Sunday, January 30, 2011
The top 1% percent income bracket continues to gain economic ground as the middle class shrinks. Paul J. Nyden has reviewed a new book titled "Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class" by Jacob S. Hacker and Paul Pierson, Simon & Schuster, 2010.
Nyden writes in The Charleston Gazette:
Middle-class and working Americans prospered for a generation after World War II. But during the past 30 years, most Americans experienced meager economic improvements or none at all.
Our economic and political systems awarded major financial benefits to the wealthiest 1 percent of all Americans.
Between 1972 and 2010, the richest one of every 10,000 households increased its average annual earnings from less then $4 million to $35 million, in figures adjusted for inflation.
At the same time, tens of millions of other Americans - under Republican and Democratic leaders -- lost their job security, lost their homes and struggled to pay ballooning health-care costs -- which precipitated more than half the bankruptcies filed in recent years.
Between 2002 and 2008, nearly 40 percent of home equities owned by American families were wiped out.
Today, the United States has higher income inequality than any other industrial nation.
These are among the stark themes of Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class, a new book by political scientists Jacob S. Hacker and Paul Pierson.
The federal government played a central role in promoting the dramatic rise in income inequality.
Back in 1965, when Lyndon B. Johnson was president, the average chief executive officer at large corporations made 24 times as much as the average employee. By 2007, CEOs were paid 300 times as much.
During Richard Nixon's presidency, between 1969 and 1974, domestic social programs expanded.
Nixon signed numerous regulatory acts, including: the Environmental Protection Act, Mine Safety and Health Act, Occupational Safety and Health Act, and legislation creating the Consumer Product Safety Commission and National Traffic Safety Commission.
Nixon's proposals for health-care reform, Hacker and Pierson write, were significantly more extensive than Obama's 2009 proposals.
Democrat Jimmy Carter, in the White House between 1977 and 1981, oversaw the beginning of the "liberal era's" demise.
They were "tumultuous years in which the unexpected liberalism of Nixonland turned into the unexpected conservatism of Carterland," Hacker and Pierson write.
Over the next 30 years, federal regulations, many created during Franklin D. Roosevelt's New Deal, were dismantled. Huge deficits and debts began to accumulate.
By the late 1990s, when Democrat Bill Clinton was president, regulations controlling banks descended to pre-New Deal levels.
Gutted laws and regulations made it easier for banks to merge, relaxed restrictions separating commercial banks from high-risk investment banks, removed interest rates ceilings and ended a decades-old separation between banks and insurance companies.
Today, the ability of federal officials to monitor and regulate corporate misdeeds has been gutted.
Today's politically liberal groups are typically upper middle class. They pay little attention to economic problems, focusing on other significant issues such as environmental protection, women's rights and civil liberties.
With the decline of unions, middle-class and working Americans lost powerful advocates for pocketbook issues to counter those at the top.
In recent decades, White House occupants have done little to help unions, which played a central role in the post-World War II prosperity.
A defining moment came in 1981, when Ronald Reagan broke a strike by the Professional Air Traffic Controllers Association -- a critical defeat for labor.
Allied with Republicans, Democrat Bill Clinton fought hard to win Congressional approval of the North American Free Trade Agreement, over opposition from trade unions and several Democratic members of Congress, such as the late Sen. Robert C. Byrd, D-W.Va.
NAFTA and the Central American Free Trade Agreement empowered U.S. companies to pay foreign workers 10 cents, or less, for every $1 they paid to American workers to do the same jobs, Hacker pointed out in his 2006 book, The Great Risk Shift.
In 1960, 40 percent of all American non-agricultural jobs were in well-paying industries like steel, auto, chemical, aluminum, textiles and mining. By 2002, just 14 percent were still in manufacturing.
For decades, "captains of industry" -- people like Andrew Carnegie, John D. Rockefeller and Henry Ford -- were big financial winners. They smelted steel, drilled for oil and produced automobiles.
Over the past 30 years, "deal makers and financial gamblers" solely focused on making personal profits displaced those captains.
When Barack Obama became president, he quickly abandoned campaign promises to promote passage of the union-backed Employee Free Choice Act, which would make it easier for people in individual workplaces to vote on whether to have unions represent them.
Dwight D. Eisenhower, the retired Army general and Republican president between 1953 and 1961, backed the rights of workers to organize.
"Only a handful of reactionaries harbor the ugly thought on breaking unions and depriving working men and women of the right to join the union of their choice," Eisenhower said.
During the past generation, the Republican Party has moved steadily rightward, Hacker and Pierson argue.
The Reagan era was halfway between the "reluctant New Dealism" of Nixon and the "winner-take-all enthusiasm" of George W. Bush.
Today, our country faces enormous challenges: reforming an increasingly troubled and expensive health-care system, improving schools, dealing with impending financial strains created by an aging population.
Yet most Republicans believe our nation's top priority is to pass, and maintain, "big tax reductions for those at the top."
During the Reagan and Bush II administrations, deficits and debts skyrocketed, despite rhetoric from both presidents about reducing government spending.
In addition to approving massive tax cuts for the wealthy, government leaders have routinely increased military spending without adequate resources to pay for that expansion and new wars.
We are also witnessing a disturbing decline in public knowledge and awareness about the causes of problems confronting most Americans.
In 2008, Obama set an all-time record for presidential fund-raising. His campaign collected more than $1 billion -- a significant portion from corporate donors like insurance and pharmaceutical companies.
But corporate lobbying dwarfs campaign spending.
In 2009, corporate lobbyists reported spending almost $3.5 billion.
Banks, investment firms, insurance companies and realtors alone hired 940 lobbyists to influence the 535 members of the U.S. Senate and House of Representatives.
The rise of television and Internet sites lead many Americans to neglect real news.
"While the best-informed citizens are better informed than ever," Hacker and Pierson write, "more and more citizens are consuming less and less news."
The news media feels constant pressure to provide entertainment.
