FDR

Let's Defend SS and Other Entitlements With the 2nd Bill Of Rights

Joseph M. Firestone — Tue, 27 Nov 2012 17:48:50 -0500

The favorite defense of Social Security by progressives harkens back to Franklin Roosevelt who famously said:

”I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.”

So, today progressives echo this even though the SS Tax is a regressive tax, and anything but progressive in its impact on the economy. With the development of the MMT approach to economics, and its emphasis on the government's ability to spend without a solvency constraint on the Federal Budget, it's now clear that SS doesn't need to be funded by a regressive payroll tax; but can be funded out of general revenues and also guaranteed by a provision in law providing for automatic annual funding. Some government “trust funds” are funded this way, including parts of Social Security and Medicare, so there's no economic reason why the primary funding for both programs couldn't be provided for these programs.

But a friend, in an echo of FDR's view, recently said to me in correspondence:

"It seems to me that it is a lot easier to make the case that people are entitled to a government benefit if they have been paying a dedicated tax for 45 years that is described as funding that benefit."

And I replied in the following way.

It is easier; but it's still not easy as we now see; and, on the downside, to defend it that way we have to:

1) support the view that people are entitled to government payments only when they pay for them;

2) then defend against the attack that the entitlement payout greatly exceeds the amount paid in, and has no relationship to what is paid in;

3) accept the idea that SS and Medicare must be self-funding like any business, while also ensuring that they are "solvent" as much as 50 years out unlike any business (that is people are upset now because questionable long term fiscal projections show that full coverage of SS spending can only be projected out for 21 years to 2033, so they are calling for fixes to extend that projected “full solvency” period out to 2075 or 2080);

4) always have a very hard time justifying any increases to entitlements for current recipients, because those oppose entitlements always cry out that the Government is running out of money, and would have to raise SS taxes to pay for it;

5) never bring into the argument the fact that things are very different now than they were when SS was first passed, because we now have a fiat money system which makes many things possible now that weren't possible back then, because THERE IS NO SOLVENCY PROBLEM; and

6) ignore the great argument that our entitlements are the embodiment of an economic bill of rights that ought to apply to all Americans which, of course was outlined by the same FDR in 1944.

In my view, the protestant ethic defense that we're entitled to SS, because we worked for it isn't worth the candle. It makes things easier in the short-run, but it reinforces a skin-flintism which is wholly inappropriate to our modern economy, with its monetarily sovereign fiat currency system, and is largely responsible for the rapidly increasing inequality we've been experiencing over the years, which has now reached a ridiculous and anti-democratic pass.

We can't look at SS and our other entitlements in isolation. We have to fight and win the battle for FDR's economic bill of rights, and for an expansion of all the entitlements in the American social safety net; now the stingiest, most inadequate safety net among modern industrial nations!

FDR's strategy for justifying SS was great for the 1930s, when we were still on the gold standard. But nearly 80 years later it's time to move on to his economic bill of rights as our justification for entitlements, and stop reinforcing the idea that it's only an entitlement if one pays for it. It's time to stand on the over-riding moral argument! It's time to say that when a nation like the United States can afford to implement these rights, as the United States has been able to do at least since 1971, they then are human rights that must be implemented as part of the public purpose. Let us have a Green New Deal with a much stronger social safety net including greatly increased payments for SS and Medicare for All, and a Federal Job Guarantee emphasizing Green Jobs!

Let's fight for that and implement it economically using Modern Money Theory (MMT)-based fiscal policies!

(Cross-posted from New Economic Perspectives.)

Mitt Romney: The Empty Suit Clueless About the Empty Chair

Leo Gerard — Tue, 16 Oct 2012 09:01:56 -0400

Billy Koehler died on March 7, 2009, for lack of health insurance. Mitt Romney said on Oct. 10, 2012, that’s impossible.

The Republican nominee for President told The Columbus Dispatch newspaper last week:

“We don’t have people that become ill, who die in their apartment because they don’t have insurance.”

