Roosevelt Reacts: How the State of the Union Could Be Even Stronger

Feb 13, 2013

President Obama laid out some strong progressive ideas, but there's lots more work to be done.

Richard Kirsch, Roosevelt Institute Senior Fellow:

Two years ago, progressive groups came together to develop the Progressive Economic Narrative. And last night, at the very beginning of his State of the Union address, the president began with our story, ending with our central metaphor:

President Obama laid out some strong progressive ideas, but there's lots more work to be done.

Richard Kirsch, Roosevelt Institute Senior Fellow:

Two years ago, progressive groups came together to develop the Progressive Economic Narrative. And last night, at the very beginning of his State of the Union address, the president began with our story, ending with our central metaphor:

Our economy is adding jobs, but too many people still can’t find full-time employment. Corporate profits have skyrocketed to all-time highs, but for more than a decade, wages and incomes have barely budged. It is our generation’s task, then, to reignite the true engine of America’s economic growth: a rising, thriving middle class.

Then he said the way we build that middle-class economic engine is by following the same path we laid out: government investment in research, infrastructure, energy and education. And he added at least some substance on good jobs, with his minimum wage proposal. This is a battle of ideas and policies we should welcome. 

Dante Barry, Chapter Services Coordinator & Summer Academy Fellowship Coordinator at the Campus Network:

Last night, the president announced a new Presidential Voting Commission, an ambiguous and amorphous idea to address the "voter experience" on Election Day, chaired by lawyers from the Obama and Romney campaigns. I am pleased that he decided to tackle this problem, yet I am also disheartened to see the efforts to take bold action on voting reform do not include a large amount of input from the communities represented, suppressed, and deterred. This commission should provide forward-thinking recommendations and take bold action to support our most sacred right for any American: one voice, one vote. We have a responsibility to provide access and opportunity for every American to vote in a way that reflects this country's progress and values with 21st century innovation and technology. 

Thomas Ferguson, Roosevelt Institute Senior Fellow and Professor of Political Science, University of Massachusetts:

What you think of the president’s speech depends on what you think the real state of our union is. I think that we are five years into an economic crisis that is barely improving thanks to a huge deficiency in aggregate demand for goods and services. All over the globe, that crisis is toppling governments, fanning competitive depreciations, and, if you look closely, stimulating arms races, especially in Northeast Asia, where governments are pushing back more vigorously against the economic crisis than in our own country. Against this standard, the president’s proposals look pretty weak. Spending $50 or even $100 billion on infrastructure is a drop in the bucket. Raising the minimum wage is an excellent idea, but it won’t solve the aggregate demand problem. We’ll just have to see about climate change, but acknowledging the problem is just a first baby step. And the problem of medical costs is fundamentally a problem of monopolistic practices and limited information. If you don’t name that situation and deal with it, you have no real hope of delivering better care at lower cost. The president didn’t. To all of this, of course, there is a ready answer: If you don’t like these proposals, wait till you see those of the Republicans. And, this, alas, is equally true. Except when it comes to drones and killing Americans without due process.

Bryce Covert, Editor of Next New Deal:

Women were decisive in helping elect President Obama to a second term, and last night he began to start thanking them for their support. Perhaps the most important policy he proposed was his call for universal preschool, an enormous yet desperately needed program that would not only help children, but also help their working parents -- and let's be real, mothers still do the majority of work in caring for children -- go to their jobs knowing their children are taken care of. But he also put forward some other key policies that, if they were to be passed, would mean a lot to the country's women workers. He called for a raise in the minimum wage to $9 an hour and to have it indexed to inflation so that it doesn't continue to stagnate as it has for the past three years. Women absolutely need a raise in the minimum wage. They make up two-thirds of the workers who make such low pay. He unfortunately didn't call for a raise in the tipped minimum wage, which has been stuck at $2.13 for 20 years and would give a huge boost to the 64 percent of waiters who are women. But he did take aim at another problem affecting women's pay: salary secrecy. He called for the passage of the Paycheck Fairness Act, which would build on the Lilly Ledbetter Act to get rid of the ban at half of all companies on discussing salary. Women first have to know what their coworkers are making before they can root out discrimination. All three of these policies would actually be huge steps forward in combatting the gender wage gap, as balancing children and work, making the minimum wage, and being forced into secrecy about paychecks are big factors.

Jordan Fraade, D.C. Pipeline member:

In terms of its delivery, the State of the Union felt like a victory lap: President Obama seems more confident and confrontational, a little bit feisty, and vindicated by the election. But despite this tone, the speech’s policy proposals seemed to focus on incremental change with a few major exceptions (universal Pre-K is a pretty big deal). The president kept coming back to the idea of making government “smarter,” not larger or smaller. His proposal for a “Fix-It-First” program for infrastructure is typical of this approach to policy, and in this case, it’s a good move. Putting people to work doing things like rebuilding deficient infrastructure and revitalizing abandoned urban neighborhoods is a far smarter way to plan for the future than building new highways to the suburbs and encouraging sprawl, which has been standard U.S. policy for over 60 years. However, along with his comments on mortgage relief and homeownership, I would have liked to see President Obama propose something to help renters as well, who are disproportionately urban, minority, and young and end up subsidizing homeowners through the tax code. Millennials, who graduated into a bad economy and a bottomed-out housing market, have largely had no choice but to pay the rent that’s asked of them, since tight credit and low salaries have made buying a home nearly impossible. The president, whose administration is filled with smart growth advocates, likely knows all of this already. His Millennial supporters would surely appreciate it if he acted on it during the next four years.

Mike Malloy, Campus Network member and student at Michigan State University:

In recent years, two Republican strategies to weaken the Democratic voting base have emerged at the state level: voter restriction and attacks on labor. Unfortunately—and unsurprisingly—President Obama neglected both in his speech last night. The president's eagerness to see bipartisan cooperation is commendable. But failing to expose partisan games undermines his bipartisan vision, enables the misleading of the public, and hurts targeted groups.

The president spoke about “improving the voting experience,” addressing logistical issues that caused long waits in November. Why not address attempts to supress voters by requiring special identification and limiting early voting, both intended to obstruct Democratic voters? The president could still champion convenient voting efforts and—in a perfect world—even call for both parties to end gerrymandering.

