Guest Post: Will Wall Street Win Again with Antonio Weiss Nomination?

Jan 7, 2015Brad Miller

Mike here. This post is from my colleague Brad Miller over the important debate on the Antonio Weiss nomination. Brad is a former U.S. Representative who recently joined the Roosevelt Institute as a Senior Fellow, so he has firsthand knowledge of the internal negotiations around financial reform. Check it out below.

The opposition to the nomination of another investment banker, Antonio Weiss, to a top position in the U.S. Treasury is not just a demagogic appeal to anti-Wall Street prejudices, as his supporters argue.

Weiss’s actual experience appears to be a poor match for the specific duties of the position in question, and may be less laudable than his supporters claim. Weiss’s principal credential appears to be that he is a product of the same culture that produced our other recent economic policymakers.

And that is the real problem for opponents, who believe that economic policies should be subject to democratic debate and require the consent of the governed.

The response to the financial crisis was the most consequential economic policy in generations. Wall Street and Washington insiders alike argue that those policies, endlessly indulgent of banks and pitiless to homeowners, were technocratic decisions that required the recondite knowledge of Wall Street professionals.

To Weiss’s supporters, disregard for public opinion is a virtue. “Making economic policy isn’t a popularity contest,” David Ignatius wrote in The Washington Post, “especially when financial markets are in a panic.” “Our job was to fix it,“ former Treasury Secretary Timothy Geithner said, “not make people like us.”

Criticism did not just come from politicians pandering to the great unwashed, however.

Most economists argued that the lesson of past financial crises was to take economic pain quickly, recognize losses on distressed debt, and take insolvent banks through an orderly receivership. The standard playbook” for financial crises since the 1870s was to “shut down insolvent institutions so executives and shareholders in the future do not think they will escape the consequences of the moral hazard they created.” “Zombie” banks, economists argued, only delay recovery.

The Bush and Obama Administrations instead helped too-big-to-fail banks pretend to be solvent and provided subsidies and other dispensations until the banks became profitable, an effort that continues.

Unfortunately, any effective effort to reduce foreclosures required banks to recognize losses on mortgages. Insiders regarded foreclosures as a lesser concern. Geithner said that even if the government used federal funds “to wipe out every dollar of negative equity in the U.S. housing market…it would have increased annual consumption by just 0.1 to 0.2 percent.”

According to Atif Mian and Amir Sufi, two prominent economists, “that is dead wrong.” Household wealth fell by $9 trillion after the housing bubble burst in 2006, which greatly reduced consumer demand. “The evidence,” Amir and Sufi said, “is pretty clear: an aggressive bold attack on household debt would have significantly reduced the horrible impact of the Great Recession on Americans.”

Wall Street’s critics did not lose that debate. There was no debate.

Senator Obama endorsed legislation in his presidential campaign to allow the judicial modification of mortgages in bankruptcy. President Obama never publicly wavered from that position, but Treasury officials privately lobbied against the legislation in the Senate, where the legislation died. The determination by economic policymakers to protect their immaculate policies from tawdry politics may extend to attempts by the President to intrude.

Meddling by Members of Congress was certainly unwelcome. In a private meeting between Administration officials and disgruntled House Democrats, I said that foreclosure relief efforts appeared designed to help banks absorb losses gradually, not to help homeowners. Geithner was offended—indignant—at the suggestion. Neil Barofsky, then the Special Inspector General for the Troubled Asset Recovery Program, later confirmed that was exactly the purpose of the programs—in Geithner’s words, to “foam the runway” for the banks.

The success of policies that are unacknowledged or even denied is difficult to measure. Since the financial crisis, however, the financial sector, from whence our unguarded platonic guardians came and soon will return, has prospered. Others fared less well. Wealth and income inequality widened dramatically.

Weiss has not served in government, so opposition to his nomination may punish him for the sins of others, perhaps unfairly. There is nothing to indicate, however, that Weiss questions the assumption that the North Star of economic policy should be the prosperity of the financial sector, or that policies should be freely debated unless there’s money involved.

The presidential campaign in 2016 will undoubtedly largely be about economic policy. Voters may assume that the election of one candidate or another will result in implementation of that candidate’s economic policies.

If the culture of economic policymakers remains unchanged, the public positions of candidates and the votes of citizens may not matter much.

Brad Miller is a Senior Fellow at the Roosevelt Institute. Previously, he served for a decade in the U.S. House of Representatives.

