Friday Reads

Good Morning!

I’ve turned into a bit of broken record on the inability of the U.S. economy to produce not only jobs, but well-paying jobs.  This article at The Nation basically says a lot of the same things I’ve been saying and thinking for several years.  It’s called ‘Why Washington Doesn’t Care About Jobs’.

This disconnect between the jobs crisis in the country and the blithe dismissal thereof in Washington is the most incomprehensible aspect of the political moment. But I think there are two numbers that go a long way toward explaining it.

The first is 4.2. That’s the percentage of Americans with a four-year college degree who are unemployed. It’s less than half the official unemployment rate of 9 percent for the labor force as a whole and one-fourth the underemployment rate (which counts those who have given up looking for work or are working part time but want full-time work) of 16.1 percent. So while the overall economy continues to suffer through the worst labor market since the Great Depression, the elite centers of power have recovered. For those of us fortunate enough to have graduated from college—and to have escaped foreclosure or an underwater mortgage—normalcy has returned.

The other number is 5.7 percent. That’s the unemployment rate for the Washington/Arlington/Alexandria metro area and just so happens to be lowest among large metropolitan areas in the entire country. In 2010 the DC metro area added 57,000 jobs, more than any in the nation, and now boasts the hottest market for commercial office space. In other words: DC is booming. You can see it in the restaurants opening all over North West, the high prices that condos fetch in the real estate market and the general placid sense of bourgeois comfort that suffuses the affluent upper- and upper-middle-class pockets of the region.

What these two numbers add up to is a governing elite that is profoundly alienated from the lived experiences of the millions of Americans who are barely surviving the ravages of the Great Recession. As much as the pernicious influence of big money and the plutocrats’ pseudo-obsession with budget deficits, it is this social distance between decision-makers and citizens that explains the almost surreal detachment of the current Washington political conversation from the economic realities working-class, middle-class and poor people face.

It is unbelievable we could be facing such a serious level of unemployment and underemployment at this time in our history.  We have full knowledge of what it takes to deal with this problem and yet our policy makers do nothing.  No less than Ronald Reagan would’ve found this situation intolerable who once said:

“Idle industries have cast workers into unemployment, human misery and personal indignity.”

Our economy is seriously under-performing.  At the same time, our politicians are slashing both taxes and budgets which have been shown by nearly 70 years of economic data and history to be a short road to disaster.   Our politicians are only responsive to their political donor base and to their own personal whims.  Christopher Hayes’s continues this theme in his article cited above in The Nation.

In a 2007 paper titled “Inequality and Democratic Responsiveness in the United States,” Princeton political scientist Martin Gilens analyzed 2,000 survey questions from 1981 to 2002, looking for the relationship between public opinion and policy outcomes. He found that “when Americans with different income levels differ in their policy preferences, actual policy outcomes strongly reflect the preferences of the most affluent but bear little relationship to the preferences of poor or middle income Americans.”

There is only so much social distance a society can take. The social science literature shows that as social distance increases, trust declines and aberrant and predatory behavior increases. The basic mechanisms of representation erode, and the social fabric tears. “An imbalance between rich and poor,” Plutarch warned, “is the oldest and most fatal ailment of all republics.”

I’ve posted a graph from FRBSF Economic Research that shows our ‘output’ gap and its trajectory.  I don’t think you have to be a mathematical genius to extrapolate how many years it’s going to take before we close the gap and return to our potential. It looks at least between 6 -8 years just from eyeballing that graph.  The output gap represents what our economy should be producing–implying more jobs–and our production shortfall.  We not only have a huge output gap but a measurable and significant income gap between those who actually produce something and those that skim money off of transactions or gamble themselves into a profit via arbitrage.  It is never a good sign when wealth goes to gamblers and third party payers who drive a wedge between buyers and sellers and distort market prices and quantities.  I continue to be amazed at the callous disregard for history, economics, and people that characterize our policy makers. We have too many lawyers and not enough economists at the helm.