Likewise, despite emphasizing manufacturing and proposing a new minimum wage, the president did not mention organized labor, including the right-to-work laws and collective bargaining restrictions Republican state legislatures have passed to weaken unions' political influence. Acknowledging the problematic worker pension and benefit costs state and local governments face, President Obama might have called for a renegotiation of contracts while reaffirming the rights of workers, acknowledging the views of both parties. Instead, the president's silence continued a trend of staying quiet on labor issues. This likely stems from the unpopularity of unions, but it also reinforces that negative view.

The president's pursuit of bipartisanship cooperation is truly admirable. But in order to achieve it, he should call attention to egregious acts of partisan gamesmanship in addition to finding common goals.

Tim Price, Deputy Editor of Next New Deal

There were a lot of takeaways from last night's State of the Union, but the most striking to me is that after the last four years, President Obama still has the ability to surprise us. After what many viewed as an uncharacteristically progressive inauguration speech, there was potential for the president to retreat into his reflexively centrist comfort zone -- and there were hints of that, like his insistence that nothing he wants to do should add to the deficit, or the questionable decision to lead off the night by talking about entitlement reform. But for the most part, he exceeded expectations and behaved like post-2012 Obama, who seems much more comfortable pushing the boundaries of the debate now that he knows he won't be running for anything again. Who expected him to even mention the minimum wage or universal pre-K, let alone highlight them as major policy proposals, before the prepared text began to leak last night? We still have a long way to go before the solutions on the table measure up to the challenges we face, but at least we're having the conversation.

Where Obama defied expectations, Republicans met them, to their detriment and ours. Whether the topic was jobs, immigration, voting rights, or protecting women from violence, John Boehner kept his hands at his sides and grimaced as if he were sitting on a tack -- except that would at least have motivated him to stand up. In his response, Republican rising star Marco Rubio rehashed every tired anti-government argument you've heard a thousand times before and offered bold ideas like... tax cuts. It's obvious that they have nothing new to offer and are hoping mindless obstruction will be a winning strategy like it was in 2010. But that was a different time and a different economy, and the president's message to them last night was clear and forceful: we're all tired of your shtick. What else have you got?

Tarsi Dunlop,  D.C. Pipeline leader:

President Barack Obama highlighted the importance of investment last night: in America, in the middle class, and in future generations. He also talked about the return on investment, which is particularly pertinent when it comes to expanding access to early childhood education. Access to high-quality Pre-K education is one of the most effective ways to ensure that all children are prepared for academic success in K-12 and then ultimately for college and careers. If children are not reading at grade level by third grade, they are at a higher risk of falling behind and dropping out by the time they reach high school. Early childhood education offers early exposure to vocabulary, numbers, and helps children learn how to socialize with others. An additional benefit for families is that access to Pre-K education allows both parents to earn an income while offering children a safe and engaging learning environment. Outside high-quality daycare is expensive, and many parents don't have several hundred dollars a week to pay for it, something that the president noted last night. While expanding early childhood education is not cheap, there is a significant lifelong return on investment over the course of a lifetime, as the president pointed out: boosting graduation rates, reducing teen pregnancy and violent crime, increasing the likelihood of students holding a job, and having more stable families of their own. Ideally, as this proposal gains traction, the president’s definition of "working with states" should not involve competitive grant funding. This implementation method puts resource-strapped districts and states at a disadvantage in applying for funding and creates winners and losers. Best practices already exist for statewide programs, with effective public-private partnerships, that can and should be replicated. In the spirit of progressive values and ideals, dollars and investment should reflect an equal and fair commitment to each child, regardless of external circumstances. 

Michelle Tham, Campus Network member and student at American University:

Obama's speech mentioned the success in natural gas and how further investments must be funneled into the renewable energy sector. However, by not mentioning intellectual property rights, Obama misses the target of the conversation on renewable energy. Alternative energy resources is one topic that all countries are willing to share information on, except the United States. Foreign firms from Europe invest in China and India because their IPR (intellectual property rights) are less stringent, which allows the flow of information and design to flourish. China is the leading producer in solar panels because its designs are more affordable than American-based solar panels. Wind technology is China's third largest energy source domestically -- after coal and natural gas. Therefore, in order to increase innovative ideas, Obama needs more open trade policies with different countries and needs to encourage cooperation, not only in diplomatic relations, but in commercial relations as well. Technology transfers are occurring in commercial levels and the government's role is to facilitate such transaction. 

Naomi Ahsan,  D.C. Pipeline leader:

In his inaugural address, the president broke with the rhetoric of politics as usual to lay out his philosophy for good government in a very genuine manner. He used this new voice again in his State of the Union address and listed several legislative priorities within the overarching objectives of addressing poverty and gender justice. The first was raising the federal minimum wage. His description of how a family fully employed with honest work at the minimum wage can still be living in poverty captures the rationale for supporting welfare programs. The president also noted that persistent poverty has emerged as a geographically-defined phenomenon within the U.S. and called for direct community development efforts as well as making high-quality preschool available to every child. This would help break the cycle of poverty, particularly in distressed neighborhoods. Children from low-income families are already less likely to graduate high school and they start kindergarten demonstrably behind better-off peers on developmental milestones leading up to literacy. Making quality preschool universal would show that we have learned from seeing programs like Head Start and Jumpstart dramatically improve underprivileged children's educational prospects by providing extra support at the pre-kindergarten level. It is also important to recognize the connection between gender inequality and poverty: women account for about 62 percent of those earning the minimum wage and often are taking financial responsibility for leading families. Fair pay for these women workers contributes to the health and opportunity of children and families as a whole. I was impressed that the President was offering informed and thoughtful solutions for the growing issue of poverty, which has great potential for benefiting the economy and is deserving of the national attention that too often goes to deficit reduction.