Mike here. This post is from my colleague Brad Miller over the important debate on the Antonio Weiss nomination. Brad is a former U.S. Representative who recently joined the Roosevelt Institute as a Senior Fellow, so he has firsthand knowledge of the internal negotiations around financial reform. Check it out below.

The opposition to the nomination of another investment banker, Antonio Weiss, to a top position in the U.S. Treasury is not just a demagogic appeal to anti-Wall Street prejudices, as his supporters argue.

Weiss’s actual experience appears to be a poor match for the specific duties of the position in question, and may be less laudable than his supporters claim. Weiss’s principal credential appears to be that he is a product of the same culture that produced our other recent economic policymakers.

And that is the real problem for opponents, who believe that economic policies should be subject to democratic debate and require the consent of the governed.

The response to the financial crisis was the most consequential economic policy in generations. Wall Street and Washington insiders alike argue that those policies, endlessly indulgent of banks and pitiless to homeowners, were technocratic decisions that required the recondite knowledge of Wall Street professionals.

To Weiss’s supporters, disregard for public opinion is a virtue. “Making economic policy isn’t a popularity contest,” David Ignatius wrote in The Washington Post, “especially when financial markets are in a panic.” “Our job was to fix it,“ former Treasury Secretary Timothy Geithner said, “not make people like us.”

Criticism did not just come from politicians pandering to the great unwashed, however.

Most economists argued that the lesson of past financial crises was to take economic pain quickly, recognize losses on distressed debt, and take insolvent banks through an orderly receivership. The standard playbook” for financial crises since the 1870s was to “shut down insolvent institutions so executives and shareholders in the future do not think they will escape the consequences of the moral hazard they created.” “Zombie” banks, economists argued, only delay recovery.

The Bush and Obama Administrations instead helped too-big-to-fail banks pretend to be solvent and provided subsidies and other dispensations until the banks became profitable, an effort that continues.

Unfortunately, any effective effort to reduce foreclosures required banks to recognize losses on mortgages. Insiders regarded foreclosures as a lesser concern. Geithner said that even if the government used federal funds “to wipe out every dollar of negative equity in the U.S. housing market…it would have increased annual consumption by just 0.1 to 0.2 percent.”

According to Atif Mian and Amir Sufi, two prominent economists, “that is dead wrong.” Household wealth fell by $9 trillion after the housing bubble burst in 2006, which greatly reduced consumer demand. “The evidence,” Amir and Sufi said, “is pretty clear: an aggressive bold attack on household debt would have significantly reduced the horrible impact of the Great Recession on Americans.”

Wall Street’s critics did not lose that debate. There was no debate.

Senator Obama endorsed legislation in his presidential campaign to allow the judicial modification of mortgages in bankruptcy. President Obama never publicly wavered from that position, but Treasury officials privately lobbied against the legislation in the Senate, where the legislation died. The determination by economic policymakers to protect their immaculate policies from tawdry politics may extend to attempts by the President to intrude.

Meddling by Members of Congress was certainly unwelcome. In a private meeting between Administration officials and disgruntled House Democrats, I said that foreclosure relief efforts appeared designed to help banks absorb losses gradually, not to help homeowners. Geithner was offended—indignant—at the suggestion. Neil Barofsky, then the Special Inspector General for the Troubled Asset Recovery Program, later confirmed that was exactly the purpose of the programs—in Geithner’s words, to “foam the runway” for the banks.

The success of policies that are unacknowledged or even denied is difficult to measure. Since the financial crisis, however, the financial sector, from whence our unguarded platonic guardians came and soon will return, has prospered. Others fared less well. Wealth and income inequality widened dramatically.

Weiss has not served in government, so opposition to his nomination may punish him for the sins of others, perhaps unfairly. There is nothing to indicate, however, that Weiss questions the assumption that the North Star of economic policy should be the prosperity of the financial sector, or that policies should be freely debated unless there’s money involved.

The presidential campaign in 2016 will undoubtedly largely be about economic policy. Voters may assume that the election of one candidate or another will result in implementation of that candidate’s economic policies.

If the culture of economic policymakers remains unchanged, the public positions of candidates and the votes of citizens may not matter much.

Brad Miller is a Senior Fellow at the Roosevelt Institute. Previously, he served for a decade in the U.S. House of Representatives.

