Americans continue to suffer from this Great Recession. According to a study released this week by The Conference Board, consumer confidence has hit its lowest level since April 2009. There are many potential reasons for this abysmal statistic: unemployment and underemployment remain at stubbornly high levels, the housing market continues to be a drag on the economy, the recent debt limit fiasco put us on the verge of default, illustrating just how dysfunctional Washington can be, and the subsequent S&P downgrade sent shocks waves through the market. Even the bravest souls who dare to peek at their 401(k) statements are sure to be spooked. And to make matters worse, the U.S. labor market added no new jobs in August, according to a Bureau of Labor Statistics report that was issued this morning.

Dimitri Papadimitriou and Greg Hannsgen of the Levy Economics Institute have recently detailed in a paper titled “Not Your Father’s Recession,” how this recession is far worse than other recessions that we’ve experienced. One key measure they point to is the employment-to-population ratio. From the beginning of the recession in December 2007, this ratio has decreased by 4.6%, from 62.7% to 58.1%. In contrast, in all other recessions since 1973, this ratio never decreased by more than 3% and always rebounded much more quickly. Clearly our current slide over the last 43 months has been deep and long.

The paper goes on to show how post-crisis growth has been 11.9% less than what one would’ve expected based on historical standards of our nation rebounding from recessions. With numbers like these, it’s no wonder why most Americans have a negative outlook.

This recession’s depth and length are unusual. But why?

One reason is that this recession came about as a result of a financial crisis, during which both stock and housing prices collapsed. As a result of all the debt that was accumulated in the process, businesses’ and individuals’ balance sheets were decimated, and they needed time to rebound and productive policies that eased their economic pain. We tried to fix businesses’ balance sheets by giving trillions away to the biggest of the big banks, hoping that this would fix the problem, but it just didn’t work.

We say it’s time for a new approach.

This new approach must put consumers’ interests ahead of corporate interests. We must repair regular American’s individual balance sheets through policies that restore confidence in the real economy.

After Labor Day, President Obama will detail a new jobs plan; he must seize this opportunity to repair the economy where it really matters, on Main Street. To this end, Public Citizen’s President, Robert Weissman, along with over sixty other organizations, has sent an open letter to the president, imploring him to harness this crucial moment and present a plan that is “big, bold, and create[s] jobs directly.”  The letter calls for investments in American infrastructure, education, green technology, and healthcare, so that rebuilding the American Dream becomes a reality.

Recovery must not merely be a slogan. We need policies that put us on the right footing. As Papadimitriou and Hannsgen warn, a jobless recovery is really no recovery at all, and unlike our father’s recession, we will only recover if we put American workers and communities first.

Micah Hauptman is the Financial Campaign Coordinator for Public Citizen’s Congress Watch division.

Share/Bookmark

There was a time not that long ago when they at least made an attempt to camouflage their contempt for our vital system of regulatory safeguards, but those days are long gone. Coming in September when Congress returns from its summer break, Republicans will brazenly target federal regulations as part of its “jobs plan.” Ultimately, this all-out attack will only expose the fact that they actually have no jobs plan at all.

flickr by TalkMediaNews

The GOP attempted to launch a jobs plan in May, but it was laughed off the table. Their flimsy 10-page document, filled with more pictures and drawings than words, contained the same old failed “trickle down” economic tools that have proven worthless since Ronald Reagan raised taxes four times from 1982-84.

So now, they are boldly turning to the “scourge” that is federal regulations as a means to revive our stalled economy – as if clean air and safe children’s toys are at the heart of the nation’s economic troubles. They are attempting to “fix” a problem that does not exist.

This attack on safeguards is not about jobs, it is about corporate profits. Ours is supposed to be a government of, by and for the people. But for our democracy to work, we need effective standards and regulations for accountability and transparency. Special interests shouldn’t be able to meet with public officials in secret, or have their lackeys in Congress bury amendments into appropriations bills that gut vital safeguards.

What is really needed is more regulatory oversight, not less. Do you think the BP oil spill disaster, the Massey mine explosion or the Wall Street meltdown of 2008 that sent 8 million Americans to the unemployment line occurred because of too many regulations?