Florence Otaigbe, Campus Network member and student at Michigan State University:

As a staunch supporter of President Barack Obama, my first reaction was that I couldn’t agree more with his introductory remarks on how America is now stronger than ever before. There is no disagreement when it comes to the matter of progress. The disagreement comes in trying to push progress further. During his address, the president laid out various proposals for his next term. Ranging from education to gun control, the president hit the nail on the head. Yet in spite of these great ideas, it’s up to Congress and the people for any change to occur. That’s where my reaction turns less optimistic. I truly believe that there is a great divide in Washington D.C. that is starting to reach the point of no return. Both sides are polarized like never before, and it’s really hard to reach a consensus on anything. I just don’t see how the country can advance when there is so much tension among the people who enable that advancement. There’s much more room for change in America, but most of that rests with most of our leaders in D.C. Without their cohesion, it’s likely that America will remain stagnant, and that is not what we want for our country.

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Obama’s Second Inaugural Should Reject the “Job Creators” Vision of Capitalism

Jan 18, 2013John Paul Rollert

Now is the time to articulate a vision of capitalism that doesn't rely on the Visible Hand.

An inaugural address finds presidents at their most philosophical. Policy prescriptions are neither expected nor desired, and the solemnity of the occasion lends itself to reflection.

Now is the time to articulate a vision of capitalism that doesn't rely on the Visible Hand.

An inaugural address finds presidents at their most philosophical. Policy prescriptions are neither expected nor desired, and the solemnity of the occasion lends itself to reflection.

But a second inaugural address differs from the first in one important way, for it must respond to recent history. A newly installed president, without any real responsibility for the larger events that saw his election, can indulge in hopeful prophecy, but a re-elected president owns the immediate past. It, and not his address, is prologue to a second term, and so, especially in troubled times, his speech must take shape around present challenges.

The financial crisis cast a long shadow over President Obama’s first term.  Yet in his battle to deliver the economy from a steep financial downturn, he stumbled into a war of sorts over how capitalism works. This is a conflict the president would no doubt have rather avoided—the presidency is challenging enough without having to convince a substantial portion of the electorate that your aim is not to subvert capitalism but to save it from itself. However, the deep disagreement over how the crisis came about, much less how it might be resolved, made an ideological debate over the very nature of capitalism all but unavoidable.

What exactly is the nub of the disagreement? During the election, everything Republicans believed to be wrong with the president’s approach to economic policy was epitomized by the “You didn’t build that” remark. The remark came amid off-the-cuff comments President Obama made at a campaign rally in July. A first-time listener might be forgiven for mistaking the endlessly disputed that, but a review of the transcript clearly shows it refers to public infrastructure—roads, bridges, educational institutions, and the like—that is necessary, if not sufficient, for a private enterprise to thrive.

At the time, some Republicans tried to twist the remark to suggest that Obama believed that business owners don’t actually have a hand in building their own businesses, a contention that was not implausible so much as incoherent. However, shrewder observers insisted that the significance of the remark lay beyond its plain meaning. “It’s an explanation,” Paul Ryan declared in a campaign stop at the site of the remark. “It tells us why our economy is not growing like it should. It tells us the mindset that he’s using to lead our government. It tells us that he believes in a government-centered society and a government-driven economy.” For Ryan and others, it suggested that President Obama rejected the “job creators” vision of economic development favored by Republicans, or what one might call the Visible Hand theory of capitalism.

This theory finds its first and most formidable expression in the work of Joseph Schumpeter, the mid-20th century Austrian economist who cast the entrepreneur as the action hero of economic growth. As far back as Adam Smith, economists had regarded the serene stasis of perfect competition as a kind of endpoint for capitalism. But Schumpeter believed this ideal blinded them not only to the chaotic reality of capitalism but to the revolutionary power of instability to pull or, more accurately, yank an economy ahead.

“Economic progress, in capitalist society, means turmoil,” he declared in his classic work Capitalism, Socialism, and Democracy. The system “is incessantly being revolutionized from within by new enterprise, i.e., by the intrusion of new commodities or new methods of production or new commercial opportunities into the industrial structure.” The people who fomented such destabilizing changes were Schumpeter’s entrepreneurs. Their efforts constituted a “distinct economic function,” one that gave rise to new possibilities in the capitalist order even as they foreclosed old ones.

Especially in Schumpeter’s early writings, the entrepreneurial class embodies the Visible Hand of capitalism. In his first book, The Theory of Economic Development, Schumpeter celebrates the entrepreneur as a “man of action,” a larger than life individual whose keen intellect, swashbuckling spirit, and stubborn irreverence toward the commercial status quo made his activity “the greatest and most splendid element that economic life offers to the observer.”

But though he never yielded pride of place in Schumpeter’s system, the entrepreneur evolved from a class of superman, distinct and identifiable, to a spirit of sorts that animated capitalism. That evolution is captured by the very way in which Schumpeter emphasized the impact of the entrepreneur. Early on he terms it “creative construction” before changing to the always-capitalized “Creative Destruction,” a subtle revision that prized the secondary consequences of entrepreneurial endeavors over their self-conscious aims.

The shift in emphasis coincided with a greater awareness by Schumpeter of what he called the “cultural performance” of capitalism, its tendency to subvert traditional ways of life and undermine social cohesion. “[O]ne may care less for the efficiency of the capitalist process in producing economic and cultural values,” he candidly admitted, “than for the kind of human beings that it turns out and then leaves to their own devices, free to a make a mess of their lives.”

Ayn Rand’s radical individualism made her the natural person to adopt Schumpeter’s vision and relieve it of its social qualms. Though she never acknowledged her debt to Schumpeter, Rand also locates the engine of capitalism in an “exceptional minority who lift the whole of a free society to the level of their own achievements.”

This passage comes from What Is Capitalism?, an essay published in 1965, 15 years after Schumpeter’s death. In it, Rand provides an eye-opening description of the just deserts implied by her vision of capitalism:

The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all their brains.

In other words, to the victors can’t go spoils enough.

Rand’s ethics of achievement, together with Schumpeter’s opinion of the essential place of the entrepreneur, provide the Visible Hand its moral license and theoretical integrity. In the 2012 campaign, it found an impassioned spokesman in Paul Ryan, whose speech at the Republican National Convention was a celebration of this vision. “With tax fairness and regulatory reform,” he pledged, “we'll put government back on the side of the men and women who create jobs, and the men and women who need jobs.”

