On TAP: Kuttner + Meyerson

Meyerson

The administration’s decision this week to place a 30 percent tariff on imports of solar panels has drawn a predictable backlash from a range of critics, including the companies that install solar panels and the disciples of corporate free trade. Among the latter are a number of congressional Republicans and right-wing think tanks, which have suddenly risen to the defense of the solar installers. The Heritage Foundation, as an article in today’s Washington Post points out, has opposed tax credits for solar installation, but has now aligned itself with the installers. As Heritage and the GOP legislators see it, whatever the market does must be right, even though there is nothing market-oriented about the Chinese government’s massive subsidies to its solar manufacturers, which has enabled China to dump huge numbers of solar panels on the U.S. market, thereby driving many American manufacturers out of business.

The belief that laissez-faire economics is invariably good for you also flies in the face of the reality that every nation provides financial assistance to its industries, through their provision of infrastructure, trained workers, purchasing, and direct subsidies. As Lou Uchitelle demonstrated in his book Manufacturing Matters, which I reviewed in the current issue of the Prospect, America’s federal, state, and local governments regularly provide about 20 percent of the funding for U.S. manufacturers. The contest that hundreds of cities have engaged in to woo Amazon with tax breaks and subsidies, curiously, hasn’t drawn much conservative ire. According to conservative doctrine, it’s OK for cities to woo businesses with financial rewards, but not okay for the federal government to do that. If the feds do it, that’s industrial policy. Horrors!

The United States was once the world leader in manufacturing solar panels, a position it relinquished almost entirely due to China’s aggressive mercantilism. American finance and their defenders in the media have responded to such developments with aggressive indifference, or worse, which is a major reason why much of American industry has been hollowed out. At some point, the hedge funds and private equity firms that increasingly own American newspapers may realize that editorials decrying government intervention to assist U.S. manufacturing could be written more cheaply by editorial writers in Beijing, or better yet, just reprinted from China’s People’s Daily. If they can make more money eviscerating American manufacturing, why not make more money eviscerating American journalism?

Kuttner

It is appalling how misleading is the mainstream press coverage of trade issues. Virtually all mainstream writers have imbibed the conventional wisdom that there is a simple divide between something called “free trade” and something disparaged as “protectionism.” Free trade, good; protectionism, bad.

But how do you proceed when another country is clearly protecting its home markets and its exports—by subsidizing their manufacture and selling them below the cost of production—at the expense of competitors who really do practice free trade by letting the free market set prices?

Do you just roll over and lose your industry? Trade law and common sense says you retaliate, to level the playing field.

Somehow, however, that distinction has escaped The New York Times, which thinks (along with most economists) that resisting someone else’s flagrant protectionism is itself protectionist.

Here is the offending article from Tuesday’s Times. I’ve bolded the misleading or mistaken use of language:

WASHINGTON — President Trump slapped steep tariffs on imports of washing machines and solar energy cells and panels on Monday, the first major step by the administration to erect the kind of trade barriers Mr. Trump has frequently said are necessary to protect manufacturers in the United States. …

White House advisers warned that additional trade measures related to steel, aluminum and other products from China could be coming, a signal that Mr. Trump is ratcheting up the protectionist policies he has long espoused as part of his “America First” approach. …

Protectionism was a defining theme of the populist presidential campaign in which Mr. Trump gleefully rebuffed the longstanding Republican embrace of free and open markets.

Now this, to put it politely, is hogwash. In fact, Robert Lighthizer, Trump’s chief trade negotiator, is a veteran of the Reagan administration, the last time the U.S. government was semi-serious about resisting other nations’ protectionism. If they had not done so, Japanese protectionism would have completely taken over U.S. manufacture of semiconductors and steel.

Reagan, of course, was a passionate believer in free markets. But Reagan, unlike the Times, appreciated that protection by other nations is far from a free market.

Meyerson

Another year, another Davos, another wildly divergent set of articles on what the super-rich have planned for the rest of us.

