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Losing Our Country October 11, 2010

Posted by Dwight Furrow in Dwight Furrow's Posts, politics, Uncategorized.
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I have blogged often about the increasing concentration of wealth in this country over the past 30 years. It is important to recognize that this has political consequences.

Economist Robert Reich lays out these political consequences:

Not only is income and wealth in America more concentrated in fewer hands than it’s been in 80 years, but those hands are buying our democracy as never before – and they’re doing it behind closed doors.

Hundreds of millions of secret dollars are pouring into congressional and state races in this election cycle. The Koch brothers (whose personal fortunes grew by $5 billion last year) appear to be behind some of it, Karl Rove has rounded up other multi-millionaires to fund right-wing candidates, the U.S. Chamber of Commerce is funneling corporate dollars from around the world into congressional races, and Rupert Murdoch is evidently spending heavily.

No one knows for sure where this flood of money is coming from because it’s all secret.

But you can safely assume its purpose is not to help America’s stranded middle class, working class, and poor. It’s to pad the nests of the rich, stop all reform, and deregulate big corporations and Wall Street – already more powerful than since the late 19th century when the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators.

Credit the Supreme Court’s grotesque decision in Citizens United vs. the Federal Election Commission, which opened the floodgates. (Even though 8 of 9 members of the Court also held disclosure laws constitutional, the decision invited the creation of shadowy “nonprofits” that don’t have to reveal anything.)

According to FEC data, only 32 percent of groups paying for election ads are disclosing the names of their donors. By comparison, in the 2006 midterm, 97 percent disclosed; in 2008, almost half disclosed.

Last week, when the Senate considered a bill to force such disclosure, every single Republican voted against it – thereby revealing the GOP’s true colors, and presumed benefactors. (To understand how far the GOP has come, nearly ten years ago campaign disclosure was supported by 48 of 54 Republican senators.)

Maybe the Disclose Bill can get passed in lame-duck session. Maybe the IRS will make sure Karl Rove’s and other supposed nonprofits aren’t sham political units. Maybe pigs will learn to fly.

In the meantime we face an election that marks an even sharper turn toward plutocratic capitalism than before – a government by and for the rich and big corporations — and away from democratic capitalism.

As income and wealth has moved to the top, so has political power. That’s why, for example, it’s been impossible to close the absurd tax loophole that allows hedge-fund and private-equity managers to treat much of their income as capital gains, subject to a 15 percent tax (even though they’re earning tens or hundreds of millions a year, and the top 15 hedge-fund managers earned an average of $1 billion last year). Why it proved impossible to fund expanded health care by limiting the tax deductions of the very rich. Why it’s so difficult even to extend George Bush’s tax cuts for the bottom 98 percent of Americans without also extending them for the top 2 percent – even though the top won’t spend the money and create jobs, but will blow a $36 billion hole in the federal budget next year.

The good news is average Americans are beginning to understand that when the rich secretly flood our democracy with money, the rest of us drown. Wall Street executives and top CEOs get bailed out while under-water homeowners and jobless workers sink.

A Quinnipiac poll earlier this year found overwhelming support for a millionaire tax.

But what the public wants means nothing if our democracy is secretly corrupted by big money.

Right now we’re headed for a perfect storm: An unprecedented concentration of income and wealth at the top, a record amount of secret money flooding our democracy, and a public in the aftershock of the Great Recession becoming increasingly angry and cynical about government. The three are obviously related.

We must act. We need a movement to take back our democracy. (If tea partiers were true to their principles, they’d join it.) As Martin Luther King once said, the greatest tragedy is “not the strident clamor of the bad people, but the appalling silence of the good people.”

Reich has some advice about what we can do:

What can you do?

1. Read Justice Steven’s dissent in the Citizens United case, so you’re fully informed about the majority’s pernicious illogic.

2. Use every opportunity to speak out against this decision, and embarrass and condemn the right-wing Justices who supported it.

3. In this and subsequent elections, back candidates for congress and president who vow to put Justices on the Court who will reverse it.

