Robert Reich Explains How We Need A New Era Of Reform Based On Public -- Not Private -- Morality

Romney Has Public Morality And Private Morality Upside Down

by Robert Reich, cross-posted from his website



Mitt Romney’s reaction to J.P. Morgan Chase’s mounting losses from reckless trades is “the market will take care of it.” His spokesman says “no taxpayer money was at risk” so we don’t need more financial regulation. Romney has even promised to repeal Dodd-Frank if he’s elected president.

Yet at the same time, Romney has come out strongly against same-sex marriage. He’s also against abortion. He has no problem with government intruding on the most intimate of decisions a person makes.

He’s got private and public morality upside down. He doesn’t want to regulate where regulation is necessary — at the highest reaches of the economy, where public immorality has cost us dearly, and will cost even more unless boardroom behavior is constrained. Yet he wants to regulate where regulation is least appropriate — at the level of the individual, in bedrooms and other intimate spaces, where private morality should govern.

This is a dangerous confusion. It should be a matter of personal choice whom to marry and when to have children. But it is undoubtedly a matter of public choice whether big banks should be allowed to take the kind of risky bets that plunged the economy into the worst downturn since the Great Depression, and whether people with great wealth and should be able to buy our democracy with huge campaign contributions.

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 Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Beyond Outrage.

Of Boardrooms And Bedrooms

By Robert Reich, cross-posted from his website

Mario Piperni

The 2012 election should be about what’s going on in America’s boardrooms, but Republicans would rather it be about America’s bedrooms.

Mitt Romney says he’s against same-sex marriage; President Obama just announced his support. North Carolina voters have approved a Republican-proposed amendment to the state constitution banning same-sex marriage. Minnesota voters will be considering a similar amendment in November. Republicans in Maryland and Washington State are seeking to overturn legislative approval of same-sex marriage there.

Meanwhile, Republicans have introduced over four hundred bills in state legislatures aimed at limiting womens’ reproductive rights – banning abortions, requiring women seeking abortions to have invasive ultra-sound tests beforehand, and limiting the use of contraceptives.

The Republican bedroom crowd don’t want to talk about the nation’s boardrooms because that’s where most of their campaign money comes from. And their candidate for president has made a fortune playing board rooms like checkers.

Yet America’s real problems have nothing to do with what we do in our bedrooms and everything to do with what top executives do in their boardrooms and executive suites.

We’re not in trouble because gays want to marry or women want to have some control over when they have babies. We’re in trouble because CEOs are collecting exorbitant pay while slicing the pay of average workers, because the titans of Wall Street demand short-term results over long-term jobs, and because of a boardroom culture that tolerates financial conflicts of interest, insider trading, and the outright bribery of public officials through unlimited campaign “donations.”

Our crisis has nothing to do with private morality. It’s a crisis of public morality – of abuses of public trust that undermine the integrity of our economy and democracy and have led millions of Americans to conclude the game is rigged.y and democracy and have led millions of Americans to conclude the game is rigged.

What’s truly immoral is not what adults choose to do with other consenting adults. It’s what those with great power have chosen to do to the rest of us.

It is immoral that top executives are richly rewarded no matter how badly they screw up while most Americans are screwed no matter how hard they work.

Regressive Republicans have no problem intruding on the most personal and most intimate decisions any of us makes while railing against government intrusions on big business.

They don’t hesitate to hurl the epithets “shameful,” “disgraceful,” and “contemptible” at private moral decisions they disagree with, while staying stone silent in the face of the most contemptible violations of public trust at the highest reaches of the economy.

We must protect and advance private rights of individuals over intimate bedroom decisions. We must also stop the abuses of economic power and privilege that are characterizing so many decisions in the nation’s boardrooms and executive suites.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Beyond Outrage.

What America Can Learn From The Revolt In Europe

By Robert Reich, cross-posted from his website

Who’s an economy for? Voters in France and Greece have made it clear it’s not for the bond traders.