Technically, that’s true of Billy Koehler. He didn’t die in his apartment. He died in his car. Koehler suffered cardiac arrest and perished slumped over his steering wheel at a stop sign in Pittsburgh because he didn’t have health insurance and didn’t have $60,000 to replace his implanted defibrillator.

Romney, a quarter-billionaire born with a silver foot in his mouth, has shielded himself from the world in which America’s many Billy Koehlers exist. Their paths don’t naturally cross. Billy Koehlers don’t hang out with Romney’s NASCAR owner pals. Billy Koehlers don’t disparage the nation’s elderly and impoverished at fundraisers in the homes of private equity moguls. FDR and JFK made an effort to understand the joys and hardships of the non-rich. But Romney hasn’t. And that’s why he so carelessly called America’s Billy Koehlers a deliberately dependent underclass, albeit one comprising 47 percent of all citizens. Because Romney knows nothing of the lives of the nation’s Billy Koehlers, the Republican nominee can dismiss their medical predicaments as nonexistent and assure wealthy donors he won’t “worry about those people.”

Romney told the Columbus newspaper that no one needs to worry about those lacking health insurance because federal law requires hospitals to treat emergency cases:

“We don’t have a setting across this country where if you don’t have insurance, we say to you, ‘Tough luck, you’re going to die when you have your heart attack.”

He continued:

“No, you go to the hospital; you get treated; you get care, and it’s paid for, either by charity, the government or by the hospital.”

Logically, then, the solution would be for no one to buy insurance. Why bother? Hospitals must treat and bill someone else, according to Romney.

But it doesn’t work that way. The late Billy Koehler is an example of how it actually operates – how it fails to work for 26,100 to 45,000 Americans who die each year for lack of insurance.

Billy’s sister, Georgeanne Koehler, a retired hospital worker and member of the Service Employees International Union, told his story at rallies for passage of Obamacare, taking with her an empty chair in his memory. She celebrated the law’s passage in 2010, particularly its provision forbidding insurance companies from denying coverage to those with pre-existing conditions. That might have saved her brother.

Billy was just 39 when he suffered his first cardiac arrest. An electronics technician, he had health insurance through his employer, and that paid for surgery to implant a defibrillator. Still, over the years, Billy spent his entire $25,000 in pension savings on medical bills that insurance did not pay.

In 2003, Billy lost his job and his health insurance when the company he worked for closed. He tried to get another job with health insurance but could not. He tried to buy health coverage privately, but every insurer in Pennsylvania denied his request because of his pre-existing heart condition. He didn’t qualify for Medicaid because he earned slightly too much money in his new job as a pizza delivery driver.

While at work on Dec. 14, 2007, he collapsed in the pizza shop. He survived, but a cardiologist told him that his defibrillator needed to be replaced. Because Billy had no insurance, the doctor required payment up front.

Romney’s right about one thing. The hospital treated Billy as an emergency cardiac arrest victim. But the hospital emergency room wasn’t required to give him surgery to replace the defibrillator. And neither Billy, nor his sister, had $60,000 to pay for it out of pocket.

Less than two years later, as Billy drove home from work, he suffered cardiac arrest again. And he died. For lack of health insurance.

Under Obamacare, insurers can’t deny coverage to people like Billy because of pre-existing conditions. Obamacare also established high-risk pools for people like Billy. And Obamacare will extend Medicaid to more low-income people like Billy.

Romney has pledged to repeal Obamacare on his first day in office. Like a 21^st Century Marie Antoinette, he says: let ‘em go to the emergency room.

Romney’s prescription doesn’t work. It wouldn’t work for his own wife, Ann, who has multiple sclerosis and survived breast cancer. As quarter billionaires, the Romneys have the best insurance in the world. But without it, a hospital emergency room would not have provided Ann Romney with the care she needed. Emergency rooms don’t perform lumpectomies or radiation therapy. Emergency rooms don’t provide therapy for fatigue, dizziness, numbness or paralysis caused by MS. Emergency rooms don’t dispense MS drugs that can cost $3,000 a month. Romney’s clearly unaware of the empty chair campaign. Not having health insurance or $60,000 for surgery is inconceivable to him. He bought his wife a $500,000 dressage horse for MS therapy, after all.

