Bryce Covert

Editor

Recent Posts by Bryce Covert

  • Police are the 99%. Will They Ever Join the Protests?

    Oct 25, 2011Bryce Covert

    They may never jump the barricades, but after their pay, benefits, and job security has been put on the line, they may say 'enough is enough.'

    They may never jump the barricades, but after their pay, benefits, and job security has been put on the line, they may say 'enough is enough.'

    You could make an argument that clashes with police turned the media narrative about Occupy Wall Street from a rabble of confused hippies to a force to be reckoned with. Nate Silver at the New York Times ran the numbers and saw significant spikes in coverage after every run-in, most significantly when innocent protesters were hit with pepper spray and when police were said to lead protesters onto the Brooklyn Bridge only to arrest them in droves. Tension between the NYPD -- and police departments in other cities as the protests have spread -- and protesters continues to run high.

    Which is why news that police in Albany refused to arrest protesters, even as the mayor urged them to do so, was so extraordinary. This is the first time that the police haven't simply obeyed orders to round up, pen in, and otherwise intimidate peaceful protesters.

    Some (admittedly including myself) have been hoping that the police will cross the barricades and join the protests as soldiers in Tahrir Square did. The idea doesn't always seem so far-fetched. After all, policemen are solidly in the 99%. The median annual wage for a police officer is $55,620; the Wall Street Journal's percentage calculator (which, it should be noted, gives a very limited picture, not taking into account geography, family size, etc.) puts that salary in the 59th percentile. Even the 1% of the police force (okay, the top 10 percent, as the Bureau of Labor Statistics doesn't break it down into that much detail) only falls into the 74th percentile at $83,510 a year.

    They're also on the frontlines of post-recession state and city budget cuts. A bunch of states, including New York, are pushing their budget crunches onto cities, who in turn are scrambling to find places to slim down. And many have turned to benefits, pay, and jobs for public workers who had nothing to do with causing the budget holes. After New York Governor Andrew Cuomo decided not to restore $302 million in aid to New York City, Mayor Bloomberg has asked city agencies to find $2 billion in cuts. And he's warned before that the NYPD may have to shrink because of the tight budget. "We cannot afford the size [of the] police force, fire department, of any of these agencies if we have a $400 million deficit," he said in April.

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    The police force knows that lawmakers have set their sights on it. In fact, when the police in Albany refused to arrest protesters, an official brought this very subject up. "We don't have those resources, and these people were not causing trouble," he said.

    This sentiment, of being slimmed down, stretched thin, and now asked to do even more in dealing with the protests, came through when Josh Harkinson of Mother Jones talked to some officers in New York. One officer, Harkinson reports, has

    been posted to Occupy Wall Street since Day One, and all the mandatory overtime is wearing him down. "I'm really working hard for this," he says. "I'm getting yelled at, I'm getting cursed out; I'd rather be at home with my family right now." ... [He] has seen his retirement fund cut in half by a declining stock market, from $40,000 to $20,000. He worries that his kids won't be able to afford college or find jobs. And he's frustrated about not being able to talk about it openly.

    While policemen are being asked to work harder to curb the protests, their benefits, pay, and even job security are all being put at risk.

    This fantasy that I harbor that the police will jump over their own lines and join the Occupiers may never actually come to pass. Allison Kilkenny is very doubtful. "I've just seen cops violently collide with protesters too many times to imagine a world where the folks in blue and activists join hands in a circle and together skip under a rainbow," she writes. And she may very well be right. As she points out, there will always be a cop, like Anthony Bologna, who is unnecessarily vicious, and there will always be a protester who yells slurs at police. But maybe what happened in Albany is the compromise. Given their decreased resources and upped hours, police may simply refuse to enforce unnecessary crackdowns. They were already stretched to the limit because of tight budgets, and now they're being asked to do even more to curb the protests. No wonder the police in Albany felt enough was enough.

    Bryce Covert is Editor of New Deal 2.0.

