Articles from Huffington Post

The press strained to find some good news in the government's April employment report. Superficially, things appeared a little better. The official unemployment rate dropped to 7.5 percent, and the number of long-term unemployed people declined by about 258,000. The government revised upwards the number of new jobs created, to 138,000 in March, plus 165,000 in April.

The stock market loved the news: Just enough job growth to keep the economy officially out of recession. But a sufficiently sluggish economy that the Federal Reserve will keep interest rates low, and workers will have little bargaining power.

Take a deeper look at the figures behind the April report and consider the coming impact of budget cuts, and the picture is still bleak for the vast majority of Americans. The job growth is not sufficient to materially improve the condition of most working (and out-of-work) Americans.

Wages are still basically flat. Since the financial collapse of 2008, 9.5 million Americans have simply left the workforce. And if you are not in the measured workforce, you don't count in the unemployment statistics.

As recently as 2000, just under 65 percent of Americans were in the workforce--employed or actively looking for a job. In the deep recession of 2008-2009, the percentage plummeted to less than 59 percent. And there it has sat for four years.

Despite 38 straight months of job growth, 2.6 million fewer people were employed in April 2013 than in December 2007 when the recession officially began. According to the Labor Department, 22 million people are unemployed or under-employed in part time jobs looking for fulltime work.

So what is the government doing to improve things? Why, cutting public spending of course. Most economists think these fiscal headwinds will snuff out the prospect of faster growth for the remainder of 2013--and for a decade if the Republicans and President Obama strike their long sought "grand bargain" of tax hikes and deeper spending cuts.

Why are they doing this? For fear that the current and projected levels of public debt will somehow risk future inflation and depress business confidence (which is actually depressed right now because not enough households have enough spending money in their pockets.)

Things are so grim that the Federal Reserve's policy-setting Open Market Committee, nobody's idea of a left-wing shop, felt the need to put out a statement Friday after the jobs numbers came out warning bluntly that "fiscal policy is restraining economic growth" and suggesting that inflation, if anything, is too low. The Fed vowed to keep interest rates extremely low, and suggested that the executive and legislative branches should take their feet off the brake. It's quite a situation when the Federal Reserve is the most fiscally left-wing outfit in town.

While the Administration and the Republicans and far too much of the commentariat are obsessed with public debt, private debts are killing the recovery. Some 22 percent of mortgages are still under water, and student debt has surpassed a trillion dollars.

My just-published book, Debtors Prison, addresses what I call "the double standards of debt." Banks can unload their toxic securities onto the Fed. Corporations can use the bankruptcy code's Chapter 11 to write off old debts (including to their pensioners) and get a "fresh start." But college borrowers stay indentured forever, as do underwater homeowners unless they want to lose the house.

The upside-down policy, of cutting public spending, giving debt relief to banks and corporations, while showing no mercy to students and homeowners, keeps the whole economy in debtors' prison. Until these policies change, we can look forward to a decade of high unemployment and an underperforming economy.

Robert Kuttner's new book is Debtors' Prison: The Politics of Austerity Versus Possibility. He is co-editor of The American Prospect and a senior Fellow at Demos.

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As a Bostonian, I have complex feelings about my civil liberties and my family's personal safety in the aftermath of the Marathon bombings. My wife was a block from the first explosion. My son and four-year-old grandson had considered going to the finish line and then changed their plans. The dead and maimed could have been any of us. I am surely pleased that the bombers were caught.

But I fear for my country on two opposite grounds.

The emerging history of Dzohkahr Tsarnaev suggests that while the much-expanded national security establishment has been largely successful at thwarting organized assaults by terrorists, it cannot prevent a one-off attack by an extremist-influenced sociopath.

To do so would require turning our country into a police state.

When I was a graduate student, a refugee professor once told the class, "I grew up in Nazi Germany. It was a very safe place to walk the streets. Unless you were perceived to be an enemy of the state."

How many more of us will have to be presumed enemies of the state in order for the rest of us to be safe from random bombers? After an attack like this, national security ratchets up, and never seems to ratchet back down. And some trade-offs are truly difficult.