America can’t afford to have in the White House an empty Armani who has made no attempt to find out what it’s like to try to survive uninsured, who remains clueless about all the chairs in America emptied by lack of insurance. The nation can’t afford a president so comatose to the lives of average Americans.

Huge Rally Demands A Second Bill of Rights For Americans

Dave Johnson — Sun, 12 Aug 2012 01:01:33 -0400

More than 35,000 working people attended Saturday's Workers Stand For America rally in Philadelphia – the birthplace of the Constitution and the Bill of Rights – to demand an economy that works for all of us. This rally was called to support America's Second Bill of Rights, inspired by President Franklin Roosevelt’s 1944 proposed economic Bill of Rights.

The Rally

The rally took place at Eakins Oval in Philadelphia. More than 35,000, and possibly as many as 40,000, people attended.

Speakers and entertainment included AFL-CIO President Richard Trumka, singer Lucinda Williams, former Philips worker Bo McCurry, Education activist Helen Gym, Pennsylvania Senator Bob Casey, International Brotherhood of Electrical Workers President Ed Hill, Democratic National Committee Chair Debbie Wasserman Schultz and Secretary Treasurer of the Philadelphia AFL-CIO Liz McElroy. President Barack Obama addressed the crowd on video.

At the rally the AFL-CIO's Richard Trumka said that workers are the "job creators," and "Those who say we have to downsize the American dream don't know what they are talking about."

"We built this country! We wake it up every day, we make it run and we put it to sleep every night — and it's time that we took it back for the American worker," he said. "Anyone who says America can't afford retirement security, or health care, or decent pay for honest work, or great schools, or a postal service, or cops or firefighters and teachers and nurses, well they don't know what they're talking about and we won't accept their defeatism!"

Liz McElroy, secretary treasurer of the Philadelphia AFL-CIO, said,

“We want to advance an agenda where it’s okay to have a middle class again and workers who speak up for their rights are not vilified and people who have a decent pension and maybe a little healthcare when they retire aren’t the enemy.”

Clifford Glass, a veteran denied his right to vote, addressed the rally and said he had voted in every election since 1960, but now is denied the right to vote because he uses his veteran's ID, which is not sufficient under new voter-ID laws.

FDR'S Proposed Economic Bill of Rights

Here is what President Roosevelt had to say to the country back in his 1944 State of the Union message, as the country fought World War II:

We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. “Necessitous men are not free men.” People who are hungry and out of a job are the stuff of which dictatorships are made.

In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all—regardless of station, race, or creed.

Among these are:

The right to a useful and remunerative job;

The right to earn enough to provide adequate food and clothing and recreation;

The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;

The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;

The right of every family to a decent home;

The right to adequate medical care and the opportunity to achieve and enjoy good health;

The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;

The right to a good education.

All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.

For unless there is security here at home there cannot be lasting peace in the world.

That was an American President, back when the government really was our government, of by and for We, the People.

America's Second Bill of Rights

America's Second Bill of Rights is an effort to rally people around a clear statement of economic rights for all Americans. People are asked to sign this, and it will be presented to delegates at the Republican and Democratic national conventions. The message will be delivered through all available media to working families throughout America to put public officials on notice that working people are tired of being ignored.

America's Second Bill of Rights begins,

"We the People want to strengthen our nation, as a beacon of equality, economic opportunity and freedom for all. We hold these rights to be essential to our vision of America and believe that the principles contained therein should guide our government, business leaders, organizations and individuals in our common goal of a just and fair society."