Referring to his own electoral woes, Prime Minister David Cameron wrote Monday in an article in the conservative Daily Telegraph: “When people think about the economy they don’t see it through the dry numbers of the deficit figures, trade balances or inflation forecasts — but instead the things that make the difference between a life that’s worth living and a daily grind that drags them down.”

Cameron, whose own economic policies have worsened the daily grind dragging down most Brits, may be sobered by what happened over the weekend in France and Greece – as well as his own poll numbers. Britain’s conservatives have been taking a beating.

In truth, the choice isn’t simply between budget-cutting austerity, on the one hand, and growth and jobs on the other. 

It’s really a question of timing. And it’s the same issue on this side of the pond. If government slices spending too early, when unemployment is high and growth is slowing, it makes the debt situation far worse.

That’s because public spending is a critical component of total demand. If demand is already lagging, spending cuts further slow the economy – and thereby increase the size of the public debt relative to the size of the overall economy.

You end up with the worst of both worlds – a growing ratio of debt to the gross domestic product, coupled with high unemployment and a public that’s furious about losing safety nets when they’re most needed.

The proper sequence is for government to keep spending until jobs and growth are restored, and only then to take out the budget axe.

If Hollande’s new government pushes Angela Merkel in this direction, he’ll end up saving the euro and, ironically, the jobs of many conservative leaders throughout Europe – including Merkel and Cameron.

But he also has an important audience in the United States, where Republicans are trying to sell a toxic blend of trickle-down supply-side economics (tax cuts on the rich and on corporations) and austerity for everyone else (government spending cuts). That’s exactly the opposite of what’s needed now.  

Yes, America has a long-term budget deficit that’s scary. So does Europe. But the first priority in America and in Europe must be growth and jobs. That means rejecting austerity economics for now, while at the same time demanding that corporations and the rich pay their fair share of the cost of keeping everyone else afloat.

President Obama and the Democrats should set a clear trigger — say, 6 percent unemployment and two quarters of growth greater than 3 percent — before whacking the budget deficit.

And they should set that trigger now, during the election, so the public can give them a mandate on Election Day to delay the “sequestration” cuts (now scheduled to begin next year) until that trigger is met.

The GOP's Death Wish

Why Republicans Can't Stop Pissing Off  Hispanics, Women, and Young People

By Robert Reich, cross-posted from his website

What are the three demographic groups whose electoral impact is growing fastest? Hispanics, women, and young people. Who are Republicans pissing off the most? Latinos, women, and young people.

It’s almost as if the GOP can’t help itself.

Start with Hispanic voters, whose electoral heft keeps growing as they comprise an ever-larger portion of the electorate. Hispanics now favor President Obama over Romney by more than two to one, according to a recent Pew poll.

The movement of Hispanics into the Democratic camp has been going on for decades. What are Republicans doing to woo them back? Replicating California Republican Governor Pete Wilson’s disastrous support almost twenty years ago for Proposition 187 – which would have screened out undocumented immigrants from public schools, health care, and other social services, and required law-enforcement officials to report any “suspected” illegals. (Wilson, you may remember, lost that year’s election, and California’s Republican Party has never recovered.)

The Arizona law now before the Supreme Court – sponsored by Republicans in the state and copied by Republican legislators and governors in several others – would authorize police to stop anyone looking Hispanic and demand proof of citizenship. It’s nativism disguised as law enforcement.
Romney is trying to distance himself from that law, but it’s not working. That may be because he dubbed it a “model law” during February’s Republican primary debate in Arizona, and because its author (former state senator Russell Pearce, who was ousted in a special election last November largely by angry Hispanic voters) says he’s working closely with Romney advisers.

Hispanics are also reacting to Romney’s attack just a few months ago on GOP rival Texas Governor Rick Perry for supporting in-state tuition at the University of Texas for children of undocumented immigrants. And to Romney’s advocacy of what he calls “self-deportation” – making life so difficult for undocumented immigrants and their families that they choose to leave.