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Daily Digest - January 7: Dynamic Scoring Comes to Washington

Jan 7, 2015Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

U.S. House Votes to Adopt Contentious Changes to Cost Estimates (Reuters)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

U.S. House Votes to Adopt Contentious Changes to Cost Estimates (Reuters)

Under new rules passed by the House, cost estimates on fiscal legislation will be measured using dynamic scoring, which could mask the impact of tax cuts, reports David Lawder.

Where Working Women Are Most Common (NYT)

Gregor Aisch, Josh Katz, and David Leonhardt examine data on women's employment rates throughout the country, considering the differing circumstances that lead women to work or not work.

Obama to Pick Former Bank of Hawaii CEO to Be Fed Governor (Bloomberg News)

Cheyenne Hopkins and Jesse Hamilton report that the President will soon announce the nomination of Allan Landon, who has worked at a firm that invests in community banks since 2010.

The Next Big Fight Among Democrats? (WaPo)

Greg Sargent says the next economic fight between populist Democrats in Congress and the Obama administration will be about how much to raise the salary threshold for overtime pay.

  • Roosevelt Take: Roosevelt Institute Senior Fellow Richard Kirsch says these fights between populists and the administration are about the soul of the Democratic party.

Why Is Wage Growth So Slow? The San Francisco Fed Has an Answer (WSJ)

Michael S. Derby looks at new research from the Federal Reserve Bank of San Francisco, which suggests that since employers fired workers rather than cut wages in the recession, hiring will increase before wages do.

The Mortgage Mistake (New Yorker)

James Surowiecki considers the costs of the American emphasis on homeownership and corresponding tax breaks, noting that homeowners' tax breaks don't really help low-income families.

Fair Value Accounting: The Obscure Rule Change That Could Make Student Loans More Expensive (Vox)

Matthew Yglesias explains how changing the method by which government accounts for federal credit programs could have difficult consequences for those seeking student loans and mortgages.

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Wall Street's Choice: Antonio Weiss Nomination Illustrates What's Wrong With Economic Policy

Jan 6, 2015Brad Miller

Installing another Wall Street insider at the Treasury Department will only reinforce the administration's anti-democratic approach to crafting economic policy.

The opposition to the nomination of another investment banker, Antonio Weiss, to a top position in the U.S. Treasury is not just a demagogic appeal to anti-Wall Street prejudices, as his supporters argue.

Installing another Wall Street insider at the Treasury Department will only reinforce the administration's anti-democratic approach to crafting economic policy.

The opposition to the nomination of another investment banker, Antonio Weiss, to a top position in the U.S. Treasury is not just a demagogic appeal to anti-Wall Street prejudices, as his supporters argue.

Weiss’s actual experience appears to be a poor match for the specific duties of the position in question, and may be less laudable than his supporters claim. Weiss’s principal credential appears to be that he is a product of the same culture that produced our other recent economic policymakers.

And that is the real problem for opponents, who believe that economic policies should be subject to democratic debate and require the consent of the governed.

The response to the financial crisis was the most consequential economic policy in generations. Wall Street and Washington insiders alike argue that those policies, endlessly indulgent of banks and pitiless to homeowners, were technocratic decisions that required the recondite knowledge of Wall Street professionals.

To Weiss’s supporters, disregard for public opinion is a virtue. “Making economic policy isn’t a popularity contest,” David Ignatius wrote in The Washington Post, “especially when financial markets are in a panic.” “Our job was to fix it,“ former Treasury Secretary Timothy Geithner said, “not make people like us.”

Criticism did not just come from politicians pandering to the great unwashed, however.

Most economists argued that the lesson of past financial crises was to take economic pain quickly, recognize losses on distressed debt, and take insolvent banks through an orderly receivership. The standard playbook” for financial crises since the 1870s was to “shut down insolvent institutions so executives and shareholders in the future do not think they will escape the consequences of the moral hazard they created.” “Zombie” banks, economists argued, only delay recovery.

The Bush and Obama Administrations instead helped too-big-to-fail banks pretend to be solvent and provided subsidies and other dispensations until the banks became profitable, an effort that continues.

Unfortunately, any effective effort to reduce foreclosures required banks to recognize losses on mortgages. Insiders regarded foreclosures as a lesser concern. Geithner said that even if the government used federal funds “to wipe out every dollar of negative equity in the U.S. housing market…it would have increased annual consumption by just 0.1 to 0.2 percent.”