The foes of public safeguards love to talk about how rules cost businesses too much and that they are an impediment to job growth. Both allegations are simply untrue.

Several studies have shown that claims about the burden of federal regulations are completely overblown. The non-partisan Economic Policy Institute released a study this spring that compared the benefits of regulations to their costs, investigated whether regulations negatively impacted the economy and assessed the studies that the federal government uses when drawing up specific rules.

It had several illuminating findings, including:

• Public protections “do not tend to significantly impede job creation.”

• Over decades, the benefits of federal regulations have significantly exceeded their costs. The latest Office of Management and Budget (OMB) report for example, shows that between 2001 and 2010, the benefits of major regulations reviewed substantially exceeded their costs. It put the total annual benefits “between $132 billion and $655 billion, while the estimated annual costs are in the aggregate between $44 billion and $62 billion.” That estimate puts benefits at 2 to 15 times more than the cost!

• Regulations “can lead to investments that create jobs, improve worker health and thus productivity, and spur important technological innovations, among other positive effects on the economy and employment.”

EPI also noted “evidence shows that an emphasis on deregulation can contribute to enormous economic dislocation, and regulations have generally and consistently struck a reasonable balance with their benefits to health, safety and well-being far exceeding their costs.” Sadly, the GOP’s coming attack next month when Congress returns from recess will have no reasonable balance.

It will be an ugly fight about ideology and a small minority’s rejection of the idea that government should play a role in keeping our air and water clean, our food safe from disease, our kid’s toys free of lead, our workplaces safe and financial system that is secure. Their push to vault corporate interests over the public good must be stopped.

Share/Bookmark

Yet the bankers on Wall Street continue to reward themselves with astronomical bonuses for engaging in the same high-risk financial gimmicks that crashed our economy back in 2008. Firms, big banks and hedge funds on Wall Street spent more than $135 billion on record-breaking payouts in 2010; the top 25 hedge fund managers raked in $22 billion by themselves.

It’s an absurd situation. It has to stop. And you can help stop it.

Congress passed the Wall Street reform bill last year, and now federal agencies are seeking comments from the public on how they should implement the section of the law about Wall Street pay practices.

That’s right – they want to hear from you.

But, in order to send your comments to the seven agencies, each has its own set of requirements, its own website and its own email address – it’s the kind of stuff that can be confusing if you’re not somebody who looks at government documents every day (heck, it can be confusing even if you do).

So we made it easy by setting up a website where you can send your message to the agencies: http://pubc.it/FixWallSt

It’s especially important for you to personalize your comments by sharing your own story about how the economic crisis has affected you, your family, your friends or your community.

And if you would like help writing your comments to maximize their impact, please don’t hesitate to write to us at action@citizen.org.

You can write a paragraph, or you can write a book. But make sure you submit your comments before May 31. Afterward, the agencies will no longer be accepting comments.

If you’re not sure what to write about, here are some ideas:

•    Write about your out-of-work relative, once awarded employee-of-the-year.
•    Write about your neighbor, forced out of retirement because the crash eviscerated her 401(k).
•    Write about your friend who just graduated from college, with honors, into a jobless economy.
•    Write about the Irish, the Icelanders and the Africans who suffer because bad pay incentives led the Wall Street fraudsters to spread their toxic practices globally.
•    Write about yourself.

Need more incentive to go write your comments? Well, you should be aware that the bankers raking in millions and billions on Wall Street would rather not see things change – and they’ve hired cadres of bank lobbyists to fight rules like this every step of the way.

Don’t take my word for it – you can read about it yourself in our recent report about Wall Street’s efforts to bias the rule-making process.

Want to learn more about Wall Street’s outrageous pay practices? Check out our essay on that very subject.

Just make sure that before the end of May, you also visit our website where you can send your comments to the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Federal Housing Finance Agency, the National Credit Union Administration and the Office of Thrift Supervision.

Share/Bookmark

Right now, the flashpoint in this controversy is Wisconsin, where tens of thousands of people are demonstrating every day in an effort to block Governor Scott Walker’s plan to all but end collective bargaining rights for public employees.

But the debate is a national one. The Wisconsin showdown is only the first in a whole series of pending state conflicts. And, over the next 10 days, a corporate-friendly Republican majority in the U.S. House of Representatives may decide to shut down the federal government.