Television stations are more likely to focus on scandals, crimes and celebrities, as well as "soft news" like personal health issues.
"Hard news" gets squeezed out, especially news about complex issues that are difficult and time-consuming to explain.
Stories about what caused bank failures routinely attract less public interest than photogenic accounts of highway accidents, fatal floods, cheating spouses and pregnant actresses.
Social interaction and civic culture is also declining.
Between 1955 and 1995, membership in the American Legion dropped by more than 40 percent. Membership in fraternal orders like the Elks, Masons and Eagles also dwindled.
Deceptive reporting of political surveys also plays a negative role. When pointing out how many Americans opposed last year's health-care reforms, media outlets routinely failed to mention one-fourth of those opponents wanted a stronger heath-care bill.
Republicans often use social issues -- such as gun-ownership, school prayer and abortion rights -- to attract millions to vote against their own economic interests.
"Making government responsible to the middle class would not just be a political achievement," Hacker and Pierson conclude. "It would reshape the economy."
Renewing the widespread prosperity of our post-World War II generation cannot be accomplished without major reforms to make our political and economic systems more equal.
Sunday, January 23, 2011
Building America's Future www.bafuture.org provides a number of useful facts which document the need to maintain and improve our country's infrastructure.
The Case for U.S. Infrastructure Investment
Fast Facts on America’s Infrastructure
* Approximately 4 million miles of roads
* 117,000 miles of rail
* 600,000 bridges
* 79,000 dams
* 26,000 miles of commercially navigable waterways
* 11,000 miles of transit (including more than 5,000 miles of rail transit)
* More than 3,000 transit rail stations
* 300 ports 19,000 airports
* 160,000 miles of high-voltage transmission lines
* 55,000 community drinking water systems
* 30,000 wastewater treatment and collection facilities
As a share of GDP, public spending on infrastructure has ranged from 2.3 percent to 2.5 percent since the mid-1980s. Before then, it had trended downward, from a peak of 3 percent in the late 1950s and early 1960s.
Few Things Make a Larger Impact on the Quality of Life for Average Americans than the Quality of Infrastructure in their Communities.
Underfunded roads and highways equal more parents stuck in traffic rather than at home with their families, an increase in unhealthy air pollution, and a decrease in overall safety.
FACT: Americans waste 4.2 billion hours and 2.8 billion gallons fuel a year sitting in traffic – equal to nearly one full work week and three weeks’ worth of gas for every traveler.
FACT: Nearly a 1/3 of all highway fatalities are due to substandard road conditions, obsolete road designs, or roadside hazards.
FACT: The national impact of crashes in 2003 was $230.6 billion (2.3% of GDP) according to U.S. DOT. (By way of comparison, Medicare annual costs in 2008 were just over 3% of GDP.)
FACT: Rough roads cost $67 billion each year an average of $335 per driver and as much as $750 in the worst metropolitan areas.
FACT: Transportation infrastructure is at capacity and projected to get worse. Congestion tripled between 1982 and 2005.
FACT: According to the Texas Transportation Institute, congestion costs Americans $78billion a year. A senior economist at U.S. DOT estimated in 2006 that the cost of congestion across all modes of transportation could approach $200 billion a year, including productivity losses, costs associated with cargo delays, and other economic impacts.
Our decaying water infrastructure is wasting billions of gallons of a nonrenewable resource, as well as putting our environment and public health at risk.
FACT: Drinking water utilities will need to invest $334.8 billion over the next 20 years, above the level of current spending, to continue to provide safe and sufficient water to the American public.
FACT: A federal investment of $20 billion in ready-to-go water infrastructure projects would create over 400,000 jobs in 2010. When transportation options are limited, the working poor bear the brunt of the burden.
FACT: Americans households spend 17.6% of their budgets on transportation (the second largest expense after housing). America’s poorest households spend more than 40% of take-home pay on transportation – a figure that has increased 33% since 1992
FACT: From 2000-2005, average American salaries went up 10.3 percent, transportation costs went up 13.4 percent.xiv FACT: Public transit users save more than $9,381 per year by taking public transportation instead of driving.
Since We Ultimately Pay for it, the American Taxpayers Deserve Safe, Efficient, Affordable and Modern Infrastructure.
FACT: One-third of America's major roads are in poor or mediocre condition, and 45 percent of major urban highways are congested.
FACT: Over 4,095 dams are "unsafe" and have deficiencies that leave them more susceptible to failure, especially during large flood events or earthquakes.
FACT: The use of portable classrooms by public school systems continues to grow at more than 20 percent each year.
It’s time for fresh approaches to old problems – we must reform and modernize the way we invest in infrastructure. Getting it done right (with accountability and transparency) is just as important as getting it done fast.
FACT: A near unanimous 94 percent of Americans are concerned about our nation's infrastructure, and 81 percent are willing to pay more in taxes to rebuild it. But over 60 percent say that accountability and transparency in how the funds are spent are their highest priorities.
Infrastructure is a Key Stimulus for Economic Growth
and a Measure of Global Competitiveness.
Our crumbling infrastructure isn’t just affecting our quality of life – it’s hurting America’s bottom line, causing lost revenues and waste.
FACT: Rolling blackouts and inefficiencies in the U.S. electrical grid cost an estimated $80 billion a year.
FACT: Over the next 30 years, our nation is expected to grow by 100 million and highway traffic will double again. Even if highway capacity grows no faster than in the last 25 years, Americans can expect to spend 160 hours – 4 work weeks – each year in traffic by 2035.
FACT: In 2003, freight logistics costs were 8.6 percent of GDP but rose to 9.5 percent in 2005, the largest such increase in 30 years. A full one-third of the increase in cost was attributable to inefficiencies in the transportation system.
Time and money are wasted when semi-trucks and trains carry goods on gridlocked roads and railways or when ports are not modern enough to meet today's demands. The more efficiently we can move people and goods, the stronger our economy will be.
FACT: On an average day, some 43 million tons of goods valued at $29 billion move on the nation’s interconnected network of ports, roads, rails and inland waterways.