The police were able to track down the brothers Tsarnaev thanks to security cameras. So, should we now have a massive proliferation of such cameras? There are already proposals. (Will this be the long-awaited national infrastructure and public employment program to cure the recession -- half the population hired by the government to observe the other half?) Not to mention domestic drones.

The FBI has already been criticized for fumbling a tip from the Russians that Tamerlan Tsarnaev had violent extremist tendencies. Should he have been placed on some kind of watch list for continuous surveillance? Should such watch lists be dramatically expanded?

One of the hallmarks of an open society is that the police miss some things. I was an anti-war activist at Berkeley in the 1960s. Later, in graduate school, I was nominated and accepted for a summer internship at the State Department, and assigned, of all places, to the Cuba desk and given a security clearance. It was even more fun that I was sporting a full beard at the time. My mother reported that a government agent had been in our neighborhood and asking the neighbors if they thought I was loyal or had any odd friends. The gumshoes somehow missed my Berkeley activities. But that was then.

When I first worked in the senate, there were no concrete barricades, no metal detectors, anyone could just walk right in. (In Sweden, which has lost one prime minister and one opposition leader to assassins, the people have rejected the course of becoming a security state. There are no metal detectors and no guards at the entrance to parliament. I had an interview there with a minister and all they asked for was some I.D.)

To have a national security state so secure as to guarantee us against any possible attacks would be to lose a fair amount of our liberty. And yet we don't want to be sitting ducks for the next attack.

The comic-opera actions of the TSA suggest that government can err in both directions -- too much "security" and not enough. On a plane trip, by accident, I had a claw hammer in my backpack (I had been hanging a picture.) TSA, despite tens of billions of dollars worth of scanner technology, totally missed it. But now, in order to improve its public relations, TSA is about to permit carry-on pocket-knives with blades long enough to slit someone's throat.

America is also totally schizophrenic on the subject of weapons. The Tsarnaev brothers had a small arsenal of guns and ingredients for bombs, which are all too easy to obtain. But the same gun lobby that just defeated even token gun control legislation ties the hands of the Bureau of Alcohol, Tobacco and Firearms.

Many of the same people who cling to the bogus Second Amendment right to own and use military weapons are the same ones who have paranoid fears of government black helicopters. Yet the NRA has not made common cause with the ACLU to prevent genuine government excesses.

The Obama administration, meanwhile, has continued the one-way national security ratchet. There has been no meaningful pulling back from the misnamed USA Patriot Act that was rushed through Congress after 9/11. If the only president ever to have taught constitutional law, and a liberal Democrat at that, cannot be counted on to have a better sense of the balance of security and liberty, what president will?

I was impressed by the work of the Constitution Project's private, bipartisan commission whose recent report definitively documented that the U.S. government during the Bush years had resorted to illegal torture. Such disclosures help to push back against government excess. Plainly, the government is getting the balance of liberty and security wrong, and the tilt is likely to worsen.

Perhaps we need a private commission of distinguished civil libertarians and security experts to offer a better formula to maximize our security without compromising our liberties. There are some remarkable people, such as former Ambassador to the Czech Republic John Shattuck, who have served both the ACLU and the State Department who could lead it. At such a moment, we appreciate the legacy and loss of Anthony Lewis, who was astutely critical of the folly of recent trends.

We don't want to be a free people who are sitting ducks, nor do we want the grim security of giving up our liberties in order to be safe in the streets. Yes, these values are somewhat in tension, but there is a far better balance than we one we are inexorably moving towards.

Robert Kuttner's new book is Debtors' Prison: The Politics of Austerity Versus Possibility. He is co-editor of The American Prospect and a senior Fellow at Demos.

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President Obama picked the very day that new job creation collapsed to propose a deflationary budget deal featuring cuts in Social Security and Medicare. This is perverse economics and worse politics, on several grounds.

The economy created just 88,000 jobs in March, down from close to 200,000 in other recent months, for one main reason: The January 2 budget deal and the March 1 sequester that hiked taxes on working people and cut public spending.

In the January deal, payroll taxes on working people were raised by some $120 billion. The more highly publicized tax hike on the top one percent raised less than $65 billion. The sequester added another $85 billion of budget cuts. The combined economic contraction will be about $270 billion this year, and according to the Congressional Budget Office the result will be to cut economic growth roughly in half.