The items in the Second Bill of Rights are:

The Right to Full Employment and a Living Wage
The Right to Full Participation in the Electoral Process
The Right to a Voice at Work
The Right to a Quality Education
The Right to a Secure, Healthy Future

The details of America's Second Bill of Rights:

America's Second Bill of Rights

We the People want to strengthen our nation, as a beacon of equality, economic opportunity and freedom for all. We hold these rights to be essential to our vision of America and believe that the principles contained therein should guide our government, business leaders, organizations and individuals in our common goal of a just and fair society.

The Right to Full Employment and a Living Wage:

All Americans willing and able to work have the right to safe, gainful employment at a fair and livable wage. We call on the public and private sectors to invest in America’s infrastructure and promote industrial development, maintaining job creation as a top policy priority.

The Right to Full Participation in the Electoral Process:

Recent initiatives to disenfranchise citizens seek to reduce the rolls of eligible voters and empower money instead of people. We believe these actions constitute an assault on our nation’s democracy and history of heroic struggle against voting restrictions based upon property ownership, religion, race and gender and call for reinforcing our fundamental right to vote.

The Right to a Voice at Work:

All workers have the right of freedom of association in the workplace, including the right to collectively bargain with their employer to improve wages, benefits and working conditions.

The Right to a Quality Education:

Education is a fundamental bedrock of our democracy, vital to America’s competitive position in the world and the principal means by which citizens empower themselves to participate in our nation's economic and political systems. Quality, affordable education should be universally available from pre-kindergarten to college level, including an expanded use of apprenticeships and specialty skills training to prepare Americans for the workplace.

The Right to a Secure, Healthy Future:

Americans have the right to a baseline level of health care, unemployment insurance and retirement security, all of which have been badly eroded by the disruption of the social compact that served the nation well for decades. We call on government and private industry together to confront the issues of declining access to health care especially for children, weakening of unemployment coverage, and inadequate pension plans that undermine the ability of working men and women to retire in dignity, even as Social Security and Medicare are under strain and threatened with cutbacks.

Go to http://www.workersstandforamerica.com/petition.aspx to sign the petition.

The FacebookPage is at https://www.facebook.com/WorkersStandforAmerica.

And another video:

Finally, for your viewing pleasure:

How Income Inequality Undermines Social Security's Finances

Daniel Marans — Tue, 15 Nov 2011 11:39:16 -0500

A recent study reveals how rising income inequality is jeopardizing Social Security’s finances.

It is by now common to hear Social Security advocates demand that we “scrap the cap” on earnings subject to the Social Security payroll tax.

This is an important appeal. Few Americans realize that millionaires only contribute to Social Security on the first $110,100 they earn. If they did, perhaps they’d be even more adamantly opposed to the benefit cuts many in Washington are proposing.

But even fewer people realize that the “cap,” or taxable maximum, as it is called more officially, at one time covered a far larger share of earnings, existing in harmony with fully-funded Social Security benefits. In fact, the cap was baked into Social Security from its inception.

The Evolution of Social Security’s Taxable Maximum, a recent study by Kevin Whitman and Dave Shoffner from the Social Security Administration’s Office of Retirement Policy, shows how rising income inequality has greatly increased the amount of earnings above the tax-max, depriving Social Security of much-needed revenue and shifting a larger share of its financing onto middle- and low-income workers.

The truth is that Social Security’s taxable maximum was born of smart policymaking. The tax max helped Social Security meet “the goal as a social insurance program of focusing on low- and middle-income workers who were more likely to be economically vulnerable in retirement.” FDR initially proposed to exempt high-income earners. The House Ways and Means Committee replaced the exemption with a taxable maximum on earnings, reasoning that virtually all workers need at least some basic level of protection against lost wages in old age. Moreover, fluctuations in individuals’ income above and below the exemption level would cause the number of workers covered by the program to fluctuate.