Yet even among those sympathetic to the Republican ticket, the unavoidable elitism of the Visible Hand left some feeling cold. “In Ryan’s intellectual bubble, there are job creators and entrepreneurs on one side and parasites on the other,” wrote Scott Galupo of The American Conservative the morning after Ryan’s speech. “There is no account of the vast gray expanse of janitors, waitresses, hotel front-desk clerks, nurses, highway maintenance workers, airport baggage handlers and taxi-drivers. They work hard, but at the end of the day, what can they be said to have ‘built’?”  

The answer, of course, is nothing—at least nothing essential to economic development. What so struck Adam Smith about the commercial system he described, “the assistance and co-operation of many thousands,” is entirely taken for granted. The daily labors of a nation are a mere fait accompli to the executive decisions of a few.

Such a vision sits uncomfortably amid democratic values of equality, empathy, and the inherent dignity of the individual, but it becomes intolerable when the theory underpinning it becomes a pretense for naked privilege. Whatever the merits of Schumpeter’s theory of entrepreneurship, his “job creators” were a class defined by spirit, not tax status. To the degree that Republicans conflate the two, they make a travesty of Visible Hand.

An aristocracy of talents is no doubt preferable to the politics of plutocracy, but neither one is commensurate with a vision of capitalism that takes as its point of departure, and its final destination, a concern for the common good. President Obama recognizes this. “Ever since” the financial crisis began, he said in his most powerful speech of the 2012 campaign, “there has been a raging debate over the best way to restore growth and prosperity; balance and fairness.” This isn’t “just another political debate,” he continued. “This is the defining issue of our time.”

And it will only continue to be, what with the upcoming battles over the sequester and the debt ceiling in addition to ongoing debates over entitlement reform, budget deficits, and tax rates. President Obama’s second inaugural address provides him a unique opportunity to describe the challenges of a common capitalism and to put forward a vision of economic development that doesn’t see us waiting on the deliverance of an enlightened few, but one in which there is dignity and place for everyone to lend a hand. 

John Paul Rollert is an Adjunct Assistant Professor of Behavioral Science at the University of Chicago Booth School of Business.

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Dorian Warren on the Significance of the Walmart Strikes

Dec 4, 2012

You may have heard that on Black Friday, hundreds of Walmart workers went on strike. But at such a large employer, what does that really mean? In the latest episode of the Roosevelt Institute's Bloggingheads series, Fireside Chats, Fellow Dorian Warren talks with labor journalist Josh Eidelson about the significance of the strikes:

You may have heard that on Black Friday, hundreds of Walmart workers went on strike. But at such a large employer, what does that really mean? In the latest episode of the Roosevelt Institute's Bloggingheads series, Fireside Chats, Fellow Dorian Warren talks with labor journalist Josh Eidelson about the significance of the strikes:

Dorian points out that "Walmart is the largest private employer in the United States," with "over 3,000 stores and 4.1 million workers." That means the Walmart way has a huge impact on the rest of the sector -- and the economy. And just what does that look like? "That model is a model of low wages, of what’s called flexible scheduling…workers not even being able to work full time even though they might want to, of workers having to go to the state, to government for different kinds of support," Dorian says.

Check out the full video below for more on the fire in Bangladesh and whether 2012 is the year of the strike:

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The Missing Living Wage Agenda

Nov 20, 2012Annette BernhardtDorian Warren

As part of our series "A Rooseveltian Second Term Agenda," a long-term plan to provide justice on the job for all workers.

As part of our series "A Rooseveltian Second Term Agenda," a long-term plan to provide justice on the job for all workers.

Now that the election is over, our hope is that we can finally move beyond the vacuous invocations of an imaginary middle class where everyone is in the same boat. It’s time to get real about the concrete policies needed to take on the multiple inequalities that run deep through the U.S. labor market. And we’re not talking about the “skills mismatch,” another red herring routinely flung into this debate by both sides (including by President Obama as recently as the last week of the campaign).

What we’re talking about is a broad, multi-year agenda to give America’s workers a living wage and voice on the job and to take on the continuing exclusion of workers of color, immigrants, and women from good jobs. The media may have discovered inequality last year with the surprise emergence of Occupy Wall Street, but in truth, there is a 30-year backlog of policies to fix the extreme maldistribution of wages and opportunity in the labor market.

First, we have to make our core workplace standards much stronger – whether it’s in terms of wages, health and safety, or voice on the job. That means raising the minimum wage so that it’s a meaningful floor again (some good news: voters in Albuquerque, San Jose, and Long Beach raised theirs last week). It means updating health and safety regulations written in the 1970s. And it means restoring the right to organize, because at this point, virulent employer opposition and retaliation has rendered U.S. labor law obsolete. Fifty-eight percent of U.S. workers say they would like to be represented by a union, but only 11.8 percent actually are. This is what happens when one out of four workers is fired illegally for attempting to organize a union while employers face minimal penalties.

Second, we have to take on the profound reorganization of the American workplace. The poster child for precarious work is temp jobs – but subcontracting has had a much broader impact, as janitors, laundry workers, warehouse workers, security guards, food service workers, and millions of others have been outsourced to low-wage firms. A good model for a solution is California’s recent law making companies liable for minimum wage and overtime violations by their subcontractors, recognizing that end-user firms such as Walmart exert considerable control over working conditions down their supply chains.   

Third, we have to double down on enforcement. A 2008 study of Chicago, Los Angeles, and New York found that 26 percent of low-wage workers were paid less than the minimum wage and 76 percent were underpaid or not paid at all for their overtime hours. Yet the number of federal wage and hour inspectors is still below 1980 levels, and it would take 131 years for OSHA investigators to inspect each workplace just once. Until employers face substantial costs to their bottom line (as is true in other bodies of law, such as environmental regulation and employment discrimination law), practices like wage theft, retaliation against workers trying to organize a union, and independent contractor misclassification will continue unabated.

Fourth, we have to do a better job of leveraging the government’s capital. Public money touches millions of private-sector jobs, whether by purchasing goods and services for the government or by funding everything from schools and bridges to health care and social services. There are plenty of innovative models to ensure that this money results in good jobs, whether it’s responsible contracting policies (in California, Massachusetts, Connecticut, and Illinois), living wage laws (in more than 140 cities and counties), or accountable economic development policies (in Los Angeles, Pittsburgh, and New York City, among others).