But the deal that Obama is trying to coax the Republicans into accepting would cut the budget at this rate for an entire decade. The economics are just insane. There is no evidence that banks are waiting to lower interest rates (which are already rock bottom) or businesses waiting to invest, pending progress on a grand budget bargain. Businesses are hesitating to invest because customers don't have money in their pockets -- and a deflationary budget deal will only make the economy worse.

The politics are worse than the economics. President Obama, violating every rule of smart negotiating, has put his final proposal on the table -- cuts in Social Security and Medicare in exchange for the Republicans' (still imaginary) agreement to raise taxes -- before the Republicans have made a single concession.

The Republican habit is well-established -- take Obama's "final" offer as the new starting point and demand further concessions. With this strategy, our president has let them take him to the cleaners for more than four years now, and is still hoping that sweet reasonableness will produce compromise. It never has and never will.

The worst part of all may be the president's offer to cut Social Security, using the sneaky, backdoor method of reducing the annual cost of living adjustment, disguised as a technical change, wink-wink, nod-nod.

The gimmick is "chain-weighting" the consumer price index. The premise is that the CPI overstates inflation because when prices rise, people find cheaper substitutes. There are two problems with this. First, hard-pressed consumers indeed find ways to pinch pennies, but cat food isn't Chicken of the Sea. Second, old folks actually face higher inflation than the rest of us because they spend so much of their budget on health care, whose costs are rising faster than other goods. The elderly are also suffering from the rock bottom interest rates that the Fed is using to keep the economy on life supports -- which translate into very low returns on savings.

If Democrats stand for anything, it is defense of Social Security and Medicare -- America's two most broadly beneficial and most beloved government programs -- and the president just gave away this last bit of product differentiation. You have to wonder where he is getting his advice. (Bob Rubin, maybe?)

Social Security benefits should be increased, not cut. The share of workers with traditional pensions is down to about 15 percent. The rest either have no pensions or have 401k plans that are not pensions at all. 401k's, like IRAs and Keoghs, are tax-sheltered savings plans. More than half of people between 55 and 64 have no pension and no retirement plan at all other than Social Security.

What we need is an increase in core Social Security benefits, and a second tier of Social Security as a universal, fully portable pension. It could be funded by raising taxes on the rich, whose effective tax rates have been steadily cut for four decades, and who now command more of our national income than ever before.

If you don't read any other piece of policy wonkery this year, you owe it to yourself, your parents, and your own golden years to read "Expanded Social Security," the recently published report from the New America Foundation (co-authored by my Demos colleague, Robert Hiltonsmith.) It provides a politically serious blueprint for expanding the retirement income of the elderly, rather than selling them out. If we had a Democratic Party worthy of the name, it would get behind this proposal and change the entire dynamics of the Social Security debate.

The Beltway pundits and supporters the view that the economy can deflate its way to prosperity love to take the president and the Republicans to task for "kicking the can down the road," meaning refusing to make a grand bargain that trades cuts in social insurance for increases in taxes. But that can looks pretty good compared to what's under discussion.

Every Democrat in Congress should be standing up to the White House and refusing to back a budget that cuts a nickel from Social Security or Medicare. Yes, we need to reform those programs, but not in the context of an ill-advised set of general budget cuts that will only sandbag the fragile recovery. In the case of Social Security, reform means increasing, not cutting the income support of the elderly. In the case of Medicare, reform is spelled National Health Insurance.

In the past, Republicans have saved Obama from himself by refusing to consider any tax hikes. Now, I'm beginning to think, it's time for Democrats save him from himself. And the Democratic Party. And us.

Robert Kuttner is co-editor of The American Prospect and a senior Fellow at Demos.

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I will start drawing Social Security next month. I think I've earned it. On the other hand, I have to admit that society has been good to my generation.

I was able to graduate from a good private college with no debt. Four years at Oberlin cost $10,000 -- tuition, room, board, books, fees. Not $10,000 a year -- but for four years.

My wife and I were able to buy our first home when housing was relatively cheap, and we accumulated net worth without lifting a finger, as housing values appreciated.

