a credit card, ever since new regulations made it so they could no longer charge more than 25 percent of the total credit limit in standard fees.

The CFPB originally proposed regulations to eliminate the introductory fees, but on Thursday relented and decided not to pursue the matter.

Consumer advocate groups expressed discontent over the decision, and what it says about the possibility of the CFPB as a sufficient consumer watchdog of financial products.

“Even if it is a small rule, it affects the most vulnerable of consumers —…..

Full Story Here: Consumer Financial Protection Bureau Caves on Credit Card Fees | Common Dreams.

Washington is lost in a snarl of confusion, cowardice and wrongheaded ideological assumptions that threaten to keep the economy in a ditch for a long time. That prospect is not much discussed in the halls of Congress or the White House. It’s as though the crisis has been put on hold until after the presidential election.

As almost everyone understands, nothing substantial will be accomplished this year. President Obama is campaigning on warmed-over optimism and paper-thin policy proposals. Republicans propose to make things worse by drastically shrinking government spending, when the opposite is needed to foster a real recovery. The president, like the GOP, embraces large-scale deficit reduction. In these circumstances, it’s just as well that the two parties cannot reach agreement. After the election they may make a deal that splits the difference between bad and worse. In the worst case, they might inadvertently tip the economy back into recession.

In this sorry situation, there is really only one governing institution with the courage to dissent from the conventional wisdom—the Federal Reserve. The central bank declines to participate in the happy talk about recovery or in the righteous sermons attacking the deficit. In its muted manner, the Fed keeps explaining why the house is still on fire, why more aggressive action is needed, and is gently nudging the politicians who decide fiscal policy to step up. But its message is ignored by Congress and the president and viciously attacked by right-wing Republicans who say, Butt out.

Full Story Here: The Federal Reserve Turns Left | The Nation.

Unions representing postal employees and supporters of universal, six-day service will hold demonstrations over the next week as Congress considers legislation that would dismantle the world’s best postal system.

logo for The National Association of Letters Carriers plans scores of demonstrations across the country on Thursday, including four in Minnesota. The American Postal Workers Union and National Postal Mail Handlers Union plan to leaflet post offices on April 17, the deadline for filing federal income tax returns.

Members of all the unions, as well as supporters of the Postal Service, have been communicating with their representatives in Congress over the Easter recess. When lawmakers return to Washington, they are expected to consider Senate File 1789, which would hurt the Postal Service by:

• Putting an end to six-day mail delivery in two years.

• Phasing out door-to-door mail delivery.

• Failing to fully address the Postal Service’s pension pre-funding requirement, which has created an artificial fiscal crisis.

• Not addressing the overpayment into the Civil Service Retirement System.

Full Story Here: Welcome to Workday Minnesota, your leading source for labor news!.

George Bush Doubles Down On Tax Cuts, Conveniently Forgets Recession [he caused]

In what felt like a flashback to the Republican party circa 2003, former U.S. President George W. Bush argued against raising taxes on “job creators” during a rare public appearance on Tuesday morning. Dozens of top GOP brass, including governors, conservative economists and other former Republican policy makers, gathered to discuss tax policies for “4 percent growth” amidst Revolutionary War relics and 9/11 photographs at the New York Historical Society.

The former president spoke for about 15 minutes to open a day-long conference organized by the Bush Institute to promote conservative tax policies. In his remarks Bush made no mention of the financial crisis that shook Wall Street during the final years of his presidency or the resulting recession, the nation’s worst since the Great Depression.

Instead, looking suntanned and relaxed, Bush breezed through many trademark Republican talking points, including private sector growth, “universal freedom” and values. “If you raise taxes for the rich, you raise them on job creators,” the former president said.

Full Story Here: George Bush Doubles Down On Tax Cuts, Conveniently Forgets Recession.

Robert Reich :-:

Next Monday most Americans will be filing their income taxes for tax year 2011. This year, though, tax day has special significance. If there’s one clear policy contrast between Democrats and Republicans in the 2012 election, it’s whether America’s richest citizens should be paying more.

Senate Democrats have scheduled a vote Monday on a minimum 30 percent overall federal tax rate for everyone earning more than $1 million a year. It’s nicknamed the “Buffett Rule” in honor of billionaire Warren Buffett who has publicly complained that he pays a lower tax rate than his secretary.

No one in Washington believes the Buffett Rule has any hope of passage this year. It’s largely symbolic. The vote will mark a sharp contrast with Republican Paul Ryan’s plan (enthusiastically endorsed by Mitt Romney) to cut the tax rate on the super rich from 35 percent to 25 percent – rewarding millionaires with a tax cut of at least $150,000 a year. The vote will also serve to highlight that Romney himself paid less than 14 percent on a 2010 income of $21.7 million because so much of his income was in capital gains, taxed at 15 percent.

Full Story Here: Robert Reich (Why the Buffett Rule Sets the Bar Too Low).

It is well known that Philadelphia was the birthplace of the U.S. Constitution and American democracy. Less well known is that it was also the birthplace of public banking in America. The Philadelphia Quakers originated a banking model involving government-issued money lent to farmers. The profits returned to the government and the people in a sustainable feedback loop that nourished and supported the local economy.

Both landmark events will be commemorated in upcoming gatherings in Philadelphia.  On April 7^th, during Occupy Philly’s celebration of its six month anniversary on the mall in front of Independence Hall, the Occupy Philly General Assembly reached consensus in support of the National Gathering Working Group proposal to hold an Occupy National Gathering at the same location from June 30 to July 4, 2012.  The endorsement included a commitment by Occupy Philly to provide the resources necessary to make the first Occupy national gathering in history a resounding success.  The stage was thus set for what could be a revolutionary event located at the historic birthplace of the First American Revolution.

Full Story Here: All Banks Are Not Created Equal | Common Dreams.

Matt Taibbi :-:

Boy, do I feel like an idiot. I’ve been out there on radio and TV in the last few months saying that I thought there was a chance Barack Obama was listening to the popular anger against Wall Street that drove the Occupy movement, that decisions like putting a for-real law enforcement guy like New York AG Eric Schneiderman in charge of a mortgage fraud task force meant he was at least willing to pay lip service to public outrage against the banks.

Then the JOBS Act happened.

The “Jumpstart Our Business Startups Act” (in addition to everything else, the Act has an annoying, redundant title) will very nearly legalize fraud in the stock market.

In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence. No, this law actually appears to have been specifically written to encourage fraud in the stock markets.

Full Story Here: Why Obama’s JOBS Act Couldn’t Suck Worse | Matt Taibbi | Rolling Stone.

Hmm. I see that some people are accusing me of overreacting to one bad month of job news. Um, no. What has actually been happening is that conventional wisdom overreacted to four months of good(ish) news, and the March numbers were a useful corrective.

Look at my current favorite measure of the labor market, the employment-population ratio of prime-age Americans — employment rather than unemployment so as to avoid distortion by people dropping out, prime-age to avoid demographic issues as the population ages. Here it is:

Full Story Here: Reactions and Overreactions – NYTimes.com.