Fifth, we have to explicitly break down systemic labor market exclusions of people of color, immigrants, women, the unemployed, and people with criminal records. For example, advocates are pushing the U.S. Department of Labor to finally end the exemption of home care workers from minimum wage and overtime protection, and cities across the country are passing “ban the box” policies to reduce hiring barriers for people with arrest or conviction records.  

But we also have to challenge de facto exclusions. A good example is targeted hiring and training programs on publicly funded projects, which in our mind will be crucial to solving the escalating (and chronically under-reported) economic crisis in communities of color. A great example is Portland’s 2009 residential retrofitting program, which mandated living wages and local hiring from designated training programs. As of last year, the program’s workers earned median wages of $18 per hour; fully 84 percent were local residents, nearly half of them people of color. While unemployment is still at Depression-era levels in many black communities, we know what works to employ those still excluded from access to the labor market.

A final word on why we think these policies (and many others; see the long-form version here) are politically viable. In communities across the country, there is an undeniable thirst for justice on the job and investment in local communities. This is true not just for raising the minimum wage, which consistently polls in the 70-80 percent range, but also policies such as paid sick days, increased funding for elder care and child care, cracking down on wage theft, using taxpayer money to create living wage jobs, and restoring the right to organize.

(If you doubt support for organizing, consider the recent wave of strikes by Walmart workers, or New York’s taxi workers organizing for better pay even though they are independent contractors, or Palermo’s pizza workers in Wisconsin staying out on strike for three months and now pressuring Costco to boycott their employer.)

The real question is whether President Obama and Democrats in Congress understand that raising taxes on the top 2 percent is only the first step on a long road toward building a sustainable living wage economy in the U.S. Our hope lies in the growing recognition among progressives that it will take the pressure and power of social movements to convince him to walk that road with us.

Annette Bernhardt and Dorian Warren are Fellows at the Roosevelt Institute.

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The Fiscal Cliff Showdown Will Set the Agenda for the Next Four Years

Nov 16, 2012Richard Kirsch

As part of our series "A Rooseveltian Second Term Agenda," a look at the four biggest budget issues that will be debated in the next four months.

As part of our series "A Rooseveltian Second Term Agenda," a look at the four biggest budget issues that will be debated in the next four months.

The very next day after the election, congressional leaders held dueling press conferences in Washington to start the stampede to the fiscal cliff. But December 31st is not a cliff; it’s a slope. Actually, the better metaphor is a showdown between two different visions for the country – a showdown that will not only take place over the next four months, but will dominate debate about the economy for the next four years.

It is true that if Congress allows the tax hikes and spending cuts to be fully implemented, the economy will go into a tailspin, with four million people forced out of their jobs. But that won’t happen on January 1st. The impact of both tax hikes and spending cuts take time to accumulate. If Congress acts on taxes early in the year, it can make lower tax rates retroactive to the beginning of the year. Between federal contracts already in place and the time it takes to implement program cuts, budget cuts too will take a while before they slow down the economy. Better for Congress to walk down and back up the slope early in the year than be stampeded into bad decisions.

In this showdown we have a choice between two paths: prosperity for working families and the middle class or more for millionaires and CEOs. While the showdown will play out in the next few months, the issues will continue to set the economic agenda for the president’s second term. Both the immediate and continued battles will be over four issues: taxes, social insurance, federal discretionary spending, and investments to create jobs.

1. Taxes: The immediate battle will be whether or not to end the Bush tax rates on income over $250,000. The president has rightly made this his line in the sand. If Republican don’t budge, Democrats should wait until next year when all the Bush tax cuts expire, forcing House Republicans to continue to protect tax preferences for the wealthy while taxes go up on working and middle-class families.

The four-year agenda is to restore progressivity to the tax system. Progressives should define tax reform as taxing wealth at the same rate as income from work and enacting higher rates on the highest incomes. With corporate taxes the lowest they have ever been as a share of federal revenue, our agenda should be to end the loopholes and tax preferences for corporations that ship profits and jobs overseas and the breaks from exploiting our natural resources. We should raise more money from a loophole-free corporate tax system.

2. Social insurance: The big three social insurance programs – Social Security, Medicare, and Medicaid – are all protected from the automatic spending cuts, but that hasn’t stopped deficit hawks from trying to bring them into the upcoming debate. Changes to Social Security, like the Simpson-Bowles plan’s “adjustments” to the COLA that will result in 15 percent or more cuts in benefits to middle-class recipients, may well be put on the table as part of “grand bargain.” Democrats should follow Senate Majority Leader Harry Reid, who declared that Social Security is not on the agenda. Over the next four years, progressives should push for the obvious fix to the projected shortfall in the Social Security trust fund: raising or eliminating the cap on how much of earnings are subject to Social Security payroll taxes. That solution would extend the life of the trust fund to 2075 and beyond. It is politically popular, easy to explain, and fits within the broader progressive theme of a tax system that bolsters working families and the middle class by requiring a little more from those with more.

While Social Security does not add a dime to federal deficits, the same can’t be said of the rising pressures of health care spending on Medicare and Medicaid. Both programs should remain off the immediate fiscal showdown agenda, with Democrats pointing out that health care inflation over the past two years is at the lowest level in decades. Some of that is because of changes being put in place by the Affordable Care Act, which has a number of measures to control health care spending in Medicare by eliminating wasteful care and overpayments to health insurance companies. The big agenda for the next four years on health care is to continue to accelerate the changes put in place by the ACA, including that new panel – which the right likes to demonize – that will push Medicare to force providers to provide better care or see their revenues drop. Another top priority is for the federal government as well as states to follow what Massachusetts is doing: use the new health care marketplaces to review health insurance company rate increases and pressure health care providers to provide better quality care at lower cost.

3: Federal discretionary spending: The choice here is straightforward: the amount of revenue raised from ending the Bush tax cuts on income over $250,000 is almost the same as the total cuts to federal discretionary spending. Republicans are eager to stop the Pentagon’s half of the automatic cuts. While many Democrats want to protect the Pentagon, they also want to block the slashing of vital services for families and all the other things – from environmental protections to diplomatic functions – that the federal government does. Progressives should focus on those services that most support low-income and working families, like Pell grants, Head Start, WIC, and food stamps. These are very popular with the public and make the choice crystal clear.

