What Should Our Agenda Be? (Economics)

By Mimikatz

Nancy Pelosi has her 100 Days Agenda, but we need to be thinking in terms of shaping the longer term agenda for the next two to four years.  Other than Iraq, the area where we most need to roll back the damage of the Bush years is in the economic sphere.  Max Sawicky proposes five issues for a populist economics, including Trade (least important), Deficit dementia (moderate deficits are better than none), Social Security (there is no problem, let alone a crisis), Health Care (there is no crisis here either, just rising demand for ever-expanding treatments that must be managed fairly) and The Imperial Fed (which has elevcated slow growth and anit-inflationary policies at the expense of labor growth).

To me the biggest issues are global warming and how to turn the tide on increasing income inequality and declining mobility.  On the latter, certainly the minimum wage increase will help, as would repealing any Bush tax cuts that have not yet taken effect (there are several, and they benefit only the wealthy), including freezing the estate tax.  Single-payer or some similar way to provide at least basic health care for all and equalize risk better would also help greatly.  Rising inequality and its effects (along with Iraq), are, it seems to me, the area where the Dems are going to fulfill their mandate and get reelected to run the government for many years, or not and not.

What do you think are the big picture economic issues for the next 2-4 years?

Comments

[Mimikatz]

I'm hoping that other Hurrahs will do similar open thread posts on other areas, like science/medicine, national security and environment.

[smiley]

Dependence on foreign oil as transportation fuel is the root of economic trouble in the US. Until we make meaningful progress towards energy independance, everything else is just window-dressing.

[Redshift]

Does reversing twenty years of anti-union legislation fall under economics? It seems to me that this, along with reversing the rich-get-richer tax policies and race-to-the-bottom trade agreements, are the main legislative ways to address income inequality and wage stagnation.

[John Lopresti]

I thought of a little populist measure. Friedman's passing very recently reminded me of this; during the Reaganomic fiasco several antisocial measures were promulgated, often with the energetic support behind the scenes of the likes of the two new justices on the supreme court of US. The measure which I thought might be fun for Democrats to publicize from the Reagan retrograde epoch is the tax which congress then voted to place on insurance payments to the unemployeed, commonly designated unemployment insurance benefits, or UIB. This is the check which is comprised of three contributions, the largest of which is a payroll deduction from the employee's regular paycheck; the other two sources are federal and state funds; together they constitute the 'unemployment check' which workers receive when off work a long time. To me, this is double taxation, having to pay a tax on taxes you had withheld as doled back to you during the brief months of being off work. This is a microscopic complaint, but represents an injustice that Democrats could repair.
Besides the new permissibility to engage in deficit spending, I think here again the Democrats need to revisit the history of how the zero-sum rule was implemented, in a jawboning session between executive and legislature at a time when Republicans were tarring Democrats as profligate spenders. I have a perhaps inverted personal view of the national budget process; although I eschew personal debit spending in my private monetary affairs, I see a modicum of deficit spending actually as stimulating for the global economy.
I would like the northeast states to be called on the environmental carpet for their bogus pollution credits laws; and if CA takes that route, as its subterfuge inclined governor appears to indicate is his preference, a reinvigorated science forum in the public media would do well to add a pollution-credit trading CA to the list of demienvironmental states. Historically CA leads in air pollution control, and after much histrionic gnashing of other states' teeth in court and in the halls of congress, the nation follows CA's wise leadership and clears its own air. It is interesting that MA has assumed the courtroom leader position in the pollution case just argued at the US supreme court. I am studying those documents avidly.

Bush and some of the leftover IranContra propagators in his current employ are tilting a lot of foreign governments toward socialist versions of government, to counterbalance Bush's neoConist view of the xenophobic universe. I am sure it will seem a placid TX plains environment to him when he is ensconced in retirement on his TX spread, but we have two difficult years ahead buffering his blunders. Congress' revisiting the torture policy will be a large beginning of remediation.

[smiley]

John: Bush is retiring in Paraguay, because Texas won't take him back.