Economy fights headwinds, politics for jobs gain :

House-passed budget is major threat to growth

(MarketWatch) Despite high oil prices, the euro area crises, and obstruction at every turn from conservatives in Congress, the private sector continued its 25-month job growth streak in March thanks to the Recovery Act and other proactive policies. Last month the U.S. economy added 120,000 jobs and the unemployment rate dropped to 8.2%.

Still, millions of middle-class families continue to struggle uphill due to the hole left in our labor market by the Great Recession that began in December 2007, and the recovery’s moderate pace and unequal distribution mean that growth is not reaching enough people.

Although a number of factors outside the United States are blowing headwinds against our recovery, the conservative budget for fiscal year 2013 passed on a party-line vote in the House of Representatives last week poses a political threat to growth, job creation, and financial security and opportunity for middle-class families.

Not only does this budget seek to change the fundamental structure of the U.S. economy and American society by undermining the popular and successful Medicare program and gifting $3 trillion in tax cuts for the already wealthy, but it also slashes nearly $900 billion from public investments in education, science, and infrastructure critical to growth — all without offering specific policies for job creation or new revenue sources. This budget would threaten the progress we’re making by undermining growth and weakening middle-class families.

Full Story Here: Economy fights headwinds, politics for jobs gain – Outside the Box – MarketWatch.

Here’s the truth: high gas prices have nothing to do with lack of available gas in America.

That’s because for the first time in 62 years, the United States became a net exporter of oil products. In 2011, our nation sent 439,000 more barrels of oil overseas than we imported. That means we’re awash in oil and gasoline — it’s just in the hands of oil barons who are making more money shipping it overseas than selling it to U.S. customers.

Drilling in Alaska or in the Gulf won’t cut gas prices. Our status as a net exporter of oil also means we’re now part of the world’s dirt pit, where the dirty work like refining and processing crude is done, because oil barons don’t have to worry about the costs of pollution.

Full Story Here: With Estimates That Gas Might Hit $5 a Gallon This Summer, Americans Are Screwed at the Pump | Economy In Crisis.

Most economists agree that the loss of industry in today’s United States is largely due to decades of heavy free trading. Because it favors corporations, free trade creates a system where the motivation for profits supersedes all other implications. The ends justify the means, and that motto is tearing the U.S. economy to pieces.

The globalization of the employment market and the mobility of companies and capital has increased instances of corporations outsourcing to take advantage of lower wages and weaker regulations. Threats to relocate also allow companies to force reductions in environmental and social standards around the world. Mergers, acquisitions and corporate restructuring are decreasing employment security. By design, this system is deindustrializing the United States: shipping jobs overseas and substantially lowering the standard of living.

The World Trade Organization was designed to enforce this ideal of global free trade. And while world trade has increased fifteen-fold since 1960, it has hardly been beneficial to the United States. Since entering the WTO in 2001, trade with China alone has resulted in the loss of millions of American jobs. Under the current system, China overtly ignores its signed WTO agreement, defying the will of international law and blocking most American exports from its market. This practice is emblematic of how free trade overall is is tilted in favor of moving industry overseas.

Full Story Here: Deindustrializing the United States | Economy In Crisis.

The economy added only 120,000 jobs in March – down from the rate of more than 200,000 in each of the preceding three months. The rate of unemployment dropped from 8.3 to 8.2 percent mainly because fewer people were searching for jobs – and that rate depends on how many people are actively looking.

It’s way too early to conclude the jobs recovery is stalling, but there’s reason for concern.

Remember: Consumer spending is 70 percent of the economy. Employers won’t hire without enough sales to justify the additional hires. It’s up to consumers to make it worth their while.

But real spending (adjusted to remove price changes) this year hasn’t been going anywhere. It increased just .5 percent in February after an anemic .2 percent increase in January.

Full Story Here: Robert Reich (What Today’s Job Numbers Mean).

The ending is your choice

Imagine a country in which the very richest people get all the economic gains. They eventually accumulate so much of the nation’s total income and wealth that the middle class no longer has the purchasing power to keep the economy going full speed. Most of the middle class’s wages keep falling and their major asset – their home – keeps shrinking in value.

Imagine that the richest people in this country use some of their vast wealth to routinely bribe politicians. They get the politicians to cut their taxes so low there’s no money to finance important public investments that the middle class depends on – such as schools and roads, or safety nets such as health care for the elderly and poor.

Imagine further that among the richest of these rich are financiers. These financiers have so much power over the rest of the economy they get average taxpayers to bail them out when their bets in the casino called the stock market go bad. They have so much power they even shred regulations intended to limit their power.

Full Story Here: Robert Reich (The Fable of the Century).

The big bad event of last week was, of course, the Supreme Court hearing on health reform. In the course of that hearing it became clear that several of the justices, and possibly a majority, are political creatures pure and simple, willing to embrace any argument, no matter how absurd, that serves the interests of Team Republican.

But we should not allow events in the court to completely overshadow another, almost equally disturbing spectacle. For on Thursday Republicans in the House of Representatives passed what was surely the most fraudulent budget in American history.

And when I say fraudulent, I mean just that. The trouble with the budget devised by Paul Ryan, the chairman of the House Budget Committee, isn’t just its almost inconceivably cruel priorities, the way it slashes taxes for corporations and the rich while drastically cutting food and medical aid to the needy. Even aside from all that, the Ryan budget purports to reduce the deficit — but the alleged deficit reduction depends on the completely unsupported assertion that trillions of dollars in revenue can be found by closing tax loopholes.

Full Story Here: Pink Slime Economics – NYTimes.com.

Republicans have been kvetching today about the fact that, as of Sunday, the U.S. will have the highest statutory corporate tax rate in the world following a scheduled cut in Japan’s corporate tax. “The United States is a world leader in countless ways. ‘World’s Highest Taxes’ is a title we should give up as soon as possible,” wrote Sen. John Barrasso (R-WY) in a Fox News op-ed.

“This isn’t an April Fool’s Day joke; as of April 1, the United States of America will have reached the inauspicious position of having the highest corporate tax rate in the developed world,” said Sen. Orrin Hatch (R-UT) in a statement “I want America to be number one in many things, but having the highest corporate tax rate is definitely not one of them.”

This is constant refrain from Republicans, who then blame the supposedly high U.S. corporate tax rate for discouraging job creation. But as we’ve noted time and time again, while the U.S. has a high statutory corporate tax rate (meaning the rate on paper), U.S. corporations actually pay incredibly low taxes due to the ever-proliferating loopholes, credits, and deductions in the tax code and the use of overseas tax havens.

Full Story Here: Reality Check: Effective U.S. Corporate Tax Rate Much Lower Than Most Other Developed Nations | ThinkProgress.

What does 50 cents buy these days? Not a cuppa joe, a pack of gum or a newspaper. But you can get a steal of deal for a 50-cent piece: a first-class stamp. Plus a nickel in change.

Each day, six days a week, letter carriers traverse 4 million miles toting an average of 563 million pieces of mail, reaching the very doorsteps of our individual homes and workplaces in every single community in America. From the gated enclaves and penthouses of the uber-wealthy to the inner-city ghettos and rural colonias of America’s poorest families, the U.S. Postal Service literally delivers. All for 45 cents. The USPS is an unmatched bargain, a civic treasure, a genuine public good that links all people and communities into one nation.

