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Julianne Malveaux

We Can't Extend the Bush Tax Cuts

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(NNPA) - It took three months and a stern presidential scolding for the United States Senate to pass legislation that would extend unemployment insurance for more than 2.5 million Americans who have been out of work for a long time.

Why did the senate drag its feet? We couldn’t afford the $33 billion legislation, they said. We could afford a bank bailout, but not money for the unemployed? Many feel the legislation that finally passed on July xx will not do enough for the unemployed. It provides dollars for some, but what is really needed is a public works program, some real job creation.

I can already hear the deficit hawks posturing that we can’t afford it. At the same time, most Republican Senators are pushing to extend the Bush tax cuts, those cuts that in 2001 and 2003 contributed mightily to the existing deficit. Let’s not forget that when President George W. Bush came into office, the Clinton Administration had produced three years worth of surpluses, handing a healthy treasury over to Mr. Bush.

In contrast, Mr. Bush had deficits in seven of his eight years in office. While Republicans love to talk about shrinking the size of government and wasteful government programs, the Bush tax cuts are responsible for nearly half of the existing deficit, according to the Center for budget and Policy Priorities.

Now the Bush tax cuts are set to expire. Allowing them to lapse would put nearly $700 billion into the treasury. That’s enough to fund a jobs program or two, and enough to trim the existing deficit, as well. But the conservative mantra on finance is that if you repeat something often enough, it must be true. Some Republicans have said, “wasteful government spending” so much that Democrats who ought to know better have begun to believe it.

The House of Representatives have recessed for six weeks, and the Senate is likely to recess after taking action on legislation that would extend the Bush tax cuts. This sets legislators up, scant months before the 2010 election, to have a conversation about the economic direction of our country. The problem with the conversation is that it is being conducted in sound bites instead of analysis, with the assertion that deficits are bad dominating the conversation. Modest deficits have long been used effectively to foster economic growth and stability.

Republicans are drawing a political, not an economic, line in the sand, and Democrats, frightened of being labeled “tax and spend” are going along with them.

Even former Federal Reserve Board Chairman Alan Greenspan agrees that letting the Bush tax cuts expire would not harm the economy. Most of those cuts went to people at the top of the income distribution, people who save, not spend, their money. If the cuts had been focused at the bottom end of the income distribution, letting them expire might cause more hardships on people who have already been hurt by our sluggish economy. But if the tax cuts had been focused on the bottom end of the income distribution, they would not have been Bush tax cuts. We are still paying the price for the tax cuts for the wealthy that Mr. Bush pushed a decade ago.

Allowing the Bush tax cuts to expire is an act of fiscal responsibility. In some ways, letting these cuts expires pumps needed dollars into our economy, both for existing programs and for deficit reductions. Those deficit hawks that say they want to reduce the deficit have an opportunity to do so, but their fealty to the flawed policies of the Bush Administration, and their desire to pick a midterm election political fight prevent them from acting responsibly.

So, among its other questionable actions, the Senate proposed cutting food stamps to pay for Medicare and teacher jobs. Senator Harry Reid (D-NV) in a tight re-election race, has too often embraced the Republican “pay go” argument to the detriment of the least and left out. For Democrats to allow Bush tax cuts to extend amounts to another capitulation. We need Democrats to show some backbone, and for Bush tax cuts, a bad idea when they were implemented in 2001 and 2003 to simply go away.

Dr. Julianne Malveaux is an economist and president of Bennett College for Women in Greensboro, North Carolina.

Who Should Really Be Drug Tested?

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(NNPA) - Utah Senator Orrin Hatch has a proposal for the unemployed. He wants them drug tested before they can receive unemployment benefits. Hilarious! With unemployment rates at 9,7 percent, with nearly six million Americans out of work for at least six months, with more than a million people without support since their unemployment benefits have run out, Hatch proposes drug testing for unemployed people.

He and some of his colleagues are actually the ones who need drug testing. How could the Senate, by a vote of 57-42, prevent legislation that would have provided an unemployment benefit extension from moving forward? What could they possibly have been thinking? Senator John Kerry (D-Ma) described the action as “One of the worst moments I’ve seen in 25 years in the United States Senate. In time of economic trouble, our country expects Democrats and Republican s to pull together.” This is politics at its absolute worst, with Republicans unifying to cut the unemployed off at the kneecaps. Meanwhile, Hatch wants drug testing. Given this vote on the unemployment benefit extension, perhaps Senator Hatch and the 42 might want to demonstrate that they were not impaired when they took their vote.