As if all this weren’t enough, the GOP has been pushing voter ID laws all over America, whose obvious aim is to intimidate Hispanic voters so they won’t come to the polls. But they may have the opposite effect – emboldening the vast majority of ethnic Hispanics, who are American citizens, to vote in even greater numbers and lend even more support to Obama and other Democrats.

Or consider women – whose political and economic impact in America continues to grow (women are fast becoming better educated than men and the major breadwinners in American homes). The political gender gap is huge. According to recent polls, women prefer Obama to Romney by over 20 percent.

So what is the GOP doing to woo women back? Attacking them. Last February, House Republicans voted to cut off funding to Planned Parenthood. Last May, they unanimously passed the “No Taxpayer Funding for Abortion Act,” banning the District of Columbia from funding abortions for low-income women. (The original version removed all exceptions – rape, incest, and endangerment to a mother’s life – except “forcible” rape.)

Earlier this year Republican legislators in Virginia, Pennsylvania, Idaho, and Alabama pushed bills requiring women seeking abortions to undergo invasive vaginal ultrasound tests (Pennsylvania Republicans even wanted proof such had viewed the images).

Republican legislators in Georgia and Arizona passed bills banning most abortions after twenty weeks of pregnancy. The Georgia bill would also require that any abortion after 20 weeks be done in a way to bring the fetus out alive. Republican legislators in Texas have voted to eliminate funding for any women’s healthcare clinic with an affiliation to an abortion provider – even if the affiliation is merely a shared name, employee, or board member.

All told, over 400 Republican bills are pending in state legislatures, attacking womens’ reproductive rights.

But even this doesn’t seem enough for the GOP. Republicans in Wisconsin just repealed a law designed to prevent employers from discriminating against women.

Or, finally, consider students – a significant and growing electoral force, who voted overwhelmingly for Obama in 2008. What are Republicans doing to woo them back? Attack them, of course.
Republican Budget Chair Paul Ryan’s budget plan – approved by almost every House Republican and enthusiastically endorsed by Mitt Romney – allows rates on student loans to double on July 1 – from 3.4 percent to 6.8 percent. That will add an average of $1,000 a year to student debt loads, which already exceed credit-card debt.

House Republicans say America can’t afford the $6 billion a year it would require to keep student loan rates down to where they are now. But that same Republican plan gives wealthy Americans trillions of dollars in tax cuts over the next decade. (Under mounting political pressure, House Republicans have come up with just enough money to keep the loan program going for another year – safely past Election Day – by raiding a fund established for preventive care in the new health-care act.)

Here again, Romney is trying to tiptoe away from the GOP position. He now says he supports keeping student loans where they were. Yet only a few months ago he argued that subsidized student loans were bad because they encouraged colleges to raise their tuition.

How can a political party be so dumb as to piss off Hispanics, women, and young people? Because the core of its base is middle-aged white men – and it doesn’t seem to know how to satisfy its base without at the same time turning off everyone who’s not white, male, and middle-aged.

 Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Beyond Outrage.

A Fair Economy Is Not Incompatible With Growth But Essential To It

By Robert Reich, cross-posted from his website

One of the most pernicious falsehoods you’ll hear during the next seven months of political campaigning is there’s a necessary tradeoff between fairness and economic growth. By this view, if we raise taxes on the wealthy the economy can’t grow as fast.

Wrong. Taxes were far higher on top incomes in the three decades after World War II than they’ve been since. And the distribution of income was far more equal. Yet the American economy grew faster in those years than it’s grown since tax rates on the top were slashed in 1981.

This wasn’t a post-war aberration. Bill Clinton raised taxes on the wealthy in the 1990s, and the economy produced faster job growth and higher wages than it did after George W. Bush slashed taxes on the rich in his first term.