The tax max started at $3,000 in 1937, the first year covered workers began contributing to Social Security. Congress increased the dollar amount on an ad hoc basis for several decades thereafter, in much the way it raised benefit levels and expanded coverage to new sectors of employment. In 1972, Congress finally indexed the tax max to changes in the average wage index. Because the automatic indexing put in place in 1972 did not work as intended as a result of the unanticipated stagflation of that decade, Congress modified it and specified as a goal that 90 percent of all wages nationwide be insured against loss by Social Security. These measures were largely successful, bringing the portion of earnings covered by Social Security to 90 percent of earnings in 1982 and 1983.

Since that time, the tax max has continued to go up with average wage increases, but rising income inequality has caused the percentage of the country’s total earnings covered by the tax max to steadily decline. “Wages above the tax max generally have grown more quickly than wages overall,” Whitman and Shoffner write. The percentage of the country’s earnings covered by the tax max has dropped from 90 percent in 1983 to 84.2 percent in 2010, and is slated to drop to 83 percent in the coming years. This seemingly small slippage translates to billions of lost revenue for Social Security every year.

While the percentage of the country’s earnings above the cap has increased, the percentage of workers with earnings above the cap has remained static—a telling reflection of the extent to which wealth is now concentrated in the hands of the few. In 1983, 6 percent of workers accounted for the 10 percent of the country’s earnings above the tax max. In 2010, the same percentage of the workforce accounted for a much greater portion of earnings above the tax max—nearly 16 percent.

Even if Social Security were not facing a modest shortfall beginning in 2036, the drop in the percentage of covered earnings below 90 percent deserves correction. Several Washington commissions have proposed raising the tax max to gradually cover 90 percent of earnings once again. This would in fact close one-third of Social Security’s projected long-term shortfall.

But increasing the tax max is often pitched as a major concession to the Left, rather than a correction for the consequences of rising inequality. As such, the price of its passage becomes wholesale passage of major benefit cuts that please the Right, but dismay the public.

If politicians in Washington want to be honest with the American people, they would raise the tax max as a matter of course – and should have decades ago—not use it as a pawn in negotiations to cut the program. Better still, they could enact policies to reduce income inequality so that more of Social Security’s earnings remain taxable.

If politicians want to completely restore Social Security to long-range balance, they should consider scrapping the cap entirely. That is what, poll after poll reports, the American people overwhelmingly favor.

Why the Payroll Tax Cut's Liberal Apologists Are Wrong--and FDR is Right

Daniel Marans — Mon, 13 Dec 2010 12:53:54 -0500

The one-year payroll tax cut proposal in President Obama’s tax deal with Republicans has Social Security advocates worried that the reduced tax rate will become permanent, doubling Social Security’s financial deficit and jeopardizing the economic protections it provides to American workers and their families.

Some on the left agree that the payroll tax cut is likely to be extended, but see nothing wrong with decoupling Social Security from payroll taxes, and making it at least partly dependent on revenue from the general fund. They argue that paying Social Security benefits out of the general fund would replace the payroll tax with a far more progressive source of revenue. By allowing Social Security to be funded out of the income tax, the argument goes, it reduces the overall burden on the middle class. In addition, they contend, Social Security would never again face a financial shortfall like the current one, because it would be free to borrow as needed.

This argument has merit, but are the potential benefits of making Social Security a standard budget item worth risking the whole program? Social Security is an independent program that has survived largely unchanged for 75 years, but making it depend on general fund revenue puts it at the whims of Washington politicians.

Social Security’s independence from the general fund has been a fundamental feature of the program since its inception. Franklin Delano Roosevelt famously said that payroll taxes “give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.” It is a statement that has rung surprisingly true. Social Security’s sense of ownership grants the program universal approval across the political spectrum; even Tea Party Activists wave signs stating, “Keep your government hands off my Social Security.” The political winds have changed time and again, but Social Security has never wavered in popularity. There is perhaps no other government program of which that can be said.

More importantly, Social Security’s independent, dedicated revenue stream in payroll taxes protects it from the cuts that perennially threaten other government programs. But co-mingling Social Security with other government programs would subject it to the yearly spending decisions of Washington insiders, placing it squarely in the cross-hairs of partisan maneuvers and ideological attacks. If Social Security were to depend on funds from the general budget, it would have to compete with other programs for increasingly scarce federal dollars. Under yearly pressure for funding, Social Security would quickly become a shadow of its former self.

