Daily Digest - December 16: Inequality Hurts our Children Most

Dec 16, 2014Rachel Goldfarb

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Inequality and the American Child (Project Syndicate)

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

Inequality and the American Child (Project Syndicate)

Roosevelt Institute Chief Economist Joseph Stiglitz says the impact of economic inequality in the U.S. is even stronger on its children, who could be protected through the right policy changes.

Taxpayers Could be Liable Again for Bank Blunders (CBS News)

Erik Sherman speaks to Roosevelt Institute Fellow Mike Konczal about the modification to Dodd-Frank built into the spending bill. Mike says the changes come straight from the banks.

Progressives Just Lost a Fight on the Budget. So Why Are They So Happy? (TAP)

Paul Waldman suggests that GOP control of Congress is liberating to the more progressive Democrats, because they no longer have to compromise to pass Democratic legislation.

The Year in Inequality: Racial Disparity Can No Longer Be Ignored (AJAM)

Ned Resnikoff says solving American economic inequality will prove impossible without acknowledging the racial disparities brought on largely by inheritance and homeownership.

Economic Recovery Spreads to the Middle Class (NYT)

Nelson D. Schwartz says the U.S. economy is showing its very first signs of the wage gains that will be needed for the economic recovery to reach the middle class.

Even With a GOP Congress, Obama Could Still Defend American Workers. Here’s How. (In These Times)

David Moberg puts together a list of ten items that the president could accomplish using the Department of Labor, in particular by strongly enforcing the Fair Labor Standards Act.

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Daily Digest - December 15: An Uber That Really Is Sharing

Dec 15, 2014Rachel Goldfarb

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

Socialize Uber (The Nation)

Roosevelt Institute Fellow Mike Konczal and Bryce Covert present a way to transform Uber into a company that would truly be part of a "sharing economy": make it a worker cooperative.

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

Socialize Uber (The Nation)

Roosevelt Institute Fellow Mike Konczal and Bryce Covert present a way to transform Uber into a company that would truly be part of a "sharing economy": make it a worker cooperative.

My Talk to the Roosevelt Institute Campus Network (On The Economy)

Jared Bernstein gave the keynote at the Campus Network's 10th anniversary party. He's published his talk, which was on the need to combine head and heart in economic policy-making.

Wall Street’s Revenge (NYT)

Paul Krugman says that Wall Street has so heavily funded the Republican party in order to get back on Democrats for Dodd-Frank financial reform, and this spending bill is only the first step.

  • Roosevelt Take: Roosevelt Institute Senior Fellow Richard Kirsch and Fellow Mike Konczal each wrote about the rollback of Dodd-Frank in the cromnibus last week.

Pension Bill Seen as Model for Further Cuts (WSJ)

John D. McKinnon says some on the left worry that the pension-cutting measure in the spending bill could create precedent for even more pension cuts, possibly even to Social Security.

Obama's Left-Side Headache (Bloomberg Politics)

Margaret Talev and Michael C. Binder suggest that one of the biggest challenges the president will face from the incoming Congress will be from progressives like Senator Warren.

The Devalued American Worker (WaPo)

Jim Tankersley explains how the past three recessions, by breaking previous patterns of post-recession job growth, have cut middle-skill jobs and lowered wages for many.

Thanks to Labor Board Ruling, You Can Now Use Company Email to Organize a Union (In These Times)

Overriding a 2007 decision, the National Labor Relations Board has decided that email functions more like the water cooler than as high-cost company equipment, reports Moshe Z. Marvit.

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The Budget Fight Was the First Skirmish in the War for the Soul of the Democratic Party

Dec 12, 2014Richard Kirsch

Democrats had the leverage to nix a deal that opens the door to more Wall Street bailouts, but they caved in to Republican blackmail.

Progressives lost the battle over the budget last night because President Obama and a minority of Democrats took the side of Wall Street. It is the first of many losses we will see in the next two years as Republicans relentlessly pursue their corporate agenda. The bigger question is whether progressives will lose the war in the Democratic Party.

Democrats had the leverage to nix a deal that opens the door to more Wall Street bailouts, but they caved in to Republican blackmail.