4. Demand that the IRS enforce the law and pull the plug on Karl Rove and other sham nonprofits.

5. If you have a Republican senator, insist that he or she support the Disclose Act. If they won’t, campaign against them.

6. Support public financing of elections.

7. Join an organization like Common Cause, that’s committed to doing all this and getting big money out of politics. (Personal note: I’m so outraged at what’s happening that I just became chairman of Common Cause.)

8. Send this post to your friends (including any tea partiers you may know).

That is all well and good but the most important thing we can do is vote in every election and vote Democratic.

Why the Democrats? It is true that the Democrats depend on campaign contributions. That is how the game is played. You don’t win if  you don’t play.

But there is an enormous difference between a political party that thinks it not only permissible but moral virtuous that the richest 1% control the political process, and a political party that does not endorse that as part of their ideology.

The Democrats may be the reasonable wing of the ruling class.

But these days “reasonable” is nothing to sneeze at.

book-section-book-cover2 Dwight Furrow is author of

Reviving the Left: The Need to Restore Liberal Values in America

For political commentary by Dwight Furrow visit: www.revivingliberalism.com

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Why Recession and Unemployment Will Continue July 13, 2010

Posted by Dwight Furrow in Dwight Furrow's Posts, politics.
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In most of the discussions of recessions, stimulus, bailouts etc. the real reason why our economy flounders is seldom mentioned. But Robert Reich hits the nail on the head today.

Missing from almost all discussion of America’s dizzying rate of unemployment is the brute fact that hourly wages of people with jobs have been dropping, adjusted for inflation. Average weekly earnings rose a bit this spring only because the typical worker put in more hours, but June’s decline in average hours pushed weekly paychecks down at an annualized rate of 4.5 percent.

In other words, Americans are keeping their jobs or finding new ones only by accepting lower wages.

Meanwhile, a much smaller group of Americans’ earnings are back in the stratosphere: Wall Street traders and executives, hedge-fund and private-equity fund managers, and top corporate executives. As hiring has picked up on the Street, fat salaries are reappearing. Richard Stein, president of Global Sage, an executive search firm, tells the New York Times corporate clients have offered compensation packages of more than $1 million annually to a dozen candidates in just the last few weeks.

We’re back to the same ominous trend as before the Great Recession: a larger and larger share of total income going to the very top while the vast middle class continues to lose ground.

And as long as this trend continues, we can’t get out of the shadow of the Great Recession. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don’t have enough purchasing power to buy what the economy is capable of producing.

As Reich points out, this is not a new phenomenon.

America’s median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class could boost its purchasing power was to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn’t pay their bills, and banks couldn’t collect.

Each of America’s two biggest economic downturns over the last century has followed the same pattern. Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation’s total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America’s total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928–with 23.5 percent of the total.

These facts were papered over by Obama’s stimulus plan that dumped a lot of cash into the economy to prevent an utter catastrophe. But as the effects of that stimulus wanes, reality will set in although I suspect much of the public and the media will not acknowledge it. If we don’t find a way to shift more money to the middle class we will face permanently high unemployment, increasing poverty, and continuing decline in our living standards.

That of course will hurt global corporations as well since demand for their products will be sluggish.  But I’m sure they will find a way to blame liberals.

Reich ends his piece on a note of optimism.

When they understand where this is heading, powerful interests that have so far resisted fundamental reform may come to see that the alternative is far worse.

But this is Tuesday, not my optimistic day.

book-section-book-cover2 Dwight Furrow is author of

Reviving the Left: The Need to Restore Liberal Values in America

For political commentary by Dwight Furrow visit: www.revivingliberalism.com

Where Were the Regulators? May 10, 2010

Posted by Dwight Furrow in Current Events, Dwight Furrow's Posts, politics.
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Via  Robert Reich:

What do oil giant BP, the mining company Massey Energy, and Goldman Sachs have in common? They’re all big firms involved in massive plunder. BP’s oil spill is already one of the biggest and most damaging in American history. Massey’s mine disaster, claiming the lives of 29 miners, is one of the worst in recent history. Goldman’s alleged fraud is but a part of the largest financial meltdown in 75 years.