FACT: Traffic on more than half the miles of interstate highway exceeds 70 percent of capacity, and nearly 25 percent of the miles are strained at more than 95 percent of capacity.
FACT: By 2020, every major U.S. container port is projected to at least double the volume of cargo it was designed to handle. Some East Coast ports will triple in volume, and some West Coast ports will quadruple.
FACT: In Chicago, the nation’s biggest rail center, more containers are transferred from train to truck than in any other city in the Western Hemisphere, and the number of rail cars passing through Chicago every day is projected to nearly double by 2020 Freight congestion in Chicago already plagues the supply chain: railroads allot longer times for a freight train to pass through Chicago than to get from LA to Chicago.
FACT: The U.S. Department of Transportation estimates that tonnage will increase 88% through 2035.
FACT: Freight traffic on U.S. railroads increased more than 50% from 1990 to 2003Freight bottlenecks cost about $200 billion or 1.6% of GDP per year.
FACT: A 2005 FHWA study estimated the direct cost of highway bottlenecks to truckers at $7.8 billion a year. Most of the bottlenecks—124 million hours of delay--occur at urban interstate interchanges at the cost of $4 billion. Each of the top ten Interstate bottlenecks causes more than a million truck-hours of delay a year.
FACT: Other countries are leapfrogging past us by investing in world-class ports. China is investing $6.9 billion; the port of Shanghai now has almost as much container capacity as all U.S. ports combined.
Targeted, accountable infrastructure investment is one of the most effective ways to stimulate our economy and create new jobs that can’t be outsourced.
FACT: Under the right conditions, a 1 percent increase in a country's infrastructure stock could produce a 1 percent increase in the level of GDP.
FACT: For every $1 billion in federal investment in transportation infrastructure, an estimated 27,800 to 34,800 jobs are created.
FACT: For every $1.00 invested in public water and sewer infrastructure services, approximately $8.97 is added to the national economy.
FACT: Repairing existing roads and bridges creates 9 percent more jobs per dollar than building new roads or bridges.
FACT: The United States Chamber of Commerce found that GDP per capita would increase by 0.3% for every single point of improvement in the Transportation Index. Allowing the overall transportation performance to lag behind the average index of the top 5 performing states leaves about $1 trillion of potential GDP on the table.
America is falling behind both developed and developing countries in tackling its infrastructure problems.
FACT: The U.S. is currently investing less on infrastructure as a percentage of gross domestic product (GDP) than Europe, China and many emerging countries.
FACT: The European Union is investing $677 million to the “Marco Polo” Program to encourage shippers to move freight off European highways and onto coastal shipping routes.
FACT: By 2020, China plans to build 55,000 miles of highways, more than the total length of the U.S. interstate system.
Smart Infrastructure Investments will help Decrease our Dependence on Foreign Oil, Clean our Air, and Support Healthy Communities.
FACT: Commercial and industrial buildings account for as much as 50 percent of U.S. energy use, and residential buildings account for another 20 percent.
FACT: Retrofitting public buildings to be more energy-efficient would reduce carbon emissions and save taxpayers energy costs, while creating as many as 800,000 jobs.
FACT: Had a “smart” power grid system been in place during the Northeast blackout of 2003, it could have saved almost $6 billion in economic loss to the region.
FACT: If 10 percent of the long-distance freight that moves by truck moved by rail instead, we would save more than a billion gallons of fuel per year, and annual greenhouse gas emissions would be reduced by more than 12 million tons – the equivalent of taking 2 million cars off the road or planting 280 million trees.
Our nation should also make a substantial investment in public transit, which will put people to work while helping to lower transportation costs for American families and businesses, reduce carbon emissions, and spur economic development across the U.S.
FACT: The U.S. economy currently generates more than 750,000 “green collar” jobs – a number that is projected to grow five-fold to more than 4.2 million over the next three decades.
FACT: Public transit reduces petroleum consumption by a total of 1.4 billion gallons of gasoline each year. This represents 108 million fewer cars filling up – almost 300,000 everyday.
FACT: In 2006, public transit around the country saved 3.4 billion gallons of oil and prevented 26 million tons of greenhouse gases.
Dr. Charles Glenn made a strong argument in favor of progressive support for school vouchers in a 1998 speech. Over a decade later, Dr. Glenn's words as still relevant to the debate over education reform. We need to support public education but also recognize that schools have been historically a public-private partnership. Poor children deserve the same opportunities as rich kids whose parents already have school choice.
A Progressive Case for Vouchers
Charles L. Glenn, Boston University
[a presentation to the New York Chapter, American Jewish Committee]
(1998-10 A Progressive case for Vouchers.doc)
There are two convincing reasons why Progressives should support educational vouchers. They go by the names of ‘Freedom’ and ‘Justice.’
There is also a compelling reason why Progressives should be closely involved with working out the way in which voucher programs will be designed and implemented. We are rightly not convinced that it is appropriate to simply “let the market rip” with no regard for the consequences, that government should wash its hands of its responsibility of ensuring that justice is done, in education, for those who are most vulnerable to unfair treatment, most likely to lack advocates in their interest, most in need of extra support.
Public funding for schools which are not operated by government is coming in the United States, as it came decades ago in other Western democracies: in Canada, Australia and Britain, in France, the Low Countries, Germany, Spain and Denmark, and as it has come over the past decade in Sweden and in the countries of the former Soviet bloc. Indeed, public funding for schools which are not operated by government–we call them “charter schools”–is the hottest education reform of the Nineties, supported by Democrats and Republicans alike. All that has been excluded in the US, apparently, is schools which reflect the religious convictions and choices of parents, and now parents in Cleveland and in Milwaukee are receiving public funds to send their children to such schools as well. Can anyone doubt that more cities and states will follow?