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  • Occupy Wall Street Puts a Focus on the Need for Political Empowerment

    Oct 25, 2011Bryce Covert

    sabeel-rahmanI got a chance to speak with Sabeel Rahman, a Fellow at the Roosevelt Institute who is working on a project outlining progressive values and goals.

    sabeel-rahmanI got a chance to speak with Sabeel Rahman, a Fellow at the Roosevelt Institute who is working on a project outlining progressive values and goals. We talked about how the Occupy Wall Street protests represent some important forms of political engagement, how progressives can best interact with the movement, and what its lasting impact on our political discourse may be.

    Bryce Covert: Now that Occupy Wall Street has been building for a few weeks, what are your initial thoughts on the movement?

    Sabeel Rahman: I think that it's potentially an important event in terms of the political discourse. Initially there was a lot of concern about whether they had specific demands, but that isn't really a concern of mine. I think that the value of a movement like this is to put issues on the table and to get people thinking and talking about them. They've raised issues such as inequality, political accountability, and what it means to be a meaningful part of the political process. They are creating a sense that ordinary citizens need to become bigger drivers of public policy and that our predicament is not just an economic one. It's also about political disempowerment.

    Whether or not these individuals at the protest are thinking about these exact issues or whether they have a nuanced view of public policy or politics doesn't matter. The real value is that you and I are talking about it and everywhere I go people are talking about it. They are changing the popular discourse about where we are as a country.

    The specific policy proposals might come later. They may or may not come from Occupy Wall Street protesters themselves; they might come from sympathetic groups, unions, or advocacy groups. That takes time, but for now there has already been a significant impact.

    BC: You've been doing work on the progressive movement and the need for it to become more decentralized and less electorally focused, as it used to be. How does this movement fit in? Is it a manifestation of this?

    SR: Occupy Wall Street is interesting in its implications for what politics should look like or what democracy actually is. On the one hand, I think it's a valuable reminder that social change comes from a lot of different sectors. Elections are a big part of how we change real things in our society, but before we can do that effectively we need to change people's ideas and the distribution of political power. Physically occupying space in the city is itself an expression of another form of political power aside from electoral mobilization that instead harnesses the power of protest and engagement with public spaces.

    In that sense it's encouraging. But on the other hand, Occupy Wall Street is also a sign of how ineffective our current forms of democratic engagement actually are. If you're worried about all the things that the "We Are The 99%" Tumblr is expressing, but for whatever reason you are hesitant to join a march or a protest, how do you as a citizen express concerns or be a part of changing the conversation? And how can ordinary citizens continue to have a meaningful political voice on an ongoing basis, even after these particular protests dissipate? If we are to be an effective democracy, we need a lot more than elections and protest politics. We need institutions that can engage regular people who are activated by the Occupy movement. We need institutions where they can be participants in the project of governance. That means something that is less institutionalized than elections but more institutionalized than protest politics -- something that can maintain political participation between elections and between moments of protest. Traditionally, political parties or unions played a major role in engaging citizens in this way, but the decline of unions and the shifts in internal party politics make them less effective as channels for ordinary citizens' meaningful participation. We need something more than that, other institutions where people can have an impact. For example, how might we tap some of this energy to reengage with state and local governments? If we had participatory budgeting, which some New York and Chicago city council districts are experimenting with, that would be the kind of institution where more ordinary people could engage regularly and express their views. We don't have those systems yet, but we could really easily and if we did the prospect for progressive social change would be much stronger.

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    BC: How do Occupy Wall Street's organizing methods specifically fit into your call for a new form of progressive organizing?

    SR: I've been watching coverage from afar and haven't experienced it firsthand. But on paper, from what I've seen it does seem like there is a really compelling form of internal, democratic governance within the movement itself. It has a daily general assembly where people can put items on the agenda with open attendance and rules of procedure.

    The call and response method for guest speakers at the assemblies is also very interesting. It underscores for me that one of the core beliefs of the movement is this conviction that people ought to be directly involved in politics. The difference between a speaker talking at an audience through a megaphone as opposed to having the other people in the assembly be part of the conversation by relaying messages back and forth and engaging in it in a more direct way is the difference between being a spectator and an active participant in a conversation. This is exactly what I think at its best this movement could provoke us to think about: the difference between us being passive spectator citizens, watching everything play out as the economy collapses around us, compared with being active participants in trying to change the direction of the country.

    BC: How do you think progressive activists and politicians should best engage with the movement?