So, naturally, it must be destroyed.

For the past several months, the laissez-fairyland blogosphere, assorted corporate front groups, a howling pack of congressional right-wingers and a bunch of lazy mass media sources have been pounding out a steadily rising drumbeat to warn that our postal service faces impending doom. It’s “broke,” they exclaim; USPS “nears collapse”; it’s “a full-blown financial crisis!”

Full Story Here: The Truth About the U.S. Postal Service by Jim Hightower on Creators.com – A Syndicate Of Talent.

At the most interesting ends of the debate, the choice is stark: A Budget for Wall Street versus a Budget for All.

Most Americans know that House Budget Committee chairman Paul Ryan is presenting the former option. The Wisconsin Republican has a history of crafting budgets that deliver for Wall Street. And he makes no great apology for that.

The Ryan budgets of the past several years have come at federal spending, tax, debt and deficit questions from different directions. But they have all ended up in the same place: outlining huge tax cuts for CEOs, billionaires and business insiders; proposing voucher schemes that have as their likely outcomes the steering of Medicaid and Medicare money into the accounts of private insurers; imagining Social Security “reforms” that would have American’s trusting their retirement “security” to the speculators.

Full Story Here: A Budget For Wall Street Versus A Budget For Main Street | The Nation.

With another presidential election on the horizon, the United States is in great need of great leadership. Many former American presidents and leaders implemented active industrial policy geared toward manufacturing at home, and this policy tended to work. There are inspiring examples of U.S. directorship on both sides of the aisle, and they go all the way back to the birth of our country. Since then, the most successful leaders we’ve had have made a point to protect American businesses first and foremost.

During colonial times, British law was to arrest and jail anyone with manufacturing talent who relocated from Great Britain to the colonies. In response to this and several trade practices that impeded our ability to manufacture our own resources, economist and founding father Alexander Hamilton drew up steps to build up our own manufacturing – and begin our own country.

Decades later, Abraham Lincoln decided against importing steel from England to build a transcontinental railroad. Instead, he…

Full Story Here: What Made Leaders of the Past Successful? Focusing on American Industry | Economy In Crisis.

During the first century of American independence, the United States was financed through protectionism. After just 100 years, the national net worth was twenty-five billion dollars more than the world’s next wealthiest country, Great Britain. U.S. gross national product was more than twice that of Germany and Russia. The United States was so rich in goods and services that it was more self-sustaining than any industrial power in history. In fact, there wasn’t even a need for a federal income tax until 1913. Up until then, the government was supported almost entirely through tariffs and protectionism.

In those days, more than half of the world’s cotton, corn, copper and oil flowed from America, and at least one-third of all steel, iron, silver and gold. Even though the U.S. was not flush with raw materials, excellent manufacturing guaranteed dominance of world markets. Wall Street was overflowing with foreign capital. It was estimated that America could afford to buy the entire United Kingdom, along with all of their national debt. Even the world-leading Bank of England began to borrow money on Wall Street. In short order, New York City was destined to replace London as the world’s financial center.

Full Story Here: The Importance of Protecting Our Economy | Economy In Crisis.

“A year ago I was absolutely certain that I had job security,” Hall said. “Change is a part of life. But, truthfully, until a few weeks before [getting laid off], I just didn’t see it coming and couldn’t imagine such a thing happening.”

Like many older workers, Hall is confronting America’s new economic reality.

“If you worked hard, chances are you’d have a job for life, with a decent paycheck and good benefits and the occasional promotion,” President Barack Obama lamented in his 2011 State of the Union Address. “That world has changed.”

Full Story Here: After A Lifetime Of Hard Work, The Indignity Of A Layoff.

Latest Proposal Released Today Offers Pain for Everyone but the Rich

The latest House Republican budget plan asks low-income and middle-class Americans to shoulder the entire burden of deficit reduction while simultaneously delivering massive tax breaks to the richest 1 percent and preserving huge giveaways to Big Oil. It’s a recipe for repeating the mistakes of the Bush administration, during which middle-class incomes stagnated and only the privileged few enjoyed enormous gains.

Each component of the new House Republican budget threatens the middle class while doing nothing to add jobs or grow our economy. It ends the guarantee of decent insurance for senior citizens, breaking Medicare’s bedrock promise. It slashes investments in education, infrastructure, and basic research, all of which are key drivers of economic growth and mobility. And it cuts taxes for those at the top, asking the middle class to pick up the tab. It’s a budget designed to benefit the top 1 percent at everyone else’s expense.

The Republican leadership in the House of Representatives today unveiled their latest budget proposal. Though there are many questions yet to be answered, one thing is clear—they have learned nothing from the damaging budget battles of last year. This latest budget blueprint not only mirrors last year’s disastrous effort but also manages to reject what little bipartisan budget agreement was forged in 2011.

Full Story Here: The 6 Key Failures of the House Republican Budget Plan.

Much of the 1930s-era Securities legislation, which served us well for more than 70 years, is about to be repealed in a moment of bipartisan madness.

Almost all attempts to amend the House version of this legislation – and to make it more favorable to investors – have now failed in the Senate, and the “cloture motion” received more than 60 votes (so the bill cannot be filibustered). But Senator Jack Reed (D., Rhode Island) is leading one last charge to make the Senate version more reasonable.

Here is the issue with H.R. 3606 (as the House version of the bill is known)

Full Story Here: Last Ditch Attempt to Save a Little Bit of Investor Protection in the United States.

But the supply-and-demand story of gas prices is largely a fairy tale. Academic experts, commodity specialists and members of Congress identify one thing that the president could do immediately to alleviate pain at the pump: He could unleash a serious-minded, subpoena-wielding probe aimed at frightening the Wall Street speculators who are responsible for most of the climb in gas prices.

This is not news to the president, who has already fingered speculators for price spikes while twice ordering up a consequential investigation. But Attorney General Eric Holder — the man tasked with overseeing the probe — seems either to have mislaid the memo or construed it as an invitation to indulge the administration’s usual modus operandi on most of its initiatives, from its impotent anti-foreclosure efforts to its weak stab at financial regulatory reform. That is, hold a press conference, talk tough and ooze empathy for struggling victims — then hope everything gets fixed up by itself.

Full Story Here: Peter S. Goodman: Behind Gas Price Increases, Obama’s Failure To Crack Down On Speculators.

Our guest blogger is Heather Boushey, Senior Economist at the Center for American Progress Action Fund.

The current economic recovery is going well if one looks at private sector job creation. The pace of private sector job creation is slower than in the recovery from the early 1990s recession, but it’s about the same as it was during the economic recovery in the early 2000s. In the first two years of both the current and early 2000s recovery, employment grew by 3.7 percent.

But since early 2009, governments at all levels have shed nearly 700,000 jobs, most of them at the state and local level. Since August of 2008 state and local governments have shed a total of 647,000 workers, of which 64 percent, or 416,000, were women workers.

