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Economy

Reich: If Consumers ‘Have To Rely On Their Sinking Wages, The Entire Economy Is In Trouble’

reich1.jpgDuring a conference call today, former Secretary of Labor Robert Reich explained vanishing consumer demand:

One big reason we are in the crisis we are in, apart from the meltdown from financial markets, is that consumers have run out of money. Consumer spending accounts for about 70% of this economy, and after the housing bubble burst, consumers were back to where they were before the housing bubble, which was not a very happy place. [...] The bursting of the housing bubble really cut off the last coping mechanism that many consumers had, and that was going into debt. If they can’t borrow any more and have to rely on their sinking wages, the entire economy is in trouble, because there’s just simply not enough demand out there.

One of the problems stunting the economy is that business capacity “far outstrips demand,” meaning that businesses currently have the capability to produce a lot more than consumers are willing to buy. “There is over-capacity in everything,” said Richard Yamarone, chief economist at Argus Research. “If capacity is too large, you don’t need that many people employed, which is another reason we’re seeing such high job losses.”

So how did this imbalance come about? It is partly a result of the current economic circumstances: “Consumers are slashing their spending because they’re perilously in debt and worried about keeping their jobs.” However, for years there has also been a general decline in wages as they relate to productivity:

If American workers were rewarded for 100 percent of their increases in labor productivity between 1980 and 2008 — as they were during the middle part of the 20th century — average wages would be $28.53 per hour — 42.7 percent higher than the average real wage in 2008.

As the Economic Policy Institute pointed out, “of the 20 richest countries tracked by the U.S. Bureau of Labor Statistics, the United States ranks 17th in hourly pay for production workers in manufacturing.” Of the 16 countries ranked higher in wages only one (Ireland) is more productive.

One way to correct this imbalance is increased unionization. As David Madland and Karla Walter found, “if unionization rates were the same now as they were in 1983 and the current union wage premium remained constant, new union workers would earn an estimated $49 billion more in wages and salaries per year.” That’s $49 billion in demand that the economy could desperately use right now.

Yglesias

Barack Obama Meets The Minimum Winning Coalition

Ruth Marcus writes: “It would have been hard to predict, as the stimulus debate began, that President Obama would end up losing more Democratic votes than gaining Republican ones.”

I dunno. It’s true that this outcome wasn’t widely predicted. And I don’t think I even thought about it seriously. But it also strikes me as pretty predictable. When a bill becomes controversial, your goal as a mover of legislation is to get all the votes you need. And in the House, the leadership can afford to lose some Democrats and to not pick up any Republicans. Given that, I think we should expect it to happen pretty frequently on controversial pieces of legislation. In purely cynical terms, if there are members from vulnerable districts whose votes aren’t needed to secure a majority it makes perfect sense for the leadership to even instruct them to vote “no” in order to bolster their independence credentials so that they’ll be better positioned to take a tough vote if they’re really needed on some future bill.

Politics

Holder: America is a ‘nation of cowards’ on racial matters.

holdera.jpg Today, Attorney General Eric Holder spoke at the Justice Department in honor of Black History Month. As the first African-American leading the DOJ, he called for a national dialogue on race — something the United States has generally avoided:

Though this nation has proudly thought of itself as an ethnic melting pot, in things racial, we have always been, and we, I believe, continue to be, in two many ways, a nation of cowards. Though race related issues continue to occupy a significant portion of our political discussion, and though there remain many unresolved racial issue in this nation, we, average Americans, simply do not talk enough with each other about things racial. [...]

And we, in this room, bear a special responsibility. Through its work and through its example, the Department of Justice — this Department of Justice — as long as I’m here, must and will leave the nation to the new birth of freedom so long ago promised by our greatest president. This is our duty, this is our solemn responsibility.

Holder’s remarks are a refreshing break from the Bush administration, during which Justice Department officials allowed conservative political interests to trump civil rights concerns. Watch Holder’s speech here.

Update

Jonah Goldberg says that he finds Holder’s comments “both hackneyed and reprehensible.”

Climate Progress

If Obama stops dirty coal, as he must, what will replace it? Part 1

A year ago I wrote a post “Old coal’s out, can’t wait for new nukes, so what do we do NOW?” where I hypothesized:

Suppose the leaders of this country were wise enough to put a moratorium on traditional coal (the most urgent climate policy needed, as discussed here)? How will we meet our steadily growing demand for carbon-free power over the next decade? And to get on the 450 ppm path, we don’t just need to stop U.S. emissions from rising — we should return to 1990 levels (or lower) by 2020.

Well, we now appear to have leaders that wise (see “Obama EPA to act on global warming emissions from new coal plants“). And we need real reductions by the end of next decade (see “The U.S. needs a tougher 2020 GHG emissions target“).

Also, while my original post focused on the key strategies of efficiency and recycled energy (i.e. cogeneration or combined heat and power), wind, and concentrated solar thermal, I left out one of the most crucial — biomass cofiring, which is almost certainly the cheapest, easiest, and fastest way to provide new renewable baseload power without having to build any new transmission lines!