According to Atif Mian and Amir Sufi, two prominent economists, “that is dead wrong.” Household wealth fell by $9 trillion after the housing bubble burst in 2006, which greatly reduced consumer demand. “The evidence,” Amir and Sufi said, “is pretty clear: an aggressive bold attack on household debt would have significantly reduced the horrible impact of the Great Recession on Americans.”

Wall Street’s critics did not lose that debate. There was no debate.

Senator Obama endorsed legislation in his presidential campaign to allow the judicial modification of mortgages in bankruptcy. President Obama never publicly wavered from that position, but Treasury officials privately lobbied against the legislation in the Senate, where the legislation died. The determination by economic policymakers to protect their immaculate policies from tawdry politics may extend to attempts by the President to intrude.

Meddling by Members of Congress was certainly unwelcome. In a private meeting between Administration officials and disgruntled House Democrats, I said that foreclosure relief efforts appeared designed to help banks absorb losses gradually, not to help homeowners. Geithner was offended—indignant—at the suggestion. Neil Barofsky, then the Special Inspector General for the Troubled Asset Recovery Program, later confirmed that was exactly the purpose of the programs—in Geithner’s words, to “foam the runway” for the banks.

The success of policies that are unacknowledged or even denied is difficult to measure. Since the financial crisis, however, the financial sector, from whence our unguarded platonic guardians came and soon will return, has prospered. Others fared less well. Wealth and income inequality widened dramatically.

Weiss has not served in government, so opposition to his nomination may punish him for the sins of others, perhaps unfairly. There is nothing to indicate, however, that Weiss questions the assumption that the North Star of economic policy should be the prosperity of the financial sector, or that policies should be freely debated unless there’s money involved.

The presidential campaign in 2016 will undoubtedly largely be about economic policy. Voters may assume that the election of one candidate or another will result in implementation of that candidate’s economic policies.

If the culture of economic policymakers remains unchanged, the public positions of candidates and the votes of citizens may not matter much.

Brad Miller is a Senior Fellow at the Roosevelt Institute. Previously, he served for a decade in the U.S. House of Representatives.

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Daily Digest - January 6: Who Needs Independent-Minded Advisors at the SEC?

Jan 6, 2015Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Nobel Laureate Stiglitz Blocked From SEC Panel After Faulting High-Speed Traders (Bloomberg News)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Nobel Laureate Stiglitz Blocked From SEC Panel After Faulting High-Speed Traders (Bloomberg News)

Dave Michaels reports that Roosevelt Institute Chief Economist Joseph Stiglitz believes he was blocked from the advisory panel because he is not "owned" by the industry in any way.

Fossil Free AU (WKOK)

Mark Lawrence interviews Katie Kirchner, president of the American University chapter of the Campus Network, about the campaign to get her university to divest from fossil fuels.

Poverty Leads to Death for More Black Americans Than Whites (The Guardian)

Jana Kasperkevic speaks to the study's lead researcher, who explains possible reasons that increases in income inequality would reduce mortality rates for whites and increase them for Blacks.

Cities Set to Take Minimum-Wage Stage (WSJ)

Eric Morath looks at the trend of cities raising their own minimum wage, in the face of state and federal GOP resistance. Federal action is seen as particularly unlikely with the current Congress.

The Mortal Threat to Medicaid -- and How to Fix It (LA Times)

On January 1, a short-term raise in Medicaid reimbursement rates expired, and Michael Hiltzik says that unless that raise is restored, Medicaid enrollees will struggle to find doctors.

American Consumers are More Upbeat (WaPo)

Catherine Rampell suggests that Americans' renewed confidence in the economy could be due to small improvements in wages and jobs – or because even mediocrity looks good today.

New on Next New Deal

Wall Street's Choice: Antonio Weiss Nomination Illustrates What's Wrong With Economic Policy

Roosevelt Institute Senior Fellow Brad Miller argues that Weiss's nomination is part of a larger anti-democratic pattern of prioritizing the financial sector's prosperity above all else in economic policy.

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Let the Fed Lend Directly to Cities and States to Save Taxpayers Billions

Jan 5, 2015Saqib Bhatti

(Updated: 1/5/15) Note: If you like this idea, be sure to vote for it in the Progressive Change Institute's Big Ideas Project. The top 20 ideas will be presented to members of Congress. Voting ends on Sunday, January 11. Click here to vote!