My employers all provided good health insurance. Though I've had a somewhat unorthodox career, I did not hold multiple jobs because economic circumstances forced me to but because I enjoyed being at the cusp of journalism and academia. Yeah, I've worked hard, but the truth is, I've had a nice generational tailwind.

Why am I telling you this? Not because I expect to retire any time soon. But because, if you are under 40, your generation is getting utterly screwed compared to mine, and you should be in the streets.

The fact that student debt just approached a trillion dollars, that kids without rich parents must begin economic life saddled with college debt, that public universities are no longer free -- none of this has anything to do with changes in the structure of the economy. It all reflects lousy policy.

The bad policy includes Pell grants not keeping up with tuition costs, state legislatures paying for tax cuts by cutting funding for state universities and shifting costs to tuition, private universities marketing themselves like soap and shifting need-based aid to "merit aid" in order to raise their rankings. It stinks.

Sure, housing prices were destined to stop increasing faster than inflation. In that respect, my generation benefited from fortunate timing and dumb luck. But the housing collapse didn't have to happen. That was also the result of bad policy -- in this case the regulators allowing the sub-prime sharks to go nuts at public expense.

The fact that employers have stopped providing good health insurance or good retirement benefits also has nothing to with technology or globalization or any of the other alibis. In a reasonable society, health insurance and decent retirement would be tax-supported and part of the basic package for everyone.

Bad policy reflects bad politics. The great hidden injustice in our society is the set of lead weights being placed on the feet of young adults. Your generation should be in the streets.

The other day, the Urban Institute released a report showing just how far people born after 1952 are falling behind where their parents were at a comparable stage of their lives. According to the report, all of these trends were happening well before the financial collapse of 2008, and the trends were only worsened by the prolonged slump, which has depressed wages and career prospects.

The report was especially satisfying to me because its lead author was Gene Steuerle. Back in 2009, I had the pleasure of debating Steuerle, who at the time was vice president of the Peter G. Peterson Foundation. Steurle, a respected economist, had left the Urban Institute to take the job with Peterson.

Then as now, the Peterson Foundation's party line on generational justice is that our children and grandchildren will suffer lower living standards because of the size of the public debt and the projected deficit in the Social Security trust funds in a decade or two. This is total nonsense. If we use austerity to cut the public debt, that strategy will only slow the rate of economic growth, and future generations will be that much worse off.

The deficit cuts undertaken so far in 2013 -- the more than $100 billion payroll tax increases that were part of the January budget deal, the relatively modest tax increases on the rich, plus the $85 billion in "sequester" spending cuts, will cut economic growth in half this year.

When I debated Gene Steuerle, who is a good economist and an honest man, he seemed distinctly uncomfortable with the Peterson line. The report he just released makes clear that generational injustices have been going on for decades, long before the financial collapse sent deficits skyward.

The worsening economic prospects for the young have everything to do with bad public policies that began three decades ago, and nothing to do with the projected health of Social Security in 2033. If we follow the advice of Peterson and company, there will be even slower growth in the future and even less in the way of public resources to spend on opportunity ladders.

Steuerle must have been uncomfortable with the Peterson line, because he soon left the Peterson Foundation and returned to the Urban Institute where he continues to do important work. But the Big Lie about the federal deficit harming future generations continues to resonate, and Peterson continues to shovel money to an array of front groups of the young, calling for budget austerity in the name of generational justice.

There are plenty of injustices in this country, but they have little to do with old versus young and everything to do with the one percent versus everyone else. You don't have to cut my Social Security benefits to give your generation a decent break.

The secret sauce of my generation was that when I was young, prosperity was widely shared, ladders were plentiful, and tax rates were progressive. If gazillionaires pay their fair share, and we invest adequately in the young, there's no reason why Generations Y and Z can't enjoy the same economic tailwind that my generation did.

That, however, will not just happen. It requires a politics -- and not the politics of young versus old, much less the politics of austerity.

Editor's note: A previous version of this blog post incorrectly referred to the Peterson Institute rather than the Peterson Foundation.

Robert Kuttner is co-editor of The American Prospect and a senior Fellow at Demos.

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