When we compare total employment between the current and early 2000s recovery, the loss of public sector jobs pops out: Employment growth is 0.6 percent lower in this recovery than it would have been had government chosen not to hand out so many pink slips.

Full Story Here: CHART: How Public Sector Layoffs Are Holding Back The Recovery | ThinkProgress.

February’s 227,000 net new jobs – the third month in a row of job gains well in excess of 200,000 – is good news for President Obama and bad news for Mitt Romney.

Jobs are coming back fast enough to blunt Republican attacks against Obama on the economy and to rob Romney of the issue he’d prefer to be talking about in his primary battle against social conservatives in the GOP.

But jobs aren’t coming back fast enough to significantly reduce the nation’s backlog of 10 million jobs. That backlog consists of 5.3 million lost during the recession and another 4.7 million that needed to have been added just to keep up with the growth of the working-age population since the recession began.

If the American economy continues to produce jobs at the g

Full Story Here: Robert Reich (The Precarious Jobs Recovery).

The amount of student borrowing crossed the $100 billion threshold for the first time in 2010 and total outstanding loans exceeded $1 trillion for the first time in 2011, according to a new report.

The report titled, The Student Loan “Debt Bomb”: America’s Next Mortgage-Style Economic Crisis? (pdf), was published the National Association of Consumer Bankruptcy Attorneys (NACBA), and paints a frightening economic picture of the world created by skyrocketing tuitions and high interest rates in a job market that continues to offer few jobs to graduates.

“How big is the danger to the US economy?” the report asks. Most worrisome to those on the ground during the ‘mortgage crisis’ that sent the world economy into a tailspin in 2008, is that the atmosphere and metrics around the student debt crisis feels much the same.

Full Story Here: Beware The ‘Student Debt Bomb’, says New Report | Common Dreams.

Technically, the economy has been in recovery for two years. But it turns out the rich have been doing most of the recovering.

In 2010 — the first full year since the end of the Great Recession — virtually all of the income growth in America took place among the country’s very wealthiest people, says an economist at the University of California, Berkeley. The top 1 percent of earners took in a full 93 percent of all the income gains that year, leaving the other 7 percent of gains to be sprinkled among the vast majority of society.

Those numbers come courtesy of Emmanuel Saez, the Berkeley economist who co-created a resource known as the World Top Incomes Database. Saez and his colleagues crunched the data on income growth from 2010, the most recent year available, and found that it was shockingly lopsided.

While much of the country is simply treading water, with a growing number of people either edging toward poverty or already there, the richest of the rich seem to be coping nicely.

Full Story Here: Richest 1 Percent Account For Nearly All Of U.S. Recovery’s Gains: Report.

America is running on imports. Meeting the basic needs of the average American on only American-made products is incredibly difficult, if not impossible. Living on imports is not sustainable in the long-term, and the United States needs to find a way to pry itself out of this increasingly desperate situation if it wishes to maintain any quality of life for its citizens.

America’s trade deficit is staggeringly high; in October alone, it totaled $43 billion. This number is so high because our policies have allowed it to grow out of control. Our government has pursued free trade policies under the guise of increasing exports. The theory is that we will open up new markets for American made goods and services by reciprocally opening our borders to other countries. But if the goal is to expand American manufacturing, it has been a massive failure.

According to Representative Betty Sutton (D-OH), the United States has lost an average of 15 manufacturing facilities per day for the past 10 years. This is the exact opposite of what was supposed to happen from expanding our free trade agreements. Not only are we not increasing our exports to other countries, but facilities that could supply goods to Americans are going out of business due to competition with cheap foreign labor. With those factories out of business, Americans are forced to buy imports.

Full Story Here: America Can No Longer Support Its Own Needs | Economy In Crisis.

Our challenge to you: Set aside 10 minutes this weekend and call up one service provider–your gym, your cellphone company–to see if you can negotiate a better rate.

Make an effort to schmooze the customer service rep on the phone — chances are they’re sitting in a call center reading from a script all day. Connecting with them and assuring them you’re a reliable customer could work to your benefit. Do your research and know what competitors are charging for the same service. Tell them you’re making less money and considering suspending service altogether.

Ramit Sethi, personal finance blogger behind the site “I Will Teach You To Be Rich,” advises:

Full Story Here: Negotiate A Better Rate With Your Cable Company.

Here’s the good news. The economic pie is growing again. Growth in the 4th quarter last year hit 3 percent on an annualized rate. That’s respectable – although still way too slow to get us back on track given how far we plunged.

Here’s the bad news. The share of that growth going to American workers is at a record low.

That’s largely because far fewer Americans are working. Although the nation is now producing more goods and services than it did before the slump began in 2007, we’re doing it with six million fewer people.

Why? Credit technology. Computers, software applications, and the Internet are letting us produce more with fewer people.

In theory, this is a huge plus. We can live better and have more time off.

Full Story Here: Robert Reich.

Matt Taibb :-:

It looks like Bank of America might have started circling the drain before the Occupy movement even had a chance to launch its campaign against the company. For weeks now there have been ominous signs of trouble at the bank, and yesterday we heard yet another dark piece of news.

Last year, there was an uproar when Bank of America announced a plan to slap customers with a monthly $5 fee for debit card usage. The bank eventually backed off that plan when the public and some politicians cried foul.

Now it seems the company is going to try to put a new package on the same crappy idea and sell it again. This time, the plan is to add charges that range from $6 to $25 a month. From an MSNBC report:

Full Story Here: Bank of America In Trouble? | Matt Taibbi | Rolling Stone.

Full Story Here: 10. Real Unemployment: One Out of Five in US | Project Censored.

The Obama administration unveiled its corporate tax reform plan last week, which would lower the top rate from 35 percent to 28 percent, billing it as an effort to help make the American corporate tax code more competitive. Republicans have long crowed for corporate tax reform, saying America’s high marginal rate stifles competition, but they have blocked efforts (including Obama’s) to close many of the loopholes and schemes corporations use to avoid paying taxes.

General Electric, one of the nation’s largest corporations, found itself at the center of the corporate tax debate last year when the New York Times discovered that it paid nothing in taxes, despite billions of dollars in profits. GE responded to the outcry by promising that its 2011 rate was “slated to return to more normal levels” because of the recovery of GE Capital, its financial arm. But according to an analysis from Citizens for Tax Justice, the company’s 2011 effective tax rate was just 11.3 percent. Even worse, over a 10-year period from 2002-2011, the company paid $1.9 billion in taxes on $81.2 billion in profits, giving it an effective tax rate of just 2.3 percent for the decade:

– From 2006 to 2011, GE’s net federal income taxes have been negative $2.7 billion, despite $39.2 billion in pretax U.S. profits over the six years.

Full Story Here: Over Last 10 Years, General Electric’s Effective Tax Rate Was 2.3 Percent | ThinkProgress.

Corporations, like the rich, aren’t paying their fair share in taxes, billionaire investor Warren Buffett told CNBC on Monday.