Using our central bank's resources to save cash-strapped local governments from bankruptcy would prevent economic devastation and bring other benefits.

(Updated: 1/5/15) Note: If you like this idea, be sure to vote for it in the Progressive Change Institute's Big Ideas Project. The top 20 ideas will be presented to members of Congress. Voting ends on Sunday, January 11. Click here to vote!

Using our central bank's resources to save cash-strapped local governments from bankruptcy would prevent economic devastation and bring other benefits.

The Federal Reserve should be allowed to make long-term loans directly to cities, states, school districts, and other public agencies so taxpayers can get low interest rates and avoid predatory Wall Street fees. Currently, banks borrow money at near-zero interest rates from the Fed while public entities are forced to pay billions in fees and interest each year. Cities and states should have access to the same low interest rates that banks enjoy so that taxpayer money earmarked for infrastructure improvement and other public goods will no longer be spent subsidizing corporate profits. If the Fed lent directly to cities and states at low interest, it would free up public dollars for services like education and mass transit. Direct loans from the Fed could also help alleviate fiscal crises and become a tool for promoting stronger environmental and labor protections.

Fiscal crises and municipal bankruptcies are typically caused by revenue shortfalls. The definition of "municipal insolvency" is the inability to pay debts as they come due. A city is insolvent and can file for bankruptcy if it is not bringing in enough revenue to be able to pay its bills on time. For example, although there were many political and economic causes for Detroit’s bankruptcy, the technical reason that Detroit went bankrupt was that the city had a $198 million revenue shortfall and could not pay all of its bills. A $198 million loan could have allowed Detroit to avoid bankruptcy. In the future, we can prevent untold devastation if the Fed can provide affordable loans to municipal borrowers.

Detractors will argue that it would be imprudent to use federal taxpayer dollars to make loans to distressed cities and states that might be unable to pay them back. However, the reality is that municipal borrowers in the United States have extremely low rates of default because their debt is ultimately backed by tax revenues. According to Moody’s, one of the three major credit rating agencies in the country, the default rate for municipal issuers that it rates was 0.012 percent between 1970 and 2012. Even though there has been a slight uptick following the financial crisis, the likelihood of municipal default is still virtually nonexistent.

If a municipality defaults on a loan, it is because elected officials made a political decision to default rather than raise taxes. In the case of Detroit, state elected officials in Michigan made that decision by cutting revenue-sharing with the city and prohibiting it from raising additional taxes. The Fed could take proactive steps to address this political problem. For example, it could attach a provision requiring elected officials to raise taxes on large corporations and high-income earners to avoid defaulting on loans from the Fed.

Direct loans from the Fed could also be used to promote fair and sustainable development. Either Congress or the Fed could establish minimum labor and environmental standards that cities and states must abide by to qualify for a loan from the Fed. For example, cities that borrow from the Fed could be required to pay all workers a living wage. Any state that borrows from the Fed for highway repairs could be required to establish stronger fuel efficiency standards for cars. The Fed could also prioritize loans for green infrastructure improvements. This would ensure that direct loans from the Fed support long-term national interests.

Currently, the Fed already has the power to purchase municipal debt securities that mature within six months. In other words, the Fed effectively has the power to lend to cities and states for up to six months, with some caveats. But if Congress were to pass a law allowing the Federal Reserve to make long-term loans directly to cities and states, we could start using our central bank to support the long-term financial, economic, and environmental health of our cities and states. It would allow us to cut Wall Street out of the middle and ensure that our taxpayer dollars are going toward improving our communities instead of padding banker bonuses.

Saqib Bhatti is a Roosevelt Institute Fellow and Director of the ReFund America Project.

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Daily Digest - January 5: Time for Federal Regulations for Predatory Payday Loans

Jan 5, 2015Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Roosevelt Institute Fellow Saqib Bhatti's proposal to allow the Fed to lend directly to municipalities is one of many ideas you can vote on in the Progress Change Institute's Big Ideas Project. The top 20 ideas will be presented members of Congress. Voting ends on Sunday, January 11. Click here to vote!

CFPB Sets Sights on Payday Loans (WSJ)

Alan Zibel reports on the Consumer Financial Protection Bureau's plans to explore creating new rules to regulate predatory payday lending, the first such rules on a federal level.