Progressives lost the battle over the budget last night because President Obama and a minority of Democrats took the side of Wall Street. It is the first of many losses we will see in the next two years as Republicans relentlessly pursue their corporate agenda. The bigger question is whether progressives will lose the war in the Democratic Party.

Blowing up this budget deal should have been easy for Democrats. They were handed a perfect message: the Republicans are willing to shut down the government so they can bail out Wall Street the next time it wrecks the economy.

Democratic votes were needed because a group of 67 right-wing Republicans opposed the bill on the grounds that it did not go far enough in opposing the president’s executive order on immigration. The Republican split gave Democrats the leverage to demand that the bank bail-out provision be stripped from the bill.

But with President Obama twisting enough Democratic arms (57 in total) to give in to the Wall Street-engineered Republican blackmail, that powerful, winning message was diluted.

Democratic negotiators also agreed to the deal to repeal a provision of the Dodd-Frank law that prevents government bailouts of banks who engage in a form of risky trading. Their argument was “Republicans made us do it; it’s the best we could do.” But of course, with all the Wall Street money going to Democrats, that’s a convenient excuse. They can turn around and wink at the lobbyists who deliver Wall Street campaign contributions, playing a game in which the dupes are the American people.

The bailout of banks and Wall Street speculators remains deeply and broadly unpopular. It is an issue that generates anger among grassroots activists on the left and the right. For Americans who see Wall Street billionaires getting richer by gaming the system while families struggle to meet the basics, there could be no clearer contrast.

Progressive Democrats fought back. In a rapid-fire display of the energy and nimbleness of progressive organizations and champions in Congress, the deal was quickly exposed.

Senator Elizabeth Warren laid it out clearly on the Senate floor: “We put this rule in place because people of all political persuasions were disgusted at the idea of future bailouts… Republicans in the House of Representatives are threatening to shut down the government if they don’t get a chance to repeal it.”

In the House, progressive Democrats joined the call. California Rep. Maxine Waters, the senior Democrat on the House Financial Services Committee, said, “We don't like lobbying that is being done by the president or anybody else that would allow us to support a bill that ... would give a big gift to Wall Street and the bankers who caused this country to almost go into a depression.”

The vigorous pushback from progressive groups and their allies in Congress convinced Minority Leader Nancy Pelosi to break with the White House. Pelosi said that they were being “blackmailed” to vote for the bill, which she called “a moral hazard.” Still, Pelosi did not use her considerable powers of persuasion to get fellow Democrats to vote no.

For the next two years we will see Republicans do everything they can to deliver for corporate America at the expense of the American people. The only question is whether Democrats will enable them. Will President Obama continue to make compromise after compromise? Will Democrats in the Senate use the filibuster to block the Republican attack on working families? Will enough Democrats in the House keep coming to the rescue of a divided Republican Party?

We will see the same fight in the Democratic primary for president. Will Hillary Clinton break from the Wall Street wing of the party with which she aligned as a senator from New York? Will her challengers make the same sharp contrast that Senator Warren did, when she began her speech on the Senate floor by asking, “Who does Congress work for? Does it work for the millionaires, the billionaires, the giant companies with their armies of lobbyists or lawyers? Or does it work for all the people?”

As I wrote after the election last month, Democrats who used a populist economic message – who named the corporate villains and declared that “we all do better when we all do better” – won. Democrats who ran to the mushy middle lost.

But this is not just a fight for the soul of the Democratic Party, it’s a fight for our very democracy. As Justice Louis Brandeis said almost a century ago, “We may have a democracy or we may have great wealth concentrated in the hands of a few, but we cannot have both.”

Americans are yearning for champions who stand up for them. If we have any hope of changing the direction of our economy from enriching the rich at the expense of the rest of us and of recapturing our democracy from the CEO campaign contributors and Wall Street bag men, it will be because progressive forces and elected champions stand up not just to Republicans but to President Obama and any Democrat who takes the side of Wall Street against America’s working families.

It is clear that progressives and the American people will lose battle after battle in Congress over the next two years. The real question is whether we will lose the war. 