Even given its current structure, the ballooning budget deficit has made massive cuts to the program viable once again. The Deficit Commission’s recommendations would cut benefits deeply. But under pressure from advocacy groups to admit that Social Security is separate from the general budget, the Commission justified its proposal on the basis that it would shore up Social Security’s finances, not reduce the deficit. One can only imagine that if Social Security were part of the general budget and actually contributed to the budget deficit, the case for cuts would be that much stronger.

Liberals who think the payroll tax is regressive must ask themselves, Why was Franklin Delano Roosevelt, perhaps the most progressive president in our nation’s history, responsible for its enactment? Roosevelt knew that the universal and flat nature of the payroll tax would be an essential component of Social Security’s popularity. It assures middle class Americans that they are paying into a program for their future benefits. Social Security is not about Washington insiders distributing benefits. In fact, payroll taxes were designed to be more like insurance premiums. Everyone pays the same share of their income into the program, up to $106,800, and everyone is insured when they retire, die, or become disabled. When the flat payroll tax rate is taken together with the progressive benefit formula, however, it becomes clear that Social Security is actually one of our most redistributive government programs. The lower your lifetime wages, the higher the proportion of your earnings will be replaced by Social Security. So while the link between wages and benefits insures the program’s overall fairness, the proportional returns of the program are greatest for those who need them most.

The timing of the payroll tax cut could not have been any worse. Confidence in Social Security’s financial integrity is at a record low. Scores of conservatives were swept into Congress by claiming that President Obama and the Democratic Congress had raided the Social Security Trust Fund. If Congress decides to lower payroll taxes and replace it with funds from the general budget, it will give credence to the myth that Social Security is “broke.” And once given the excuse, Social Security’s opponents will defund the program to prop up their pet projects.

Social Security is a promise. It’s a promise made explicitly on every pay stub. And it is the American public's ownership of the program that has kept the promise alive for 75 years, allowing Social Security to lift 20 million people, including 1 million children, out of poverty this year alone.

But if Social Security's dedicated tax is substituted with revenue from the general fund, it will confirm many Americans' fears that the government has been "raiding" Social Security, severely undermining their ownership of the program. Rather than remain a promise kept, Social Security will be a promise forgotten.

Vote for Hope

Leo Gerard — Thu, 28 Oct 2010 09:30:27 -0400

The electorate is bitter and angry. It’s no wonder. Foreclosures rise while Wall Street bankers, whose recklessness caused this grave recession, grab million dollar bonuses. Unemployment is stuck at 9.5 percent, but corporations continue to ship jobs overseas.

The level of acrimony showed itself Monday in Lexington, Ky., when a group of men supporting Republican U.S. Senate candidate Rand Paul threw a woman backing Democrat Jack Conway to the ground and stomped on her head.

This is not the hope America voted for in the fall of 2008. Now another election is upon us. On Tuesday, voters can choose candidates capitalizing on bitterness, or they can return to hope and provide time for change to play out. Voters can stay the course with the President whose basic philosophy is a Biblical one – that we are all our brothers’ and sisters’ keepers. Or Americans can empower Republicans who believe it’s every man for himself, who espouse the view that a man’s success is his own, and, equally, each man is solely responsible for all of his setbacks.

This midterm election is about how those disparate Republican and Democratic values will play out in legislation. Do Americans want to live in a Republican country that blames individuals for their unemployment in an economy creating only one position for every five jobless workers? Or do Americans want a country that lives by the Democratic philosophy that government must aid, not blame, the unemployed, that it must give a hand up, not a slap in the face, to the suffering?

Hard as it is during troubled times, as difficult as it may feel after some legislative efforts have fallen short of important idealistic goals, let’s build a country of hope, one in which we help our fellow Americans.