[smiley]

And re: health care- sure there's a crisis. The cost of health insurance has been increasing in double-digit percentages every year for at least the last three or four years. It's a real concern for people trying to start their own small businesses, and it's another example of the widespread and wholesale transfer of weath from peons like you and me to large corporate interests.

I propose a few modest corrections to start with:

• 1. ban all pharma company advertising in all media. I can't tell you how much it upsets me to know that even a single dime of my health insurance payment is going to fund ads for claritin, let alone V|agr4 or some other lifestyle drug. Pharma company prices for drugs should be capped at 10% above the cost of the raw materials that go into a drug's synthesis. Period. The US should have access to pharmaceuticals at the the lowest retail price available anywhere on the globe. Period. The FDA should put discriminatory age and sex limits on pharma sales reps- no hot chicks allowed to pimp drugs to MDs, only overweight men who are 45 years old or older.
• 1.5: ban the pharma lobby. let them fight about the free speech implications in the courts for the next five years- more power to them. Meanwhile they'll have to stay out of Congress while we're fixing their little purple wagons.
• 2. single payer health insurance. Or at least government-imposed caps on prices for most procedures.
• 3. limit access to emergency/extreme/over-the-top care to people actually deserving the help. No liver transplants for alcoholics. No heart bypass surgeries for old fat white men who never exercise and eat cheeseburgers and eggs benedict every day. No life support for drug users who overdose. Medicine shoud stop saving people from their own bad choices and focus on helping people who are suffering through no fault of their own.
• 4. aggressive audits of fraud and waste at "non-profit" insurers and providers. Kaiser Permanente, I'm looking right at you, you bunch of slack-jawed neanderthal incompetant @&#(@*#(@s. Kaiser could fire 60% of the admin staff they have right now and deliver BETTER care as a result. There are managers working there now who aren't qualified to tie their own shoes, let alone make decisions that affect the lives of 8 million Americans.

The important thing here is that wholesale change to the system is required- you can't have universal insurance without lowering prices. You can't lower prices while Pfizer is buying 30-second ads during primetime on all the major networks. Increasing Medicare funding is treating the symptom, not the disease.

[windje]

In addition to energy independence, the mandatory public financing of elections will reduce the influence of the lobbyists.

Far less expensive for the taxpayers to directly finance elections than the current cycle of lobbyist special interest pay to play indirect financing of elections.

[Mimikatz]

Max Sawicky's point about deficits isn't that "deficits don't matter" a la Cheney, but that most of the policy effects of going off deficit spending will be felt by those least able to handle it, because it will (as the GOP did) be used as an excuse to cut programs for the poor and middle class, and anyway it is no longer possible, without very drastic measures on the revenue side. We need prudent spending and some reversals of the gap-widening Bush tax cuts.

I disagree with him on the health care issue, in that it is certainly a crisis, or one step from a crisis, for people who work for employers who don't provide either health care or high enough wages for their workers to afford to buy it, but who don't qualify for Medicaid. It is also a problem for anyone who doesn't have a Kaiser-type plan (and even with them sometimes) to get emergency care in many communities.

I also think we need to have a full and frank discussion of end-of-life care, so that people understand the wisdom of at some point letting nature take its course and, concomitantly, just how agonizing and invasive some "routine" emergency measures are. I personally oppose heroic measures for people who aren't going to live much longer in any event, but it is not a choice I want to make for anyone else (but my immediate family members, with their permission) or want hospitals making as an economic decision.

[freepatriot]

off topic

libby news

Ruling on intelligence keeps CIA leak trial on track

hopefully emptywheel and Jeff are already writing about this new ruling

[lizard]

RAISE MY TAXES and everybody else's. Get money flowing into state and federal governments to begin to repair the educational disaster that looms, invest in the crumbling infrastructure neglected these past ... what, 30 years? Since Reagan, anyway (damn, I am old). The military is broken, and as much as I would love to say that we dont really need to dump money into the armed forces, we desperately do. Give me a steeply progressive tax structure wherein those who derive the most benefit from our society (the absurdly rich) pay for much more of it than they do now. I realize this will have the popularity of farts in elevators and laughter during funerals, but what the hell.