The clashes in Wisconsin and other states, and in Washington, D.C., are dressed up in the language of budget debates. But these debates have nothing to do with “fiscal responsibility.” They are about what kind of society we want.

Do we want government to provide vital services, or exacerbate inequality? Should we have strong protections for health, safety, the environment and economic stability, or should giant corporations be free to impose their rules on the rest of us? Will we protect the right of workers to join together in unions, or will we permit private and public employers to drive down wages in the interest of generating more profits or lowering taxes for corporations and the wealthy?

Corporate plutocracy or a working democracy?

The people in Wisconsin who are demonstrating to stop Governor Walker’s union-busting plans are acting not just to preserve Wisconsin’s democratic traditions, but to make the case for a better America for all of us.

The people in Wisconsin — including many Public Citizen members and friends — need our solidarity. Even more, they need us to join with them in fighting for the America we all want.

Tomorrow, people will be gathering in state capitols to do just that. Please join them. Find a rally near you.

As we engage this contest for the future of America, it’s important to understand how we got into our current circumstance, and exactly what is at stake.

How Did We Get Here?

The Republican line on state and federal budgetary shortfalls, echoed by too many in the media, and by too many Democrats, is that we are spending beyond our means and “mortgaging our future.” This is not true.

States are not suddenly spending more than they were two, three of four years ago. (This is true for the federal government as well, with the caveat that there was an addition of federal stimulus spending, now winding down.) The reason states are facing acute budget crises is because revenues have declined. The reason revenues have declined is because the economy crashed. And the reason the economy crashed is because an unregulated Wall Street enabled a housing bubble, and then built a financial bubble on top of the housing bubble.

In other words, Republican governors are blaming state employees for the budget crisis, when the blame actually rests with Wall Street. Making things even more obscene, while state employees are seeing salaries and benefits slashed and jobs cut, the Wall Street titans are paying themselves outrageous bonuses. Wall Street paid out more than $20 billion in bonuses last year, while Wall Street profits totaled more than $27 billion, the second highest total on record.

This central point can’t be emphasized enough: The story of the current state and federal budget challenges is the diminished tax revenue that has followed from the Wall Street-induced recession.

Raising Revenues

OK, you might say. Maybe Wall Street deserves the blame, but what choice do governments have?

Well, the states are under an obligation to balance their budgets. The simple solution for this problem is for the federal government — which does not need to balance its budget — to give them grants. Unfortunately, that solution is not forthcoming.

Still, the states have options. Notably, they can raise taxes on corporations and the wealthy, as some are now preparing to do.

Amazingly, however, those most vociferously demanding state and federal budget cutbacks in the name of fiscal rectitude also support tax cuts for those most able to pay. In Wisconsin, Governor Walker — who took office just this January — has pushed through $127 million in tax cuts. Meanwhile, in D.C., last December’s tax deal between President Barack Obama and congressional Republicans gives about $120 billion in benefits to the wealthy over the next two years.

Would it be unreasonable to ask for a rule that anyone supporting such tax breaks for the super-rich is prohibited from claiming they care about balancing budgets?

There are, of course, other ways to raise revenues. Cracking down on corporate welfare would be a good place to start. States have given away billions in corporate welfare deals, as Good Jobs First has documented. Walmart alone is grabbing $400 million a year in state and local tax breaks. At the federal level, there are tens of billions of dollars in corporate welfare giveaways that should be eliminated or reformed, involving everything from loan guarantees to nuclear power plants to export promotion schemes for big corporations.

The federal government has other ways to raise revenues that would be worth pursuing as good policy, in addition to their revenue implications. A very small tax on Wall Street trading, for example, could raise more than $100 billion a year. It would force Wall Street to offset some of the damage it has inflicted on the rest of the country. And it would slow the dangerous churning of stocks, bonds and derivatives.

The Role of Government

The Republicans’ insistence on cutting back government spending is ultimately a disguised way to advance their agenda of selectively limiting the role of government in society. (It is selective because they and their corporate backers DO support an aggressive role for government when it comes to policies and activities that benefit big corporations.)