If you need more evidence, consider modern Germany, where taxes on the wealthy are much higher than they are here and the distribution of income is far more equal. But Germany’s average annual growth has been faster than that in the United States.

You see, higher taxes on the wealthy can finance more investments in infrastructure, education, and health care – which are vital to a productive workforce and to the economic prospects of the middle class. 

Higher taxes on the wealthy also allow for lower taxes on the middle – potentially restoring enough middle-class purchasing power to keep the economy growing. As we’ve seen in recent years, when disposable income is concentrated at the top, the middle class doesn’t have enough money to boost the economy.

Finally, concentrated wealth can lead to speculative bubbles as the rich in the same limited class of assets – whether gold, dotcoms, or real estate. And when these bubbles pop the entire economy suffers.

What we should have learned over the last half century is that growth doesn’t trickle down from the top. It percolates upward from working people who are adequately educated, healthy, sufficiently rewarded, and who feel they have a fair chance to make it in America.

Fairness isn’t incompatible with growth. It’s necessary for it. 

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

The Buffett Rule Sets The Bar Too Low

By Robert Reich, cross-posted from his website

Next Monday most Americans will be filing their income taxes for tax year 2011. This year, though, tax day has special significance. If there’s one clear policy contrast between Democrats and Republicans in the 2012 election, it’s whether America’s richest citizens should be paying more.

Senate Democrats have scheduled a vote Monday on a minimum 30 percent overall federal tax rate for everyone earning more than $1 million a year. It’s nicknamed the “Buffett Rule” in honor of billionaire Warren Buffett who has publicly complained that he pays a lower tax rate than his secretary.

No one in Washington believes the Buffett Rule has any hope of passage this year. It’s largely symbolic. The vote will mark a sharp contrast with Republican Paul Ryan’s plan (enthusiastically endorsed by Mitt Romney) to cut the tax rate on the super rich from 35 percent to 25 percent – rewarding millionaires with a tax cut of at least $150,000 a year. The vote will also serve to highlight that Romney himself paid less than 14 percent on a 2010 income of $21.7 million because so much of his income was in capital gains, taxed at 15 percent. 

Hopefully in the weeks and months ahead the White House and the Democrats will emphasize three key realities:

1. The richest 1 percent of Americans are now taking in over 20 percent of total national income, and so far have raked in almost all the gains from this recovery. Thirty years ago, the richest 1 percent got 9 percent of total income. Income and wealth are now more concentrated at the top than they’ve been since the 1920s. 

2. The richest 1 percent are paying a lower tax rate than they’ve paid since 1980. For three decades after World War II, their tax rate never dropped below 70 percent. Even considering all deductions and tax credits, they paid close to 55 percent. Under Eisenhower, the top rate was 91 percent and the effective rate was 58 percent.

3. Right now the nation faces two yawning deficits – an investment deficit and a federal budget deficit. The investment deficit includes deferred maintenance on America’s infrastructure – roads, bridges, public transit, water and sewer systems that are all crumbling – and an educational system that’s being starved for resources (the federal government pays for 8 percent of K-12 education and about 5 percent of public higher education, but could do much more). The federal budget deficit is projected to mushroom to $6.4 trillion over the next ten years, mostly because of aging boomers and soaring healthcare costs.

Any serious person looking at these three realities would conclude that the rich should be paying far more. It’s not just a matter of fairness; it’s also a matter of patriotism. 

In fact, given these realities, the Buffett Rule sets the bar too low. For most Americans, wages and benefits are declining (adjusted for inflation), net worth has been plummeting (their only asset is their homes), and the public services they rely on have been disappearing. For the top, it’s just the opposite: Their incomes are rising, their stock-market portfolios have been growing, and a growing portion of their earnings has been subject to a capital-gains tax of just 15 percent. 

The Buffett Rule would generate only about $47 billion in extra revenues over the next decade, according to congressional estimates. Why not restore top rates to what they were before 1980, and match the capital-gains rate to the income-tax rate?

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.