NOBODY IN AMERICAN PUBLIC LIFE is more focused than the labor movement on offering solutions to the most serious challenges facing America: wage stagnation, economic inequality, full employment, economic insecurity, the transition to a 21st century economy and restoring our democracy. Solving these problems also would stabilize the national debt over the long term.
We need to address the real causes of our long-term budget imbalance—wasteful tax cuts for the wealthy and rising costs throughout our health care system—and not use the deficit as a pretext to pursue unrelated agendas.
What Congress Should Do
- The first thing we have to do is stop lowering tax rates for the wealthiest Americans and Wall Street. When the Bush tax cuts expire at the end of this year, the top individual tax rate will rise to 39.6%, where it was under President Clinton. We simply cannot afford to lower the top individual rate below 39.6%, or reduce the corporate income tax rate, or eliminate taxes on overseas corporate income. It makes no sense to balloon the deficit by lowering tax rates for Wall Street and the wealthiest Americans and then turn around and demand more sacrifice from the middle class because the deficit is ballooning.
- The second thing we have to do is rein in health care cost growth, which is the main driver of projected long-term deficits. But shifting costs to workers and retirees is not the solution. The key to reining in cost growth throughout our private and public health care system is to get providers (pharmaceutical companies, hospitals and physicians) to deliver care in more cost-effective ways.
- We can start making our entire health care system more cost-effective, without shifting costs to individuals or cutting their benefits, by (1) allowing Medicare to negotiate lower drug prices with drug companies; (2) creating a robust public option that offers lower premiums to the non-Medicare population, reduces the deficit and partners with Medicare to implement cost-saving reforms; (3) requiring Medicare to “bundle” payments to hospitals for post-acute care so Medicare will pay for results rather than the volume of services provided; (4) ending pay-for-delay agreements between brand name and generic drug manufacturers; and (5) expanding Medicare competitive bidding to all durable medical equipment and supplies throughout the country.
- There is no urgent debt crisis that requires us to make bad decisions. Markets around the world are signaling more confidence in the U.S. dollar than in any other currency, and U.S. interest rates have seldom been lower. And there is absolutely no need to reduce the deficit by $4 trillion over the next 10 years in order to stabilize the national debt. Since this target was established two years ago, the projected national debt in 2022 has fallen by $3.2 trillion.
- However, for those who seek to “go big,” we have identified five additional ways to raise significant new revenues without demanding any more sacrifice from the middle class: (1) eliminate all tax incentives for exporting jobs overseas ($583 billion over 10 years); (2) impose a 0.03% tax on Wall Street speculation ($353 billion over nine years); (3) let estate and gift tax cuts expire at the end of this year ($253 billion over 10 years); (4) increase income tax rates for millionaires and billionaires ($800 billion over 10 years); and (5) end special low tax rates on income from stocks and bonds ($533 billion over 10 years).
- Social Security has never added a penny to the deficit and should not be part of any deficit reduction negotiations. However, the labor movement does support “scrapping the cap” ($110,100 in 2012) so that all earnings are subject to the Social Security payroll tax. High earners should contribute the same percentage of their income to Social Security as everyone else.
- Whatever else we do, we still have to fix what is wrong with our economy. Deficits are the result—not the cause—of our economic crisis. The real problem is weak middle class buying power, which is caused by high unemployment, lingering household debt, stagnant wages and a towering trade deficit. These are our most urgent problems, and budget cuts can make them worse.
- The AFL-CIO’s approach to fixing the economy is to replace the failed low-wage economic strategy of the past 30 years with a high-wage strategy for shared prosperity. The four pillars of a high wage strategy are (1) achieving full employment; (2) restoring workers’ ability to bargain collectively so we can raise wages, reduce economic inequality, fuel consumer demand and help rebuild the middle class; (3) making things in America again; and (4) shrinking our bloated financial sector and making it serve the real economy again.
- The AFL-CIO has also endorsed “Prosperity Economics,” a long-term economic blueprint written by Jacob Hacker and Nate Loewentheil of Yale University. Among other things, “Prosperity Economics” calls for stronger investment in infrastructure to grow the economy; enhanced economic security for working families to make markets work better; and reforms to reinvigorate our democracy.