[notjonathon]

The low inflation you describe does not look low to one who has lived in Japan for the past fifteen years and has seen the changes in US prices over that period. With the exception of the Lands End Squall Jacket, inflation since the late nineties has been dramatic. From the housing bubble to produce prices, the US is no longer a cheap place to live compared to Japan. In that sense, the Fed policies have been a sham. Low inflation has been achieved more by manipulating price indices than by monetary policy.

More generally, what needs to be done is to make the US a nation where it is no crime not to be rich. A robust healthcare system, aid for inner city development and a reduced US military presence around the world are starters. Money needs to be redirected to education, microeconomic investment and scientific research.

In addition to the military-industrial complex, the other industry that must be dismantled is the drug-police-"justice" complex. The California prison guard union opposes reduction of the inmate population, and the DEA opposes drug reform, for example. The US has officially become the cruelest nation on earth in its treatment of people convicted of crimes. We need more lenient sentencing of non-violent crimes, of course, but even more, we need to decriminalize a great deal of private behavior, in particular, drug use.

[notjonathon]

I forgot to add development of green industry. This applies both to existing industry, which must be made more energy efficient, and to the development of new industries dedicated to reducing the human footprint (carbon reduction and heat-neutral power production). This is an area of potential economic growth that does not ignore economic burdens on the environment.

[emptypockets]

For populist economics, go after predatory lenders & corruption in the credit industry. Fix bankruptcy too.

[knut wicksell]

Nothing serious is going to happen in this round, except for raising the minimum wage. The Democratic play is to heat up the fire for Universal Health Care and the tax raise required to fund it. That tax raise needs to be focused on the rich, who though they complain they pay more than their share of the income tax also get more than their rightful share to national income. Their share of the tax doesn't come close to their share of GDP.

This session should be an agenda setting exercise. It is hopeless to expect anything to get pass Bush, and it would bust the base to settle for less than we can get in 2008. This session should be devoted to public education on the subject of national priorities and the budget.

[Vadranor]

Smiley,

It really is not necessary to ban things such as pharma advertising. All the one has to do is to disallow spending for such matters as a deductible business expense. I do not believe that this would raise First Amendment issues.

[kim]

Cut Medicare, boost social Security, reverse tax cuts for the rich, cut taxes for the rest, reduce corporate tax breaks, reduce subsidies for rich farmers, boost Medicaid, stop hiding Iraq war costs, start selling war bond to pay for this silly war, raise the minimunm wage, freeze salaries for the do-nothing Congress; ok here's some radical stuff - raise taxes on lobbyists, a mandatory tax on no-bid government contracts, raise taxes on stock option sales, raise sin taxes (alcohol, gambling, tobacco, maybe something special for Nevada too), raise taxes on luxury good like diamond and Ferraris, eh... blah blah blah... all the usual liberal stuff that no one gets around to doing.

[ab initio]

On the economics front the country has to solve the long term macro problem of mismatch between production and consumption. With the evisceration of our manufacturing base, we have lost the productive capacity of the vast middle class. Flipping burgers is no substitute for making stuff. Shipping factories off to China with no investment making the next generation or higher valued stuff is devastating the future. The other side of the coin is consumption has grown on a sea of debt. Consumer debt 15 years ago was around $3 trillion now its over $12 trillion. Mortgage equity withdrawal with a booming housing market enabled robust consumption growth in an environment of stagnant wage growth. This is a train wreck waiting to happen with $trillions in unfunded liabilities in social security, medicare, pension guaranty and implicit guarantee of the financial system. We are now completely dependent on our strategic competitors to finance our profligate lifestyle. We are trading away the seed corn accumulated by previous generations and leaving the next generations with obligations they may not be able to meet. We have turned an economy based on savings, investment, innovation, the best infrastructure and rising productivity that benefited a growing middle class with an exceptional standard of living into a finance-based economy of speculation, debt-based consumption, negative savings, stagnant income growth for the middle class and enormous concentration of wealth.