Labor Secretary Hilda Solis was among the many blasting the Republicans for playing games with people’s survival. In Denver last week, she told Latino elected officials that the loss of unemployment benefits for more than 200,000 people a week would be “devastating”. Some Republican Senators say the bill was too costly, and loaded up with too many amendments to pass. But debate on this legislation has lasted for more than two months – the House of Representatives voted for unemployment benefit extensions back in March. The tab on this bill is $18 billion, which is not chump change but it is certainly just a fraction of the $700 billion bank bailout, and just half of the money we just sent to support our effort in Afghanistan.

Unfortunately, the Republican Senators are taking their cues from those who are demonizing the unemployed. Writing for the US Chronicle, Stephanie Lee reported that online hostility toward the unemployed is notable, with those who need help being called “whiners” and “pathetic”. Some companies looking for workers indicate that they will not consider people who are unemployed, no matter what the reason. (Now that is fascinating logic – who needs work more than the unemployed?).

And in my own review of online responses to the failure of HR4213 in the Senate, I’ve found posts that describe the unemployed as “losers” and “lazy". AT the same time, many of our unemployed brothers and sisters have posted poignant accounts of what their lives are like after they have lost their job, of making choices to feed children or spend money on transportation for job search, of adjusting expectations downward, of applying for positions for which they are overqualified, only to be rejected because they are overqualified. And Orrin Hatch wants to impose drug testing. When the United States Senate turns its backs on unemployed citizens to play partisan games who should really be drug tested?

The Toronto meeting of the G20 actually worsens prospects for the unemployed. Despite opposition by the United States, the G20 made a nonbinding pledge to halve budget deficits by 2013 and to balance budgets by 2016. Germany, which boasts a budget surplus, has argued that deficits in other countries are destabilizing. Yet government spending in many countries has provided a way out of the current economic slump.

President Obama has cautioned that imposing austerity measures too soon may hinder world economic recovery. World deficit hawks prevailed, though, and France is now likely to announce deficit cuts in the next week or so, possibly planning to reduce tax breaks that had already been scheduled. In Spain, workers are protesting wage cuts with a three-day strike on Madrid’s underground rail system. As in the United States, deficit hawks seek to balance budgets on the backs of workers.

Because the G20 accord is nonbinding, it has not legislative impact in the United States. At the same time, our own deficit hawks will use the G20 agreement as a way to buttress their own attempts to spend less. The victims, of course, are those unemployed people who need benefit extensions. Our casual acceptance of high rates of unemployment and the human toll this unemployment is repugnant.

There is the possibility that the Senate will reconsider the unemployment extension, perhaps passing it as a stand-alone bill, but they made no commitment after last Thursday’s vote. If unemployed people would share their ire with the Senate, perhaps these folks would understand. For the moment, though, they have thumbed their noses at the nation’s unemployed. In doing so, they’ve made it clear who really needs drug testing.

Julianne Malveaux is president of Bennett College for Women in Greensboro, N.C.

Connecting the Dots: Appreciating Rev. Jackson

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(NNPA) Rev. Jesse Louis Jackson, Sr. has been an advocate since his high school freshman days when he, among the Greenville Eight, protested segregated library practices. As a student at North Carolina A&T State University, he was part of the actions to integrate the city, involved with the phenomenal Bennett Belles who were the backbone of that movement.

As an aide to Dr. Martin Luther King, Jr., he was the onion who raised hell, caused trouble, and moved the economic justice agenda. As a Presidential candidate in 1984, he was the man who stood firmly in the constitution, asserting his right to run.

In 1988, he cleared hurdles as a candidate, earning majority votes from states where African Americans were a minority. He has made history.

To be sure, Rev. Jackson’s climb has not always been smooth.

There have been missteps, foibles, and unfortunate words. Rev. Jackson is human, as we all are. In 1984, as part of his remarks at the San Francisco Democratic Convention he declared, “God is not finished with me yet.” A seasoned citizenleader, and still a work in progress; he prevails, with courage and confidence, in ways that inspire us all.

I am writing after spending some days last week during the Rainbow/PUSH annual conference, after some days of reflection on the ways that Rev. Jackson and his team connected the dots in the deliberate erosion of our public space, of the public sector, whether it is in education, civil rights, BP cleanup, or other matters. It is interesting to watch Rev. Jackson thread the needle and put all of the work together, gathering leaders who are interested in disparate issues, connecting their work into an overarching theme.

One of the best sessions that I participated in was keynoted by Diane Ravitch, the former Assistant Secretary of Education to Lamar Alexander between 1991 and 1993. She was associated with the federal effort to promote academic standards, but now she says she had no clue that her efforts would lead to the relentless testing and absurdity connect with “No Child Left Behind”. Ravitch was masterful as she discussed the many ways so-called education advocates are really about dismantling federal involvement in education. And we know that there are advocates that simply want to shrink government and let the “market” work.