The question for Progressives, I suggest, is whether they will join in the discussions through which these programs are shaped, or persist in a state of denial while others make all the running. They might pause to reflect that in none of the countries in Western Europe where
the Left are now in political control have they proposed to abolish the present arrangements for parent choice of religious schools; it is reported in The New York Times of October 20, 1998 that the first ex-communist premier of Italy is expected to be more generous to Catholic schools than have been any of his Christian-Democrat predecessors.
But isn’t this a question of ‘Church and State’? No, that is a fundamental misconception which only emerged in the Fifties. The historical record is clear: opposition to public funding for religious schools–and even to their existence, as with the Ku Klux Klan’s campaigns for the “little red schoolhouse” in the 1920s--was based on anti-immigrant sentiment. The Protestant majority felt profoundly threatened by millions of Catholic and Jewish immigrants, and the goal of preventing children from following their parents’ unAmerican ways motivated legislation from the 1850s on blocking public funding to non-government schools. These debates–which never mentioned the First Amendment–were an echo of political struggles in Europe, especially France, where for some decades the Catholic Church fought against Liberal governments with control of the schools the most important pawn in those battles.
But in the United States it is not the Catholic Church which is creating the demand for religious schools–the Catholic “market share” dropped dramatically in recent decades–but millions of parents, many of whom are Evangelical Protestants, African-American Protestants, Muslims . . . or Jews. Thousands of new schools have been established since the 1970s, and the great majority of these have a religious character.
Isn’t it “unconstitutional” to provide public funds for the education of children in religious schools? Curiously, while the First Amendment privileges the free exercise of religion as especially worthy of protection, the effect of Supreme Court decisions over the past forty years has been to treat religion as the only forbidden motivation for school choice.
Parents may choose among publicly-funded schools because of ambition for their children, or pedagogical theory, or fear of minority children, but they have not been able to choose because of religious conviction. This reverses the legal situation in other Western democracies, which privilege and support school choice based upon religious convictions over other motivations. Such policies recognize that religion has a way of encapsulating, for many parents, a whole range of hopes, moral convictions, and loyalties that they want above
all to transmit to their children.
The signs are more positive for flexibility on the part of the courts now than they have been in many years. The Rosenberger case, requiring that government act on the basis of “content neutrality” between religious and non-religious activities, the Agostini case (here in New York City), finding that secular educational goals can be met within religious schools, and other recent decisions create strong prospects that the door will continue to open. Public funds are already going to religious day-care programs and adolescent programs, as well as to colleges, without First Amendment barriers, and the Charitable Choice provision of the federal welfare law has created a whole new ball-game. But I’m not here to argue the legal case, but the policy case, for a voucher system of funding education.
I said at the start that there were two principled reasons why Progressives should support and work for a well-designed and equitable voucher system. The first, I said, is Freedom. Parents have a fundamental right, in a free society, to decide about the values that their children will be taught in school. That right has been recognized by a whole string of international covenants, beginning with the U. N. Declaration on Human Rights (1948), which states that "parents have a prior right to choose the kind of education that shall be given to their children" (article 26, 3). Similarly, the 1966 International Covenant on Economic, Social and Cultural Rights guarantees “the liberty of parents . . . to choose for their children schools, other than those established by public authorities, which conform to such minimum
educational standards as may be laid down or approved by the State and to ensure the religious and moral education of their children in conformity with their own convictions” (article 13,3).
It is on the basis of this fundamental human right, and not of any theory about “markets,” that virtually all the other Western democracies provide public funding to non-government schools that meet public standards and that are selected freely by parents.
Nor is this anchored only in the abstractions of human rights, but also in a series of Supreme Court decisions, notably in Pierce v. Society of Sisters (1925), where the Court famously declared that “the fundamental theory of liberty upon which all governments in this Union repose excludes any general power of the state to standardize its children by forcing them to accept instruction from public teachers only.” But, as Progressives have argued vigorously in the case of abortion, a right which you cannot afford to exercise is no right at all!
If Freedom demands that we allow parent choice, then, Justice demands that we support and promote it, especially for low-income families and those otherwise condemned to send their children–under mandatory attendance laws–to schools which they are convinced are doing or will do them harm. The learning gap in our society based upon social class and race is larger than the gap in other comparable societies. That is, the achievement gap between high-scoring and low-scoring schools in the United States is substantially larger than that in other countries with many immigrant children in their schools, like Australia or the Netherlands or France.
This is not the place to rehearse the evidence–available a number of countries--that schools based upon a religious viewpoint tend to be especially effective serving at-risk pupils. James Coleman and, more recently, Anthony Bryk of the University of Chicago found that the achievement growth benefits of Catholic school attendance are especially strong for students who are in one way or another disadvantaged: lower socioeconomic status, black, or Hispanic. The dropout rates from Catholic schools are strikingly lower than those from public schools or other private schools. This reduced dropout rate holds both for those who show no signs of problems as sophomores and for those who as sophomores are at risk of dropping out. Contrary to the conventional wisdom that Catholic schools simply do not admit or quickly expel potential trouble-makers, the studies have found that they rely much more heavily upon socialization to maintain order and motivation. Bryk and his colleagues found that “the achievement of students in Catholic high schools was less dependent on family background and personal circumstances than was true in the public sector” and “the
achievement advantage of white over minority students . . . increases in public high schools during the last two years of schooling, whereas the minority gap actually decreases in Catholic schools.”
In a society driven by educational credentials, what happens during the years of formal schooling has a dramatic life-long impact. If religious schools can offer an education that might make all the difference to a poor child or youth, it is unjust to make it impossible for their families to choose such schools, because we--who are able to do so much for our own children (including deciding where we will live)--see these schools not as benevolent but as a threat to democracy. They are, instead, a threat to an undemocratic monopoly system of vested interests.
Nothing could be more futile than to debate--as so many do--about whether an abstraction called “school choice” is a good or a bad thing. Choice is massively present in American education, and those who exercise it (most parents including those with children in public schools--and most public school teachers who are parents) would not willingly give it up. A report by the National Center for Education Statistics found that, in 1993, of families with incomes over $50,000, 72 percent had their children in private schools, public schools of choice (such as magnet schools), and schools which they had selected through residence decisions.