In response to the Pentagon lobbying for more, progressives should argue that Pentagon spending can easily be trimmed, since even if the automatic cuts go through the Pentagon will still be spending more than at the height of the Cold War. Over the next four years, progressives will need to drive home the point that Pentagon spending creates far fewer jobs than spending on health care, education, and other domestic programs, so that reshaping the Pentagon for the 21st century makes both military and economic sense.

It is crucial that progressives link spending choices to jobs. For example, if unemployment insurance for the long-term unemployed is allowed to expire at the end of the year, the loss of benefits to 5 million people will result in another 448,000 being pushed onto the unemployment rolls in 2013. In fact, the biggest job losses among the many choices facing Congress would come from ending long-term unemployment insurance and cutting domestic spending.

4. Good jobs: One thing not on the immediate fiscal agenda is a program to create good jobs. It should be, as the sluggish economy and long-term decline in wages and benefits promises to keep millions of Americans out of work and a growing share of the workforce struggling to make ends meet. Progressive should use the fiscal showdown to go beyond highlighting the job impact of spending cuts. Instead, we should put forth a two-pronged jobs agenda and make this the central push for the next four years.

One prong is investment to create jobs: infrastructure, green jobs, “caring jobs” like day care, elder care, and putting more teachers in our classrooms. We should be pushing for a big youth jobs program. The second prong is job quality: restoring the rights of people to effectively organize unions, modernizing basic work standards by doing thing like raising the minimum wage and indexing it to inflation, and requiring all employers to provide a set number of paid sick days.

The Affordable Care Act will address the growing problem of jobs not coming with health care; here implementation is key. We should also be pushing for the establishment of a new retirement program, such as proposed by Senator Tom Harkin, under which workers would put aside a share of earnings in a pooled, professionally managed plan, with guaranteed, lifetime benefits at retirement or upon permanent disability.

The push for the comprehensive progressive economic agenda above – fair taxes, stronger social insurance programs, protecting vital public services for working families, and investment in good jobs – should start with the upcoming fiscal showdown. The battle between a vision of prosperity for working families and the middle class versus more for millionaires and CEOs is one we should wage for the next four years.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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To Solve the Jobs Emergency, Put Government to Work for Us

Nov 14, 2012Jeff Madrick

As part of our series "A Rooseveltian Second Term Agenda," a reminder that creating more good jobs must be the president's top priority.

The presidential victory of Barack Obama was an important vindication for the uses of government. The small-government ideologues were defeated, but now the nation must go farther and recognize government is indeed a job creator.

As part of our series "A Rooseveltian Second Term Agenda," a reminder that creating more good jobs must be the president's top priority.

The presidential victory of Barack Obama was an important vindication for the uses of government. The small-government ideologues were defeated, but now the nation must go farther and recognize government is indeed a job creator.

Let’s begin with the harsh facts: Neither policymakers nor the media fully understand or communicate that America has a jobs emergency. In his victory speech last Tuesday, President Obama did not even cite job creation as one of his four main goals for the new term. Not only is unemployment high, but wages are stagnant and poverty is rising in an economic recovery. The evidence on the creation of low-wage jobs rather than high-wage jobs is almost frightening; the Roosevelt Institute’s own Annette Bernhardt has been a leader on this.

Our mainstream economists are not of much help. Many, though not all, are loathe to blame globalization for low wages in America. We hear almost nothing from them regarding Wall Street’s role in wage suppression, although American business was obsessed with creating rising short-term profits to appease Wall Street, which rewarded such consistency with high stock prices. Add to this the pressures of LBOs, privatizations, and hostile takeover threats. Little is discussed of the role of the Federal Reserve in maintaining a tight monetary policy until the late 1990s, in my view suppressing wages as an objective. Finally, almost nothing is heard of the benefits of adequate demand, except in the current crisis, in creating productivity growth over the long run, even as China and Japan have clearly suffered secularly from a lack of demand.

All of these mainstream economists warmly support the view that skill-biased technology is the main cause of stagnating wages. But such technologies cannot explain the runaway of incomes at the top. Nor can they explain the lesser inequality in Europe, which is also subject to technological change.

In my view, we need a very aggressive, jobs-related agenda. This includes aggressive fiscal stimulus over the next two years amounting to as much as $500 billion and focused on infrastructure, aid to the states, and extending unemployment insurance. These will meet dire needs and also will have the most GDP bang for the buck.

The minimum wage should be raised to end poverty for all those who work full-time, and a living wage, or something close to it, should be demanded for all federal contracts.  

Industrial policies to target critical new technologies should be aggressively pursued, which might require infant industry protection.

Policies to help our trading partners develop a progressive revolution, including higher wages, the right to labor organizing, and decent labor conditions should be emphasized. As reflected in the Trans-Pacific Partnership, the opposite is occurring. All emphasis is on protecting investors, very little on workers. This would also go some way to creating a more level playing field in trade.

A federal jobs-creating program, similar to those in the New Deal, should be undertaken, emphasizing construction jobs in public works, teaching, and care workers. Tax rates should be raised sharply on the well-off to ameliorate the temporary increase in the federal deficit. Such taxes will not reduce the GDP multiplier very much.

Wall Street pressure to cut wages must be softened. Business executive compensation must be more closely aligned to long-term results. The tax deduction on borrowing for LBOs, privatizations, and corporate takeovers should be sharply reduced or eliminated.

In addition to these immediate needs, there are three longer-term policies we must pursue. First, in three years or so, America will need a sharp tax increase. Its average tax rate, including federal, state, and local, is 10 percentage points below the OECD average. If that is reduced to five percentage points, it would raise nearly $1 billion more a year. There is little evidence such an increase would impede economic growth.

Second, any such tax increase should only partly be used to pay down the debt. It should be used to shore up major entitlements programs, develop a public option for health care, and increase infrastructure and education spending.

Finally, although educational deficiency is not the primary cause of the current wage problem, it will be in the long run. A major educational equalization campaign is necessary, which includes pre-K for all.

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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Voters Demand a Progressive Second Term Agenda

Nov 13, 2012Felicia Wong

As part of our series "A Rooseveltian Second Term Agenda," a call for progressives to seize the moment after Election Day.