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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The Bipartisan Policy Center Gets It Wrong: The Lincoln Amendment is Critical to Financial Reform

Dec 11, 2014Mike KonczalAlexis GoldsteinCaitlin Kline

A wide variety of people, ranging from Senators Elizabeth Warren and David Vitter to Representative Maxine Waters and FDIC’s Thomas Hoenig, are trying to stop a last-minute attempt to remove an important piece of financial reform. They are all speaking up against a move to repeal the Lincoln Amendment using language written by Citigroup in the year-end budget process.

Given the wide variety of people against it, it’s interesting how few people are for it. One of the few institutions that has defended it is the Bipartisan Policy Center (BPC), whose Financial Regulatory Reform Initiative released a statement saying:

“The Consolidated and Further Continuing Appropriations Act is consistent with BPC’s recommendations to repeal the Lincoln Amendment and to substantially increase funding for the SEC and CFTC.”

These recommendations they cite date back to a 2013 paper, “Better Path Forward on the Volcker Rule and the Lincoln Amendment,” that included arguments against pushing out swaps.

What’s their case, and does it hold up under scrutiny? We argue it does not. It misreads the purpose and scope of the Volcker Rule, disregards their own analysis on how financial reform should proceed, misses recent developments in the derivatives market, and ignores the issue of what an implicit government support means for exotic derivatives.

As a reminder, the Lincoln Amendment pushing out swaps (which we’ll refer to as 716) insists that the largest banks hold their exotic, customized, and non-cleared derivatives outside of their FDIC-insured entities in separately capitalized subsidiaries. 716 exempted most standardized derivatives, including interest rate and foreign exchange swaps, as well as cleared credit default swaps (CDS). This provision only applies to the odd and dangerous stuff.

So what are BPC's arguments?

716 and Volcker Accomplish Different Goals

Their core argument is that 716 is redundant, and therefore unnecessary, because of the Volcker Rule.  As they put it,“[L]ike the Volcker Rule, the Lincoln Amendment was intended to separate certain securities-related activities from traditional banking activities.” BPC further argues that with a “proper implementation of the Volcker Rule… the rationale for the Lincoln Amendment may no longer apply.”

This is not the case. The Volcker Rule is about risky activities, and focuses on eliminating the gambling risks associated with proprietary trading and exposure to certain types of investment funds. 716, on the other hand, is about risky products, and aims to reduce risk to the Deposit Insurance Fund (DIF) by utilizing separately capitalized entities for the riskiest derivatives.

While there is some overlap between the two, there are significant gaps. For instance, exemptions in the Volcker Rule allow some of the riskiest trades to be done within FDIC-insured entities -- things like making markets in bespoke, exotic, uncleared credit default swaps. Indeed, walking away from the financial crisis with an attitude that uncleared credit default swaps are no big issue is quite troubling. This puts the Deposit Insurance Fund at risk. 

716 complements Volcker by forcing the riskiest and most non-vanilla derivatives and CDS into a separately capitalized entity, something Volcker doesn’t do by itself. This helps protect the DIF in case a firm gets into trouble market-making bespoke trades that can’t be perfectly hedged – a Volcker-compliant activity. 

The Final Volcker Rule Isn’t Fully Implemented

Shockingly, BPC is violating its own analysis with this recommendation. In the 2013 paper, BPC “recommends a wait-and-see approach regarding the Lincoln Amendment until more experience can be gained from the Volcker Rule.” Only then, if the full implementation of the Volcker Rule is working well, could the Lincoln Amendment “be repealed without any negative effect.”

It is disturbing that the BPC supports this removal of the Lincoln Amendment before the Volcker Rule is fully implemented in mid-2015, and even before we've had time to see how it impacts the financial markets. It’s not even clear how they are judging whether the Volcker Rule is working the way they want, given that the data and metrics they rely on so heavily have only just begun to be reported to regulators, and are non-public.

Shoving a bank-written addition into a budget bill, not unlike the CFMA of 2000 which helped create the crisis, is the exact opposite of a “wait-and-see approach.”

Pushout Doesn’t Harm Bank Resolution

Another argument made against 716 was that it would complicate the ability of regulators to deal with a bank failure. BPC points out that regulators are empowered to grant a temporary stay to derivatives, preventing derivative creditors from grabbing collateral while others wait two days, as they did with Lehman Brothers. (Under bankruptcy, derivatives are exempt from this temporary stay, which can complicate and accelerate bankruptcy.)

