On Wisconsin

Everyone is saying the same thing about the stock market crash yesterday (Thursday, August 4): job creation, not deficit reduction, is what we need right now. So I won’t bother saying again, but will discuss something more important instead: the Wisconsin recall elections in six State Senate districts next Tuesday, August 9.

The recalls grew out of the storm of protest last winter against Republican Governor Scott Walker’s bill to strip state workers’ unions of collective bargaining power. As you probably remember, all the Democratic state senators left the state to prevent the bill from passing, but eventually it did. In the meantime, however,  there were massive protest demonstrations in Madison, in and around the state Capitol, for weeks.

The anger against Walker and the Wisconsin Republican party lead to campaigns to recall Republican state senators. In Wisconsin, you can only recall a political office-holder who has been in office for one year, so recall petitions were filed against all six Republicans who had been in the Senate for longer than that. The Republicans filed petitions against 3 Democratic senators, as well. The first won reelection in July, the other two will be coming up next week. Wisconsin recalls are basically a special election between the incumbent and the nominee of the other party. If 3 of the 6 Republicans are defeated on the 9th, and the 2 Democrats hold onto their seats, the Democrats will take control of the Senate, and be able to block the right-wing legislation that Walker and the Republicans have been pushing through. They won’t be able to repeal anything, but they will also build momentum toward the next election, and toward an anticipated campaign to recall Governor Walker next January.

Why is this so important? First, obviously, it will show that progressive forces can win, and perhaps suggest that the right-wing tide that rose with the Tea Party is now turning. That will not only change things in Wisconsin, but also give progressive politicians everywhere the courage to be more assertive in advancing their policies, rather than sticking to a defensive position.

But beyond that, it is about unions. Unions do far more than improving the lives of their members – although they certainly do that. They are also the most important institutional support for progressive politics. Unions have been declining in strength, and even in legal rights, for the last few decades, a trend that accelerated with the Reagan administration and has not slowed until very recently.

The Obama administration has begun to reverse some of the anti-labor policies of the past, and the Republicans are digging in to resist those reversals. That’s what the recent shutdown of the Federal Aeronautical Administration was all about: the board that regulates air unions had ruled during the Bush administration that unions would have to get a majority of all eligible voters, rather than a majority of those voting, in order to be designated to represent a bargaining unit. In other words, those who didn’t show up to vote would be counted as “no” votes. Obama’s appointees had reversed this decision, and the Republican House has been trying to reinstate it through legislation – and refusing to reauthorize the FAA unless the Senate would agree.

Walker’s bill was part of this general assault on labor rights. It not only took away the power of state workers’ unions to bargain over benefits, it also ended the collection of union dues through payroll deduction; union members now have to pay their dues directly to the union themselves. Obviously, Walker’s hope is that many workers simply won’t pay, depriving the unions of their participation and their money, and weakening them as a result.

The Citizens United case gave corporations the amount to spend unlimited amounts of money to influence elections. Most of this money will be spent to further the cause that is dearest to the hearts of those who own the big corporations: increasing inequality. The rich want to get richer (quite naturally); and the only way that they can do that is to make the rest of us poorer. They’ve been doing pretty well at this, because most of the resources are on their side. Restoring the strength of labor unions can provide a powerful weapon to resist them, and to promote the cause of greater equality.

What’s wrong with Obama’s tax-bill compromise

There are four basic issues with the tax deal President Obama announced Monday: economic stimulus, fairness, the federal deficit, and (surprise! It has nothing to do with the basic issues) social security. Let me take them in order.

1. Economic stimulus. In times of recession, government is supposed to put more money into the economy than it takes out — i.e., run a deficit. It can do this in two ways: spend more, or tax less. Spending more provides a more direct link to jobs, since jobs are created directly by the spending; it also allows government, through democratic processes, to determine what the public priorities are. We could spend a lot on a high-speed train network, renewable energy, education, and other things everyone agrees are desirable. Tax cuts for working people also lead pretty directly to jobs, since people are likely to use the money to increase consumption. Tax cuts for the rich are another matter — the rich can consume as much as they want already (that’s what “rich” means), so they will invest the money. In the 1980s, Reagan argued that there wasn’t enough investment money around to get the economy moving, so he turned to tax cuts as a “supply-side” stimulus. Whether or not that was right then, it is certainly not right now. The problem is just the opposite — because most available investments are risky, investors are sitting on their money. So tax cuts from the rich are not likely to lead to jobs at all.

2. Fairness. Ever since the Reagan administration, the capitalist class has been continuously increasing its proportional share of the national income. There are many parts to this: lower taxes for the rich, higher taxes for the poor; eliminating the estate tax, so that the children of the rich can be rich without having to work; limiting the power of labor unions, the major institutional force for greater equality, by weakening the labor laws (see Michael Goldfield’s book The Decline of Organized Labor in the United States); and now, the Citizens United decision permitting corporations to spend unlimited money to influence elections. This involves more than fairness – it’s also a matter of power. Money buys power, so as the rich get richer it becomes harder and harder for the rest of us to bring fairness back into the system. The progressive alternative was to give everyone a tax cut (that is, extend the existing tax cuts) on income less than $250,000 per year. The compromise accepts the Republican alternative to give those with higher incomes an additional, larger tax cut. This is contrary to fairness, and should be rejected. (The package does contain one progressive component, extension of the Earned Income Tax Credit. This is the only part of the tax package that gives more to the poor than to the rich.)

The Federal Deficit. As I said in the stimulus portion above, a deficit is a good thing right now, but it should be the kind of deficit that goes away with prosperity. Spending more on unemployment compensation is a good example; with prosperity, unemployment goes down and so does spending. But extra tax cuts for the rich are a permanent hole in the government’s ability to do positive things.

Social security. The most outrageous part of the deal is the “temporary” cut in payroll taxes. For years the establishment has been howling that the social security trust fund is going broke. It isn’t, but that’s the topic for another essay. However, it will go broke if we cut the flow of revenue into the fund. All the conservatives complaining about social security should be complaining about this – they are not, only because they understand that this payroll tax cut will achieve their real objective: destroying social security. As Jed Lewison has been pointing out on Daily Kos, there will be just as much pressure to extend the “temporary” payroll tax cuts when they expire as there is to extend the “temporary” Bush tax cuts today. Labor Notes has a good article with further analysis of this point.
Obama’s tax deal gets some temporary good things by making some bigger bad things permanent. I hope it is defeated.