As part of our series "A Rooseveltian Second Term Agenda," a call for progressives to seize the moment after Election Day.

Last week’s election results weren’t just a win for the president. Across the board, voters went to the polls and registered their support for progressive values, supporting needed tax increases, passing marriage equality for gay and lesbian Americans, and giving a candidate who ran on a platform of proactive government and a strong safety net a second term. The message was clear: despite an economy that continues to recover too slowly, the direction that progressives are taking the country in is the right one.

The polling we have done with Democracy Corps makes it plain – voters don’t want austerity or cuts in Medicare and Social Security. They want to fix the economy with long-term investments in infrastructure and a focus on jobs. And they want solutions – like raising taxes on the well-off and reforming the financial industry – that can raise the revenue to pay for it. As Hurricane Sandy made apparent, we need to update the country’s infrastructure, and we can put people back to work doing it.

So our job has just begun. Now is when we really have to roll up our sleeves and work to achieve an ambitious agenda. The politics won’t necessarily be much easier than they were over the last four years. But with a Democratic president, a Democratic majority in the Senate, and an electorate strongly behind us, progressives have an opportunity to seize over the next four years.

Over the next few weeks, Roosevelt Institute Fellows and staff will weigh in with their thoughts on what our national agenda should look like. While we might differ on some of the specifics, we all agree on basic values and goals: reducing inequality, creating jobs, kick-starting economic growth, building a community among the American people, and regaining trust in both the private sector through functioning markets and in the government and our political system.

On the eve of a second Obama term, and with some fundamental economic and political choices before us, we are proud to be in this historic moment together, Our goals are ambitious. We believe that our ideas can have real impact. As President Franklin Roosevelt put it 80 years ago, “The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation.” Nothing could be truer of our times. Progressives must lead the way.

Felicia Wong is President and CEO of the Roosevelt Institute.

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What We’re Not Talking About When We Talk About Inequality

Oct 31, 2012Joelle Gamble

It's not enough to maintain a safety net that catches people when they fall. We have to keep them from falling in the first place.

It's not enough to maintain a safety net that catches people when they fall. We have to keep them from falling in the first place.

As a millennial, my generation has been told that if we simply work hard and go to college we will be able to achieve even greater economic gains than our parents. That promise now rings false. The gap between the economic have and have-nots is widening dramatically. Those of us who grow up in middle or low-income families may not have the opportunity to move up the socioeconomic ladder. With the widening gulf between rich and poor hampering economic opportunity so markedly that economist Alan Kreuger has named the phenomenon the Great Gatsby Curve, we need to ask ourselves if our political leadership is taking the right steps to address inequality in America.

The current election debate has focused on progressive tax policy and debt reduction as the central components of how government will both spur growth and reduce inequality in America. We only hear about how education, infrastructure, and health care play into the debate on specific occasions, such as when a question is directed toward one of those topics.

Meanwhile, the conversation around government priorities, outside of direct fiscal policy, has been limited to what programs people will lose if a particular candidate is elected. The two major presidential candidates, as well as many down ticket national candidates, regularly accuse each other of wanting to destroy social security “as it is” or restrict access to Medicare for seniors.

How we change tax rates on the middle class and how we continue to fund our social safety net are both important questions. Our government must ensure that the tax code is working fairly. It must make sure that social programs protect individuals when they fall. But the larger drivers of our economic growth and equality in the United States are being largely ignored in favor of these narrow topics. It is not enough to catch people when they fall. Government must, more importantly, ensure that its citizens have the equal access to resources that will make them less likely to fall in the first place. By providing equality and opportunity, we can spur long-term economic growth and prevent higher costs.

There are some investments that government can make that will do more for long-term economic growth and equality in America than others. Investing in education and job training, building a strong infrastructure of Internet access, and providing quality health care has been shown to not only reduce inequality but also promote economic growth.

Education and training are paramount in providing job opportunities. One of the largest factors affecting earnings inequality in the United States is technological change. Innovation has caused many modern companies and industries to become increasingly dependent on the availability of human capital found in the communities in which they are located. Areas with higher percentages of college-educated works are doing better at attracting and retaining business (and the jobs they bring) than areas with less educated populations. American workers need affordable access to education and skills training to be able to compete in the changing labor market.

Future worker competitiveness will also depend on building strong information infrastructure, especially increasing access to high-speed Internet, as Roosevelt Institute Fellow Susan Crawford rightly argues. Technology has created jobs that require workers to be able to work with large quantities of information and work collaboratively with partners who may not live in the same country, yet alone the same city. Even simple processes such as job applications or unemployment benefit applications now require access to a stable Internet connection. Currently, around one-third of Americans lack access to high-speed Internet.

As has been widely shown, access to quality, affordable health care reduces costs for individuals and their families, as well as American taxpayers as a whole. In the absence of access to affordable preventative care, only individuals with significant financial resources can pay for regular doctor visits, examinations and, potentially, long hospital stays. For those without large incomes, these basic health care needs can severely affect their ability to pay bills and sometimes send them into bankruptcy. Beyond basic care and insurance, affordable care for reproductive health services can serve as a step toward gender parity.

Not only do education, Internet access, and health care move us toward a more equal society, they also give taxpayers more for their tax-dollar. Individuals without access to quality schools and health care grow up to have fewer choices and opportunities to get high-skill, high-pay jobs that offer benefits. This makes them more likely to need social programs during the course of their lives. Making a stronger initial investment in programs such as education and heath care that give people opportunities is wiser than allowing the negative effects of failing to do so cripple the federal budget and the economy over the long run.

Making a stronger initial investment in opportunity via programs such as education and heath care is wiser than allowing the negative effects of not making those investments cripple the federal budget and the economy over the long run. None of this is to say that spending on defense, physical infrastructure, and our basic social safety net are not needed. But the United States needs to change its priorities and push for long-term planning with investments in long-term results. Education, information, and quality care are key to producing a more equitable society.

Joelle Gamble is Deputy Field Director of the Roosevelt Institute | Campus Network.

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Paying Taxes to Your Boss: Another Step Toward 21st Century Feudalism

Oct 26, 2012Tim Price

Employers are already treating their workers like their subjects. Now some of them get to collect taxes, too.

Employers are already treating their workers like their subjects. Now some of them get to collect taxes, too.