But, like many of the goods which we value, school choice is unevenly distributed in a way which reflects the income, the influence, and the sophistication of different groups in society. For that reason, it should be no surprise that support for school choice, as reflected in many surveys, is strongest among those who have the least opportunity to exercise it, and for whom the stakes are highest. The strongest support for parent choice of schools, including private schools with a religious identity, is among urban and minority respondents with school-aged children
Those who oppose public policies that would allow poor parents to choose what schools their children will attend, claiming that this would undermine the common public school and thus divide American society, do not apply that argument consistently. After all, if the unity of our society requires that children from different backgrounds attend school together, why should we allow the affluent to enroll their children in private schools or escape to the suburbs? Why not forbid private schools and mandate metropolitan school desegregation? We have not heard such proposals from the defenders of the public school monopoly, nor are we likely to. After all, big-city public schoolteachers are twice as likely as the general public to put their own children in private schools, and have strongly resisted residency laws requiring them to live within the school districts which employ them. Few–perhaps none--of their allies in Congress and the White House send their own children to the District of Columbia public schools.
However, there are significant negative effects from the present non-system of parent choice of schools, under which individual choices tend to increase racial and class segregation and the funding and taxation inequities between cities and suburbs. The question for Progressives, then, is not whether to have choice, but how to ensure that choice has equitable and socially-beneficial effects? This is what I’ve been devoting most of my attention to in recent years; it is a rather lonely position to be in because most of those I would expect to be my allies are committed to maintaining the government monopoly on public education at all costs.
I will not go into details here about how to make choice function equitably, but want to close by noting that nothing that I have said suggests that we should abandon public education in the slightest respect. In the first place, public education does not have to be provided in schools owned and operated by local government, as the charter school movement amply demonstrates. Public education is education which is available to all without cost and which is publicly accountable for fairness and for quality, whether provided by government or not. I wish, indeed, that all of our government-operated public schools met that standard of accountability!
In the second place, the existing public schools should be set free to function with greater autonomy and focus, freed from the smothering bureaucracy which crushes the education out of them. I was in charge of urban education and civil rights for Massachusetts for 21 years, through all three Dukakis terms, and finally grew convinced that lasting improvements could be achieved only through fundamental structural changes. That’s why I became an early supporter of charter schools, and eventually of vouchers. All public schools should be as autonomous as charter schools and should be eligible for vouchers. To the extent that they are as good as their advocates claim, they will suffer neither enrollment nor financial losses. When we abolished individual school attendance zones in Boston and a dozen other Massachusetts cities, public schools were suddenly forced to demonstrate to parents that they could serve their children effectively. Some closed, many improved. But the improvements were more limited than they should have been, because the schools were still tangled in the compulsion of any bureaucratic system to require that all of its parts behave precisely the same.
Abraham Lincoln pointed out that a nation could not survive half slave and half free. The truth applies to a nation’s educational system as well. I am not for vouchers as a way for some lucky children to escape from a bankrupt public education system, but as a way to transform that system, to abolish its choking monopolies and reshape it in ways consistent
with a free society.
1998-10 A Progressive case for Vouchers.doc
Monday, January 17, 2011
Trade Watch reports:
On December 3, 2010, President Obama backtracked on his campaign commitments to create a new American trade policy that stopped the job offshoring crisis by announcing he would bring the NAFTA-style Korea FTA negotiated by President Bush to Congress for a vote. Members of Congress from Democratic leaders to Libertarian Ron Paul announced their opposition as did unions, environmental and other organizations.
Now it is up to us to make sure that the 112th Congress makes the right decision and rejects this deeply flawed, job-killing, NAFTA-style deal. The agreement could come to a vote as soon as mid-February. The Korea agreement literally replicates large swaths of NAFTA and CAFTA. The U.S. International Trade Commission, the independent government agency that reviews trade agreements, says it will increase our trade deficit. The Economic Policy Institute says it will cost 159,000 more U.S. jobs.
The Korea FTA would promote further financial deregulation - even after the hard lessons learned through the economic crisis. And it includes the outrageous NAFTA -style extraordinary rights for foreign investors that allow them to directly sue the U.S. government in World Bank and UN tribunals to demand compensation in our taxpayer funds for the loss of ‘expected future profits’ caused by having to meet U.S. environmental, financial, health and other laws our own firms must meet. This investor-state system has led to many corporate demands for taxpayer cash in challenges of NAFTA countries public interest regulations with millions paid out so far. There are over a two hundred corporate affiliates of Korean firms in the U.S. that would obtain these new rights under the FTA to challenge local, state and national laws.
Background: This agreement is one in a series of NAFTA expansion that the Bush administration negotiated. It was signed by Bush in 2007. As a Senator and then as a presidential candidate, President Obama opposed the deal. He pledged to replace the damaging NAFTA model. In June 2010, President Obama said he would start renegotiating parts of the agreement in preparation for sending it to Congress. But he only focused on some modest changes to automobile trade issues. This came after over 100 members of Congress and over 500 unions, environmental, faith and other organizations called on him to meet his commitments and really fix Bush’s old text. The deal Obama is now pushing directly conflict with his campaign commitments.
Sunday, January 09, 2011
How can we balance both the federal budget and our massive trade deficit ? The conservative-leaning Ideal Taxes Association blog makes a compelling case for a scaled tariff:
The United States faces not only a huge budget deficit, but also a huge foreign trade deficit. A December 2010 National Review/Allstate Heartland Poll contained an extensive battery of questions on trade and U.S. manufacturing. The poll revealed strong public majorities in favor of a variety of measures that would move trade towards balance. For example, 68 percent of respondents supported a policy requiring that "a certain percentage of every high-end manufactured product, such as automobiles, heavy machinery, and transportation equipment, sold in the U.S. also be produced or assembled within the U.S., even if that means higher prices for their products."
