(OPE-L) Kerrynomics

From: glevy@PRATT.EDU
Date: Sun Oct 24 2004 - 13:55:39 EDT

Note the reference to Bob Pollin, a former
New School student who studied with the late
David M. Gordon. /In solidarity, Jerry

>>Weekend Edition
>>October 22 / 24, 2004
>>"Hurt the People Who Vote For Us"
>>Kerrynomics: Seems Like Old Times
>>Robert Pollin's excellent Contours of Descent: U.S. Economic Fractures
>> and
>>the Landscape of Global Austerity provides a snapshot of Clintonomics
>> that
>>should be required reading for those in the anybody-but-Bush school. It's
>>a taste of things to come. Pollin writes:
>>"Unlike Clinton, Bush is unabashed in his efforts to mobilize the power
>> of
>>government to serve the wealthy. But we should be careful not to make too
>>much of such differences in the public stances of these two figures, as
>>against the outcomes that prevail during their terms of office. It was
>>under Clinton that the distribution of wealth in the U.S. became more
>>skewed than it had been at any previous time in the past forty
>> years-with,
>>for example, the ratio of wages for the average worker to the pay of the
>>average CEO rising astronomically from 113 to 1 in 1991 under Bush-1 to
>>449 to 1 when Clinton left office in 2001."
>>Such skewing was conscious policy, as will be reviewed momentarily.
>> Pollin
>>reports that Clinton's tax policy did reverse some of the regressive
>>taxation under Reagan but not all of it. And, he notes, "The fact is
>> that,
>>insofar as the end of the Cold War yielded any peace dividend under
>>Clinton, it took the form of an overall decrease in the size of the
>>federal government rather than an increase in federal support for the
>>programs supposedly cherished by Clinton, such as better education,
>>improved training, or poverty alleviation."
>>Pollin allows that the Earned Income Tax Credit (EITC), the most
>>significant initiative under Clinton, more than doubled from $9.3 billion
>>to $26.8 billion during his two terms. But food stamps,
>>"dropped by $8.5 billion a decline reflecting a large increase in the
>>percentage of households who are not receiving food assistance even
>> though
>>their income level is low enough for them to qualify. Under Clinton's
>>presidency, the decline in the number of people receiving food stamps-9.8
>>million-was 17 percent greater than the decline in the number of people
>>officially defined as impoverished, and was accompanied by a dramatic
>>increase in the pressure on private soup kitchens and food pantries.
>>"And while the EITC does correct some of the failings of the old welfare
>>system, it has created new, and equally serious problems. Moving poor and
>>unskilled women from welfare onto the labor market exerts a downward
>>pressure on wages, and the national minimum wage itself is too low to
>>allow even a full-time worker to keep just herself and only one child
>>above the official poverty line."
>>But wasn't Clintonomics the policy that created boom times? Poverty did
>>decline under Clinton by almost 4 percentage points. Yet, as Pollin
>>explains, in the prosperity of the 1990s, this small drop back to the
>>level it was in 1974 is reprehensible: "Per capita GDP in 2000 was 70%
>>higher than it was in 1974, productivity was 61% higher, and the stock
>>market was up 603%."
>>Clinton's presidency did see a stop to the declining wages from 1993 to
>>1996, according to Pollin. And in the next 3 years wages rose sharply.
>> But,
>>"the real wage gains were also, in turn, largely a result of the stock
>>market bubble. The Clinton economy of the late 1990s, whose successes
>> were
>>so heavily dependent on the stock market, offers little guidance as to
>>what such an alternative path to sustained improvements in real wages
>> might be.
>>"Moreover, conditions under Clinton worsened among those officially
>>counted as poor. This is documented through data on the so called
>> "poverty
>>gap," which measures the amount of money needed to bring all poor people
>>exactly up to the official poverty line. The poverty gap rose from $1,538
>>to $1,620 from 1993-99 (measured in 2001 dollars)."
>>The good news is both not so good and not repeatable. As Pollin points
>> out
>>in his chapter "The Down Side of Fabulous":
>>"The conclusion is clear: the overall rise in consumption spending in the
>>Clinton years-which was itself central to the economy's overall growth in
>>this period-was driven almost entirely by an enormous increase in
>>consumption by the country's richest households, tied to the similar
>>formidable increase in wealth for those households."