Signs of Economic Promise Are Offering Some Hope for the New Year (NYT)

Rachel Swarns reports on the positive signs that some are seeing, including new jobs for long-term job seekers and raises and more hours for workers at retail chains like Zara.

Don't Believe What You Hear About the U.S. Economy (AJAM)

Dean Baker says it's not yet time to celebrate an economic comeback. Growth is still slow enough that the labor market won't reach pre-recession numbers by the end of 2015.

Why the Democrats Need Labor Again (Politico Magazine)

Timothy Noah interviews Thomas Geoghegan on his new book, which he describes as a "last-ditch effort for the Democrats" to revive the labor movement and win elections.

California Colleges See Surge in Efforts to Unionize Adjunct Faculty (LA Times)

Larry Gordon speaks to adjunct faculty at some of the private colleges in California that are seeing union organizing on campus for the first time.

Austerity’s End Strengthens U.S. Recovery (MSNBC)

Steve Benen corrects Grover Norquist's attempt to give Republicans credit for economic growth, pointing to small increases in public spending as proof that austerity didn't fix anything.

The Five Major Things We Screwed Up in Inequality in 2014 (The Guardian)

Suzanne McGee's list includes the minimum wage, which she says needs a boost at a federal level, and race and economic opportunity, an issue she says we practically ignored.

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Daily Digest - December 23: Big Money is Destroying America's Two-Party System

Dec 23, 2014Rachel Goldfarb

The Daily Digest is taking a break for the holidays. It will return on Monday, January 5, 2015.

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

The Daily Digest is taking a break for the holidays. It will return on Monday, January 5, 2015.

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Americans Are Sick to Death of Both Parties: Why Our Politics Is in Worse Shape Than We Thought (Alternet)

Roosevelt Institute Senior Fellow Thomas Ferguson and Walter Dean Burnham say the combination of incredibly high political spending and low voter turnout signals a serious problem with our democracy.

McDonald's Can No Longer Hide Behind its Franchises (The Hill)

Roosevelt Institute Senior Fellow Richard Kirsch says that holding McDonald's accountable for labor practices at its franchises is the kind of common-sense labor policy we need today.

Forecast for the 2015 Economy: Sunny (MSNBC)

Suzy Khimm gathers up economists' predictions for the coming year. Trends point toward some increases in wages, which means more people will feel the recovery in their lives.

Yellen’s First Year at Fed: A Remarkably Steady Course (NYT)

Binyamin Appelbaum reviews Janet Yellen's actions and accomplishments this past year. Her distinguishing characteristics as Fed chair include a focus on unemployment and jobs.

Volkswagen’s Employee Engagement Plan Could Weaken Labor (In These Times)

Alexandra Bradbury explains the concerns around Volkswagen's plan, which recognizes groups representing at least 15 percent of workers but doesn't allow any collective bargaining.

Republicans Block Reappointment of CBO Chief Doug Elmendorf (Bloomberg Politics)

Dave Weigel says the decision not to reconfirm Elmendorf to the Congressional Budget Office revolves around the GOP's desire for dynamic scoring, an unproven method of calculating budget costs.

New on Next New Deal

Chuck Schumer and the Democrats' Identity Crisis: Economic Policy vs. Rhetoric

Roosevelt Institute Senior Fellow Richard Kirsch says that New York Senator Chuck Schumer embodies the dilemma facing the Democratic Party: Wall Street funding vs. the populism it promises voters.

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Daily Digest - December 22: Yellen Speaks and the Markets Answer

Dec 22, 2014Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Markets Bounce After Yellen Announcement (Melissa Harris-Perry)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Markets Bounce After Yellen Announcement (Melissa Harris-Perry)

As guest host, Roosevelt Institute Fellow Dorian Warren leads a roundtable discussion about how Janet Yellen's statements are impacting the current economy.

Wall Street Is Dismantling Financial Reform Piece by Piece (TNR)

Friday's announced delay of the Volcker rule, which prohibits proprietary trading, shows the financial sector's ability to limit Dodd-Frank's interlocking provisions for its benefit, writes David Dayen.

  • Roosevelt Take: Dayen links to Roosevelt Institute Fellow Mike Konczal's recent piece on Next New Deal with Alexis Goldstein and Caitlin Kline to explain how another rule eliminated in the recent budget negotiations fits into this picture.