The two deficits -- budget and trade -- are easier to balance simultaneously than to balance separately. Balancing budgets reduces demand for American products, but balancing trade increases it. Balancing trade increases long-term interest rates, but balancing budgets reduces them. Moreover, the government revenue from tariffs that balance trade would help balance budgets !
The most effective way to balance trade is through a scaled tariff. Its rate with each trade surplus country goes up when our trade deficit with that country goes up, down when our trade deficit with that country goes down, and disappears when trade with that country gets close to balance. As a result, it would not only reduce American imports, but it would also increase American exports by forcing our trading partners to take down their barriers to our products so that they could continue to sell us their products.
Import duties, such as the scaled tariff, were envisioned by our founding fathers as one of the major ways to balance the federal budget. Article 1, Section 8 of the United States Constitution begins thus: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts."
Although free trade is a worthy goal, it is not as important as balanced trade. The purpose of trade is to exchange a bundle of goods and services produced with comparative advantage in one country for a bundle of goods and services produced with comparative advantage in the other country. When trade is in balance, both trading partners benefit. But when trade is chronically out of balance, the trade deficit country loses jobs in import-competing sectors without gaining more productive jobs in exporting sectors.
During the third quarter of 2010, our trade deficit was running at a $550-billion-per-year pace. Since trade-oriented jobs generate about $100,000 in revenue each, if trade were balanced, the United States would gain about 5.5 million productive new jobs.
The United States and all other nations experiencing large, chronic trade deficits are entitled under World Trade Organization (WTO) rules governing international trade to impose barriers to imports from their offending trading partners. This rule was partly designed to insure steady growth in world trade. Balanced trade can grow forever, but imbalanced trade eventually bankrupts the trade deficit countries, ruining the markets for the trade surplus countries.
Article XII of GATT 1994, annexed to the Agreement Establishing the World Trade Organization, permits any country that has both a perilous external financial position and a balance of payments deficit in the current account to restrict the quantity or value of merchandise permitted to be imported in order to bring payments toward balance. With the United States net foreign debt in 2009 at 25% of GDP and the balance of payments deficit in the current account at 2.7% of GDP, the United States qualifies and is permitted to use import restrictions to balance trade. Such restrictions can include price-based measures such as import duties in excess of the duties inscribed in the WTO schedule for that member.
Countries that impose import duties under Article XII of GATT 1994 must progressively relax such import duties as the trade deficit grows smaller, maintaining duties only to the extent that a continuing balance of payments deficit in the current account justifies such application. Therefore, an import duty that is implemented under the authority of Article XII of GATT 1994 should go down in rate as trade approaches balance and should disappear when the balance of payments in the current account reaches balance or goes into surplus.
The scaled tariff complies with Article XII of GATT 1994 because it is suspended if the United States balance of payments in the current account goes to surplus and because its rate goes down when the United States trade deficit with a country improves.
Bills passed by the last Congress often numbered thousands of pages in length; in contrast, a scaled tariff bill would be extremely short. In fact, we have written up a scaled tariff bill that is only four pages in length, and two of those pages are the preamble!
The scaled tariff would be applied only to countries that had a sizable trade surplus with the United States over the most recent year (four economic quarters). The duty on imported goods from that country would be designed to collect, as government revenue, half of the value of the trade deficit (goods plus services) with that country. The Commerce Department would simply charge the scaled tariff at the appropriate duty rates to imported goods from the trade surplus countries and rebate scaled tariff payments to the United States exporters to the extent that they were paid on inputs to those particular exports.
The Commerce Department publishes complete trade data (both goods and services) with twenty countries. We can calculate from these data for the last four economic quarters that eleven of these countries would not have any duty applied to their goods (Argentina, Australia, Belgium, Brazil, Canada, Hong Kong, Luxembourg, Netherlands, Singapore, South Korea, and the United Kingdom), while the other nine would have the following initial duty rates applied:
China - 36%
Venezuela - 28%
Italy - 25%
Germany - 24%
India - 22%
Japan - 16%
South Africa - 14%
Mexico - 13%
France - 12%
Taiwan - 8%
A duty of 36% on Chinese goods is just about right since the Chinese yuan is about 40% undervalued. A 13% duty on Mexican goods is also about right since Mexico has been placing tariffs on U.S. goods lately while intervening in foreign exchange markets to keep the peso undervalued.
If trade levels did not change, the tariff on just the countries listed above would take in $226 billion in revenue, enough to make a sizable dent in the federal budget deficit. But trade levels with these countries would change. As revenue from the scaled tariff declines, income earned by U.S. producers would rise. Eventually, trade would come into balance, ending the revenue from the scaled tariff while producing income tax revenue from about 5.5 million new and highly productive American jobs.
The initial economic benefit of the tariff would be a surge in the building of highly efficient factories in the United States. International corporations would locate new factories here so that they would be on the right side of America's tariffs.
A longer-term benefit would be the preservation of the dollar as the world's reserve currency. Over the past three decades, America's chronic trade deficits have converted the U.S. from the world's leading creditor nation to the world's leading debtor nation. This has led the BRIC nations (Brazil, Russia, India, and China) to suggest that a new currency be created to replace the dollar, presumably a currency issued by the International Monetary Fund, like its so-called "drawing rights." Once replaced, the dollar would collapse in value.
But the biggest benefit of all would be to world freedom. Currently, totalitarian China manipulates the dollar-yuan exchange rate while placing tariff and non-tariff import barriers against American products so that it can grow its trade surplus with the United States. As a result, its economy grows at about 10% per year, while the U.S. economy grows at about 2.5% per year. If Congress were to pass the scaled tariff, the renewed success of the United States economy would likely turn China democratic.
On the other hand, if the new Congress wimps out and lets our budget and trade deficits stay high and chronic, the Chinese Communists will prove their argument that democracies cannot solve their own economic problems. The only question will be this: which disaster will precipitate the American crash -- spiking interest rates caused by the budget deficits or a collapsing dollar caused by the trade deficits?