Consider the contrasting takes in two news stories today, one in The New York Times, the other in The Washington Post. The contrast is clear even before you read the stories, since they’re expressed in the headlines. “Ahead of Davos, even the 1% are worried about inequality,” reads the headline in the Post. Au contraire, says the Times headline: “Populism is Waning, Which is Reason to Party in Davos.”

Worried? Indifferent? Either way, the Davosites do agree on a common fact: Capital income has been soaring, while wage income has been lagging farther and farther behind. In the United States, that gap has just been pried wider by the GOP’s new tax law. As yet another story in today’s Times documents, the bonuses that Bank of America will pay its employees come to just 5 percent of the savings it will realize this year from the tax cuts. Apple’s bonuses to its workers will come to $300 million; its estimated tax savings this year on just one provision in the new law will come to $40 billion. An S&P Global report says that 75 percent of banks’ reduced taxes will be returned to shareholders through additional buybacks or higher dividends.

So if those Davos Men (and Women, of whom there are fewer) who are concerned about rising inequality are even remotely serious about narrowing the gap between themselves and everyone else, here are a couple ideas they might consider in the intervals between their deal-making and sybaritic pleasures: How about taxing capital at a higher rate than earned income? How about requiring worker representation on corporate boards, at a minimum of half the board seats? How about a new law setting aside a share of capital income to build worker-controlled organizations?

Of course, the Davos intervals between deal-making and sybaritic pleasures can only be measured nanoseconds.

Kuttner

The Senate is set for a noon vote today on whether to defer consideration of DACA and keep the government open for three weeks.

Democrats would be fools to take this deal. In three weeks, nothing will have changed, and Congress will go through this all over again.

Public opinion supports extending DACA by margins upwards of 80 percent, depending on the poll. Even a majority of Republican voters support it.

The more this drags on, the clearer it becomes to voters that the sole obstacle to resolution—and to reopening the government—is Donald Trump, his petulance, and his failure to keep his word as a negotiator. At various points in the recent past, he has been all for DACA extension, until he wasn’t. He keeps pulling the rug out from under Republican negotiators as he keeps changing his mind.

Despite Republican Majority Leader Mitch McConnell’s efforts to spin this impasse as the Democrats’ fault, with every passing hour it becomes more evident that the problem is President Trump. And as a shutdown drags on, Trump has the most to lose.

The closure has already upstaged the first anniversary, and it threatens to rain on his trip this week to Davos, where he plans a high-profile speech. And imagine giving a State of the Union address with the government shut down?

Hang tough, Dems.

Kuttner

About that impending government shutdown: Who will blink first?

I’m guessing that Trump will.

Why? Because he and the Republicans, as the governing party, have more to lose if the government actually shuts down.

And because Trump, in the end game, is pretty good at making a deal, and likes to brag that he can get things done.

And because the Democrats realize they have the cards this time, and are prepared to hang tough.

And because, at different times, Trump has clearly said he wants a deal on the DACA Dreamers, as do lots of Republican members of the House and Senate. That deal was all but done, and is in suspension only because of Trump’s foul mouth.

And because Trump wants to turn the page and not let this mess define his leadership.

The outlines of the deal are very simple. Trump gets to keep the government open. He gets part of his enhanced border with Mexico in the form of an actual wall, but not the entire 1,933 miles. He gets tougher standards on visas.

The Democrats get permanent DACA and a path to citizenship for Dreamers. And they get funding for The Children’s Health Insurance Program (CHIP).

That’s the deal. The deal may happen tonight, or there may be a very brief shutdown before it is consummated.

I could be wrong, of course. With Trump, you never know. But as much as Trump may resent the “deep state,” we can’t operate without a government and he is the president. 

Meyerson

Six days ago, I was having an email exchange with the author of a piece I was editing on how Democrats can both turn out their base and reach out to voters outside their base in the 2018 midterms. We were going back and forth on three points in the piece—chiefly, on whether Latinos could be said to have realigned themselves more toward the Democrats during the 1990s (the author’s position) or whether so many new Latino voters came forth during that decade that their Democratic shift was more a surge than a realignment (my position).