That the real issue is the role of government itself is underscored by congressional Republican budget proposals. As Congress debates a short-term government funding bill, not only are the Republicans proposing to slash vital programs, they are seeking to block, stop or undermine government restraints on Big Business — an array of rules, regulations, programs and enforcement schemes that have little or no budgetary impact, but are hugely important for protecting the public and the environment from predatory corporations.

Among many, many other troubling measures, the House Republican proposals would:

* Eliminate funding for a new consumer product safety database. Removing its funding would deprive consumers of a critical tool — three years in the planning — to report and research safety incidents on toys and other products.
* Slash the budget for the Commodity Futures Trading Commission by roughly a third. Saving only $50 million, this measure would completely hamstring the agency charged with implementing some of the most important components of the Wall Street reform law.
* Eliminate the presidential public financing system.
* Stop the Environmental Protection Agency from listing coal ash as hazardous waste, enforcing rules that would curtail mountaintop-removal coal mining, issuing new rules that would protect rivers from coal waste, or improving air quality standards.

It’s important to emphasize in this discussion that the Obama administration budget proposals, while far superior to the Republican alternative, accept many of the Republican premises — including the most important one, that the government should be reducing spending.

At a time when one in six people who would like a full-time job are unable to find one, the government should be spending more money to put people back to work, get the economy moving and prevent the waste of letting workers and plants remain idle. Instead, the Obama administration has essentially conceded the need for austerity.

Adopting the false politics of scarcity, the president needlessly proposes to shortchange vital public programs. A distressing example is his proposal to slash $3 billion from the Low Income Home Energy Assistance Program, which provides cash assistance to poor people to help them pay their utility bills.

One can go program by program, or rider by rider, and explain how misguided are proposals from both the Republicans and the administration. But even more important is to insist on what we want our government to do. We need a strong government. There are of course government programs that should be eliminated or improved. But we do need a government that is able to educate our children, ensure access to health care for all, move us to a clean energy future, keep the economy working, provide a social safety net, and protect us from corporate predations. We need a government that takes seriously its duty to advance the General Welfare.

The Role of Unions

At this point, the debate in Wisconsin is no longer about obtaining givebacks from teachers, nurses and other public employees. The public employee unions have agreed to the governor’s economic demands.

What is now in dispute is whether public employees will maintain the right to be represented by unions.

What a sad state of affairs.

The right of workers to join together into a union to bargain collectively with their employer is a basic First Amendment right and a fundamental right of workers everywhere. Unions enable workers to band together to offset the otherwise overwhelming bargaining power of employers, and make the economy and workplace a fairer and more just place.

We all benefit from a strong union movement, whether or not we are union members. Because they organize workers to act together, unions are — by far — the most important countervailing force to concentrated corporate power.

It’s not just a matter of unions supporting particular policies. By their very existence, unions change the political terrain, making it more possible to advance justice, fairness and equality.

The severe decline of unions over the past 40 years is a crucial contributing factor in explaining why inequality has risen so dramatically and why corporations have been able to increase their political influence.

The remaining union stronghold in the U.S. economy is the public sector. If Wisconsin, followed by other states, manages to undermine unionization in the public sector, it’s not just public sector workers who will be worse off. We all will be.

Let’s Get to Work

It is now incumbent on all of us to make Wisconsin just the beginning of something much bigger.

We start by demonstrating on Saturday.

Share/Bookmark

Today, the New York Comptroller’s office released numbers showing that these same executives rewarded themselves with obscene compensation in 2010, even as corporate-backed governors demand a major sacrifice from already modestly compensated public employees.

The comptroller’s report shows that overall compensation increased 6 percent on Wall Street, while bonuses declined only 8 percent to $20.8 billion in 2010.

Contrasting with this compensation, Republican governors are seeking pay cuts from school teachers, highway maintenance crews and other public servants vital to the real American economy. The disparity is painful.

Bart Naylor is the financial policy advocate in Public Citizen’s Congress Watch.

Share/Bookmark

Flickr photo by Keith Ramsey

It’s bonus season on Wall Street. The big banks and firms that crashed our economy are doling out millions to high-rolling CEOs, stock traders and hedge fund managers.