The authors maintain a blog at www.idealtaxes.com and co-authored the 2008 book Trading Away Our Future: How to Fix Our Government-Driven Trade Deficits and Faulty Tax System Before it's Too Late, published by Ideal Taxes Association.
Saturday, January 01, 2011
Photo: Model of Chinese J-20 Stealth Fighter
America's failure to protect vital industries from unfair foreign competition is leading to a significant military challenge from China. Where is China spending all of those American dollars from Wal-Mart and other big retailers ? A major area of China's spending is on building a stronger military. Thanks free traitors for helping to bring about the rise of China and the decline of the United States of America.
Shane McGlaun writes at The Daily Tech:
The Chinese government is spending heavily to increase its military might and is increasing spending on research into new weapon systems. China insists that it is no threat to other countries, but much of the world looks warily at the communist country and its growing power.
China's defense minister Liang Guanglie says that the country wants to modernize its military without foreign aid. Liang said, "In the coming five years, our military will push forward preparations for military conflict in every strategic direction."
Liang continues to say that China would advance its capability to fight and win future high-tech wars while boosting its conventional military arsenal. China is working on weapons that trouble some military analysts and military personnel in the U.S. with new weapons systems like the DF-21 missile which can destroy a U.S. supercarrier with a single hit.
Liang said, "We will stand on our own feet to solve the problem and develop our equipment. The modernization of the Chinese military cannot depend on others, and cannot be bought."
According to Liang, China is building up its navy, air force, and strategic missile forces. China is thought to be launching a new aircraft carrier as much as a year before analysts expected and the Chinese Air Force has a new stealth jet that has been seen recently in spy shots. The Chinese stealth aircraft is called the J-20 and is thought to be aimed at the U.S. F-22 Raptor. Some reports have claimed that the J-20 is larger than the Raptor with more weapons and fuel capacity making some think that the aircraft may not be as fast or agile as the Raptor in a fight.
Defense News reports that U.S. Defense Secretary Ronald Gates will head to Beijing soon for talks with Chinese officials. The visit will undoubtedly be in part to talk about the fact that China is allied with North Korea. North Korea recently shelled a small South Korean island killing four people, including two civilians.
Karen Friedman writes in the Christian Science Monitor:
Washington is panicking over the national debt. Powerful members of Congress, spurred on by recommendations made by some members of President Obama’s recently concluded fiscal commission, are planning an aggressive legislative agenda to balance the books. Part of this strategy is attacking Social Security.
Focusing on Social Security cuts is misguided on two counts. First, it wrongly assumes that Social Security is going broke and causing a long-term fiscal crisis. Second, it ignores a much more urgent financial crisis in our midst: the retirement income deficit – representing the gap between what people have saved for retirement today and what they would need to have saved by today to meet a basic threshold of adequacy in retirement.
If the new Congress is serious about both protecting economic security for older Americans and getting the economy back on track, the last thing we should do is cut Social Security. We should strengthen it, and work to create a new reliable private retirement income system on top of it.
Contrary to the widespread myth further forwarded by the commission, Social Security is neither going broke nor causing our federal deficits. It never contributed and, unless the law is changed, never will contribute a penny to the debt. It is self-financing, has no borrowing authority, and cannot pay benefits unless it has the income on hand to cover the entire cost.
Today, Social Security is running surpluses and will be in sound financial shape for nearly three decades. Even after that, its long-term shortfall can be addressed easily without cuts. If a corporation could make such claims to its shareholders, it would be cause for champagne, not gloom and doom.
What is a source for gloom is the massive retirement income deficit already facing millions of Americans. Calculated by the Center on Retirement Research at Boston College, the Retirement Income Deficit is already $6.6 trillion – five times the size of the federal deficit.
The retirement income deficit covers households in their peak earning and saving years — those in the 32-64 age range. It assumes that people will continue to work, save, and accumulate additional pension, retirement savings, and Social Security benefits until they retire at age 65, later than most people currently retire. It also assumes that retirees will spend down all their wealth in retirement, including home equity. The $6.6 trillion is thus in many respects a conservative number.
Cuts to Social Security will only make the retirement income deficit worse. Social Security was intended to provide only a minimal foundation of retirement income, with private sources making up the rest. Our current problem is that in practice, Social Security is the lion’s share of retirement for most Americans: it’s half the income for two out of three retirees and virtually all the income for one out of five.
And these benefits amount to subsistence payments: $14,000 for the typical retiree. That’s less than a full-time minimum wage worker earns flipping hamburgers.
These figures didn’t seem to have much sway over the president’s deficit commission. Even though the commission proposal failed to attain the supermajority support needed to go to Congress for an immediate vote, key members of both houses are already promising to advance its agenda next year.
This commission proposal recommends a range of substantial cuts to Social Security. These include reductions in cost-of-living adjustments, increases in both the normal and early retirement ages to 69 and 64 respectively, and draconian changes in the benefit formula. Today’s retirees will see their benefits reduced just as cuts in Medicare take effect. And, as for tomorrow’s retirees – who are just toddlers today – they will be living on Social Security benefits that will be cut by as much as 41 percent. So much for the contention by the commission’s co-chairs that they are doing this for their grandchildren.
These commissioners and legislators may think that phasing in Social Security cuts will somehow result in young people saving more for retirement on their own, but that is unrealistically optimistic given the facts we know today. Half of today’s private-sector workers have no retirement plan at work. That means they will be left to live on only the minimal payments of Social Security. Those with true pensions – ones that are employer-paid and that promise a stream of guaranteed benefits – are a dwindling breed. In 1980, two out of three American workers participated in traditional pension plans with guaranteed, lifetime benefits. Now, it’s one out of five and falling as employers cancel these plans, rescinding long-standing promises to workers and increasingly turn to do-it-yourself 401(k) plans.
But 401(k) plans are failing to close the Retirement Income Deficit. Even before the stock market drop, half of all households with 401(k) and other retirement savings plans had less than $45,000 in their accounts. For those approaching retirement, the median account balance was just $98,000 – not much to retire on.