That virtuous aim, of course, is the subject of ridicule. Here’s Sarah Palin mocking optimistic Americans at a Tea Bagger event in February, “How’s that hopey-changey thing working out for ya?”

But come out to vote for hope Tuesday anyway; stand up to the malevolent bullies.

What the bullies want is a country where workers are on their own: for health insurance, for income security in their old age, for surviving another Wall Street collapse. For everything.

Unemployment insurance is a good example. Over the past year, the GOP has scorned the jobless, calling them lazy freeloaders. Republicans repeatedly voted against extending unemployment benefits. From the GOP point of view, Wall Street’s crash didn’t cause the economic collapse and high unemployment. No, according to Republicans, each unemployed worker is responsible for his situation, and it’s not the role of government to intervene to help. That philosophy is behind Republican South Carolina Lt. Gov. Andre Bauer’s comment that the unemployed, like stray animals, should not be fed: “You are facilitating the problem if you give an animal or person ample food supply.”

Come out Tuesday and vote for hope, vote to aid the unemployed.

Wall Street reform is another example of Republican “on your own” philosophy. Before the stock market crash of 1929, the unregulated American financial system whipped the economy in wild boom and bust cycles. The frequent crashes and runs on banks were called panics. In Democrat Franklin Delano Roosevelt’s New Deal, Congress imposed rules on Wall Street and the banking industry. For the next sixty years the economy largely avoided panics. Then Congress lifted the regulations, and the crash of 2008 wrecked the economy. Former President Bush responded by proposing and orchestrating the Wall Street bailout. But his party vigorously opposed re-regulation to avoid another economic disaster. The GOP voted against the legislation restoring protections for the economy, investors and consumers. Republicans believe government has no business policing the free market or interceding for investors and consumers because individuals are solely to blame for everything that happens to them.

Come out Tuesday and vote for hope, vote to protect hardworking Americans against financial fraud and the machinations of powerful, multi-national financial firms.

Health insurance reform provides one of the clearest examples of Republican “on your own” philosophy. The GOP proposed that “reform” consist of granting individuals small tax breaks, about a quarter the cost of health insurance, while revoking breaks given companies that provide health coverage to workers. This, Republicans said, would “free” companies from providing insurance and “free” individuals to choose their own plans. It would have liberated individuals to negotiate coverage and claims payment with giant, sophisticated, lawyer-laden insurance corporations. If an individual got a bad deal, one that enabled the insurer to drop coverage when he got sick, deny coverage to his sick child or raise rates continuously, well, then, that would be the fault of the individual purchaser. Republicans have promised that if empowered, they will repeal the Democrats’ Patient Protection and Affordable Care Act.

Come out Tuesday and vote for hope, vote to support the health insurance reform law that uses the power of government regulation to shield policy holders from insurer abuses, that lowers costs and that enables nearly all Americans to obtain insurance.

Retirees should be “on their own” as well, Republicans believe. Some in the GOP even contend Social Security is unconstitutional. Others want to cut it or privatize it. What privatizing means is getting the government out of the business of collecting Social Security taxes to ensure that all workers receive benefits after retiring. Instead, Republicans want workers to be on their own to invest for their retirement. If there’s another market “panic” – which could happen if Republicans repeal Wall Street reform – and workers lose their “privatized” retirement savings in the crash, the GOP’s response would be that individuals must take responsibility – their loss is their fault.

Come out Tuesday and vote to keep America’s promise to provide basic income security to all elderly citizens. Vote to be your brothers’ and sisters’ keeper and for them to be yours. Vote for hope.

The Real Lesson From the Great Depression: Fiscal Policy Works!

Dave Johnson — Mon, 06 Sep 2010 22:36:30 -0400

The President Has Spoken. Now Let's Help Him Act.

Richard Eskow — Thu, 22 Apr 2010 14:51:04 -0400

If you've ever wondered what the phrase "the sound of silence" means, you should've been listening when the President invited "the titans of industry" to join him in promoting financial reform this morning.