Agent Orange is promising “GOP cover” for slashing “entitlements”.  I still hate the way  that benefits that I have paid for since I was 14 years old and held my first job down as a docent at a museum could be called an “entitlement” .  They spit that word out with the implication that only lazy and shiftless people collect THAT kind of money.  We’re entitled to it because we paid for it dear Speaker!  Anyway, raise you’re hand if you think this is a honey trap of sorts!  This is from The Hill.

Moreover, Boehner has personally promised Obama that he will stand side-by-side with him to weather the strong political backlash expected from any proposal to cut entitlement costs.

So far, Obama has not taken Boehner up on the deal, as Democratic strategists have warned the White House not to cut payments from the Social Security trust fund or to reopen the acrimonious debate over healthcare.

Social Security reform has been prominent in behind-the-scenes talks about entitlement spending because it is relatively easy to reduce its cost projections — at least, compared to the complex morass of healthcare policy reform.

Social Security has been known traditionally as the “third rail” of politics, because grappling with the issue is considered as deadly as touching an electrified subway rail.

President George W. Bush saw his post-election political capital plummet in 2005 after Democrats led by Sen. Max Baucus (D-Mont.) excoriated his administration’s proposal to divert a portion of Social Security revenues into private retirement accounts.

Boehner has promised that Republicans will not exploit entitlement reform for political gains if Obama shows leadership on curbing the cost of Social Security and other mandatory spending programs, according to sources familiar with the offer.

An interesting post has shown up at Politico implying that many Democratic Senators have decided to retire.  It’s a rather long bit but I’d like to concentrate on one senator I will not miss.

Five senators from the Democratic side of the aisle have already decided to hang ’em up after this term. Each has his own reasons, but it mostly boils down to this: For some senators, a job in the “most exclusive club” is not worth the hassle anymore.

“It’s about campaigns,” Sen. Joe Lieberman (I-Conn.), a retiring member of the Democratic Caucus, told POLITICO. “It’s about both the unremitting — that’s a bad word to use — about the constant pressure to raise money and travel all over the country doing that and the nastiness of the campaign. … I have no second thoughts about it.”

Here’s the list of the five retirees:  Kent Conrad (ND), Joe Lieberman (CT), Daniel Akaka (HI), Jeff Bingaham (NM), and Jim Webb (VA). Does this make life easy or difficult for Patty Murray who gets the job of funding and re-electing Democratic Senators?

“As Republicans face a brutal primary between a flawed Washington establishment candidate and a right-wing extremist who is raising money at a good clip, Democrats will field a strong candidate,” promised Democratic Senatorial Campaign Committee Chairwoman Patty Murray (Wash.). “The 2012 Virginia Senate race will be competitive but Democrats will prevail there just like we did in 2006 and 2008.”

Given Democrats’ near-certain difficulties in holding the North Dakota open seat and its incumbents representing Republican-leaning states like Nebraska, Missouri and Montana, the party has to hope Murray is right.

So, I’ve got one last item to leave you with before I turn the comments and the reading suggestions over to you.  It comes from WAPO columnist Jonathan Capehart.  It seems GLBT activists are having a difficult time holding on Congressman to his promise on the issue of marriage equality.  Congressman Sam Arora from Maryland holds a key vote in the Judiciary Committee and is being noncommittal after accepting a lot of dollars and support from GLBT groups.

According to the Baltimore Sun, Arora has said he will vote for the marriage equality bill in the judiciary committee, but has yet to commit to voting for the measure when it hits the floor, possibly next week. “This bill deserves an up-or-down vote, so I’m voting to send it to the floor,” he told the Sun. That sudden reluctance to say he will vote for a bill he co-sponsored has friends mystified and former supporters fuming, at best, calling him a liar and demanding their donations back, at worst.

Even Arora’s friends from Democratic Party politics and Hillary Clinton’s presidential campaign are mystified. Democratic strategist Karen Finney called his apparent change of heart “[v]ery disappointing” in a post on Arora’s Facebook page. And Neera Tanden, policy director for Clinton’s campaign and then the domestic policy adviser on the Obama-Biden campaign, is among those who wants her contribution refunded.

This brings me back to my neighbor Antwoine’s sage advice on politicians.  It doesn’t matter who they are or where they come from, you elect them and then they turn on you.  That about sums it up for me.

What’s on your reading and blogging list today?