It is hard to believe that things will get better for future generations when employers have made it clear that they don’t want the responsibility of contributing to retirement plans and do-it-yourself savings approaches have not worked.
Instead of building on the flawed commission recommendations, Congress should take a fresh, hard look at these issues with public input and open debate.
What we need is comprehensive retirement policy that protects future generations of retirees. In addition to doing everything possible to protect and strengthen Social Security, policymakers should create a 21st-century pension system on top of Social Security – one that has shared responsibility of employers, employees, and the government.
Congressman Bart Stupak is a profile in political courage. The pro-life Democrat from Michigan sacrificed his political career to support health care reform. As Stupak prepares to leave Capitol Hill, he has no regrets about the decision. Stupak has been a consistent fighter for working familes and moral values. He is a man of principle and will be missed in public life.
The Bay City Times reports:
When U.S. Rep. Bart Stupak began cleaning out his Washington, D.C., office earlier this month, he came across a flier that he published during his first run for Congress in the early 1990s.
It read, “Health care is a right, not a privilege.”
“I coined that phrase almost 20 years ago,” said Stupak, D-Menominee. “I’ve always believed that all Americans have the right to health care.”
As he prepares to leave office, Stupak says the passage of universal health care for all Americans — a controversial issue that thrust the Congressman into the national spotlight — is the highlight of his political career.
As a career-long supporter of universal health care, Stupak naturally wanted to support President Barack Obama’s 2009 health care reform bill. But as a pro-life Democrat, he feared the bill would allow for federal funds to be used to pay for abortions.
So he, along with Republican Congressman Joseph R. Pitts submitted an amendment that national media coined the “Stupak Amendment.” The amendment prohibited such payments.
The amendment was adopted by the House, but not in the Senate’s version of the legislation. Stupak said he would not vote for the final version of the bill if his amendment was not included.
But in March, Stupak struck a deal with Obama that had the President signing an executive order that barred federal funding for abortions. The deal cleared the way for the passage of the health care bill and ignited a firestorm of criticism against Stupak.
It’s a decision Stupak says he’ll never regret.
“It was worth it,” said Stupak. “It means that people finally have the opportunity to qualify for affordable health care.”
Stupak went on to say the executive order has been upheld three times in different litigation.
In April, Stupak announced he would not seek re-election in Michigan’s 1st Congressional District. He will be replaced by Republican Dan Benishek, of Crystal Falls, who defeated several challengers, including Democrat Gary McDowell, in November.
After 34 years of public service — which also includes work as a Michigan State Police trooper and state representative — Stupak said he plans to step away from government work for now, but he hasn’t ruled out returning to politics.
“I’ve been married for 36 years and spent 34 years in public service,” said Stupak, 58. “I need to step away for awhile.”
Stupak is married to Laurie Stupak. His son Ken Stupak is an attorney in California.
Stupak likely will be heading to Massachusetts for a teaching fellowship at Harvard University beginning after the new year. He will work with graduate students in the Harvard Kennedy School of Government, pending approval from the university, according to Jake Ackman, a Harvard spokesman.
“The opportunity at Harvard is a chance for me to do something different, it’s something I’m looking forward to,” Stupak said.
Stupak’s political allies say he will best be remembered for his hybrid politics, which include pro-life and pro-gun beliefs that won over Republicans and financial and economic philosophies that brought fellow Democrats to his side.
“Bart is a unique one,” said Thomas Baldini, of Marquette, who has served as Stupak’s district director for the past eight years. “He knows what he believes in and he understands his district.
“He’s not a wide-eyed liberal, or a wide-eyed conservative, despite what some people would say because he voted a certain way on an issue.”
Stupak’s decisions regarding the health care reform bill turned out to be polarizing as former supporters turned their backs on the Congressman and spoke out publicly against him.
More seriously, Stupak dealt with threats from constituents and out-of-district residents.
Russell Hesch, 73, of West Branch, is charged with threatening Stupak and his family because of his health care vote. He’s accused of writing a letter that threatened to paint the Mackinac Bridge with Stupak’s blood.
“You always take all threats seriously,” said Stupak.
In an interview with The Times earlier this year, Stupak said his phone rang off the hook with complaints and threats.
Now leaving office, he said his “Stupak Amendment” could still be installed into the reform bill.
“It could happen, especially with a Republican-controlled House,” said Stupak. “I’d still like to see it in statute, because it’s harder for the President to overrule it.”
Another major project that Stupak said he wanted to accomplish by year’s end is finalizing the purchase of Standish Maximum Security Prison by the Federal Bureau of Prisons.
In August, Stupak said federal officials were “very serious” about purchasing the prison, which closed in October 2009, but hung in limbo until last December, when federal officials considered sending Guantanamo Bay detainees to the Arenac County prison.
The Obama administration decided to house those detainees in Illinois instead — a success for local opposition groups, such as the Michigan Coalition to Stop Gitmo North, but a blow to city officials and residents that didn’t want to see the prison vacant.
Stupak said his predecessor will have to take up the fight to see the prison reopened.
“I brought it as far as I could under my watch,” said Stupak. “It’s up to Benishek to make sure that money is there.”
Though excited for the next chapter in his life, Stupak admits leaving government service is difficult for him. He remembers his father, Frank Stupak, being active in local politics, and helping him knock on doors during election seasons.
“That was me, that’s who I am,” said Stupak. “I loved going door-to-door to get out the Democratic vote.
“I remember times where my high school buddies and I would go out and take a weekend to just go and do it, pedaling for my dad.”
He said he will miss his daily interaction with other members of Congress, also.
“99.9 percent of the people in there are great people,” said Stupak. “I’m going to really miss the members, the daily interaction.
“I don’t agree with 100 percent of the people I worked with, but I know their hearts are in the right place — they all want the best for this country.
“We may disagree, but that keeps things interesting.”