Part of the argument is true: Dodd-Frank did grant the FDIC new powers under the Orderly Liquidation Authority, which allows them to force a 24-hour stay on derivatives (overriding the exemption), but this only applies to banks under FDIC purview.

BPC argued that the largest banks should be allowed to keep derivatives inside the FDIC accounts, so that they could utilize the FDIC’s OLA power. BPC writes that the 716 “subsidiaries would not enjoy the temporary stay on the unwinding of contracts that applies to banks under FDIC resolution procedures. Rapid termination of such contracts in the event of a bank failure would have a disruptive impact on financial markets."

But this argument is much less valid than it was when it was written, precisely because regulators are anticipating this problem. Eighteen of the major banks and the International Swaps and Derivatives Association (ISDA) agreed in October that they’d contractually apply temporary stays to derivatives. With wide agreement among the banks to apply temporary stays anyway, the proper course of action is to work through this process of standardizing derivatives for automatic stays across the financial sector, rather than trying to use taxpayer funds to backstop them.

Apart from the BPC arguments, we wish to raise an additional point:  

Should Policy Allow Firms to Capitalize on Market-Perceived Subsidies?

Keeping derivatives in FDIC-insured entities lowers their costs: creditors charge lower rates, as FDIC accounts are seen as having the backing of the federal government. And these FDIC accounts typically have higher credit ratings, which is why, in 2011, Bank of America moved derivatives from its Merrill Lynch subsidiary, which had just suffered a downgrade, into its FDIC-insured subsidiary, much to the chagrin of the FDIC.

As Peter Eavis writes in The New York Times, this directly helps Citigroup, who lobbied for and wrote the change, as they own a lot of CDS: “With some $3 trillion of exposure, the bank is one of biggest default swap dealers in the United States. Those swaps right now live inside an entity called Citibank N.A. that enjoys federal deposit insurance. Nearly $2 trillion of those swaps are based on companies or other entities with a junk credit rating.”

And as Eavis points out, it’s very likely that a huge portion of Citigroup’s CDS are uncleared, as very few CDS overall are cleared: “Only about 10 percent of such swaps are centrally cleared, according to official surveys.”

Banks keeping derivatives in the FDIC accounts lower their cost of doing business, due to the market perception of an implicit government support. It should not be the role of policy to artificially lower the cost of bank borrowing, and as such we find the case for removing the Lincoln Amendment to be unconvincing.

Mike Konczal is a Fellow at the Roosevelt Institute.

Alexis Goldstein is a former Wall Street professional, who now serves as the Communications Director at Other98.org.

Caitlin Kline is a derivatives specialist at Better Markets.

Follow or contact the Rortybomb blog:
 
  

 

A wide variety of people, ranging from Senators Elizabeth Warren and David Vitter to Representative Maxine Waters and FDIC’s Thomas Hoenig, are trying to stop a last-minute attempt to remove an important piece of financial reform. They are all speaking up against a move to repeal the Lincoln Amendment using language written by Citigroup in the year-end budget process.

Given the wide variety of people against it, it’s interesting how few people are for it. One of the few institutions that has defended it is the Bipartisan Policy Center (BPC), whose Financial Regulatory Reform Initiative released a statement saying:

“The Consolidated and Further Continuing Appropriations Act is consistent with BPC’s recommendations to repeal the Lincoln Amendment and to substantially increase funding for the SEC and CFTC.”

These recommendations they cite date back to a 2013 paper, “Better Path Forward on the Volcker Rule and the Lincoln Amendment,” that included arguments against pushing out swaps.

What’s their case, and does it hold up under scrutiny? We argue it does not. It misreads the purpose and scope of the Volcker Rule, disregards their own analysis on how financial reform should proceed, misses recent developments in the derivatives market, and ignores the issue of what an implicit government support means for exotic derivatives.

As a reminder, the Lincoln Amendment pushing out swaps (which we’ll refer to as 716) insists that the largest banks hold their exotic, customized, and non-cleared derivatives outside of their FDIC-insured entities in separately capitalized subsidiaries. 716 exempted most standardized derivatives, including interest rate and foreign exchange swaps, as well as cleared credit default swaps (CDS). This provision only applies to the odd and dangerous stuff.

So what are BPC's arguments?