If the Democrats want to be the party of the next renaissance of the American economy they need to call it like it is. The obfuscation of our economic realities mean that we cannot take the tough choices to rebuild the seed corn. Fundamentally, that means bringing our consumption in line with our real incomes, building up our savings and using that to invest in our infrastructure and productive capacities and strengthening middle class balance sheets. Policies need to be debated and enacted with a 50 year perspective not just the next quarters earnings report or the next election cycle. We need to get back to old fashioned virtues of thrift and industriousness. The spirit of JFK's call to the nation to land a man on the moon is what is needed - a call to rebuild a hollowed out economy!

[Dismayed]

Carbon emissions is the most serious issue in the history of mankind. This country must have a massive effort to reduce carbon emissions. We must attack the problem from every conceivable direction. Tremendous push for mass transit, immediate increase in fuel efficiency standards, banning the incandescent light bulb, a Manhattan project for renewable energy, and perhaps even more nuclear power. We have to make decisions scientifically instead of politically.

But under that I agree with most of the items you guys have posted. We have to get our economic house in order, screw that war, get back to ensuring a basic level of services for all Americans. Basically, start undoing everything that the Cheney administration has done ASAP.

Interestingly, I really think that almost all of our problems would quickly start moving in the right direction if we could get the corporate money out of the political system. Corporate America is running this country. Someone once said to me. "If you can't vote, you must not be allowed to give money." That works for me. We must wrestle our nation back from the corporations.

[GREYDOG]

1. STOP THE GENOCIDE IN IRAQ
A. cut off funding for the war
B. make war profiteering a capital offense

2. REPEAL:
A. THE PATRIOT ACT
B. MILITARY COMMISSION ACT
C. TERRORIST SURVEILLANCE ACT
D. 850 SIGNING STATEMENTS and
E. ALL anti-constitutional laws instituted by this criminal administration.

3. IMPEACHMENT

4. RESTORE THE FAIRNESS DOCTRINE

5. NET NEUTRALITY

6. ELECTION REFORM
A. PAPER BALLOTS HAND COUNTED...END OF STORY

7. AID TO NEW ORLEANS

[Sara]

Good News on the Alternative Energy side of things.

It turns out that a mixture of 12 kinds of native Prairie Grasses and flowering plants, all of which are perannuals, and can be harvested twice a season, make an exceptional bio-fuel in a process that uses yeasts to accomplish the conversion of the raw product.

Big Oil has been making the argument that such a system would take too much land out of crop production. Not so. Some calculations were made regarding the acreage dedicated to medium strips and verges on the Interstates, plus sandy land not suitable for crops, but previously part of the great prairie -- and it is more than sufficent. Moreover, the process is Carbon negative, the root systems collect and store carbon and act as a sink. Apparently existing hay making farm machinery plus bailers is all that is needed to harvest, and the process can be scaled so transport costs of raw material can be kept low. Residue can be used as totally organic soil supplements. The only patent is on the Yeast.

To say the least, Big Oil is having a cat fit on this one. And yes, with essentially a tune-up, existing cars can use this fuel, as can farm machinery. Miles per gallon about the same as today.

What's needed is an economic strategy to bring this sort of possibility into mass production and consumption. I suspect this begins with a carbon tax on all energy sources, with strategies to use the revenue to build out all the alternative systems, and to finance additional research and development. A Carbon tax not only would be environmentally useful, it would create a preference for fuels that are Carbon negative or at least neutral. It would disadvantage coal and oil, advantage bio-fuels of this sort. Research regarding similar "crops" for other regions of the country needs to be undertaken.