Even while enjoying record profits, corporations last year paid just 12.1 percent of those earnings in taxes, their lowest tax rate since 1972, according to the Congressional Budget Office. At least thirty of the country’s most profitable companies had a negative tax rate between 2008 and 2010.

Buffett, for one, says it’s time to take notice.

“It’s a myth that American corporations are paying 35 percent or anything like it,” Buffett said, referring to the top marginal corporate tax rate. “Corporate taxes are not strangling American competitiveness.”

Full Story Here: Warren Buffett: High Corporate Taxes Are An American ‘Myth’.

Ellen Brown :-:

Seventeen states have now introduced bills for state-owned banks, and others are in the works. Hawaii’s innovative state bank bill addresses the foreclosure mess. County-owned banks are being proposed that would tackle the housing crisis by exercising the right of eminent domain on abandoned and foreclosed properties. Arizona has a bill that would do this for homeowners who are current in their payments but underwater, allowing them to refinance at fair market value.

The long-awaited settlement between 49 state Attorneys General and the big five robo-signing banks is proving to be a monumental disappointment before it has even been signed, sealed and court approved. It appears that the bankers who took your home and your job will again be buying their way out of jail, and the curtain will again drop on the scene of the crime.

Full Story Here: Move Our Money: New State Bank Bills Address Credit and Housing Crises | Common Dreams.

Billionaire investor Warren Buffett said Saturday that he was “dead wrong” with a prediction that the U.S. housing market would begin to recover by now, but he remains optimistic about the nation’s economy.

In his annual letter to Berkshire Hathaway shareholders, Buffett said he is sure housing will recover eventually and help bring down the nation’s unemployment rate. But he did not predict when that will happen.

Investors eagerly await the letter from Buffett, 81, the so-called Oracle of Omaha, who built a roughly $44 billion fortune by following a steadfast, no-nonsense investing strategy.

Full Story Here: Warren Buffett On Housing Market: I Was ‘Dead Wrong’.

Mitt Romney this week unveiled a new tax plan that includes a 20 percent reduction in all marginal income tax rates. Previously, Romney had said that he’s not concerned about the very rich and is “proposing no tax cuts for the rich.” But during this week’s GOP primary debate, he reneged on that position, saying, “number one, I said that we’re going to cut taxes on everyone across the country by 20 percent, including the top 1 percent.”

Romney’s new tax cut may reduce all tax rates by the same amount, but it gives most of its benefits to the already wealthy. The Tax Policy Center had modeled a 20 percent reduction in all income tax rates, and as this table shows, nearly half the benefit of such a cut would go to the richest 5 percent of Americans, with more than 25 percent of the benefit going to the richest 1 percent, compared with current policy.

Full Story Here: Romney’s New Tax Plan Gives The Richest 0.1 Percent A $264,000 Tax Cut | ThinkProgress.

The oil lobby American Petroleum Institute weighed in on President Obama’s corporate tax reform that closes an array of tax loopholes, including $4 billion in subsidies for the oil industry. Not surprisingly, API is unhappy. API President Jack Gerard played victim, calling the plan “discriminatory” against an industry that “receives not one subsidy”:

One day after the Obama administration unveiled a sweeping corporate tax reform plan, the oil and gas industry’s top lobbyist went on the attack against the president’s proposal.

Calling it “discriminatory,” Jack Gerard, president and CEO of the American Petroleum Institute, said the administration’s outline was more of a “Swiss cheese approach that we’re trying to get rid of in this country.”

Full Story Here: Oil Lobby Says Obama’s Call To End Big Oil Handouts Is ‘Discriminatory’ | ThinkProgress.

Angry at the Wall Street banks that were at the center of the financial meltdown, Americans have spent the last six months moving their money to credit unions and community banks in unprecedented numbers. More than 650,000 people moved to credit unions in one month last year, and 5.6 million Americans switched banks in the last three months.

Religious organizations have been at the forefront of movements to get consumers to move their money. The New Bottom Line, a coalition of faith groups, pledged to move $1 billion this year, and before Thanksgiving, churches moved $55 million away from Wall Street banks with pledges to remove as much as $100 million more. This week, churches in San Francisco announced they were moving another $10 million, Faith in Public Life reports:

Full Story Here: Move Your Money: San Francisco Churches Move $10 Million From Wells Fargo | ThinkProgress.

Joe Nocera, the columnist currently challenging Tom Friedman for the title of Hackiest Militant Centrist Hack–it’s a tough job that just about everyone on The New York Times op-ed page has to do–loves the robo-signing settlement announced last week between the Obama Administration, 49 states and the five biggest mortgage banks. “Two cheers!” shouts Nocera.

Too busy to follow the news? Read Nocera. If he likes something, it’s probably stupid, evil, or both.

As penance for their sins–securitizing fraudulent mortgages, using forged deeds to foreclose on millions of Americans and oh, yeah, borking the entire world economy–Ally Financial, Bank of America, Citibank, JPMorgan Chase and Wells Fargo have agreed to fork over $5 billion in cash. Under the terms of the new agreement they’re supposed to reduce the principal of loans to homeowners who are “underwater” on their mortgages–i.e. they owe more than their house is worth–by $17 billion.

Some homeowners will qualify for $3 billion in interest refinancing, something the banks have resisted since the ongoing depression began in late 2008.

Full Story Here: Obama Sells Out Homeowners Again: Mortgage Settlement a Sad Joke | Common Dreams.

The Obama administration is proposing to lower corporate taxes from the current 35 percent to 28 percent for most companies and to 25 percent for manufacturers.

The move is supposed to be “revenue neutral” – meaning the Administration is also proposing to close assorted corporate tax loopholes to offset the lost revenues. One such loophole allows corporations to park their earnings overseas where taxes are lower.

Why isn’t the White House just proposing to close the loopholes without reducing overall corporate tax rates? That would generate more tax revenue that could be used for, say, public schools.

Full Story Here: Robert Reich (Corporations Don’t Need a Tax Cut, So Why Is Obama Proposing One?).

In an article titled “Still No End to ‘Too Big to Fail,’” William Greider wrote in The Nation on February 15th:

Financial market cynics have assumed all along that Dodd-Frank did not end “too big to fail” but instead created a charmed circle of protected banks labeled “systemically important” that will not be allowed to fail, no matter how badly they behave.

That may be, but there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS). Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt.

CDS are a form of derivative taken out by investors as insurance against default. According to the Comptroller of the Currency, nearly 95% of the banking industry’s total exposure to derivatives contracts is held by the nation’s five largest banks: JPMorgan Chase, Citigroup, Bank of America, HSBC, and Goldman Sachs. The CDS market is unregulated, and there is no requirement that the “insurer” actually have the funds to pay up. CDS are more like bets, and a massive loss at the casino could bring the house down.

Full Story Here: How Greece Could Take Down Wall Street | Common Dreams.

As President Obama’s re-election campaign heats up, there are several new accounts of his track record finding their way into print. One item for which he is undeservedly given credit is saving the country from a second Great Depression.

The political elites believe in the salvation from the second Great Depression myth with the same fervency as little kids believe in Santa Claus. And, it has just as much grounding in reality.