Here’s how the market works. BP spews a million barrels of oil onto the Gulf of Mexico because our nation has not appropriately regulated them. They’ve had more than 700 safety complaints in just three years, compared to Exxon Mobil’s one.

Republicans and Blue Dog Democrats have been anti-regulation, hoping that markets work. But they haven’t. They’ve set up this tragedy.

The brilliance of the Rev. Jesse Jackson is that he connected failure in the Gulf of Mexico with failure in our nation’s schools. In other words, the whole notion that regulation, that government intervention is bad, is being challenged.

There is no magic dust in free market charter schools any more than there is magic dust in free polluting rules for international oil polluters. Rev. Jackson connects the dots because he is able to see the big picture, the writing on the wall, the work that must be done.

Those who retreat from federal intervention into markets expect things to resolve themselves magically. Yet, last week, the United States Senate rejected legislation that would extend unemployment insurance payment to those who do not have work.

They say that they are interested in a “pay as you go” system, a system they had not figured out when they decided to just give banks $700 billion. Now, a modest bill that would spend about $25 billion for jobs and unemployment insurance has failed. The House of Representatives did their work months ago, but the senate has decided that they have no constituents or caring. Instead, they want to lean on this notion of short-term pay as you go, not long-term economic sustainability.

When we invest in workers, we invest in a stable workforce. We invest in long-term tax payments. We invest in workers who invest in community. To be sure, we spend some short-term money. That’s the nature of economic recovery. Instead of half-stepping, why not revive a Work Progress Administration, a real jobs plan. Why not engage young people, who face an unemployment rate that flirts at 40 percent, in infrastructure repair? Why not open libraries for more hours? Why not revive, not reject the public sector?

At his conference, Rev. Jesse Jackson was always ready to connect the dots between attacks on the public sector and the diminishment of our quality of life.

Conference attendance confirmed his perspective.

Who can attract Gulf fishermen, a former assistant Secretary of Education, several Congressional Representatives, Senator Roland Burris, and others, and then tell a coherent story about why they are all gathered? Rev. Jesse Jackson began connecting dots when, as one of the Greenville Eight, he chafed at waiting for six days to get library books from the “white” library. Today he reminds us that we still have work to do, and we applaud him for his fealty and tenacity.

Julianne Malveaux is president of Bennett College for Women and also President of the PUSH/Excel Board of Directors.

Our Jobless Recovery

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(NNPA) Our economy generated about 431,000 jobs last month. Good news? Only if you don’t count the fact that more than 400,000 of the jobs were temporary jobs connected to collecting data for the Census. Those jobs won’t last for long and when the dust clears the current 9.7 percent unemployment rate, down from 9.9 percent a month ago, is likely to rise again.

Still, those who are desperate for good news are clinging to the fact that there are more jobs out there.

What they don’t understand is that people are looking for something more than a few months of work here and there. Nearly seven million Americans have been out of work for more than half a year. What has this done to their finances?

Of course the situation is worse for African-Americans, even though Black unemployment dropped from 16.5 to 15.5 percent last month. The 15.5 percent is a modest estimate of what is really happening.

The U6 number in the Bureau of Labor Statistics Employment Situation report includes discouraged workers, those working part time that really want full time work and others peripherally connected to the labor market. That number dropped last month from 17.1 to 16.6 percent for the overall population. While the BLS does not report the number for African Americans, using the same relationships, the African-American U6 number is at least 25.6 percent. That means that one in four African Americans is jobless!

This jobless recovery means that some economists are willing and able to have conversations about the way the economy is turning around, even as only a few people feel the impact of the turnaround? Some of the numbers do look good, but the numbers that matter – the unemployment rate numbers, are stuck. How can the economy recover without generating jobs and what does this mean in the long run? We should all be apprehensive about public policy that does not embrace job creation, because at the basis of economic viability is an individual’s ability to earn and spend.

Without jobs, that just won’t happen.

As an economist, my focus on the labor market is usually about work and pay.

Several experiences in the last few months have forced me to focus, also, on the human consequences of high unemployment, including the mental health consequences of being jobless in a culture that says that what you do is who you are. I met a woman who had been downsized from her job at 61.

She told me, despondently, that she would probably never work again because of her age. Her aura was one of someone battered and lifeless. She asked me, a stranger, why her company could have done that to her. Part of me wanted to ask if she ever read the headlines. Part of me wanted to give her a hug.

A young White man who is a 2009 graduate of a prestigious college delivered my room service, just a few days ago. Personable and positive, he shared, as we talked, that he worked about 20 hours a week at the hotel. His major is communications, but after sending out more than 100 resumes and tapes, he has no jobs offers.