I've just about finished reading a fascinating biography I want to recommend. David Cannadine's "Mellon: An American Life." Cannadine is British, an interesting historian of Social Class, the first of his books I read was about the demise of the Titled British -- then a fascinating non-biography of Churchill that looks at his class as it applied to politics and beliefs, and less at his more familiar leadership role -- and finally the most understated joke I have ever read, Ornamentalism -- an analysis of the British Compulsion to dress up. Now he is living and working in the US, so this bio of Andrew Mellon is a slice into Class American Style, from the early 19th Century actually in some ways, right up into the Bush Administration. He tracks the Mellon Family from a thatched hut in Northern Ireland to Western PA. First generation were all farmers, then Thomas Mellon, alone in his family found his way to a classical and then a legal education, and then into the world of Finance just as Pittsburgh was taking off in the mid 19th century. Two of his sons essentially became Billionaires by the early 1920's. They did everything -- Coal Mines, Coke Ovens, Streetcars, Railroads, founded banks, merged banks, forced other banks out of business, Founded Alcoa, Gulf Oil, Made Whiskey, Financed Steel Mills, built Railway cars -- you name it, if there was any profit in it they took a position. Andrew Mellon then in 1920 became Secretary of the Treasury to Harding, Coolidge and Hoover -- and then when the depression got too deep, they packed him off to the Court of St. James for the last year of Hoover's term. Mellon probably would be the archtype political appointee Bush and Rove would love -- he too thought the greatest era in American History was the McKinley Administration. During the 20's Mellon's objective was to go back to McKinley -- a set of policies that certainly deepened the Great Depression. The last chapters deal with the case against Mellon in the Tax Court of FDR's first term (one of those malifactors of great wealth that FDR wanted to use to set an example) but it ends with Mellon going to FDR and essentially begging him to accept about 30 million dollars to finance building the National Gallery, and accept an equal value in Mellon's Painting Collection. (Mellon secretly dealt with Stalin to buy out the best of the Czar's collection in the Hermitage so Stalin could finance the first Five Year Plan.) I wish Mellon had been more interested in the 19th century French Impressionists on the top floor of the Hermitage that the Soviets only showed to foreign visitors. Mellon died about six months after FDR finally accepted the National Gallery.

One reason I wanted to read this thick bio was because I felt sure it would give me detail about Richard Mellon Scaife, the guy who financed all the shit they threw at Clinton, plus Heritage, the American Spectator, Paula Jones and all the rest. Well nothing. He isn't even in the Index. But his Granddaddy and Father are there, and in the family diagram Scaife is represented by an arrow and a blank. Andrew Mellon and Dick Mellon (Scaife's grandpappy), were life-long business partners, with almost everything shared equally. As of 1920, when Mellon went into Government, his means of getting rid of "conflict of Interest" was simply to transfer everything to Dick Mellon, and then take it back with all the profits when he finally left. What a sham. Anyhow, what I suspect is that Scaife sent an army of Lawyers around and threatened big time Ken Starr like attractions if he was ever mentioned in the book. It is precisely as if Cannadine took an exacto knife to his text, and except for the arrow showing that Sarah and Scaife had unnamed issue -- everything else was cut out. So by indirection the whole book serves the point of a history of the background to Scaife, even though he doesn't peep in the text. The book was done with the active assistance of Paul Mellon -- son of Andrew, who died in the late 1990's, and left about 90 million to the National Gallery. (and that's after he helped finance the Pei addition.)

I was tired of reading the details of Bush's sins. I needed a bigger picture, and this book intrigued me, including the stuff that isn't there. Moore's book, the Architect, dealt with Rove's (and by indirection Bush's) McKinley worship and the idea that Harding-Coolidge and Hoover were a kind of restoration after the horrars of TR, Taft and Wilson. And then everything fell apart, and FDR emerged to do a counter restoration, the Progressive side of TR, with the political tactics that made Mellon grovel to get his art and money accepted. FDR invited Mellon to tea on December 31, 1936 (just after he won 46 states) and he was charming and indicated an interest in the gift to the US. But FDR was also very much tied to the clock, and I notice that the tea ended (FDR hated Tea) just before the daily Cocktail Hour in the Oval Office. No business, just gossip. I wonder if there is a record of that particular Cocktail hour. Hopkins diaries do not record it, Ickes apparently was not present. But I can imagine FDR doing the storytelling (while he mixed the drinks) about how he had just acquired 30 million for the aesthetic betterment of the Human Race, and for a place to hang all Stalin's rejected bourgeois art from one of those malifactors of great wealth who just begged him to take it. He would have laughed, thrown the head back, and lighted up his cigarette in the long holder.

Maybe we can find a candidate who can do something similarly ironic to this crew.