What are they doing to make so much money? Absurdly, they’re using the same high-risk financial gimmicks that crashed our economy back in 2008. The payouts have no link to creating real value or a sound economy in the long term.

So we’ve started a campaign calling on Wall Street to stop rewarding itself for making more trouble with our economy.

More than 9,000 activists have already signed the petition demanding Wall Street end its outrageous pay practices. Sign at www.citizen.org/wall-street-pay-petition.

How out of control is Wall Street pay? You be the judge.

JPMorgan Chase’s CEO, Jamie Dimon, is expected bring home more than $17.5 million.

Lloyd Blankfein, the infamous CEO of Goldman Sachs, got $13.2 million.

Morgan Stanley CEO James Gorman raked in $15 million.

It may be hard to believe, but by Wall Street standards, these are historically low compared to pre-crisis payouts. Blankfein alone got $70 million in 2007. And CEOs are not necessarily even the highest paid employees at these firms.

Meanwhile, the median income for working Americans in 2005 was $28,567. (More recent census data are not yet available; one can imagine the impact of the economic crisis has not been good). 

The bottom line is that the American economy is still struggling to recover. We can’t afford to have banksters paying themselves millions to make things worse.

Sign the petition today, and follow this link to spread the word.

Rick Claypool is an online organizer in Public Citizen’s Congress Watch division.

Share/Bookmark

More upsetting than the redundancy and waste of time that this represents is the one-sided language contained in the rule. Not content to just order committees to do what they already do, the rule hits the business talking points that we’re all familiar with by now.

For example, the rule states that “In completing the review and inventory described in the first section of this resolution, each committee shall identify regulations, executive and agency orders, and other administrative actions or procedures that

1. impede private-sector job creation;
2. discourage innovation and entrepreneurial activity;
3. hurt economic growth and investment;
4. harm the Nation’s global competitiveness;
5. limit access to credit and capital;
6. fail to utilize or apply accurate cost-benefit analyses;
7. create additional economic uncertainty;
8. are promulgated in such a way as to limit transparency and the opportunity for public comment, particularly by affected parties;
9. lack specific statutory authorization;
10. undermine labor-management relations;
11. result in large-scale unfunded mandates on employers without due cause; or
12. impose undue paperwork and cost burdens on small businesses.”

That’s nice, but it of course allows for no real analysis and in fact would prevent committees from considering all of the positive effects of regulations–like preventing tainted food and toys, protecting consumers from abusive lending practice, and keeping our air and water clean. It would also prevent consideration of the yearly OMB reports that find that the benefits of regulations outweigh the costs by 2:1 to 14:1.

So modifying the one-sided language of the rule, we’d suggest reviewing whether regulations

1. stimulate private-sector job creation;
2. have lead to innovation and entrepreneurial activity;
3. spur economic growth and investment;
4. strengthen the Nation’s global competitiveness;
5. increase access to credit and capital;
6. produce benefits that exceed their costs;
7. reduce economic uncertainty;
8. are promulgated in such a way that public comment is solicited, considered, and discussed;
9. are hindered by duplicative or arbitrary procedural requirements;
10. ensure safe workplaces and fair treatment of employees;
11. result in compliance costs that are significantly lower than those forecast by industry; and
12. treat small businesses fairly while also ensuring that the regulation’s purpose is not defeated by excluding regulated parties from compliance.

We expect that there would be plenty of material for committees to consider. Just a couple examples:

How many jobs have been created to meet compliance requirements? How much economic growth and investment has occurred to meet compliance requirements? For example, restrictions on greenhouse gas emissions has led to the development of emissions-control systems for power plants. A recent BusinessWeek article estimated that the market for these systems would be between $10 billion to $12 billion.

How does the promulgation of regulations increase economic certainty? During recent outbreaks of contaminated food and toxic children’s products, farmers and manufacturers urged the development of strong standards that would ease customers’ worries about purchasing safe products.

Indeed, if House Republicans were serious about this inquiry, they would discover that although regulations might cost their donors, they benefit their voters.

Share/Bookmark

This is the wrong way to think about regulation, and it is the wrong direction for the American people. Markets cannot function without proper regulation. That means businesses cannot function without proper regulation. We do not need a “balance” between regulation and the free market. We need effective regulations that foster the right types of markets.