All three of these companies are also publicly-held, which means that much of the financial costs of these failures will be passed on to their shareholders, many of whom are already watching their stock prices plummet. Prominently among those shareholders are pension funds and mutual funds held by people like you and me.

That may seem fair. After all, shareholders benefited when BP made big profits extracting oil without paying attention to a possible blowout, when Massey Energy got fat earnings from its careless coal mining operations, and when Goldman Sachs did wondrously well for its own stock holders by allegedly defrauding others. In fact, it was pressure from their shareholders seeking the highest possible returns — and their executives, whose pay is linked to the firms’ share performance — that led all three companies to cut whatever corners they could cut in pursuit of profits.

But profits aren’t everything, which is why we have regulations that are supposed to be enforced. So a key question in each of these instances is: Where were the regulators?

Good question. But, of course, if we believe markets know best so we don’t need government meddling in business affairs, we will get the regulators we deserve. That has been the prevailing philosophy for the past 30 years.

When shareholders demand the highest returns possible and executive pay is linked to stock performance, many companies will do whatever necessary to squeeze out added profits. And that will spell disaster – giant oil spills, terrible coal-mine disasters, and Wall Street meltdowns – unless the nation has tough regulations backed up by significant penalties, including jail terms for executives found guilty of recklessness, and vigilant enforcement.

Reich is right. We need strong government regulations. But that means we have to learn once again to trust government. And that means we can’t put people in charge of government agencies who think government is the problem.

No one in their right mind would choose to go to a doctor who did not believe in the power of medicine to heal. Yet, Americans persistently elect government officials who don’t believe that government can be effective.

Clearly, we are often not in our right minds when we vote.

book-section-book-cover2 Dwight Furrow is author of

Reviving the Left: The Need to Restore Liberal Values in America

For political commentary by Dwight Furrow visit: www.revivingliberalism.com

Moral Outrage Redux March 23, 2009

Posted by Dwight Furrow in Current Events, Dwight Furrow's Posts, Ethics.
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I wrote last week that moral outrage is a cheap emotion—easy to generate but demanding very little from us.

Robert Reich provides the evidence:

In a rare show of bipartisanship, members [of Congress] are eagerly registering shock and outrage at AIG’s bonus payments by coming up with an assortment of ways to reclaim the bonanza…But much of this is for show. When the public isn’t looking, Congress reverts to its old ways. The Obama-supported plan to allow distressed homeowners to renegotiate their mortgages under the protection of bankruptcy has run into a Wall Street wall. Although Citigroup temporarily broke ranks… the rest of Wall Street has remained adamantly opposed, and apparently Democratic leaders have decided not to push back.
Meanwhile, Obama’s plan to limit itemized deductions for the richest 1.2 percent of taxpayers (including the top 1.9 percent of small business owners) to 28 percent, starting in 2011, is also in trouble on the Hill. Wealthy contributors and friends of congressional leaders involved in setting tax policy have balked. So Congress is telling the White House to look elsewhere for the $320 billion it needs over ten years to finance half of the tab for health care reform. Congressional leaders have also informed the White House that they don’t have the votes to pass Obama’s proposal for treating the earnings of hedge-fund and private-equity managers as income rather than capital gains.

The bonuses paid to AIG executives are small potatoes with minimal impact on the public compared to the package of reforms contained in the budget. Yet, when it comes to the stuff that really matters, changes in policy that would make a real difference, Congress will roll over for their Wall St. patrons.

And why are Congress critters so easily bought off? Because they know the public is interested in cheap emotional payoffs and lacks the sustained attention required to follow through on holding their feet to the fire.

Outrage can be readily manufactured when you can point to easily identifiable villains in the spotlight of a media-driven narrative that demands of us only punching the TV remote. It is much more difficult to sustain outrage when knowing who the villains are requires more complex judgments about systematic abuse of power.