716 and Volcker Accomplish Different Goals

Their core argument is that 716 is redundant, and therefore unnecessary, because of the Volcker Rule.  As they put it,“[L]ike the Volcker Rule, the Lincoln Amendment was intended to separate certain securities-related activities from traditional banking activities.” BPC further argues that with a “proper implementation of the Volcker Rule… the rationale for the Lincoln Amendment may no longer apply.”

This is not the case. The Volcker Rule is about risky activities, and focuses on eliminating the gambling risks associated with proprietary trading and exposure to certain types of investment funds. 716, on the other hand, is about risky products, and aims to reduce risk to the Deposit Insurance Fund (DIF) by utilizing separately capitalized entities for the riskiest derivatives.

While there is some overlap between the two, there are significant gaps. For instance, exemptions in the Volcker Rule allow some of the riskiest trades to be done within FDIC-insured entities -- things like making markets in bespoke, exotic, uncleared credit default swaps. Indeed, walking away from the financial crisis with an attitude that uncleared credit default swaps are no big issue is quite troubling. This puts the Deposit Insurance Fund at risk. 

716 complements Volcker by forcing the riskiest and most non-vanilla derivatives and CDS into a separately capitalized entity, something Volcker doesn’t do by itself. This helps protect the DIF in case a firm gets into trouble market-making bespoke trades that can’t be perfectly hedged – a Volcker-compliant activity. 

The Final Volcker Rule Isn’t Fully Implemented

Shockingly, BPC is violating its own analysis with this recommendation. In the 2013 paper, BPC “recommends a wait-and-see approach regarding the Lincoln Amendment until more experience can be gained from the Volcker Rule.” Only then, if the full implementation of the Volcker Rule is working well, could the Lincoln Amendment “be repealed without any negative effect.”

It is disturbing that the BPC supports this removal of the Lincoln Amendment before the Volcker Rule is fully implemented in mid-2015, and even before we've had time to see how it impacts the financial markets. It’s not even clear how they are judging whether the Volcker Rule is working the way they want, given that the data and metrics they rely on so heavily have only just begun to be reported to regulators, and are non-public.

Shoving a bank-written addition into a budget bill, not unlike the CFMA of 2000 which helped create the crisis, is the exact opposite of a “wait-and-see approach.”

Pushout Doesn’t Harm Bank Resolution

Another argument made against 716 was that it would complicate the ability of regulators to deal with a bank failure. BPC points out that regulators are empowered to grant a temporary stay to derivatives, preventing derivative creditors from grabbing collateral while others wait two days, as they did with Lehman Brothers. (Under bankruptcy, derivatives are exempt from this temporary stay, which can complicate and accelerate bankruptcy.)

Part of the argument is true: Dodd-Frank did grant the FDIC new powers under the Orderly Liquidation Authority, which allows them to force a 24-hour stay on derivatives (overriding the exemption), but this only applies to banks under FDIC purview.

BPC argued that the largest banks should be allowed to keep derivatives inside the FDIC accounts, so that they could utilize the FDIC’s OLA power. BPC writes that the 716 “subsidiaries would not enjoy the temporary stay on the unwinding of contracts that applies to banks under FDIC resolution procedures. Rapid termination of such contracts in the event of a bank failure would have a disruptive impact on financial markets."

But this argument is much less valid than it was when it was written, precisely because regulators are anticipating this problem. Eighteen of the major banks and the International Swaps and Derivatives Association (ISDA) agreed in October that they’d contractually apply temporary stays to derivatives. With wide agreement among the banks to apply temporary stays anyway, the proper course of action is to work through this process of standardizing derivatives for automatic stays across the financial sector, rather than trying to use taxpayer funds to backstop them.

Apart from the BPC arguments, we wish to raise an additional point:  

Should Policy Allow Firms to Capitalize on Market-Perceived Subsidies?

Keeping derivatives in FDIC-insured entities lowers their costs: creditors charge lower rates, as FDIC accounts are seen as having the backing of the federal government. And these FDIC accounts typically have higher credit ratings, which is why, in 2011, Bank of America moved derivatives from its Merrill Lynch subsidiary, which had just suffered a downgrade, into its FDIC-insured subsidiary, much to the chagrin of the FDIC.