While the Obama Administration, working alongside Ben Bernanke at the Fed, deserves credit for preventing a financial meltdown, a second Great Depression was never in the cards. The first Great Depression was brought about not only from misguided policies at the onset of the financial crisis, but also from an inadequate policy response.

Full Story Here: Revisiting the Second Great Depression » Counterpunch: Tells the Facts, Names the Names.

The process for this shift is complicated, and has been flagged by the Center on Budget and Policy Priorities. Essentially, Obama wants to eliminate individual spending caps for both military and non-military spending, and institute one single discretionary spending cap instead. Here’s the basic rundown.

To understand how deep the retreat really is, one first needs to understand the difference between security spending and defense spending. Spending on defense applies to the “National Defense Function”—that is, the entire Pentagon budget, plus $24 billion for nuclear weaponry and environmental cleanup programs at the Department of Energy, the defense activities of the FBI, and a small handful of other defense programs. Security spending, on the other hand, excludes some of the Department of Energy money, along with some of the other FBI and small program funding—but includes the Department of Veterans Affairs, the Department of Homeland Security and the “International Affairs” part of the budget, which is mainly State Department funding and foreign aid.

Full Story Here: Obama’s Plan to Save the Military From Cuts—at the Expense of Domestic Programs | The Nation.

Just who is paying for the big mortgage settlement, anyway?

The Obama administration says it’s the banks. Mortgage investors worry it will be them. Taxpayers fear they’ll have to pony up.

Unfortunately, until we actually see the settlement terms and watch the process in action, we won’t know for sure.

Based on currently available information about the settlement, there’s no way to refute the government’s claim that banks will bear the brunt of the settlement’s costs. But the waters have been muddied by past government statements, and by the government’s failure to make the terms of the settlement public even as it rushed to announce that a deal was done.

Full Story Here: Mortgage Foreclosure Settlement: Who Pays?.

Republicans have become born-again champions of American manufacturing. This may have something to do with crucial primaries occurring next week in Michigan and the following week in Ohio, both of them former arsenals of American manufacturing.

Mitt Romney says he’ll “work to bring manufacturing back” to America by being tough on China, which he describes as “stealing jobs” by keeping value of its currency artificially low and thereby making its exports cheaper.

Full Story Here: Robert Reich (Manufacturing Illusions).

Oil is once again trading above $100 per barrel, bringing with it estimates that U.S. gas will cost more than $4 per gallon by May, if not sooner. The Obama administration is already bracing for higher gas prices and the political cost that they could exact.

But it isn’t increasing demand for oil that is driving the recent price increase. In fact, demand is the lowest it’s been since April, 2007, according to the Oil Price Information Service (OPIS). Instead, OPIS points to speculators as the party responsible for driving up prices:

Strangely, the current run-up in prices comes despite sinking demand in the U.S. “Petrol demand is as low as it’s been since April 1997,” says Tom Kloza, chief oil analyst for the Oil Price Information Service. “People are properly puzzled by the fact that we’re using less gas than we have in years, yet we’re paying more.”

Full Story Here: Oil Prices Are Rising Despite Lowest Demand Since 1997 | ThinkProgress.

President Obama’s 2013 budget was greeted on Monday with Republican catcalls that it is simply a campaign document, but election-year budgets are supposed to explain priorities to voters. This one offers a clear and welcome contrast to the slashing austerity — and protect-the-wealthy priorities — favored by Republican Congressional leaders and the party’s presidential candidates.

The president’s budget calls for long-term deficit reduction, but its immediate priority is to encourage the fledgling economic recovery. Instead of trying to stabilize the budget on the backs of the poor, it would raise taxes on the wealthy and on big banks and eliminate many corporate tax loopholes.

To put Americans back to work, it would invest $350 billion in constructing roads, rail lines and schools, and encourage manufacturing through tax incentives and research spending. It would maintain the Pell grant program for low-income college students and add new spending for teacher improvement and education reform

Full Story Here: A Responsible 2013 Budget – NYTimes.com.

The U.S. economy is transitioning to a new normal in which businesses invest less and consumers spend less than before the recession, Goldstein told The Huffington Post in an interview last week. As a result, he said, economic growth and job growth will be slower than before.

He said that businesses, consumers and the government would need to spend at least $1 trillion more than they are likely to spend in order for the economy to return to its pre-recession growth rate. But he added that no one is willing to spend the money necessary to jumpstart the economy, since the government is cutting spending, consumers are saving more, and businesses expect a lower return on their investments.

“Where’s the money?” Goldstein asked.

The Conference Board, which counts half of all Fortune 500 companies among its members, provides economic and business advice and research to its member companies.

Full Story Here: Conference Board Economists: U.S. Economy Transitioning To A New Normal.

President Barack Obama’s Fiscal Year 2013 budget isn’t inherently unique or surprising. It sticks to the same objectives that the White House has pursued for months: short-term investments in job growth, combined with a mix of long-term spending cuts and revenue raisers to achieve a decent amount of deficit reduction.

Yet many have responded to the proposal with a great deal of alarm. The reaction has been decidedly political on both sides, with the White House making a major bet that the country is tired of austerity measures and Republicans jumping to brand the president as a paradigm of fiscal irresponsibility.

“The President’s goal isn’t to solve our problems, but to ignore them for another year,” said Senate Minority Leader Mitch McConnell (R-Ky.), in what was one of many harshly critical Republican responses. “If anybody wants to know what a failure of leadership looks like, this is it.”

The administration, naturally, sees things a bit differently.

Full Story Here: Obama Budget Signals Shift From Austerity Measures To Campaign Promises.

OPS: It’s about goddamn time…..Mr President. Think where you would be if you had been doing this from day one! Asshole.

The announcement, made quietly on a day Washington is digesting the president’s budget proposal, is a stark reversal. Senate Minority Leader Mitch McConnell (R-Ky.) took the floor shortly after the statement was emailed to reporters and spoke only of the budget.

“Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue regarding offsets, unemployment insurance, and the ‘doc fix,’” said Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.) and Majority Whip Kevin McCarthy (R-Calif.) in a statement.

Payroll Tax Cut Fight: House GOP Leadership Offers 10-Month Extension Without Offsets.

A little-noted provision in the House Republicans’ controversial energy and transportation bill would strip several thousand workers within the rail-industry of their federal minimum-wage and overtime protections, potentially making low-wage jobs pay even less.

Listed in the bill under the heading “Technical Correction,” provision 6602 would exempt several companies who transport rail workers from their obligations under the Fair Labor Standards Act, the 1938 law that guarantees basic worker rights. The carveout would allow a handful of boutique contractors to pay no overtime to their drivers who haul rail workers between worksites, often driving long distances of 300 miles or more.

“It’s outrageous that House Republicans are trying to take away overtime protections for a class of workers at the behest of a special interest,” Rep. George Miller (D-Calif.) said of the provision in a statement to HuffPost. “These workers deserve the right to overtime pay. It’s not only a matter of fairness, but also a matter of public safety.”

Full Story Here: House Transportation Bill ‘Technical Correction’ Would Strip Workers Of Pay Protections.

The philosophical, economic, and political case for raising capital gains taxes.