So he is waiting tables, delivering room service, keeping his chin up, and quietly dying. He said he could hardly bear to look at his dad, a man who had invested in his education. “I’m still living at home,” he told me. “I should be out doing things.”

This crisis knows no race or gender, but African-Americans are being hit harder than most. Public policy has to address this. It is unconsciounable that we should talk economic recovery while people are not working, while people are suffering. And we have to consider the many ways our society pains because of joblessness. There is a malaise that has infected our society because of this high unemployment. Our mental and emotional health has been affected by this unemployment. And we are all to quiet about it because we don’t know what to do next. Here is what we must do – we must push our legislators to address high unemployment. And we must protect the long term unemployed by extending their long-term benefits. A jobless recovery is no recovery, but instead it is a joke.

Julianne Malveaux is president of Bennett College for Women.

Financial Reform – The Devil's in the Details

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(NNPA) - Late last week, the United States Senate passed a financial reform bill by a vote of 59-39. Two Democrats crossed party lines, as did four Republicans to come up with the result. Now, the House, which has already passed financial reform legislation, and the Senate, will have to reconcile their versions of the bill.

Now is the time for consumer advocates and others to counter the aggressive lobbying that will be done by banks and the auto industry to minimize the effects of legislation. This may also be an opportunity for the Congressional Black Caucus to raise its voice on the side of the many consumers who have been damaged by this financial crisis. While legislation is not meant to look backwards, but instead forward to prevent future crises, the CBC are among those who advocate for the least and the left out. Their perspective on financial regulation is badly needed.

The House would create a consumer protection agency that is freestanding; the Senate would house the agency inside the Federal Reserve Bank. In some ways having the Fed run consumer protection is like having the fox patrol the chicken coop. Isn’t this the same Fed that was part and parcel of the 2008 financial meltdown, the same Fed (then led by Alan Greenspan) that turned a blind eye to predatory and sub-prime lending and the market distortions that emerged from the packaging of substandard loan paper?

The Federal Reserve theoretically already deals with regulation around credit cards and mortgages and to date they’ve not done a good job. What will change when they now have a consumer protection agency? Hearings, anyone?

The House would exempt auto dealers from regulation, but the Senate would not. Why should auto dealers get a special break? Some say that we need people to buy autos to stimulate economic recovery. Shouldn’t they buy autos on fair terms? The lobbyists are lining up to make the case for auto dealers, but who is lining up for consumers?

This financial regulation reform makes it clear that the people have little power to affect legislation when lobbyists are involved. Too many are so happy that this financial reform legislation has been passed in both houses that they won’t look closely at the details or at reconciliation.

If we looked closely enough we might find that payday lenders, you know those folks who charge interest rates that veer into the triple digits, were able to stop a proposed provision of financial reform that would limit the number of payday loans (so called because you are borrowing against your paycheck) one individual could get.

The payday loan industry ran an astroturf campaign to stop a provision North Carolina Senator Kay Hagan introduced to limit payday loans to six (!) at a time. Consumers are worse off because the Hagan provisions were not included in the legislation.

Indeed, the final version of this legislation may be ready by the end of June. The House and the Senate aren’t too far apart on their provisions, which makes reconciliation easy. But neither the House nor the Senate has gone far enough in regulating derivatives, though both require derivatives to be traded publicly, and to be collateralized. This will stop the speculative nature of derivates, except for the fact that the House provides lots of exemptions to derivative clearinghouse rules. Washington Senator Maria Cantwell (D) opposed Senate legislation because she said it had too many loopholes for derivative trading.

Banks got off easy in this legislation. They are still allowed to do proprietary trading, or to speculate with their own money. But their money is really shareholder money, so who protects the shareholder? Indeed, banking lobbies are likely to tweak the compromise legislation so that financial reform regulations are less onerous to banks. Yet less onerous regulation is what caused the financial services industry to seek a $700 billion bailout from the federal government.

Congress will be rushing to get back to their districts this summer, what with contentious mid-term elections to deal with in November. We can’t let their haste weaken legislation that is already far from ideal. Most Republicans have opposed financial reform regulations on the grounds that this legislation simply expands the role of government and increases the size of the bureaucracy. The Obama Administration will have to take a forceful role in ensuring that the haste to pass financial reform regulations does not gloss over important details.

And, most importantly, consumer protection must be a cornerstone of this legislation. Both the House and Senate bills are a step in the right direction. Still, the devil is really in the details on financial reform legislation, and negotiations that take place in this next month will be critical to the success of meaningful financial reform.

 

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