Walmart’s explosive growth has gutted two key pillars of the American middle class: small businesses and well-paying manufacturing jobs.
Between 2001 and 2007, some 40,000 U.S. factories closed, eliminating millions of jobs. While Walmart’s ceaseless search for lower costs wasn’t the only factor that drove production overseas, it was a major one. During these six years, Walmart’s imports from China tripled in value from $9 billion to $27 billion.
Small, family-owned retail businesses likewise closed in droves as Walmart grew. Between 1992 and 2007, the number of independent retailers fell by over 60,000, according to the U.S. Census.
Their demise triggered a cascade of losses elsewhere. As communities lost their local retailers, there was less demand for services like accounting and graphic design, less advertising revenue for local media outlets, and fewer accounts for local banks. As Walmart moved into communities, the volume of money circulating from business to business declined. More dollars flowed into Walmart’s tills and out of the local economy.
In exchange for the many middle-income jobs Walmart eliminated, all we got in return were low-wage jobs for the workers who now toil in its stores. To get by, many Walmart employees have no choice but to rely on food stamps and other public assistance.
Walmart’s history is the story of what has gone wrong in the American economy. Wages have stagnated. The middle class has shrunk. The ranks of the working poor have swelled. Whatever we may have saved shopping at Walmart, we’ve more than paid for it in diminished opportunities and declining income.
And work continues on this expansion without any protest. If you want to change that, drop a line.
Houghton Mifflin Harcourt Publishers Inc, whose textbooks have been a staple in American schoolhouses for decades, filed for Chapter 11 bankruptcy protection on Monday after agreeing with creditors to eliminate $3.1 billion of debt. The “pre-packaged” bankruptcy would give control of Houghton Mifflin to its lenders. It comes as cash-strapped state and local governments defer or cancel education-related purchases, reducing demand for textbooks for students from kindergarten to 12th grade. Traditional book publishers also face pressure from the online availability of published material, including e-books. Houghton Mifflin has a 41 percent market share in the K-12 educational material and services sector, and its education business accounts for about 90 percent of revenue.
UPDATE 4-Houghton Mifflin files Chapter 11 bankruptcy | Reuters
HMH publishes the Peterson field guide series, along with many other nature-related books.
Let’s look on line in that passage: The “pre-packaged” bankruptcy would give control of Houghton Mifflin to its lenders. . Think about the kind of pressure an unethical creditor could put in the content of text books. Don’t think that they won’t do it because it’s already being done. Do you actually think that school boards have the capacity or the determination to keep that misinformation out of the classrooms?
Concentration of wealth yields concentration of political power. And concentration of political power gives rise to legislation that increases and accelerates the cycle. The legislation, essentially bipartisan, drives new fiscal policies and tax changes, as well as the rules of corporate governance and deregulation. Alongside this began a sharp rise in the costs of elections, which drove the political parties even deeper into the pockets of the corporate sector.
As unwelcome as these expenses might be, the alternative — letting those vacant properties fall into disrepair — is arguably even worse. A house with peeling paint and uncut grass is a house that’s less likely to get sold. In the meantime, the longer that house stands empty and decrepit, the more damage it does to neighboring property values.
Yet this kind of maintenance work costs money, specifically $557 million last year, according to a recent segment on ABC News. In the coming year, ABC reports, American taxpayers will spend more than $40 million just to keep the lawns mowed at these addresses.
But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America’s bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank’s bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it’s also far too corrupt to survive.
All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic failure – and now that catastrophe might finally be at hand. Bank of America’s share price has plunged into the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.
In a study released Wednesday, the nonpartisan Public Policy Institute of California reports that the proportion of households it defines as the middle class — those with annual incomes between $44,000 and $155,000 — has dropped below half, to 49.7 percent.
Households below that level account for 36.6 percent of Californians, and those above account for 13.7 percent.
The percentage of Californians in the middle class is the lowest in at least 30 years, the report says, and has consistently fallen since its peak of 60 percent in 1980.