Full Story Here: The “Romney Rule”: Raising capital gains taxes is both morally right and good for the economy. – Slate Magazine.

Mother Jones readers have seen this one:

Full Story Here: Mind-Blowing Charts From the Senate’s Income Inequality Hearing | Mother Jones.

How economic inequality destroys opportunity for the Millennial generation.

Video at link…….

Full Story Here: Full Show: Economic Malpractice and the Millennials | Moyers & Company | BillMoyers.com.

First, it is striking how America’s all-male Catholic hierarchy has seemingly colluded with Republicans in miraculously conceiving this issue as a potential “wedge” issue to mobilize blue-collar Catholics against President Obama and the Democrats.

Second, it is almost amusing to see bishops, now pretending to launch a last-ditch effort to prevent a sudden and unique incursion by the Obama administration against the freedom to practice their religion. The Catholic hierarchy has decisively “lost the war at home “ already, as Gail Collins notes, but is choosing to pick a political fight. The majority of Catholic women use birth control. Fe

Full Story Here: Obama/Catholic Contraception Controversy Boils Down to Workers’ Rights – Working In These Times.

Republican leaders in Congress are talking about dismembering the US Postal Service by cutting the number of delivery days, shuttering processing centers so that it will take longer for letters to arrive, closing thousands of rural and inner-city post offices and taking additional steps that would dramatically downsize one of the few national programs ordained by the original draft of the US Constitution. At the same time, supposedly “centrist” US Senators Tom Carper (D-DE), Joe Lieberman (I-CT), Susan Collins (R-ME) and Scott Brown (R-MA) are trying to build a “bipartisan consensus” for a death by slower cuts.

Their “21st Century Postal Service Act,” a supposed compromise now being weighed by the Senate, would still force the postal service to close hundreds of mail processing centers, shut thousands of post offices, cause massive delays in mail delivery and push consumers toward most expensive private-sector services. It is, says National Association of Letter Carriers President Fredric Rolando, “a classic case of ‘killing the Post-Office in order to save it.’ ”

Their rationale for making the bloodletting, much discussed in the media, holds that radical surgery is necessary because the postal service is in financial crisis.

The postal service, we are told, is broke.

There’s only one problem with this diagnosis.

It’s wrong.

The postal service is not broke.

Full Story Here: The Post Office Is Not Broke | The Nation.

The Labor Department said seasonally adjusted claims dropped by 15,000 to 358,000 in the week ended Feb. 4. That’s the second lowest level since April 2008, before the financial crisis that sent the U.S. economy into its worst recession since the Great Depression.

The four-week moving average, considered a more accurate reading of the health of the job market, dropped 11,000 to 366,250, also the lowest since April 2008.

Full Story Here: Bottom Line – Jobless claims drop to almost a four-year low.

On September 25, 2010, Monica and Ricardo Zapata should have been out celebrating their tenth wedding anniversary, or enjoying a candlelight dinner inside their five-bedroom home 30 minutes inland from West Palm Beach, Fla.

Instead, the couple packed and left their dream house behind. After two failed attempts at a mortgage modification and what the Zapatas describe as a suspiciously timed foreclosure sale, the bank managing their loan ordered the couple and their two children out. That day, the Zapatas lost more than $100,000 in mortgage payments. In the months that led up to the foreclosure and those that followed, they also racked up thousands of dollars in stress-related medical bills and family loans. Ally Financial, whose predecessor, GMAC, handled the Zapatas’ mortgage, declined to comment on the details of the Zapatas’ claims.

Full Story Here: Mortgage Settlement Leaves Some Foreclosure Victims Wanting.

The bill under consideration by the state’s tourism and commerce committee, SPB 7210, would allow restaurants to ditch the state’s minimum wage for servers in favor of the lower, federal one, provided the businesses guarantee that their workers will earn at least $9.98 per hour after tips. If the bill were passed, servers would end up taking home less pay, and customers would be paying a greater share of the salary burden.

The state senate’s website does not disclose who introduced the bill, though it appears to have the wide support of Florida’s hospitality industry, including the Florida Restaurant and Lodging Association. Carol Dover, the group’s executive director, said in an Orlando Sentinel article that the industry is saddled by rising pay and health care costs and “it’s going to be a matter of time before the back of this industry breaks … Minimum wage is killing them.”

Full Story Here: Florida Minimum Wage Could Be Slashed For Restaurant Workers.

Growing numbers of Americans are finding themselves bankrupt, with their college diplomas partially to blame.

Slightly more than 80 percent of bankruptcy attorneys say the number of their potential clients with student loan debt have increased “significantly” or “somewhat” in the past three to four years, according to a survey by the National Association of Consumer Bankruptcy Attorneys. And there’s little hope those debtors will get out of their obligations; 95 percent of bankruptcy attorneys surveyed said that very few student loan debtors will be discharged from their loan as a result of undue hardship.

“Take it from those of us on the frontline of economic distress in America: This could very well be the next debt bomb for the U.S. economy,” William E. Brewer, Jr., president of the NACBA said in a statement accompanying the survey.

As college costs spiral out of control and public universities cut back on financial aid, more students and their parents are taking on loans to pay tuition, according to the Los Angeles Times. At about one trillion dollars, Americans’ student loan debt surpassed credit card debt for the first time in history in August 2010.

Full Story Here: Student Loans Could Be America’s Next ‘Debt Bomb,’ Report Finds.

January’s increase in hiring is good news, but it masks a bigger and more disturbing story – the continuing downward mobility of the American middle class.

Most of the new jobs being created are in the lower-wage sectors of the economy – hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they’ve agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they’ve lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid six years ago.

Other people are falling out of the middle class because they’ve lost their jobs, and many have also lost their homes. Almost one in three families with a mortgage is now underwater, holding their breath against imminent foreclosure.

Full Story Here: Robert Reich (The Downward Mobility of the American Middle Class, and Why Mitt Romney Doesn’t Know).

One of the problematic developments for the U.S. economy in the last several decades has been increased financialization. In the 1950s, the financial sector made up less than 3 percent of the economy. Today, it is back to its pre-recession heights of more than 8 percent. The financial sector accounts for about 30 percent of total corporate profits, which is actually down from before the financial crisis, when it made closer to 40 percent.

Increased financialization is of dubious societal use; as former Federal Reserve Chairman and big bank critic Paul Volcker has said, “I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence.” (Volcker has opined that the last useful bit of financial innovation was the ATM.) At the same time, the industry is one of the highest paid. In a new piece in New York magazine, a former Lehman Bros trader explained that, in his view, “there’s no other industry where you could get paid so much for doing so little“:

Many [on Wall Street] acknowledge that the bubble­-bust-bubble seesaw of the past decades isn’t the natural order of capitalism—and that the compensation arrangements just may have been a bit out of whack. “There’s no other industry where you could get paid so much for doing so little,” a former Lehman trader said.

Full Story Here: Former Wall Street Trader: ‘There’s No Other Industry Where You Could Get Paid So Much For Doing So Little’ | ThinkProgress.

As a percentage of ever-growing profits, corporations are paying less in taxes than they have in decades.

