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Labor Losing to DC Elites Over Job Creation, Unemployment?

by Art Levine
In a fight over paying for Social Security, AFL-CIO President Richard Trumka and his allies took on The Washington Post this week as part of a running battle against Washington insiders' drive for deficit cutting. The emerging political consensus, essentially supported by the White House, favors cutting spending over creating jobs or helping the unemployed, two million of whom have lost benefits so far because of the Senate's delay in passing an extension.

Even as the White House and Democratic leaders nominally support extending unemployment benefits, the conventional wisdom they share about the menace of deficits undercuts their ability to rally political support for the needed spending to create jobs or aid the unemployed. This consensus of most Washington elites can have deadly consequences: near-permanent unemployment or underemployment for millions, while the joblessness epidemic is fueling a sharp increase in calls to suicide hotlines, AOL News reports.

This latest skirmish over the deficit isn't as arcane or removed from the lives of working people as it might appear at first. It involves a snarky Ruth Marcus column in The Washington Post that took Richard Trumka to task for favoring increasing taxes on the rich and opposing raising the retirement age to qualify for Social Security—an essential, if meager, lifeline in tough economic times.

As the AFL-CIO Now blog observes:

Here's a great way to save some Social Security money. Let more folks die before they can get a check. Cold? Maybe. But pretty darn effective according to Washington Post columnist Ruth Marcus.

Marcus seems to have taken offense at AFL-CIO President Richard Trumka's objection to raising the retirement age and his call for the better-off among us to pay the Social Security tax on all their income, just like the rest of us do.

This is all part of a growing indifference to the unemployed, led by the Republicans but also enabled by the White House and some Democratic leaders. The Huffington Post compares the emerging view of the White House political team—over the objection of some economists—to the anti-scientific know-nothingism of the Bush administration:

Today, a new band of Mayberry Machiavellis has gained control, counseling President Obama to ignore the advice of his economic team and press forward with deficit reduction ahead of job creation.

Senior White House adviser David Axelrod told the New York Times recently that "it's my job to report what the public mood is." The public mood, said Axelrod, is anti-spending and anti-deficit and so the smart politics is to alleviate those concerns. "I've made the point that as a matter of policy and a matter of politics that we need to focus on this, and the president certainly agrees with that," said Axelrod of the deficit hawkery that the administration has engaged in over the last several months.

It's an odd political strategy because Axelrod knows that if it succeeds, it will be both bad policy and bad politics. He said as much when asked about the pressure from economic advisers to focus on stimulus and job creation. "I'm very much allied with the economic group, because even as a political matter it would be very shortsighted to take steps that would send us backward," he said.

But the Mayberries have already taken those steps: by using the bully pulpit to highlight deficit fears, by proposing an across-the-board spending freeze, by creating a commission to reduce the deficit and stacking it with hawks, by making it clear to progressive allies that the White House political team believes a deficit-reduction focus is important for the midterm elections.

What's just as troubling is the way this self-destructive political perspective has gained so much ground so fast. Now, liberal economist Brad DeLong flatly declares in a new column that the pro-spending Keynesians among economists have lost, Paul Krugman and a few outliers notwithstanding. DeLong not only illustrates how the pro-spending forces have lost, but offers some potential reasons—some of it due to the current political weakness of the labor movement compared to Big Business.

DeLong observes, citing the President's claim on Friday that the economy is "headed in the right direction":

The employment-to-population ratio has been flat since November. Over the past six months--since the downturn ended--the U.S. economy has not been recovering from its near-depression, and not been putting a greater and greater portion of its potential labor force to work. Rather, it has been bumping along the bottom. There is a big difference between the economy getting "better" and the economy "no longer getting worse rapidly."

The president's calm rhetorical pose is not helpful to policy-making. As Ezra Klein writes, "the White House's broad approach... is to emphasize how much improvement there is, rather than how much needs to be done. That makes political sense." But it also "makes it difficult for the White House to run around with its hair on fire about how bad things are and how necessary it is that Congress doesn't abandon the labor market in order to pretend to care about the deficit."

Premature declarations of victory are especially worrisome because the Congress is only one of the many centers of power in the global economy that have decided too much has already been done to boost global demand, and that the next policy moves must serve the opposite goals of austerity, retrenchment, and contraction. From the German and British governments to the U.S. Federal Reserve, and from all 50 U.S. states to the European Central Bank, economists seeking additional stimulus have lost the argument. Those of us who believe that double-digit unemployment, accompanied by less-than-single-digit inflation and record lows for nominal long-term government bond rates, signals a crisis of confidence not in the government but in the banking system and the private sector find that we have no policy traction.

The upshot of these economic trends is a crisis that sees counselors fielding calls from desperate people out of work as their benefits disappear—and few jobs are available, with five applicants for every one job.

As AOL News reports:

In one of the darkest tallies of the nation's still-sputtering recession, experts say financial desperation has played a significant role in increased calls to suicide-prevention hot lines -- and likely has led to increased suicide rates.

While government statistics on suicides often lag by two or three years, experts say the easier-to-track calls to hot lines have grown significantly. The National Suicide Prevention Lifeline, which operates 24-hour crisis help lines around the country, reported an increase of 18 percent from January to May this year. The rates have fluctuated wildly, from 13,424 in January 2007 to a peak of 59,500 two months ago.

Dr. John Draper, director of the National Suicide Prevention Lifeline, said it's hard to tell whether the increased pace reflects more people needing help, or whether it's the effects of media attention on the problem and increased outreach by crisis counselors. But Draper has no doubt the need is there.

AOL highlights some recent examples of the hard times ratcheting up the stress on those already vulnerable to mental illness and suicide:

  • An armed man facing foreclosure in Chattanooga, Tenn., who called police early July 1 threatening suicide. Authorities said that after officers arrived, the man talked with them from the porch of his house and then burst down the steps waving his gun while screaming, "Suicide by cop!" He died in a hail of bullets.
  • A husband and father in Anaheim, Calif., facing foreclosure and a mountain of credit card debt, last month shot and killed his wife, critically wounded their 3-year-old son, shot at but missed their 5-year-old son and then killed himself, police said.

For those running out of options, such extreme acts are fortunately quite rare, but the pain afflicting families today is widespread. So the policy-making fights among economists and Washington politicians over the direction of our government's approach to joblessness have had all too clear an impact. Why are the advocates for more spending for the unemployed well on their way to losing?

DeLong pinpoints a few key potential factors:

The situation is grim. So why isn't everybody running around with their hair on fire?

Why aren't there irresistible political demands for more government action to steer us toward a better economic recovery --or at least to hedge against a double-dip in what seems likely to be called not a "recession" but a "depression" when historians get around to writing about it?

I have my theories:

• widening wealth inequality and an upgrading of the class position of reporters and pundits, who are no longer ink-stained wretches immersed in mainstream America;
• the collapse of union power, which ensures that nobody who sees real workers on a daily basis sits at the table when the deals are made;
• increasing job security for the powerful in Washington, aided by the growth of the lobbying apparatus that envelops the mixed-economy government;
• the collapse of professional integrity among the Washington press corps, which no longer dares to call balls and strikes as it sees them, preferring to say only that the Democrats say it was a strike and the Republicans say it was a ball, and that opinions on the shape of the earth differ.

How would the political world in Washington be different if there were a truly powerful labor movement fueled by greatly expanded organizing, millions of new members, and genuine union rights through, say, an Employee Free Choice Act?

In addition, if labor wasn't facing plummeting private sector union membership and a 60 percent drop in union elections, would this political apathy in Washington over the unemployed be so great?

I doubt it.

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