After dredging up the exit poll percentages from the California gubernatorial elections of 1990, 1994, and 1998, and doing the numerical calculations (candidate preference percentage times Latino share of the electorate times raw number of votes cast) to come up with the steadily declining number of Latino votes for the Republican gubernatorial candidates in those three elections, the author quietly and indisputably won his point.

He then added: “I’m a trifle indisposed though I will try to do some revisions on points 2+3 later this morning. (Actually I’m at Sibley [a Washington, D.C., hospital] dealing with a flare-up of leukemia!). Can you point me to more data sources on the CA question?” 

The indisposed author—Paul Booth—suddenly and shockingly died yesterday, succumbing to his flare-up of leukemia. So suddenly and unexpectedly that his wife, the legendary organizer Heather Booth, was on Capitol Hill getting herself arrested for demanding justice—and legal standing, and a path to citizenship—for DACA recipients and the other undocumenteds.

For decades, Paul had been one of the labor movement’s key strategists. As AFSCME’s organizing director, and then consigliore to the union’s presidents, Paul devised the nation’s very first living-wage campaign, helped mastermind the 1995 insurgency that ousted the old-line cold warriors from the leadership of the AFL-CIO, and mentored scores—perhaps hundreds—of union leaders and organizers, movement activists and elected officials. His organizing pedigree was as long and distinguished as any figure’s in American politics: As national secretary of Students for a Democratic Society in 1965, he organized the first anti-Vietnam War demonstration in the nation’s capital. The following year, he became one of the first of numerous New Left veterans who entered, renewed, and, with varying degrees of success, transformed the main institution of the Old Left: the labor movement. The union presidents who hired Paul—first, Ralph Helstein at the Packinghouse Workers, then Jerry Wurf at AFSCME—were democratic socialists who found in Paul a comrade, a kindred spirit, and a brilliant analyst and tactician.

Some labor leaders are bombastic. Paul was quiet, ironic, self-effacing, witty, warm, scholarly, and diligent—just the kind of guy who’d crunch the numbers to make a point about Latino realignment, whose commitment to a decent future for his nation was such that he’d research and rewrite from his hospital bed on what the Democrats needed to do to win in 2018 (we’ll post that article tomorrow), who could dismiss his own illness as a trifle indisposition.

There was nothing trifling about Paul’s life or work. Damn your indisposition, Paul. We’ll miss you.

Kuttner

Want to know why Democrats are failing to optimize their role as the true economic populists against the purely symbolic faux-populism of Donald Trump? Consider the bill to weaken the Dodd-Frank Act, now working its way through the Senate.

The bill would exempt financial institutions as large as $250 billion in assets from many of the safety and soundness regulations of Dodd-Frank. In a world of multitrillion-dollar banks like Goldman, that sounds like a medium-sized operation, but it includes giants such as American Express.

Pure Republican mischief, right? If only. The bill’s lead sponsor is Senator Mike Crapo of Idaho, who chairs the Banking Committee. But the bill has 11 Democrats as co-sponsors.

They include Dems from swing states up for re-election such as Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana—but also Wall Street Dems with safe seats such as Mark Warner of Virginia. Moreover, the idea that Democrats in purple states should posture as “moderates” is hogwash. Maybe they need to be moderate on some social issues, but they would do much better channeling the grievance of regular people and running as populists.

If ever there was a moment not to blur differences between Republicans and Democrats, this is it. Truth to tell, this is not about campaign tactics. It’s about campaign finance.

Meyerson

For those still groping for a precise characterization of today’s Republican Party, minus any profanities, I submit the following mots justes: neo-Confederate.

The neoconservatives of the Reagan-George W. Bush era may be estranged from today’s GOP (hello, Bill Kristol), but the semi-abbreviation “neocon” need not be discarded. Only henceforth, it means “neo-Confederate.”