As Peter Eavis writes in The New York Times, this directly helps Citigroup, who lobbied for and wrote the change, as they own a lot of CDS: “With some $3 trillion of exposure, the bank is one of biggest default swap dealers in the United States. Those swaps right now live inside an entity called Citibank N.A. that enjoys federal deposit insurance. Nearly $2 trillion of those swaps are based on companies or other entities with a junk credit rating.”

And as Eavis points out, it’s very likely that a huge portion of Citigroup’s CDS are uncleared, as very few CDS overall are cleared: “Only about 10 percent of such swaps are centrally cleared, according to official surveys.”

Banks keeping derivatives in the FDIC accounts lower their cost of doing business, due to the market perception of an implicit government support. It should not be the role of policy to artificially lower the cost of bank borrowing, and as such we find the case for removing the Lincoln Amendment to be unconvincing.

Mike Konczal is a Fellow at the Roosevelt Institute.

Alexis Goldstein is a former Wall Street professional, who now serves as the Communications Director at Other98.org.

Caitlin Kline is a derivatives specialist at Better Markets.

Follow or contact the Rortybomb blog:
 
  

 

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Daily Digest - December 11: We Don't Need Weakened Financial Regulations in the Spending Bill

Dec 11, 2014Rachel Goldfarb

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Democrats Revolt Against 'Wall Street Giveaway' In Deal To Prevent Government Shutdown (HuffPo)

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Democrats Revolt Against 'Wall Street Giveaway' In Deal To Prevent Government Shutdown (HuffPo)

Zach Carter and Sabrina Siddiqui quote Roosevelt Institute Chief Economist Joseph Stiglitz on why a provision that will bring risky derivative trades under FDIC protection is a disaster.

Warren Leads Liberal Democrats’ Rebellion Over Provisions in $1 Trillion Spending Bill (WaPo)

Senator Warren is calling on House Democrats to withhold support of the spending bill unless this derivatives provision is removed, report Lori Montgomery and Sean Sullivan.

Congress' Backroom Pension-Cutting Deal is Even Worse Than Expected (LA Times)

Michael Hiltzik details the pension-cutting measure attached to the omnibus spending bill, which he says has far fewer protections for older retirees than originally implied.

The Wall Street Takeover of Charity (ProPublica)

Donor-advised charitable funds, which are run by financial firms, aren't increasing charitable giving as much as they're making money for the firms, writes Jesse Eisinger.

Walmart Illegally Punished Workers, Judge Rules (NYT)

Steven Greenhouse reports on a National Labor Relations Board decision in California, which found that Walmart managers had illegally intimidated workers for supporting unionizing efforts.

The Economic Threat to Cities Isn't Gentrification; It's the Opposite (Vox)

With gentrification comes a higher concentration of poverty, writes Danielle Kurtzleben, and increased economic segregation comes with less economic mobility.

New on Next New Deal

The Financial Regulation Congress Is Quietly Trying to Destroy in the Budget

Roosevelt Institute Fellow Mike Konczal explains why Section 716 of Dodd-Frank was implemented in the first place, and why weakening it today would put the economy and taxpayers at risk.

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Daily Digest - December 10: Young People Want Political Engagement Across the Calendar

Dec 10, 2014Rachel Goldfarb

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Millennials Need to Turnout Every Day, Not Just Election Day (Huffington Post)

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

Millennials Need to Turnout Every Day, Not Just Election Day (Huffington Post)

Joelle Gamble, National Director of the Roosevelt Institute | Campus Network, argues that young people want to be asked not just to show up to the polls, but to be engaged in the political process year-round.

New York's Signature College Aid Program Turns 40, But Falls Short of Meeting Needs (Gotham Gazette)

Roosevelt Institute | Campus Network Leadership Director Kevin Stump proposes ways to update New York State's Tuition Assistance Program, which he argues is woefully out of date after 40 years.

Elizabeth Warren's Latest Wall Street Attack Was Her Boldest Yet (TNR)

David Dayen reports on Senator Warren's speech at yesterday's "Managing the Economy" conference, co-sponsored by the Roosevelt Institute. The senator directly attacked Wall Street's influence on financial policy.