>>Pollin makes clear that the modicum of good news was temporary,
>>unsustainable, and costly. "The stratospheric rise in stock prices and
>>debt-financed consumption and investment booms produced a mortgaged
>>legacy. The financial unraveling had begun even as Clinton was basking in
>>praise for his economic stewardship."
>>But how can we blame Clinton for the stock market boom? As Pollin shows,
>>Federal Reserve Chairman Alan Greenspan not only knew of the "irrational
>>exuberance" of the market back in 1996, but in minutes of a September
>> 1996
>>meeting stated that, "I guarantee that if you want to get rid of the
>>bubble[raising margin requirements on stock speculators to lower how much
>>they can borrow] will do it." But Greenspan, like Clinton, was not
>> willing
>>to confront Wall Street. Instead, the Clinton administration and the Fed
>>presented a united front in advancing across-the-board financial
>>deregulation in the name of market efficiency and modernization.
>>The yawning gap in wealth distribution was by design. Quoting from Bob
>>Woodward's The Agenda, Pollin reports that:
>>Clinton himself acknowledged only weeks after winning the election that
>>"We're Eisenhower Republicans here We stand for lower deficits, free
>>trade, and the bond market. Isn't that great?" Clinton further conceded
>>during this same period that with his new policy focus "we help the bond
>>market and we hurt the people who voted us in."
>>Just as Bush's personnel were key players in past Republican
>>administrations and therefore represent no real break with the past, a
>>Kerry administration would employ key players from Clinton's
>>administration. As discussed later key members of the team-Roger C.
>>Altman, Gene Sperling, and Sarah Bianchi who worked for Gore-are mapping
>>out the Kerry economy.
>>Kerry's economic policy shows the promise of moving the country
>> rightward,
>>just as Clinton's did. In fact, Kerry is running right so fast that he's
>>running against the promises he made during the primaries. In a May 3,
>>2004 interview with the Wall Street Journal, he proclaimed that he was
>>scaling back some promises in an effort to woo business. These "involved
>>paring earlier proposals to expand college-tuition subsidies and provide
>>aid to state governments, to help achieve the higher priority of halving
>>the federal deficit in four years," the Journal reports. Regardless of
>>what one thinks of this particular trade-off, it is yet another sign
>> that,
>>in his bid for the presidency, nothing is safe.
>>Another example of Kerry's rightward push is his orientation toward the
>>bond market. As mentioned earlier, Clinton admitted his rightwing
>> position
>>in saying that he was helping that market while hurting his voters. With
>>Kerry, we are already one step farther right, and the guy hasn't even
>> been
>>elected yet. As the Wall Street Journal concluded that May 3 article:
>>Liberals worry that, in the White House, Mr. Kerry is likely to tack even
>>further toward the center. Some on the left complain Mr. Kerry is already
>>doing so-undercutting the populism that was a key part of Mr. Clinton's
>>1992 campaign. "The risk is that he's going to run the way Clinton
>>governed, rather than the way Clinton ran," says Robert Kuttner, editor
>> of
>>the liberal American Prospect. "No president ever got elected by
>> promising
>>to appease the bond market."
>>Kerry's advisors make clear where his presidency would take us. As the
>> New
>>York Times headlined March 28, 2004, it's "A Kerry Team, A Clinton
>> Touch."
>>Four people are at the heart of the team. Roger C. Altman was a deputy
>>Treasury secretary in the early Clinton years who got derailed by the
>>Whitewater scandal and resigned. He's back, having invigorated his wallet
>>with stock market wealth. The three other team members are Jason Furman,
>>an economist trained at Harvard, Gene Sperling, who served under Clinton
>>for all of the eight years, and Sarah Bianchi who served as Al Gore's
>>health care specialist and later policy advisor during the 2000 campaign.
>>And the man in the wings is Clinton's former secretary of the Treasury.
>>"This group is consulting literally daily with Bob Rubin," Altman told
>> the
>>"The right tax code will spark job creation at home," Sperling claimed.
>>Gone is any whiff of aid to the poor, any sense that government could
>>reinvigorate the New Deal politics of FDR, which long ago sought to
>> employ
>>people directly instead of paying companies to do it indirectly-the
>> latter
>>being at greater cost to the taxpayer per job created, and a far more
>>dicey form of insuring the economic health of the country.