The fundamental ideology of today’s GOP is white racism, with all its historic trimmings. In one particular after another, the party’s program is a compendium of the bigoted, sectionalist, xenophobic, patriarchal, anti-paid-labor, anti-empirical, anti-majoritarian, and violent organizing principles of Jefferson Davis’s South.

The strength of today’s Republican Party is its success in winning adherents north of the Mason-Dixon line. The spread of what previously had been largely Southern beliefs and practices to the Northern GOP—restrictions on the franchise, “right-to-work” laws, the fear and loathing of immigrants, the attachment of punitive hurdles to those seeking Medicaid, and other forms of government assistance—has been enabled by the complete flight of racial moderates from the GOP’s ranks and the efforts of Fox News and kindred outlets to depict whites as an endangered species.

The new War Between the States is as virulent as it’s ever been—excepting, of course, the years 1861-1865. As in the decade immediately preceding the Civil War, the Republicans are using federal power to impose their warped beliefs on the states that do not share them. The immigrant deportation policies of Jeff Sessions and ICE are latter-day variants of the Fugitive Slave Act, which sought to require Northern legal authorities, and, indeed, anyone residing in Northern states, to participate in the hunting down and re-enslavement of escaped slaves. The GOP’s new tax law is an attack on Democratic states and their model of government, which features a more adequate level of public support for education, social spending, and all that today’s GOP and yesterday’s Confederates disdain.

This isn’t to gainsay that “white racist,” “white nationalist,” or “batshit bigoted” can’t also be used to describe today’s Republicans. But for the more decorous and historically minded among us, “neo-Confederate” will do just fine.

Kuttner

The New York Times recently reported that more and more employers are considering hiring people with criminal records, as unemployment falls and labor markets tighten.

As Keynes and the Keynesians have long argued, all the compensatory programs in the world are no substitute for full employment. We can support “ban the box” and other efforts to prevent discrimination against formerly incarcerated people who’ve paid their debt to society, but they just don’t work well when unemployment is high and employers have their choice of applicants.

But there is one big flaw in the happy story of low unemployment. It is doing very little to change the deeper patterns of lousy jobs and career paths.

Tight job markets have begun to raise wages modestly. Walmart recently announced with great fanfare that it is increasing its base wage to $11 an hour. That sounds swell, but it adds up to just $22,000 a year. Care to try living on that?

At the very least, we need a $15 minimum wage and tight regulation against the needless or fraudulent use of gig and contract work.

 Once upon a time, 4.1 percent unemployment—the current rate—equaled significant worker bargaining power. But that was in the context of stable payroll employment, career ladders, powerful unions, and a strong industrial base.

Today, the norm is increasingly contingent work, which deprives workers of the bargaining power that would ordinarily flow from tight job markets. Add that to the high cost of housing, and you can understand why the deep economic distress, that produced Bernie Sanders on the Democratic side and Donald Trump on the Republican side, is still there.

On Martin Luther King Day, let us never forget that Dr. King was assassinated while he was in Memphis, in solidarity with striking sanitation workers. He understood better than anyone that justice and jobs went together.

New circumstances demand new forms of struggle. A low unemployment rate is essential, but it isn’t what it used to be.

Happy MLK Day.

Kuttner

Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tossed to me,

I lift my lamp beside the golden door!

—Emma Lazarus, inscription on the base of the Statue of Liberty, 1903

Why do we want all these people from shithole countries coming here?

—Donald Trump, 2018

We know that Trump is an oaf, a buffoon. But if you go into bars in places not far from the Mexican border, or in parts of Suffolk County, Long Island, where members of the MS-13 gang from El Salvador  not only torture other Salvadorans but menace the locals, you will find similar sentiments. That’s why he hits political pay dirt with his pledge to take care of Americans before admitting the wretched refuse of the world.

If Trump is to be thrown out of decent society, progressives need to find a way to build better lives for America’s own forgotten people, who have been sacrificed on the altar of Trump’s cronies on Wall Street. Otherwise, they will take out their frustrations on the most tempest-tossed of refugees.

To be our best self as a nation, we need to be a better self to our own as well as to the world.

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