AFL-CIO President Richard Trumka responds to the Senate agreement on the “Fiscal Cliff”:

by Richard Trumka

Richard Trumka

(Jan 1, 2013)The agreement passed by the Senate last night is a breakthrough in beginning to restore tax fairness and achieves some key goals of working families.  It does not cut Social Security, Medicare or Medicaid benefits. It raises more than $700 billion over 10 years, including interest savings, by ending the Bush income tax cuts for families making more than $450,000 a year. And in recognition of the continuing jobs crisis, it extends unemployment benefits for a year.  A strong message from voters and a relentless echo from grassroots activists over the last six weeks helped get us this far.

But lawmakers should have listened even better.  The deal extends the Bush tax cuts for families earning between $250,000 and $450,000 a year and makes permanent Bush estate tax cuts exempting estates valued up to $5 million from any tax. These concessions amount to over $200 billion in additional tax cuts for the 2%.

From Fiscal Cliff to Debt Ceiling Debacle 2.0

by Dr. Jack Rasmus

Jack Rasmus

In a press conference concluded today, December 31, 2012, just hours ago, President Obama reported a partial agreement on the Fiscal Cliff was very near. To hold a conference and report such at this stage, means the major sticking points have been settled and just the details are now being worked out.

The agreement, as this writer has been predicting, will be only a partial one. Fiscal cliff (aka ‘Austerity American Style’) negotiations on unresolved matters will continue for the next several months.

In a press conference concluded today, December 31, 2012, just hours ago, President Obama reported a partial agreement on the Fiscal Cliff was very near. To hold a conference and report such at this stage, means the major sticking points have been settled and just the details are now being worked out.

Fiscal Cliff—The Well Orchestrated Dance

By Jack Rasmus

Jack Rasmus

(December 17, 2012) As the Democrats and Republicans continued their political theater this past week, coming closer step by step to an agreement on the so-called Fiscal Cliff (aka ‘Austerity American Style’), it has become increasingly clear that the key to a final agreement is how much and how to raise taxes. Given the offers and latest positions of Obama-Boehner in recent days, both are one, possibly two, steps at most away from a final agreement in principle on the tax issue. And once the tax side of the fiscal cliff debate is resolved, the spending cuts issue will quickly fall into place.

Since November 2010 and the publication of the Simpson-Bowles report, both sides have been always in agreement on the target of $4 trillion in deficit cuts. That $4 trillion number was confirmed in Obama’s budgets of the past two years, in Paul Ryan’s House budget proposals, in the aborted ‘grand bargain’ in the summer of 2011 between Boehner and Obama, and is the target once again, in the abrupt return to deficit cutting after the hiatus from deficit cutting during the 2012 election year. The contention has always been how much tax increases vs. how much spending cuts. Within the tax side of the equation, how much will the wealthiest 2% pay vs. how much the middle class will have to pay in a ‘broadened tax base’; while on the spending side, how much to cut military spending vs. how much to cut social programs, and social security-medicare-medicaid, in particular.

In a well orchestrated political dance, yesterday, Monday, December 17, Obama took the lead in the fiscal waltz and agreed to reduce the tax revenue mix a second time. After an initial offer of $1.6 trillion in tax revenue generation (tax hikes) two weeks ago, he reduced it to $1.4 trillion last week, and again, most recently, to $1.2 trillion. Boehner raised his offers for tax revenue, from an initial $800 billion to $1 trillion. A compromise at $1.1 trillion is just about what Simpson-Bowles recommended two years ago.

CEOs Use Their Undemocratic Economic Power to Hold the Country Hostage

by Nyegosh Dube

Nyegosh Dube

An article in the Wall Street Journal caught my attention recently. Titled “Investment Falls Off a Cliff,” it describes a large-scale cutback in investments by American companies in recent months, which is happening “at the fastest pace since the recession.” The main reasons for this, according to the article, are the uncertainty surrounding the impending fiscal cliff and a reduction in overseas demand, especially from China and the Eurozone countries. While the second reason is a legitimate, objective factor, the first, which is the primary factor, is pretty discretionary, i.e. it is the result of subjectively-based decisions made by CEOs. But clearly, lots of CEOs are making similar decisions in response to the fiscal cliff situation. I mentioned overseas demand, but what about domestic demand? The WSJ gives a clear answer: “The slowdown in capital spending contrasts with a rebound in U.S. consumer spending and confidence, which has returned to a five-year high.” Domestic demand is quite robust, yet investment and hiring are dropping off. What gives?