Obama Labor Board Comes Down Hard on McDonald’s (Politico)

In a significant first, the National Labor Relations Board has filed legal complaints that hold McDonald's accountable to workers at its franchises, reports Brian Mahoney.

Workers’ Rights at McDonald’s (NYT)

In an editorial, the Times asks McDonald's if it wouldn't be easier to just bargain directly with employees, instead of illegally interfering with the Fight for $15 movement.

Ocwen Head to Resign in New York Settlement (WSJ)

James Sterngold and Alan Zibel report on the settlement between Ocwen Financial Corp. and New York State's financial regulator, which includes $150 million to be paid to housing programs and borrowers.

Obama Compared to Prior Presidents On Job Creation, In Graphs (TAP)

Paul Waldman compares President Obama's job creation numbers to other presidents', and his clearest discovery is that Republicans are wrong: tax cuts won't save the economy, and Democratic policies won't kill it.

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Daily Digest - December 19: It's a Whole New Economic Policy-Making World

Dec 18, 2014Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Uncharted Interest Rate Territory (U.S. News & World Report)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Uncharted Interest Rate Territory (U.S. News & World Report)

Jason Gold points out that since interest rates have been declining for 33 years, none of today's lawmakers know quite what they're in for when the Fed begins to raise rates in 2015.

  • Roosevelt Take: Roosevelt Institute Fellow Mike Konczal says that raising interest rates is not the way to fight "financial instability."

The Greatest Tax Story Ever Told (Bloomberg Businessweek)

Zachary R. Mider shares the story of the very first corporate tax inversion, in which a company incorporates abroad to avoid paying U.S. taxes. The idea was invented by a liberal tax lawyer in 1982.

A Big Safety Net and Strong Job Market Can Coexist. Just Ask Scandinavia. (NYT)

The strong safety net programs in Scandinavian countries, which include far more direct aid, might be more effective at getting people to work than the U.S. tax subsidy model, writes Neil Irwin.

How ALEC Helped Undermine Public Unions (WaPo)

Alex Hertel-Fernandez explains that ALEC's attacks on public sector unions aren't new: ALEC-backed anti-union laws were enacted in some states a decade before the Great Recession.

Pro-Warren Protesters Take Their Fight to Wall Street (MSNBC)

Zachary Roth reports on yesterday's protest at Citigroup's New York City headquarters, where protesters denounced the Citigroup-crafted measure weakening Dodd-Frank in the spending bill.

From the E.R. to the Courtroom: How Nonprofit Hospitals Are Seizing Patients’ Wages (ProPublica)

Paul Kiel and Chris Arnold profile the Missouri hospital that sues the most patients in the state. Nonprofit hospitals are required to offer low-cost charity care, but that isn't particularly regulated.

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Ten Years: Students Moving the Country Forward

Dec 18, 2014Taylor Jo Isenberg

After ten years of engaging young people in the political process, the Roosevelt Institute | Campus Network continues to push for a system that works for all of us.

In an email to peers at Stanford University students on November 4, 2004, a student attempted to turn the tide on the malaise setting in after a disappointing election night for progressives. He captured the sentiment of the moment:

After ten years of engaging young people in the political process, the Roosevelt Institute | Campus Network continues to push for a system that works for all of us.

In an email to peers at Stanford University students on November 4, 2004, a student attempted to turn the tide on the malaise setting in after a disappointing election night for progressives. He captured the sentiment of the moment:

Elections are a great time to shape the future of our country, but democracy is not something that happens every four years. We have a lot of work to do … we need to figure out how to explain what we care about in a coherent and convincing way, we need to develop a leadership network to match the conservatives of the next generation, and we need to keep public officials accountable to the issues that brought us all in.

In a follow-up email, he boiled it down to one simple statement: "I'm seeing a student-run think tank that will reinvigorate mainstream politics with a new generation's ideas."

In one of those rare occurrences that indicate that people might be on to something, others were incubating a similar concept. Two friends at Middlebury and Bates also felt compelled to respond to the political moment, and articulated their initial thoughts on a "think tank that unites college students across America under one political agenda aimed at taking back our democracy." Something similar was taking shape at Yale University.

The rest of the story is Roosevelt lore – the late nights, cross-country recruiting trips, the passionate debates about how best to position the organization to effectively elevate young people as a source for powerful ideas capable of policy change.