>>Another principle is that "New spending must be offset by cuts in
>> existing
>>spending," the Times reported. Kerry has made clear that spending on
>>Defense and Homeland Security will continue to outpace inflation; the
>>growth of these sectors will impose draconian fiscal discipline on the
>>rest of the government if Kerry were to keep his pledge of balancing the
>>The article also reveals what John Kerry really means by healthcare for
>>all. Not single payer insurance, by far the most cost efficient and most
>>effective means for insuring access to health care for all-favored by
>> most
>>Americans. Instead, money will be shoveled to corporations: "federal
>>subsidies for some aspects of corporate health insurance," the Times
>>reports. The Wall Street Journal, May 3, 2004, quotes Kerry as saying
>>about his health care subsidies, "I would think American business would
>>jump up and down and welcome what I am offering."
>>The Wall Street Journal explained further in a sober-eyed analysis of the
>>two candidates just before that third debate. On October 13, the paper
>>"Mr. Kerry balances his support for new government programs with a
>>Clintonian bow to limits on government action. His health-care plan
>>eschews regulatory mandates and is heavy on market-based incentives: It
>>gives uninsured people tax credits to buy into existing plans, and
>>encourages companies to lower health-care charges for employees by having
>>the government subsidize their most expensive cases."
>>Returning to the Times article, regulation of outsourcing is out the
>>window, the only hope for actually addressing the more pernicious effects
>>of globalization's race to find the cheapest worker. Instead, Kerry will
>>"provide tax rebates to manufacturers that add jobs in the United
>> States."
>>And he would cut corporate taxes-already at astonishing low levels-by 5%.
>>It could be a nice tax break-offset in part by forcing companies with
>>overseas income to pay tax on it immediately instead of deferring it
>>indefinitely. Then, to cut the deficit by $250 billion, Kerry will
>>reinstate the tax rates Bush cut on those households earning over
>> $200,000
>>a year. Sounds good, but there is no plan to cut back on Bush's bloated
>>Defense and Homeland Security spending. Kerry claims he can save tens of
>>billions a year by ending some corporate welfare subsidies. But ending
>>deficit spending while increasing the Defense and Homeland Security
>>budgets would be devastating nonetheless. Progressives, arguing we must
>>vote Kerry to "stop the pain," should consider exactly what they are
>>voting for. Lest there be any question whether Kerry's presidency would
>> be
>>a move to the right for the economy, Altman clarifies that "It is a
>>credible, enforceable pledge that will position Kerry to the right of
>> Bush
>>on fiscal policy."
>>In the third presidential debate, Kerry promised to level the playing
>>field for the American worker, but put the matter bluntly:
>>"Outsourcing is going to happen. I've acknowledged that in union halls
>>across the country. I've had shop stewards stand up and say, "Will you
>>promise me you're going to stop all this outsourcing? "And I've looked
>>them in the eye and I've said, "No, I can't do that." "
>>The Wall Street Journal pointed out (October 13),
>>"In practice, both men are free traders, and their rhetoric exaggerates
>>their differences. Both support a new global trade pact, as well as one
>>for the Western hemisphere. Mr. Kerry says he would review all existing
>>trade pacts in the first 120 days of his administration to ensure their
>>fairness, but it's nearly inconceivable that he would pull out of any of
>>them because of the havoc that would cause the trading system."
>>Returning to the band of merry men and women who are designing
>>Kerrynomics, is there any shred of remorse over what these policy wonks
>>did while they worked for Clinton? Any hope that we can escape the
>>accelerated transfer of wealth to the rich, that, as mentioned, went from
>>a CEO-to-worker ratio of 113 to 1 to 449 to 1 during Clinton's reign?
>>Bianchi was asked in general terms about the relationship between Kerry
>>and the Clinton years, and framed it this way, "The Clinton-Gore
>>administration had a fantastic record on the economy, and John Kerry
>>supported their plan. It's a logical place for him to be
>> philosophically."
>>Greg Bates is the founding publisher at Common Courage Press and author
>> of
>>Ralph's Revolt: The Case For Joining Nader's Rebellion. He can be reached
>>at gbates@commoncouragepress.com.

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