Workers at Amazon Warehouses Won't Get Paid for Waiting in Security Lines (Bloomberg Businessweek)

Josh Eidelson reports on the Supreme Court's decision in Integrity Staffing Solutions, Inc. vs. Busk. The Court held that workers do not have to be paid for time spent waiting for security checks.

Congressional Leaders Hammer Out Deal to Allow Pension Plans to Cut Retiree Benefits (WaPo)

Michael A. Fletcher says retirees on the plans that will be permitted to make unprecedented cuts feel betrayed by this speedy congressional decision.

How Income Inequality Holds Back Economic Growth (AJAM)

A new report examines the significant link between income inequality and slowed economic growth, which cost the U.S. as much as 7 percent of GDP from 1990 to 2010, writes Ned Resnikoff.

New on Next New Deal

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

Roosevelt Institute Fellow Saqib Bhatti suggests that allowing the Fed to make long-term loans to municipalities would protect cities from economic crises and promote fair and sustainable development.

The Universal Declaration of Human Rights at 66: How Do We Make the Promise a Reality?

Ariel Smilowitz, Northeast Regional Policy Coordinator for the Campus Network, and Monika Johnson, a member of the Alumni Advisory Committee, call for an expanded approach to human rights, including non-state actors like corporations accepting responsibility.

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Daily Digest - December 9: One Strong Voice Against the Mega Cable Company

Dec 9, 2014Rachel Goldfarb

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Blows Against the Empire (Medium)

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Blows Against the Empire (Medium)

Roosevelt Institute Fellow Susan Crawford praises the new "Stop Mega-Comcast Coalition" for uniting the voices of those who view the Comcast-Time Warner Cable merger as monopolistic.

Fed’s Lockhart Still Favors Mid-2015 for First Fed Rate Increase (WSJ)

Lockhart, President of the Atlanta Fed, calls for patience regarding raising interest rates, writes Michael S. Derby, who describes Lockhart as "a bellwether of policy makers’ consensus outlook."

Congress Races to Reach Spending Deal Before Shutdown Deadline (MSNBC)

With a potential shutdown approaching at midnight on Thursday, Benjy Sarlin says Congress is working through disagreements on issues like environmental regulation and financial reform.

Are West Coast Longshoremen Spoiling Christmas? (Politico)

As their union continues to negotiate wages and benefits, Mike Elk reports that the longshoremen are accused of slowing holiday season shipping by sticking exactly to company rules.

The Lame-Duck Congress Plots to Undermine Retiree Pensions (LA Times)

A proposed change – which has no public language only days before Congress goes on vacation – would decrease the pensions of already-retired workers on certain plans, writes Michael Hiltzik.

U.S. States' Revenue Growth Picks Up But Still 'lackluster' (Reuters)

Lisa Lambert reports on a new survey on state revenues and budgets, which says that stagnant wages are keeping revenues from growing as well.

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Daily Digest - December 8: What Changes When China is the Largest Economy?

Dec 8, 2014Rachel Goldfarb

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The Chinese Century (Vanity Fair)

Roosevelt Institute Chief Economist Joseph Stiglitz considers the implications of China becoming the world's largest economy, particularly as the U.S. system perpetuates so much inequality.

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

The Chinese Century (Vanity Fair)

Roosevelt Institute Chief Economist Joseph Stiglitz considers the implications of China becoming the world's largest economy, particularly as the U.S. system perpetuates so much inequality.

U.S. Jobs Report Beats Forecasts as 321,000 Positions Added in November (The Guardian)

Heidi Moore looks at the November jobs report, which surprised many economists with its strength. She emphasizes that many of the jobs created are low-wage.

Even at 321,000 Jobs a Month, It Will Be Nearly Two Years Before the Economy Looks Like 2007 (Working Economics)

Charting out scenarios for catching up with the jobs shortfall, Elise Gould points out that even a "good" jobs report like this one isn't indicative of a speedy recovery.

Recovery at Last? (NYT)

Paul Krugman considers what recent positive economic news means for our understanding of this recession. He thinks it's proof that government paralysis slowed the recovery.

Wall Street to Workers: Give Us Your Retirement Savings and Stop Asking Questions (In These Times)

David Sirota looks at current cases in which public officials have refused to release information about the fees paid to investment firms by public pension funds.