The President's speech walked a fine line between vision and reality. At times it seemed almost an internal dialog between the technocrat who sees the problems and knows how to fix them, and the political pragmatist who wants to reap electoral rewards from whatever bill finally gets passed.

"Between the dream and the reality," wrote T. S. Eliot, "falls the shadow." The President's speech demonstrated that he sees what needs to be done. But reform has to make its way through the legislative shadows on Capitol Hill. That means it's up to the rest of us to create the political climate that makes that makes genuine reform possible - or, better yet, inevitable.

The signs are good. Sen. Chuck Grassley's vote yesterday for Blanche Lincoln's derivatives amendment reflected a new political reality: Republicans can't afford to be seen as favoring Wall Street, and when they're faced with an up-or-down vote they'll be under tremendous pressure to cave.

The President's speech was strong on principles. He led off the policy section of his speech with a strong endorsement of the Volcker rule, which in his words "places some limits on the size of banks and the kinds of risks that banking institutions can take." That's exactly what's needed (although the Dodd bill as currently written fails to deliver it.) The President also spoke strongly in favor of transparency, and was at his strongest when talking about consumer protection. He said:

"While a few companies made out like bandits by exploiting their customers, our entire economy suffered. Millions of people have lost homes, and tens of millions more have lost value in our homes ... unless your business model depends on bilking people, there is little to fear from these new rules."

That last comment was met with stony silence from the financiers in the audience, and no wonder: Their business model frequently does depend on "bilking people." As my colleague Zach Carter has pointed out, Jamie Dimon's JPMorgan Chase expects to lose one-half to three quarters of a billion dollars as a result of new consumer credit card protections, and to book a loss on their card operations for the year. So, at least in one of his corporate divisions, the man once called "Obama's favorite banker" did build a business model based on bilking customers.

Some viewers of the speech were no doubt frustrated by some of the parsing. Shahien Nasiripour cleverly caught the contrast between Obama's "join us" stance toward bankers and FDR's defiant "I welcome their hatred" speech. But that difference reflects the President's temperament and a changed political climate, and doesn't detract from the core of his message.

Obama's comment that both the Senate and House bills "represent a significant improvement" over the status quo will frustrate a lot of people, too. That's the politician talking: If the weak Dodd bill is the best he can get, he'll still need to declare a great victory in anticipation of November's elections. But there's no reason to expect that this bill really is the best he can get.

Strong reform measures need to be brought to an open vote on the Senate floor, where Wall Street-friendly Senators of both parties are unable to hide behind procedural smoke screens. It's tough to make a public stance in favor of the big banks in the "transparency" of an open vote, and that provides an unprecedented opportunity for real change. That's why Simon Johnson's suggestion - that you call your Senator, Harry Reid, and the White House to demand an up-or-down vote on the Brown/Kaufman SAFE Banking Act - makes so much sense. (Why not take a quick break and do it right now?)

There are other amendments that deserve support, too. Sen. Jack Reed's consumer amendment, Bernie Sanders' proposed audit of the Federal Reserve, and the truly bipartisan McCain/Cantwell amendment to reinstate the Glass-Steagall Act are all important.

Sure, we could critique parts of the President's speech. His statement that "there is no dividing line between Main Street and Wall Street ... we rise or fall together as one nation" is demonstrably false. One look at unemployment figures and the Dow will tell you that. But he can be forgiven the rhetorical excesses, especially if he succeeds in providing what he rightly describes as "common sense" fixes to a real problem. These reforms should appeal to people across the political spectrum, and deserve support from anyone who believes in non-monopolistic free market capitalism.

The President will face an ongoing temptation to compromise, to declare victory with the Dodd bill as written when he's faced with organized resistance. The same political pressure that encourages Senators to strengthen reform will also help the President stay resolute on this issue.

The political climate is right for meaningful change. The President needs public help and support to get tough reforms through the Senate. He's said his piece. Now he - and we - need to follow it up with concrete action.