    SR: I think that's a really, really good question. It's hard to know, but it is a question that progressives must think about seriously. It is important for progressives who agree with the general thrust of the protest -- themes of inequality, accountability, and self-rule -- to actually engage with them, whether or not they join. Before progressives start talking about ways that they should do things better or ways to tap or co-opt their energy, before playing savior, progressives should at least engage with them, get a sense of what's going on, who are they as individuals, and what is really happening.

    One approach would be for established progressive groups to bring some kind of organizational muscle to some of these ideas. For example, state, local, and congressional lawmakers can be generally unresponsive, but as a whole they may respond if constituents start calling them and knocking on their doors. If you are an established progressive and you know who the key policymakers are on certain issues and how to get a hold of them, maybe that's the next step, to channel some ideas and energy into forms that would put pressure on specific policymakers and link it with specific policy proposals. This shouldn't supplant the protests at all. The goal is to find some way in good faith to link up with the protests and to make the most of the division of labor. It's not to say they're amateurs who should be supplanted by professionals. The protesters bring something to the table, as do the professional advocacy groups.

    BC: How might this shape future progressive organizing and the movement itself? Or not?

    SR: It may not have a lasting impact. I think a lot depends now on what more mainstream or established progressives, activists, and groups do next, as well as what happens among the citizens who aren't part of protests but are sympathetic. One possible outcome is for established progressive advocacy groups, policymakers, and politicians to engage with the issues and languages raised by the protests.  They could start running with concerns about inequality, unaccountability, and unemployment. Lots of progressives have been doing this to varying degrees already, but the protests could help catalyze a broader shift in discourse and agenda-setting.

    Another possible outcome is citizens not involved with the protests engaging with the ideas raised by the protesters and starting to think differently about their own role as political actors or how they should approach the upcoming elections. And if these two mechanisms for impact -- progressive groups and other sympathetic citizens -- link up with one another, then there could be a genuinely powerful shift in the political landscape. The biggest imperative for progressives is to engage seriously with this event and these ideas. That means either experiencing it directly or at least using this as an opportunity for introspection about what progressivism is and what it ought to be.

    BC: What would be the best long-term change to come out of this movement?

    SR: First: a shift in the broader political conversation. If the protest changes the discourse so that it engages more directly with issues of inequality, political accountability, unemployment, and the economic crisis, then a lot of important policy changes become more possible.

    Second: a longer-term focus on building channels for participation and political engagement. If the protests inspire us to think seriously about institutional reforms along with the substantive issues of economic policy, then that might open up another form of lasting change.  Democracy is not just an abstract notion of wanting to participate or be involved; often when we talk about improving democracy we view it as a separate concern independent of other substantive policy issues. But what is really compelling about the protest and what progressives should pick up on is that the substantive issues -- inequality, the economy, post-Dodd-Frank financial regulation -- are intimately bound up in questions of political power and empowerment. And combining the two dimensions makes for a very powerful political argument: that current policies are on the merits flawed, but that the way to change things isn't simply by replacing one set of elites with others. Rather, it's about shifting political power in a way that makes government more accountable and pushes it to respond to the kinds of things people are really worried about.

    At its best that's what Obama's 2008 campaign rhetoric was really about. He argued that we have these problems in our country, and they are bound up with the idea that ordinary people need to be empowered and engaged in politics. That's what made his campaign so compelling, but it was a promise as yet unrealized. Democratic empowerment is part and parcel with having a more just economy; the two go together. And that is the best argument progressives can make for social change.

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  • The Economics Behind Occupy Wall Street: Shameful Income Inequality

    Oct 19, 2011Bryce Covert

    One of the biggest driving forces behind the movement is a phenomenon 30 years in the making.

    One of the biggest driving forces behind the movement is a phenomenon 30 years in the making.

    What could we call the economics behind the Occupy Wall Street protests and the "We are the 99%" movement? One of the most driving themes behind both is this country's growing and embarrassing income inequality. In the aftermath of the recession, incomes have been on the decline for most of us. Median household income fell to $49,445 last year, the lowest in more than a decade. Yet those making over $100,000 a year have actually seen improvements.