I think it is incumbent on progressives to propose a realistic alternative to new coal plants — and a path to reduce emissions from existing ones. That’s especially true since it is increasingly clear carbon capture and storage will not be a major player by 2020 (see “Is coal with carbon capture and storage a core climate solution?“). So I will revise and extend my previous analysis:

Read more

Climate Progress

Wire Services Uncritically Promote Fossil Industry Propaganda

plant_emissions_s.PNGEven as the costs of global boiling increase from Australia to California, the mainstream media continues to provide a platform for conservative polluter propaganda. In the past few days, both the Associated Press and Reuters have written news stories based on polluter misinformation without indicating their industry ties.

Reuters (2/18/09): “Western climate plan could prolong recession.” “A cap-and-trade program planned for the Western United States and Canada,” Reuters reporter Nichola Groom writes, “could prolong the economic recession and chase high technology investment to other regions, according to a new study commissioned by” the Western Business Roundtable, described only as “a group of business leaders.”

Although Groom does report that Jim Sims is not only the chief executive of the Roundtable but also “chairman of Colorado-based lobbying firm Policy Communications Inc,” nowhere does the article describe who the “group of business leaders” are. The Roundtable is, in fact, as the DeSmog Project’s Kevin Grandia has previously reported, a “fossil-fuel industry organization whose membership includes Peabody Coal, Shell Oil, and the Western Fuels Association.” Policy Communications is also responsible for these other Orwellian front groups: Partnership for America, Americans for American Energy, NextGen Energy Council, and the Conservation Science Foundation.

AP (2/15/09): “Former astronaut speaks out on global warming.” “Former astronaut” Harrison Schmitt “is among 70 skeptics scheduled to speak next month at the International Conference on Climate Change” hosted by “the Chicago-based Heartland Institute,” reports the Associated Press. Schmitt “walked on the moon and once served New Mexico in the U.S. Senate,” with a “science degree from the California Institute of Technology” and “doctorate in geology from Harvard University in 1964.”

The Associated Press story, cribbed from a piece by the Santa Fe New Mexican, fails to mention that Schmitt is a Republican who was the president and chairman of the Annapolis Center for Science-Based Public Policy from 1994 to 1998, and remains its “chairman emeritus.” The Annapolis Center is an ExxonMobil-funded front group founded by Richard Siebert, a National Association of Manufacturers lobbyist. Furthermore, Media Matters notes the article fails to mention the “Heartland Institute receives funding from the fossil fuels industry.”

Of course, this misreporting is not special to the wire services. The Washington Post publishes the global-cooling rants of George Will; the New York Times publishes John Tierney’s radical global-warming Pollyannaism; CNN’s Ali Velshi promotes liquid coal and goes on drilling junkets with Michelle Bachmann. Igor Volsky describes the sorry state of climate-change journalism in today’s Progress Report:

Given the media’s eagerness to prop up global warming skeptics, it’s no surprise that “only 40 percent of Americans believe that ‘most’ scientists agree that ‘global warming is happening.”

Yglesias

Defense Spending Going Up, Up and Away

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The Bush administration’s Fiscal Year 2009 budget for the Department of Defense came in at $513 billion. That does not include the ongoing costs of the wars in Iraq or Afghanistan. It’s by far the largest number in the world. And it represents a huge increase in the baseline budget from where it was in FY2001. And, to repeat, that’s not because the budget has gone up because of the wars. Well, the Office of Management and Budget was preparing to tell the Pentagon to spend $527 billion—a $14 billion increase—in FY2010. But the Pentagon wanted to spend $584 billion. So they had this effort underway to protray Obama’s $14 billion hike as a $57 billion cut. And now Spencer Ackerman tells me that the administration is starting to cave and promising a $537 total budget.

I expect conservatives concerned about overspending and especially deficit-averse Blue Dogs to be leading the charge against these kind of wasteful outlays.*

Read more

Media

Ifill Responds To Juan Williams: People Should ‘Make A Better Effort To Know What They’re Talking About’

Yesterday, PBS Senior Correspondent Gwen Ifill was at the Center for American Progress for an event on her new book, The Breakthrough: Politics and Race in the Age of Obama. Afterward, she sat down with ThinkProgress, and we asked her about her thoughts on NPR analyst Juan Williams’s recent comments comparing Michelle Obama to Stokely Carmichael in a designer dress.

Ifill politely declined to comment on these specific comments, but made clear that she often disagrees with him. She also said that reporters who are supposed to just “gather the news” need to be careful about slipping into punditry:

IFILL: Well, there are a couple of different questions there. Since Juan was one of the people who criticized my book before it was published, I really — I just leave it at that. I think that people really should make a better effort to know what they’re talking about.

But in general, the whole idea of this line between commentary and straight journalism, is a fuzzy one, and it gets fuzzier every day, in part because of the growth of new technology. But I also think it can be a fairly bright line if we bother to draw it. It is really easy to tell the difference. … But the viewer doesn’t often see the distinction; they think everyone is doing this.