Thanks in part to federal tax breaks, corporations paid out just 12.1 percent of their 2011 profits in taxes, according to the Congressional Budget Office. That’s well below the country’s top marginal corporate tax rate of 35 percent — and as The Wall Street Journal notes, it’s the lowest percentage corporations have paid since 1972. During the two previous decades, a period that included the economic prosperity of the 1990s and the housing boom of the George W. Bush administration, corporations were paying an average percentage almost twice as high.

The CBO’s numbers undercut a popular conservative claim — that the United States places a higher tax burden on its corporations than almost any other first-world nation — and arrive at a time when national politicians are engaged in a fierce rhetorical battle over how much wealthy institutions and individuals should pay to the government.

Corporations reported a combined $1.97 trillion in profits in the third quarter of 2011. As recently as June, they were also believed to be sitting on more than $2 trillion in cash hoardings. Most of that money has not been touched by taxation, even though the federal government has experienced budget shortfalls of more than $1 trillion for each of the past four years, and is scrambling to cut back on staff and services as a result. Meanwhile, the money isn’t going to employees either, as real wages for most Americans declined in 2011 in spite of strong corporate balance sheets.

Full Story Here: Corporate Taxes As Percentage Of Profits Now Lowest In Decades.

The action is part of a continuing effort by Republicans to kill the entire project, which was a major element of President Obama’s 2009 stimulus. California’s $100 billion plan for bullet trains running from San Francisco to San Diego already has the stimulus money in hand to get started, but future federal funding on which the project depends is very much at risk if House Republicans maintain control of the chamber, not to mention take the White House.

The high speed rail prohibition came as an amendment, approved 31-22, by Rep. Jeff Dunham, R-Turlock, who said he wanted to make sure that all transportation funds for California to go to highways.

Full Story Here: Republicans prohibit funding for high speed rail | Politics Blog | an SFGate.com blog.

The most significant aspect of January’s jobs report is political. The fact that America’s labor market continues to improve is good news for the White House. But as a practical matter the improvement is less significant for the American work force.

President Obama’s only chance for rebutting Republican claims that he’s responsible for a bad economy is to point to a positive trend. Voters respond to economic trends as much as they respond to absolute levels of economic activity. Under ordinary circumstances January’s unemployment rate of 8.3 percent would be terrible. But compared to September’s 9.1 percent, it looks quite good. And the trend line – 9 percent in October, 8.6 percent in November, 8.5 percent in December, and now 8.3 percent – is enough to make Democrats gleeful.

But the U.S. labor market is far from healthy. America’s job deficit is still mammoth. Our working-age population has grown by nearly 10 million since the recession officially began in December 2007 but many of these people never entered the workforce. Millions of others are still too discouraged to look for work.

Full Story Here: Robert Reich (America’s Jobs Deficit, and Why It’s Still More Important than the Budget Deficit).

The New York Times has an o-kay story on the problem here: As Jobs Go Global, U.S. Workers Pay.

I’m glad the NYT is running this, and glad Reuters wrote it.

But it’s mild, mild stuff. In terms of my book Free Trade Doesn’t Work, they’ve admitted to Chapter 5′s dubious assumptions #3 (domestic factor mobility) and #4: (increased inequality). No mention of the other 7. I summarized these issues in an article here.

So they’re really trying to preserve the conventional “free trade is, all things considered, best” model, by showing how observed problems do not refute that model but can be explained within it. As I noted in my book, none of my “7 deadly sins” are exotic stuff; they’re all actually well-cataloged within conventional economics, if one knows where to look.

Expect more of this: the conventional wisdom is designed for defense in depth. The establishment’s strategy is to make the smallest possible concession in the face of every new fact.

I wrote about the MIT “China Syndrome” report the article mentions when it came out, here.

In a similar vein, the Third Way think tank has a new report out on dealing with China, “China’s Trade Barrier Playbook: Why America Needs a New Game Plan,” here.

Third Way styles itself, more or less, as a post-partisan “fresh thinking” good-government group. I’m not a huge fan, as they tend towards repackaging establishment-pleasing solutions in “new” garb, but they’re sometimes worth reading.

Their report grasps the scale and nastiness of China’s trade barriers against the U.S. But I can’t take seriously any would-be trade reformer who supports the Trans-Pacific Partnership, which I debunked here.

Also, the report has some tediously naive stuff about how China supposedly doesn’t know what’s best for it (and how we can teach them!), to wit:

The United States should redouble its efforts to convince China’s government, business and thought leaders that playing by the rules is ultimately in China’s own interest. America might note, for example, that:

 • Increasing the value of the Yuan will help China control serious inflation,
increase domestic consumption and benefit China’s consumers.

• Protecting IP is critical if China is to develop its own new ideas and build a
real innovation-based economy.

• Fair, international technical standards will help Chinese companies sell
innovative products in foreign markets.

• Assuring fairness for U.S. investors will win China allies as it seeks to
increase its own investment in the United States.

Like China’s going to take trade pointers from the side that’s currently losing!

Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor. He was previously Research Fellow at the U.S. Business and Industry Council, a Washington think tank, and before that, an economist in private practice serving mainly hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco. He is the author of Free Trade Doesn’t Work: What Should Replace It and Why.

When travelers from abroad come to this city, the financial and cultural capital of the world’s richest nation, two dilapidated and depressing airports greet them. The clogged runways, the leaking roofs, the maddening taxi lines, the lost travelers bumping into each other — all these depredations are just part of flying the friendly skies to JFK or LaGuardia.

Jetsetters’ laments about subpar airports, now almost a cliche, may not have been foremost on President Obama’s mind when he gave his State of the Union address on January 24. But they may actually be more representative of the country’s nagging infrastructure problems than the images invoked by the “crumbling roads and bridges” he referenced in that speech.

The problems America faces with its infrastructure are often much less headline-grabbing than the 2005 collapse of the I-35 bridge in Minnesota, which focused national attention on the subject in a way that has set the tone of discussion ever since. They are more often on the order of lost productivity and lost opportunity. They include other problems Obama referenced in his speech, like “a power grid that wastes too much energy; an incomplete high-speed broadband network.”

Full Story Here: Infrastructure Problems In U.S. Go Far Beyond Dollars.

\Treasury Secretary Tim Geithner, speaking at the World Economic Forum in Davos a few days ago, said the “critical risks” facing the American economy this year were a worsening of Europe’s chronic sovereign debt crisis and a rise in tensions with Iran that could stoke global oil prices.

What about jobs and wages here at home?

As the Commerce Department reported Friday, the U.S. economy grew 2.8 percent between October and December – the fastest pace in 18 months and the first time growth exceeded 2 percent all year. Many bigger American companies have been reporting strong profits in recent months. GE and Lockheed Martin closed the year with record order backlogs.

Yet the percent of working-age Americans in jobs isn’t much different than what it was three years ago. Yes, America now produces more than it did when the recession began. But it does so with 6 million fewer workers.

Full Story Here: Robert Reich (The Biggest Risk to the Economy in 2012, and What’s the Economy For Anyway?).