The dominant fact of American life in recent years has been grossly inadequate public protections. In the past several years, under-regulation and corporate disregard of safety rules have resulted in multiple salmonella and E. coli outbreaks, a flood of lead-tainted toys, a massive and environmentally devastating oil spill, deadly mine disasters and the collapse of our economy, which has cost eight million American jobs. We need to focus most urgently on fixing these problems and others, not burden agencies, which already are overworked and under-resourced, with more internal reviews and red tape.

Republican leaders have signaled that they intend to challenge existing public protections, weaken agencies like the Food and Drug Administration, Environmental Protection Agency and the Occupational Safety and Health Administration, and block the implementation of financial reform and other legislation. Some Democrats also have indicated a strong skepticism of regulation, if not an outright anti-regulatory bias.

The stakes could not be greater: At risk are our lives, our health and our economy. The administration should be preparing for a major fight to implement effective public protections on behalf of the American people – not echoing the Big Business’ talking points.

We will have to review the administration’s executive order and memoranda before commenting specifically on them. We can only hope, however, that the administration’s op-ed is nothing more than a mistaken communications strategy, not an indication of its substantive plans.

Robert Weissman is president of Public Citizen.

Share/Bookmark

Flickr photo by philroeder

If you read one thing today . . .

Markos Moulitsas on the Daily Kos highlights some interesting exit polling from the midterm elections. More voters blamed Wall Street for our economic woes than either Barack Obama or George W. Bush. But among those who blamed Bush, 83 percent were Democrats and among those who blamed Obama, 91 percent were Republicans. No surprise there. What is puzzling, as Markos points out is that even though a lot of Republicans blamed Wall Street, it didn’t stop them from voting for GOP candidates who, by and large, push a pro-Wall Street agenda.

So why is that? It’s because people think there is no difference between the parties when it comes to the rich and powerful. And why should they? Obama’s finance team is essentially a branch office of Goldman Sachs and company. Treasury was more concerned with using HAMP as a way to protect the banks than help struggling homeowners stay in their homes. In a bizarre role reversal — the White House economic team tried to water down the finance reform bill that came out of Congress.

It’s not hard to see why people have gotten the sense that Democrats aren’t much better on Wall Street matters than Republicans (even if they are).

Overheard:

This whole new Wisconsin paradigm will take some getting used to. Red state? Wisconsin? Anyways, this once progressive bastion is now filled with legislators who want to tell the federal government where it can stick its socialized health care. Kevin Sack in the New York Times says the opposition to health care reform helped fuel the GOP rise in Wisconsin, as well as other states. Wisconsin’s Gov.-elect Scott Walker says that on his first day in office, he’ll tell the state’ s attorney general to join a multi-state suit challenging the constitutionality of Obama’s health care reform.

“I think the more free-market the better,” Mr. Walker, the Milwaukee County executive, said in an interview. “I think history has repeatedly shown the more the government gets involved the more it not only distorts the marketplace but the more likely it is to inflate costs.”

Share/Bookmark

The trailer for the new Charles Ferguson documentary, Inside Job, looks great. The movie, which is narrated by Matt Damon, looks at the causes behind the 2008 economic meltdown, i.e. the financial deregulation that began with Reagan, the insatiable greed on Wall Street and the complicity of federal regulators who turned a blind eye to Wall Street’s reckless behavior. The movie had a limited opening this past weekend.

The documentary, which a group of critics voted the best film at the 2010 Cannes film festival, was also praised by Roger Ebert, who called it a “devastating” indictment of Wall Street:

It is a very angry, very carefully argued, brutally clear documentary about how the American financial industry set out deliberately to defraud the ordinary American investor. It was directed by Charles Ferguson (below), whose academic, business and government backgrounds make him unusually well-qualified for this subject. The remorseless narration is by Matt Damon.

Here is the argument of the film, in four sentences. From Roosevelt until Reagan, the American economy enjoyed 40 years of stability, prosperity and growth. Beginning with Reagan’s moves against financial regulation, that sound base has been progressively eroded. The crucial federal error (in administrations of both parties) was to allow financial institutions to trade on their own behalf. Today many large trading banks are betting against their own customers.

Share/Bookmark