    Not to mention that corporate profits have rebounded while wages have staggered backward. Those profits accounted for 88 percent of economic growth during the first year and a half after the recession ended, while wages and salaries for the rest of us only accounted for one percent. Corporate profits were $343 billion higher from 2008-2010 than predicted, while personal income for families was $265 lower than expected. The booming profits have brought little for most of us, but have meant nice raises for top executives: their median pay at 200 major companies was $9.6 million in 2010, up 12 percent from the year before.

    But the income inequality that has urged so many take to the streets is not an overnight phenomenon. It's part of a much longer-term trend. As the CBPP reports, the gap between the after-tax income of the richest one percent of Americans and the rest of us more than tripled over the last three decades, far before the Great Recession started. And after this 30-year rise, we're now at a level of income inequality not witnessed since the Great Depression. As one telling example, in 2007 the top 1 percent had an income of $1.3 million, up $88,800 from just the year before -- and that $88,880 gain is more than the total income of the average middle-income household. Meanwhile, the discrepancy between income at the top one percent and in the bottom fifth grew ever faster during the last three decades: in 1979, the top income was 22.7 higher, but by 2007 it was 74.6 times higher.

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    What brought us here? I've just finished reading Barbara Ehrenreich's classic, Nickel and Dimed, in which she details her entry into the low-wage labor force and her struggle to both make ends meet and hold onto her human dignity. The most striking thing about reading the book now is that she wrote about these struggles at a time when the country was experiencing booming prosperity. In the late 1990s and early 2000s, there was actually a reported labor shortage, a housing boom, and other signs of economic health. But as she shows, little of that was shared with those at the bottom of the ladder struggling to make ends meet. Even then, with incredible national wealth, income inequality was growing and the lower classes were falling farther behind. As she recently wrote in reflecting on those times, a report shortly after the book's publication found that 29 percent of American families earned less than what they needed to cover housing, child care, health care, food, transportation, and taxes.

    At the end, she evaluates both her ability to subsist (and her attempts to thrive) and our country's support for low-wage workers. She talks about what she saw as a "culture of extreme inequality": part of it is to do with cutting services for the poor while "investing ever more heavily in prisons and cops" to police them. Another factor has been the invisibility of the poor:

    Some odd optical property of our highly polarized and unequal society makes the poor almost invisible to their economic superiors. The poor can see the affluent easily enough -- on television, for example, or on the covers of magazines. But the affluent rarely see the poor or, if they do catch sight of them in some public space, rarely know what they're seeing, since -- thanks to consignment stores and, yes, Wal-Mart -- the poor are usually able to disguise themselves as members of the more comfortable classes.

    This invisibility was reflected in policies that made things worse for the less well off, such as welfare reform and bankruptcy reform that just made things more difficult for people who need those services, lowered tax rates for the very wealthy, and attacks on social safety net programs. Many of those problems are with us today.

    That dynamic, in which the poor are invisible and ignored by politicians, is one of the things Occupy Wall Street has served to change. The poor, downtrodden, jobless, over-indebted, and financially strapped are easy to find and to see. They're hanging out in Zuccotti Park. One can only hope that by bringing income inequality into the spotlight, they will also be able to help get something done to address it.

    Bryce Covert is Editor of New Deal 2.0.

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  • Banks Have No “Right” to Fleece Customers for Profit

    Oct 12, 2011Bryce Covert

    Far from dragging down Bank of America's profits, consumers are actually giving it a boost. So why does it say it needs to charge us extra fees?

    Far from dragging down Bank of America's profits, consumers are actually giving it a boost. So why does it say it needs to charge us extra fees?

    It was just about a week ago that a strange fight broke out between President Obama and Bank of America CEO Brian Moynihan, Occupy Wall Street rumbling in the background. Bank of America had just announced its plans to charge customers a $5 monthly fee on debit cards. Obama hit back, warning the bank that it doesn't "have some inherent right just to, you know, get a certain amount of profit if your customers are being mistreated." Moynihan retaliated, saying, "we have a right to make a profit."

    Which one is right? While the rest of Moynihan's statement is true -- "I have an inherent duty as a CEO of a publicly owned company to get a return for my shareholders" -- there is no inherent right to make a profit. Companies start and fail all the time. That's one of the functions that bankruptcy serves. While CEOs have a legally binding duty to shareholders to turn as much profit as they can, the rest of us aren't on the hook to help them do it.