As Ifill noted, Williams went on Fox News last fall and criticized the fact that she was going to host a presidential debate while writing this book, picking up on a right-wing smear campaign. He said that Ifill “spent a lot of time with Obama, she praises him in the book, and so therefore it seems as if she’s invested — and the book’s success — invested in Obama’s victory.” (Ifill’s book had not yet been written.)

Watch ThinkProgress’s interview with Ifill:

Ifill also addressed Washington Post style writer Robin Givhan’s recent column, which said that many journalists and pundits are intent on canonizing Michelle Obama, and anyone who attacks her faces an unfair amount of “vitriol.” “I think we’re four weeks into this presidency, and anybody who assumes that any kind of coverage is too much this or too much that, really ought to take a deep breath and let it unfold,” said Ifill. She added that this sort of coverage is part of a honeymoon period, which will be over “as soon as the sun rises and falls.”

Transcript: Read more

Politics

McGovern not attending CPAC.

Following up on ThinkProgress’ report from earlier today, The Hill’s Briefing Room blog reports that former Democratic presidential candidate George McGovern will not be attending CPAC “due to scheduling conflicts related to a book tour — a development coming Wednesday.” American Conservative Union President David Keene, CPAC’s organizer, explains:

“When I talked to him two or three weeks ago, he very much wanted to come,” said David Keene, chairman of the American Conservative Union, which organizes the conference. [...]

Keene said McGovern would hopefully attend next year’s conference, when he would receive the award. The conference will still let attendees know that had McGovern been able to attend, they would have given the award.

Media

Fred Hiatt Won’t Correct Dishonest Climate Change Columns, Will Lecture Congress on How to Handle Climate Change

7149.jpg

An excellent point from Dave Roberts:

The Washington Post editorial board, which just this weekend elected to run a column from George Will denying climate change entirely, now presumes to lecture Barbara Boxer on how to solve it.

The classic post-war American newspaper has been largely insulated from market pressure and competition. Typically, you’d have a city and the city would have a newspaper. People could choose to subscribe to the newspaper, or they could choose not to. But they couldn’t choose a different paper. You just had to decide, as a citizen and as an individual, if you wanted to be the sort of person who read his town’s broadsheet or else if you didn’t want to be that sort of person. Thus, the audience was guaranteed and, at the time, so was the advertising. Under the circumstances, papers were remarkably free to just do whatever they wanted to do with their actual content.

When you talk about this with working journalists and newspaper nostalgics, there’s a tendency to focus on the upsides of this insulation from market competition. You could dispatch some reporters to work on a Pulitzer-contending feature or major investigation and not really worry too much if the marginal increase in readership justified the cost. You could keep a Moscow bureau open just because you thought it was important. All good stuff. But it’s also bread this weird arrogance where nobody in the business seems to think that the deplorably low quality of the product plays any role whatsoever in the declining relevance of these institutions. But here’s a George Will column in my paper, lying to me about global warming. Here’s Will’s editor refusing to correct the record or say anything about why he decided it would be a good idea to run a column in which George Will lies about global warming. And now here’s the very same indifferent-to-the-truth editorial team writing about global warming. And I’m supposed to read the editorial why? What value to me, as a consumer of information, do inaccurate uncorrected George Will columns offer me? How will the addition of Bill Kristol to the roster increase the value of the newspaper to me as a consumer of information?

These issues don’t get considered, at all. These guys are Important Conservatives so it’s important that we pay them to lie to people.

Health

Why Do So Many Young People Lack Health Insurance? 66% Are Poor Or Near Poor

In an effort to undermine health care reform, some fairly prominent conservatives argue that the estimated number of uninsured Americans (currently 45.7 million) is inflated. Some Americans are uninsured by choice, they contend, pointing to the 11-13 million uninsured Americans in their 20s who allegedly “shun insurance either because their age makes them feel invulnerable.” Here is a sampling:

BOB DOLE: Where do you get the number 47 million? When you watch CBS, they may tell you that number. However, 11 million of that total are illegal immigrants. Ten million more are people who can buy their own insurance. Finally, another 10 million are people your own age who think they are never going to get sick or hurt and are not vulnerable. [Tufts Daily, 12/2008]

MIKE HUCKABEE: Of those 47 million, one-third don’t have it because they are self-insured. Another one-third don’t have it because they think they’re healthy and invincible. There is one-third that don’t have it because they can’t afford it. [FactCheck.org, 12/11/2007]

youthchange.jpgBut as today’s New York Times points out, a great majority of these so-called “young invincibles” lack insurance because they can’t afford it:

Young adults are the nation’s largest group of uninsured — there were 13.2 million of them nationally in 2007, or 29 percent, according to the latest figures from the Commonwealth Fund, a nonprofit research group in New York. … In dozens of interviews around the city, these so-called young invincibles described the challenge of living in a high-priced city on low-paying jobs, where staying healthy is one part scavenger hunt and one part balancing act, with high stakes and no safety net.

Indeed, as James Kvaal and Ben Furnas reiterate in a forthcoming report, [chart on the right], approximately “66 percent of people aged 18-34 without insurance are poor or near-poor.”

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