[smiley]

vadranor: disallow spending for [pharma advertising] as a deductible business expense. I do not believe that this would raise First Amendment issues.

it's not deductible now. It's sales expenditures, a cost of doing business. And the pharmacos are perfectly happy to pass that cost on to you and me... we're consumers, not customers. The prescribing MD's are customers.

[readerOfTeaLeaves]

Integrate carbon calculations into market pricing -- internationally. Nature does it constantly, and our failure to recognize this elementary fact has put our human 'market system' at odds with the biological conditions in which we breath, drink, grow food, travel, etc. Global warming can't be addressed without integrating 'carbon costs' into our market systems.

Health care and pay equity are important, as is the tax code; however, nothing matters if it's not biologically viable. Carbon pricing mechanisms are probably the single most critical thing we need to do. (Neither Bu$hCo, nor Straw Wise Men, will be capable of this, BTW.)

In order to remain biologically viable, we must address carbon issues and global warming. I don't say that to be a scold, but rather as a pragmatist. Without attention to carbon issues -- which is at the core of all biological systems -- all else is window dressing.

Because most of the world operates on the basis of market systems, the primary policy challenge of the coming year is to integrate carbon calculations into our market pricing structures. Once we do that, many other factors will fall into place.

Areas of emphasis on the short term need to be:
1. Market integration of carbon calculations into pricing mechanisms and pricing systems.
2. Land use and urban planning (including road design for better pedestrian, bike, and minibike transport, but also to bring commercial, shopping, medical, and housing activities into a 'hub' rather than a sprawl pattern).
3. More emphasis on farmland protections and local agriculture initiatives close to urban centers and cities.

After those are addressed, some of the medical issues and educational issues are somewhat simplified. If the three items above were addressed, there would be economic and social ramifications (primarily lower-cost living in less anonymous developments) that would move us toward safer, more sustainable communities.

Current laws and market pricing favor sprawl; this must change quickly. I hate to say it, but the 30-year mortgage needs to integrate factors like housing energy costs, transportation costs, and 'carbon costs' associated with lifestyle decisions. Without altering the assumptions on which that 30-year mortgage is based, we'll continue to have huge social and economic problems.

Today in the US, huge amounts of equity have been drawn out of mortgages; this has been used to prop up a lifestyle we really can't afford. But much of that lifestyle is based on sprawl; the subdivision builders are as implicated in global warming and the Iraq mess as are the oil companies. Until pricing mechanisms force changes to the decision making processes of millions of individuals, we'll continue to live in an increasingly dangerous world.

People tend to make wise choices if the structure allows them to do so; currently, it favors sprawl, obesity, big box retail... all of which has led us to Iraq and other misadventures.

[Paul Lyon]

There are lots of good suggestions here, but I rather fear that most of them have a snowball's chance in hell of getting passed and signed into law. Even if the D's can keep holy jumpin' Joe and other conservative Democrats in the Senate on board, I suspect the GWB will veto much of what has been suggested (such as reversing his tax cuts for the haves and have mores). It will take all of his economic chickens coming home to roost, at the expense of the lower 80% of the income distribution, before we are like to get serious action.

[Jim Campbell]

Collapse of the consumer debt bubble is a big upcoming economic hazard. Banks have written trillions of dollars in high-risk mortgages under loose lending standards, then sold those mortgages to Fannie Mae and Freddie Mac, which have then sold them to investors as ordinary mortgage bonds. A dangerous percentage of current homeowners can't actually afford their houses for the long term, and since the recent bankruptcy reforms no longer allow consumers to easily stiff their credit card companies, lots of homeowners and their former lenders will be putting houses on the market. Unfortunately, these days the *typical* household would have trouble weathering a serious real estate downturn. Next year, about one-seventh of the total outstanding home mortgage principal in the U.S. switches to an adjustable rate for the first time. A disturbingly large percentage of those homeowners have been on interest-only or "option" payments up to now. I suspect that the next few years will see a painful transition to a more realistic level of spending throughout the U.S. economy, along with all the market stagnation, currency trouble and job losses that will imply. So far, it seems the only large organizations that have taken corrective action at the federal level are the credit card companies; they will definitely be getting paid no matter what happens.