Though a lot of Americans really (really, really) hate paying taxes, most of us can at least justify it as our contribution to some greater good, whether it’s the broad range of social programs favored by progressives or a libertarian night watchman state. But what if the government instead told us, “We don’t want your money, but we would like to make friends with some rich guys, so just give it to them and let them have fun with it”? That could soon be the law of the land in Pennsylvania, where the state legislature has passed a bill that would, as Philadelphia City Paper blogger Daniel Denvir describes it, “allow companies that hire at least 250 new workers in the state to keep 95-percent of the workers' withheld income tax.” These workers will essentially be paying their employers for the privilege of having a job. Some have called this “corporate socialism,” but it also calls to mind an even older economic model that was once popular in Europe – except back then, the bosses were called lords. It’s a more modern innovation in the U.S., but combined with increased political pressure from employers and a crackdown on workers’ rights, it all adds up to feudalism, American-style.

The Pennsylvania bill is just the most recent example of state income taxes being turned into employer subsidies. It’s already the law of the land in one form or another in 19 states, and according to Good Jobs First, it’s taking $684 million a year out of the public coffers. The theory is that this will boost job creation. But the authors of the Good Jobs First report note, “payments often go to firms that simply move existing jobs from one state to another, or to ones that threaten to move unless they get paid to stay put.” In other words, it’s more like extortion than stimulus. With state governments facing a projected $4 trillion budget shortfall and continuing to cut social services and public sector jobs, they can hardly afford to be wasting money on companies that already have plenty and have no intention of putting it to good use. And the more governments turn over their privileges to businesses, the more the distinction between the two becomes blurred.

But if corporations have state governments over a barrel, they have their employees stuffed inside the barrel and ready to plunge down the waterfall. As I’ve noted before, some conservatives view all taxation as theft, but there’s surely no better term for what happens when employers promise their workers a certain wage or salary and then pocket some of the money for themselves. When you pay taxes to the government, you get something in return, whether it’s a school for your kids or a road to drive on or a firefighter to rescue you from a burning building. When you pay taxes to your boss, you… well, you give your boss your money. Your only reward is that you get to continue to “work the land,” so to speak. The lords didn’t consult with the peasants on which tapestries they should buy with the money they collected from them.

Did I forget to mention that these employers aren’t even required to tell their workers that this is how their “income taxes” are being used? Journalist David Cay Johnston, who covers this issue in his new book, The Fine Print: How Big Companies Use ‘Plain English’ to Rob You Blind, writes that this bait-and-switch is “stealthy by design.” Of course it is; if these workers were important enough to know where their money is going, it wouldn’t be legal to steal it.

Employers may be able to exert pressure, but they can’t actually control who you support, right? Well, they might not be able to accompany you to the voting booth (yet), but if you work in a state that allows your employer to confiscate your tax withholdings and donate them to a pro-Romney Super PAC, they can turn you into a Romney supporter whether you like it or not. It’s not enough that our current campaign finance system gives wealthy executives nearly unchecked power to support the candidate of their choice; subsidizing them with income taxes allows them to choose for everyone in their fiefdom.

If employers were always secretive about their exploitation, the comparison to feudalism might not seem apt – after all, serfs were pretty clear on what the score was. But there’s nothing subtle about the way some employers have begun to apply political pressure in the workplace. From forcing workers to attend Romney rallies without pay to outright threatening their jobs if President Obama is reelected, employers in the post-Citizens United era are feeling emboldened to conscript their employees as bannermen for the candidates of their choice. Suddenly, a job is not just a job, but an oath of allegiance. And Republicans, at least, are all for it. Mike Elk reports that Mitt Romney himself urged business owners to lobby their employees on his behalf, assuring them that there is “Nothing illegal about you talking to your employees about what you believe is best for the business.” And as we all know, if you can’t technically be arrested or fined for doing something, that means it’s totally okay to do it. Q.E.D., coal miners.

This lopsided power dynamic is reflected more generally in the shoddy state of modern labor law. In most states employers can fire their workers whenever they want for pretty much any reason, forcing them to fall in line with even the pettiest demands. When your boss is trying to tell you when you can and can’t go to the bathroom, forcing you to hide your Obama bumper sticker seems like an almost trifling concern in comparison. This lack of employee agency has led Roosevelt Institute Fellow Dorian Warren to describe today’s employers as “mini-dictators,” and as more public funds are diverted to private business owners, that comparison is only becoming more literal.

If conservative policymakers succeed in their nationwide effort to eliminate collective bargaining rights and neutralize already weakened unions, conditions aren’t likely to get better for workers anytime soon. Business owners and corporate execs will continue to assert more and more authority, bending their workers’ will to their own while using those workers’ paychecks to solidify their power. But there’s still hope of turning things around and restoring a more balanced playing field. If more American workers take note of the fact that two of their least favorite people, the tax collector and their boss, are being combined into one entity, it might just spark enough anger for them to fight back. As the feudal lords eventually learned, the peasants were the ones holding the pitchforks.

Tim Price is Deputy Editor of Next New Deal. Follow him on Twitter @txprice.

 

Businessman with crown image via Shutterstock.com.

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What Do We Get Out of Government?

Oct 25, 2012

"Let us not be afraid to help each other -- let us never forget that government is ourselves and not an alien power over us." FDR said those words in Marietta, Ohio in July 1938, but it's just as relevant today. As conservatives continue to deride every attempt to create progressive change through government as an oppressive socialist takeover, we need to remember that government is nothing more or less than an expression of common initative -- a forum through which we come together to build the things we need to make our country stronger.

"Let us not be afraid to help each other -- let us never forget that government is ourselves and not an alien power over us." FDR said those words in Marietta, Ohio in July 1938, but it's just as relevant today. As conservatives continue to deride every attempt to create progressive change through government as an oppressive socialist takeover, we need to remember that government is nothing more or less than an expression of common initative -- a forum through which we come together to build the things we need to make our country stronger. In the video below, the Roosevelt Institute's Rediscovering Government Initiative looks at the government's vital role in every facet of society, from encouraging innovation to defending our shores, and at what we can still achieve if we're willing to dream big.

Click here to find out how you can get involved in the Rediscovering Government Roadshow.

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