    But as it turns out, we are helping Bank of America do it. BoA, it's true, is in a tough financial position lately. Its stock is down 53 percent for the year and it posted a loss of more than $9.1 billion in July. What's dragging it down? Much of it has to do with its acquisition of mortgage company Countrywide Financial and the legal challenges it faces related to mortgage lending. In its filing in April, the bank showed a loss of $2.4 billion in the consumer real estate business.

    Card users, it turns out, are one of the bright spots. The poor earnings reported in April were partially offset by "strong earnings from the credit card business," the New York Times reported. That unit saw income rise by 77 percent. And in fact the bank beat analysts' forecasts in July, earning $3.1 billion, and part of its success story was a return to profitability for its credit card business after losing about $1.6 billion last year. The company attributed this in part to fewer delinquencies -- in fact, charge offs fell by $1.2 billion from the previous quarter. Overall, in its latest SEC filing, it reported that net income from the Global Card Services unit -- which includes both credit cards and deposits as of March -- is up 110 percent for the first half of the year as compared to 2010, from $1.8 billion to $3.8 billion. It's up even higher looking at just the latest quarter: 146 percent. While it did report losing about $300 million related to new regulations, or the CARD Act, it seems to have made a pretty small dent. As Moynihan put it when it released its first quarter earnings, "Our customer-focused strategy is working well." Sure is.

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    Banks overall aren't faring too terribly in the aftermath of a recession they caused. Banks insured by the FDIC reported a profit of $29 billion in May, an almost 70 percent increase from the same quarter in 2010. It was the seventh consecutive quarter of year-over-year industry earnings gains. In the second quarter, profits were up at most other large banks, including Goldman Sachs, which more than doubled its profits.

    So what of the charge that a cap on debit card interchange fees makes the cards less economic, leading to the need for monthly card fees? Bank of America's debit card business, after all, is nearly $3 billion, and now that charges on each card transaction will be capped to 24 cents, those profits will likely take a hit. But it may help to visit the history of debit cards to understand their "cost." As Lloyd Constantine wrote in an op-ed for the New York Times:

    Debit cards were developed by banks as a replacement for paper checks. When a consumer pays with a debit card instead of a check, the bank saves money. In the 1980s, Visa calculated the savings at 55 cents to $1.60 per check. The savings is much higher today... [P]urchases made with a debit card didn't involve a loan from the bank, posed very little fraud risk and were extravagantly profitable to banks because they eliminated the costs of processing and clearing checks.

    Constantine recounts the case that lead to a $3.4 billion settlement to stores in 1996 due to the practice of "deceiving stores and forcing them to accept overpriced debit transactions" while the bank was actually saving money. They also had to reduce their interchange fees to 42 cents. While Bank of America doesn't have some legally protected right to reap profits from consumers, it does have the obligation to follow court rulings that find it is deceiving customers and retailers. It also has a legal obligation to follow new rules set out by the CARD Act and Consumer Financial Protection Bureau looking out for the interests of working Americans. It can't even blame its financial struggles on us. Bank of America's stock and profits may be depressed from an ill-fated acquisition, but money from our use of credit cards is helping to keep it afloat. If it wants to pad its profits, it'll have to turn elsewhere.

    Bryce Covert is Editor of New Deal 2.0.

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  • Why the 99 Percent is Crying Out

    Oct 5, 2011Bryce Covert

    Occupy Wall Street is right to be angry. Americans are falling farther and farther behind.

    The biggest controversy over Occupy Wall Street is about what they stand for. Are they a bunch of dirty hippies with no agenda? Do they really think they can change the entire system? Why won't they just put out a concrete list of demands and policy prescriptions?

    Occupy Wall Street is right to be angry. Americans are falling farther and farther behind.

    The biggest controversy over Occupy Wall Street is about what they stand for. Are they a bunch of dirty hippies with no agenda? Do they really think they can change the entire system? Why won't they just put out a concrete list of demands and policy prescriptions?