 

Predicting the ‘Fiscal Cliff’: Why A Deal Will Happen

by Jack Rasmus

Jack Rasmus

While both candidates in the recent election period were busy telling voters about their fictional economic programs, the real economic program that would emerge post-election was being formulated and debated by the elites of both parties and their corporate benefactors. Behind the scenes for months before the election, heads and CEOs of multinational and other large corporations were developing their recommendations. As the election day approached, their voice became louder and then was carried across the media in the week following the national election. Wall St. Journal, New York Times, Barron’s, and all the other pro-corporate media outlets gave preferred coverage, as the real policymakers took increasing control of the policy agenda post election.

Two years ago almost to this date the Obama-appointed Simpson-Bowles Commission released its report calling for $4 trillion in deficit cuts. The midterm 2010 elections disrupted and delayed their implementation, as the right wing injected its ‘all or nothing’ proposals into the national political equation. The next year would bring incremental deficit cutting, culminating in the August 2011 ‘debt ceiling debacle’ deal, for which the House radicals got $2.2 trillion in all spending cuts and Obama and Democrats gave up all their primary proposals in exchange for merely an agreement of no more debt ceiling brinksmanship until after the 2012 elections. As part of the August debt ceiling deal, the notorious ‘Supercommittee’ was established and mandated to deliver its version of an additional $1.5 trillion of deficit cutting by year end 2011. All that was a year ago, November 2011. But like the ‘get me re-elected first’ politicians they are, the Supercommittee House and Senate politicians of both parties agreed to ‘kick the can down the road’ one more year. The US economy moved sideways in terms of recovery for yet another year, 2011-12. Then the recent national election. The election period fantasy economic proposals of both candidates. And now the re-emergence of the real economic program the media calls the ‘Fiscal Cliff’.

350 Economists Warn President and Congress: Bad “Grand Bargain” on Deficits Could Kill Recovery.

Economy Needs Growth and Jobs, Not Austerity

 Washington, DC – 350 prominent economists issued a statement on Wednesday warning that “the fragile recovery is threatened by obsessive concern with cutting deficits that has infected both parties.”  The economists from universities and research groups across the U.S. and the world reminded politicians that the U.S. economy in the post-election period is still “marked by mass unemployment, rising poverty, and declining wages.”  And they warned that big spending cuts aimed at reducing deficits could throw the economy back into recession.

Their statement, called Jobs and Growth, Not Austerity, was written by Robert Borosage and Roger Hickey, co-directors of the Institute for America’s Future and by Robert Kuttner, founder of The American Prospect.

The statement and signers can be found at jobsnotausterity.org.

U.S. Jobs, GDP, and the Eurozone

by Jack Rasmus

Jack Rasmus

Friday, June 1, is a date that marks a shift in the public consciousness of the state of the US and global economy. What was touted for months over the past winter as a rebound taking hold in the US economy and the assertions that the US economy was ‘exceptional’ and would not suffer the slowdowns underway in Europe, China and the rest of the world – were all swept away on June 1 by the May US jobs report, a downward revised U.S. GDP numbers for the first quarter 2012, as well as by the rapidly deteriorating banking and general economic situation in the Eurozone.

Why Economists’ Jobs Forecasts Consistently Miss Their Mark

On the jobs front, Friday’s labor department data showed a growth of only 69,000 jobs, while the preceding month’s jobs numbers were revised downward for April from 115,000 to only 77,000. Both months were originally officially forecast by mainstream economists to show jobs growth of 150,000 and 180,000 respectively. A day earlier, the first quarter GDP numbers were also adjusted downward from 2.2% growth to only 1.9%, a decline that was totally unexpected by most economists, who had been forecasting that the current quarter, April-June, GDP would come in around the 2.5% to 3% range. But now will almost certainly end up in the 1.5% or even lower range, given a likely more rapid slowing in June.

One cannot miss jobs and GDP forecasts that badly without something being fundamentally wrong with forecast methodologies employed by most mainstream economists today, a point this writer has been making publicly repeatedly since last December.