  • Roosevelt Take: Roosevelt Institute Fellow Saqib Bhatti explains how predatory municipal finance deals are harming taxpayers in his recent report.

Labor's New Reality -- It's Easier to Raise Wages for 100,000 Than to Unionize 4,000 (LA Times)

Harold Meyerson looks at the labor movement's shift toward focusing on issues that impact many workers who are not members, a project in which Los Angeles is at the center.

Elizabeth Warren Doesn't Like This Treasury Nominee. Here's Why. (Mother Jones)

Erika Eichelberger explains Senator Warren's opposition to Antonio Weiss's nomination, which is based on his lack of experience in banking regulation and coziness with the financial sector.

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Daily Digest - December 5: Policy Created This Economy – And Policy Can Fix It

Dec 5, 2014Rachel Goldfarb

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The Poor Used to Have the Most Opportunity in America. Now the Rich Do. (WaPo)

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The Poor Used to Have the Most Opportunity in America. Now the Rich Do. (WaPo)

In the 1960s, the bottom 10 percent saw faster growth than the top 1 percent, but Matt O'Brien says policy has since promoted fundamental economic shifts that benefit the rich.

  • Roosevelt Take: Roosevelt Institute Chief Economist Joseph Stiglitz says that policy, in the form of tax reform, can fix the inequality in the U.S. economy.

Strong Voice in ‘Fight for 15’ Fast-Food Wage Campaign (NYT)

Steven Greenhouse profiles Terrance Wise, who works at a Burger King in Kansas City, MO and has become a leader in the fast food workers' movement over the past two years.

Apple and Camp Bow Wow: Sharing Strategies to Keep Wages Low (Working Economics)

Ross Eisenbrey ties non-compete clauses at low-wage jobs to tech companies' refusal to "poach" each other's workers: in both cases, corporate entitlement keeps wages down.

Chicago Raises Minimum Wage to $13 by 2019, But Strikers Say It’s Not Enough (In These Times)

Those who have been fighting for a $15-per-hour minimum wage are sticking to that number and accusing Mayor Emanuel of political opportunism, writes Will Craft.

Does the Media Care About Labor Anymore? (Politico)

Timothy Noah argues that strong labor reporting, taking a close look at workers and the labor movement's ideas, will be needed to get the economy back on track.

JPMorgan Said to Put Mortgage-Bond Trader on Leave Amid Scrutiny (Bloomberg)

Jody Shenn reports on the latest in a string of suspensions at JPMorgan, which is currently under strong regulatory scrutiny due to recent mortgage securities fraud cases.

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Daily Digest - December 4: Fixing Overtime Will Boost the Economy

Dec 4, 2014Rachel Goldfarb

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An Overdue Fix to Overtime (Other Words)

Roosevelt Institute Senior Fellow Richard Kirsch argues that raising the salary limit for mandatory overtime pay would help the underemployed, too, as they would likely get more hours.

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

An Overdue Fix to Overtime (Other Words)

Roosevelt Institute Senior Fellow Richard Kirsch argues that raising the salary limit for mandatory overtime pay would help the underemployed, too, as they would likely get more hours.

Study Finds Violations of Wage Law in New York and California (NYT)

Steven Greenhouse reports on a new Department of Labor study that finds that in 2011, between 3.5 and 6.5 percent of workers in New York and California were paid less than the minimum wage.

Even the Night Owls Need to Go Home Eventually (Pacific Standard)

Jake Blumgart looks at the Philadelphia subway system's shift to 24-hour weekend service, which was advertised as a nightlife service but has been heavily used by workers who get off late.

Legislator to Introduce Right-to-Work Legislation (Bloomberg Businessweek)

Todd Richmond reports on the Wisconsin GOP Assembly member who plans to introduce the legislation despite warnings from Democrats that it could lead to protests like Wisconsin saw in 2011.

Are Cities the Next Front in the Right’s War on Labor? (The Nation)

Moshe Marvit looks at anti-union groups' plans to push right-to-work laws on a local level, which has no legal precedent but is likely to be attempted anyway in labor-friendly states.

Democrats, It’s Time to Move On (WSJ)

Focusing on the could'ves and should'ves of the midterms won't deliver the economic momentum that American voters want, writes William Galston. Democrats need to instead focus on these next two years.

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