    While signs at the protests have many, many messages -- from BP to Iran to capital punishment -- the affiliated Tumblr, We Are the 99 Percent, exposes what's motivating people to get on the streets. With over 700 submissions at this point, Americans from all over have been writing down personal stories to explain their frustrations. While those protesting on Wall Street have grievances that are far ranging, those on the Tumblr are almost all sparked by a combination of a few common things: joblessness, debt, and low wages. They are the stories of those who can't make ends meet. These days, that covers a lot of us.

    Here's a sampling just from the most recent page (my bold):

    My mother (leader in her field of pathology, MA) is upside-down on her house. My father (multiple PhD's) lives in his car so that he can do what he loves for a living rather than be a slave to the system.

    I am 45 years old. I was laid off twice in 18 months... I am "unemployable" because of layoffs. I have not worked since November 2008.

    I am 27 years old with $100,000 in debt. I was laid off in 2009 and have been struggling ever since then. I have not made more than $10,000 a year since then.

    My husband and I have $80k in student loan debt. I am in the process of being diagnosed with Multiple Sclerosis, a hard enough thing in and of itself. I also have over $30,000 in medical debt because of that... We own cheap cars, live frugally, have a roommate to help, and try hard to keep up... I work when I'm not too sick, and he works full time.We have a combined annual income of less than $40k annually.

    I have an MS from a top state university- & $135k in student loans (& growing). I've lost 2 jobs in 3 months.

    Lost my job in 2006. Sold my home and moved in with my 87-year-old mother.... Cancer survivor. Need medical care. Can't afford health insurance... TOO YOUNG TO RETIRE. Watching my retirement funds and savings shrink.

    As a newer, less established member of the faculty I was out of work when my college cut classes. Over a year later and I still can't find work... Because of deferments my $41,000 loan has become $62,000.

    Adjusted for inflation, a smaller American reality than that of my dad -- a civil servant who dropped out of college... My son is learning to speak Mandarin.

    I am 29 years old. I have a Master's degree. I am $120,000+ in student loan/medical debt. In the past 18 months I: was diagnosed with cancer, lost 2 jobs, worked 70 hours/wk and unable to keep up. I get more calls from creditors than I do friends... I have $4 in my bank account and no job.

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    And I find this one perhaps the most emblematic of the average American's experience:

    We live within our means, we own our cars, yet cannot accumulate much savings. We live responsibly, and consider ourselves "citizens" and not "consumers." We find it troubling that living simply can still accrue so much debt... We are one emergency away from financial ruin.

    "Living simply can still accrue so much debt." That's been the American experience for years now. As Ezra Klein put it, the Tumblr is full of "small stories of people who played by the rules, did what they were told, and now have nothing to show for it."

    For those who are lucky enough to work, the money we take home has been either stagnating or decreasing, and it's getting worse in the aftermath of the recession. As reported by Bloomberg:

    Take-home pay, adjusted for prices, fell 0.3 percent in August, the third decrease in five months, and personal income dropped for the first time in two years, the Commerce Department reported last week. The declines followed news from the Census Bureau that median household income in 2010 fell to $49,445, the lowest in more than a decade, and the poverty rate jumped to 15.1 percent, a 17-year high.

    That figure, $49,445, isn't going to cut it. A recent report showed that a household with two working parents and two young children needs to earn $67,920 to meet basic needs without relying on public support. It only drops to $57,756 for a single parent with two young kids. Not to mention that rent, food, and health costs are rising. On top of this, 14 million Americans don't even have jobs. When we don't bring in enough money to pay for the basics, the next place we have to turn is debt. Our total revolving debt comes to $796.1 billion, with the average household carrying $14,743 in credit card debt. Household debt is currently 90 percent of GDP, up from 70 ten years ago. It's no wonder, then, that despite making some headway in paying down our debt loads, consumers are still struggling to do so.

    And student debt is a whole other story. The total is on track to reach $1 trillion this year, more than our combined credit card debt. Alongside this surge is a rise in delinquencies post-recession. This is partly fueled by the government, schools, and hard-pressed parents pulling back on support. It is also certainly fueled by the dismal job market and graduates' unemployment rate -- which will have ramifications for their earning capacity for years to come.

    I'm not surprised that people are at their wit's end over personal finances. I'm not surprised that they're blaming the banks that make money from keeping us in debt. I'm just surprised it took this long for the anger to find its voice.

    Bryce Covert is Assistant Editor of New Deal 2.0.

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