Yet what makes this particular story potent is that, ten years later, we celebrate not only that vision, but also today's reality. Thousands of students over the past ten years have worked tirelessly to actualize the initial vision that emerged from a bleak moment in our political history. We’ve published 600+ policy solutions that have been read over half a million times; trained thousands on how to challenge the fundamentals of our social, political, and economic systems; and catapulted young people as civic actors into key debates on the policy challenges of our day. Most importantly, the list of student and chapter successes on the ground is staggering in its breadth and depth of examples where young people have taken active ownership of their communities to bring about solutions with meaningful impact.

As a proud Roosevelter, I think we have much to celebrate. We took a few days last week to elevate our work in Washington, DC – a celebration that included a conversation with Representative Rosa DeLauro and members of Congress on how to look to best practices from Roosevelt’s model to effectively engage a new generation in policy and politics, a discussion on the Campus Network’s next ten years, and presentations at the White House featuring our student’s policy work. And of course, we hosted a party for 190+ alumni and supporters (a rockin’ one, according to keynote speaker Jared Bernstein).

Ten years is also a moment to look towards our future. It’s been a common refrain around our office and with our members that there are some unsettling parallels between the post-election reality ten years ago and the one we face today. Distrust of institutions is on the rise, policy priorities with high public support are thwarted by special interests, and our debate is seriously deprived (with a few exceptions) of a vision for what our country can build towards. We’re still in need of a shake up. The upside? Where things are happening, it’s often led or heavily supported by young people – from the ballot initiatives in the 2014 election to the sustained demand for accountability in our justice system.

It’s no secret that the political establishment is perplexed about young people. The media haphazardly jumps between two narratives, unable to decide if we’re self-absorbed, naïve and complacent in the face of our economic future, or the most civically minded quiet do-gooders since the Greatest Generation. Yet many of the major civic and political organizations are struggling with declining membership numbers. It’s not unheard of for organizations to develop “Millennial engagement strategies” to combat this problem.

We think the answer pretty simple: it’s about institutions and systems embracing the shifts instead of fearing them. From the moment they walk through the door, our members are asked to be a part of building something as equals. They’re given the tools to be the architects – and are instantly connected to a network of peers who support them. In a political system more interested in managing young people than tapping into their ingenuity and energy, Roosevelters come to us because they see the limitations of traditional pathways of engagement. As a result, the Roosevelt Institute | Campus Network has remained a network that evolves and shifts as our students lead the way.

We aren’t, of course, the only ones – there is a vibrant ecosystem of organizations and movements that are also innovating and responding to the changing ways people of all ages are expressing their priorities. We could not be more proud of our alumni who have gone on to lead, participate in, and learn from these efforts.

Our successes also beg the question – what does this mean for the next ten years? How do we continue to amplify our strengths and evolve to reflect the moment, opportunities, and risks? That’s the conversation we’re having next – a conversation we want our alumni and supporters to be a part of. In 2015, the Roosevelt Institute will introduce our Alumni Network, which will focus on how to strengthen the Roosevelt community and its potential to influence social and economic priorities. If we are to respond to the call for an economic and democratic system that works for this century, it is going to take all of us.

It is now a Campus Network tradition to close any major convening or retreat with a passage from Jean Edward Smith’s FDR. It narrates President Franklin D. Roosevelt accepting the nomination at the 1936 Democratic National Convention. It’s a famous speech, most notably for his “This generation of Americans has a rendezvous with destiny” quote. We start reading a little earlier – Smith sets the stage, with the country emerging from the worst of the Great Depression. Roosevelt walks to the platform on the arm of his son James. Smith details a powerful moment, where the President sees the poet Edwin Markham, author of Man with a Hoe, reaches out to greet him, and stumbles and falls. People rush to snap his braces back into place. He then proceeds to give the speech, which puts forward uncompromising and substantive statements on political and economic equality. It’s resolute, forceful, and clear – there are wrongs we must right, power that needs to be rebalanced, problems to be solved by the people.

I hope that our members take two things away from the passage. First, that every individual can’t do it alone. Second, that it is possible to stand for something that upsets the current balance of power – and to see the country move forward as a result. It’s a valuable reminder today, when all seems hopeless in the face of stagnation and entrenchment.

As we look to the next ten years, that’s the question Roosevelters will continue to ask, and will eventually answer. What do we stand for, and how will we move this country forward?

Taylor Jo Isenberg is the Vice President of Networks at the Roosevelt Institute.

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