Tag Archives: Obama

How They Think: The Complexity of White Working-Class Voters

Since the late 90s, political pundits have debated how to define the working class and how to explain their voting patterns. Prior to the 2000 presidential election, a standard definition of the working class combined income, occupation, and education. But Ruy Teixeira and Joel Rogers made the case for using education as the primary element for political analysis, in part because exit polls didn’t ask for occupation. They noted that 45% of voters were white and working-class, and, when all working-class voters were included regardless of race, the working class was an absolute majority. Political scientist Larry Bartels agreed, though he used an income-based definition and subdivided the working class to show that the bottom third of the white working class by income was strongly Democrat. On the other hand, Thomas Frank argued that the white working class was becoming more conservative and moving away from the Democratic Party, voting their moral interests rather than their economic position. In response to George W. Bush’s victory in 2000, The Nation magazine asked, “Who Lost the Working Class?”  A few years later, Bill O’Reilly claimed that 60% of the country was now working class, based on occupational indicators defined by Michael Zwieg, and he promised that he and other conservatives were “looking out” for them. More recently, Charles Murray argued that the white working class supported Democratic polices involving government and the social safety net because they had lost the “founding virtues” of family and hard work. On the other hand, Salon’s editor, Joan Walsh, explained that the white working class had lost confidence in government and that liberal Democrats had alienated the white working class.

The shifting definitions and perceptions of the working class and its politics often obscured a fundamental issue: racial polarization. As Ron Brownstein has observed about recent Presidential elections, Obama needed 80% of all minorities and 40% of whites to win election. While the working class as a whole gave Obama majorities in both 2008 and 2012, within the working class, whites voted nearly 2 to 1 against Obama.  Because of these patterns, discussions of working-class voting have focused on white working-class voters.

In his new book, The White Working Class Today: Who They Are, How They Think, and How Progressives Can Regain Their Support, Andrew Levison tries to move the discussion forward. He points out that most definitions of the working class focus narrowly on educational attainment or on some configuration of income and/or occupation. Using data from the Bureau of Labor Statistics and surveys of attitudes, Levison finds that the working class is quite large and urban, and a significant majority is white.  But he also reminds us that there is no one working class, and definitions of the working class that use education, income, or occupation alone have limited value. He argues that political scientists and pundits may do better to consider the political diversity of the working class.  They should pay attention to “how ordinary workers think—how they process, store, and organize political ideas and opinions.”

Looking at political values, Levison finds a diverse range of views among the white working class, ranging from conservative to liberal/progressive to “open-minded.” This echoes the way political operatives think about potential voters: those who are against us, those who are with us, and those who could be persuaded. Most important, Levison suggests that we should see much of the working class as pragmatic – that is, as voters who could be persuaded to support either side — rather than as ideologically committed to specific economic or moral values.  For those pragmatic voters, what matters is policy, not party.

Contrary to conventional wisdom, Levison does not believe that shifts in and geography have changed the political orientation of the working class as a group.  Rather, he thinks that the working class should be studied in more individualistic terms in light of shifting values. He concludes that working-class value systems are largely shaped by four institutions — church, education, the military, and small business. Yet this “cultural traditionalism,” as Levison calls it, translates into both conservative and progressive political views.  Both draw upon the same framework, but importantly, different life experiences lead working-class people to different political positions.

Levison also shows that the majority of white working people are not strongly conservative, as some might believe. In polls, less than 50% expressed “strong agreement” with conservative propositions, and on some questions conservative support was as low as 20%.  This suggests that a significant proportion of white working-class voters are sufficiently open-minded that they could be persuaded to support progressive politics and candidates.

Here Levison becomes more partisan and suggests that the Democratic Party should appeal to the large “open-minded” working class through economic and social policies. It can do this in several ways. First, it must eliminate the Party’s elitism and condescension toward the working class. But the Democrats must also replace approaches based on identity politics with a more pragmatic populist rhetoric focused on policies that the working class participates in formulating.  That means rebuilding working-class community and labor organizations and giving the working class more opportunities to participate in policy formulation. None of this will be easy, but it is necessary to counteract the Republicans’ money, pointed critiques of liberalism, counter-narratives, and their own grassroots institutions.  

The White Working Class Today is an important book that should be read by journalists, political scientists, and political operatives. But I have several concerns.  First, I would have liked to see something about how the white working class differs from the white middle class and from people of color of all classes. That more complex analysis might help Democrats solve a core puzzle: how to appeal to the white working class while also mobilizing the young people, educated white women, LGBT voters, and people of color who helped Obama win reelection? This will be particularly important in the upcoming midterm state elections in 2014.

Second, Levison also puts too much emphasis on messaging while largely ignoring specific policies. He recommends ways to talk to working-class voters but offers few suggestions about what to do about the problems they face. Yet Democrats have rightly been criticized for the gap between their populist campaign rhetoric and their often-neoliberal policies. While Republicans are responsible for most recent legislative inaction, Democrats too often get blamed. That frustrates working-class voters and makes them susceptible to Republican appeals to “libertarian populism.” At some point, the Democrats must address the policy gap.

Finally, Levison assumes that Democratic politicians and apparatchiks are committed to improving the life chances of working-class people.  I’m not sure that’s true. In fact, most politicians conspicuously avoid even using the term working class. Rather, their messages subsume the working class under aspirational terms — middle class or working people. Most Democratic politicians understand that while they need working-class support, they cannot alienate their more elite donors.  And too often, that shapes their political behavior.

John Russo

How Kasich Can Win Ohio Again

In November 2011, I published a New York Times op-ed entitled “How Obama Can Win Ohio Again.” Now, with my pundit credentials firmly established (sic), I am opining that Ohio Governor John Kasich will win reelection in 2014. This could play havoc with Democrats’ hopes for the 2016 Presidential election.

Ohio, Pennsylvania, Michigan, and Wisconsin are usually thought of as swing states that are gradually but decisively getting bluer.  But the 2010 midterm elections were a watershed for Republican governorships in those states. Four right-wing Republicans came to power and immediately mounted formidable attacks on traditional Democratic supporters, including unions, blacks, and women. Major political struggles ensued in Wisconsin, Michigan, and Ohio, but with very different results. Following the 2012 Presidential election, where all four states went for Obama, those attacks continued, especially on issues of immigration, abortion, and same-sex marriage.

In Wisconsin, Michigan, and Ohio in 2011, rust belt Democrats counterattacked.  Particularly important were mass mobilizations around collective bargaining changes and recall elections for state officials. While receiving most of the media attention, the Wisconsin actions did little but slow the state’s draconian labor law changes, though they did put Republican legislators on notice for the dangers of overreach.  The same was true in Michigan, where changes occurred on a piecemeal legislative basis. The mobilization in Ohio was more successful, resulting in a stunning repeal of anti-union legislation, SB5. Since then, Governor John Kasich and Ohio Republican legislators have scaled back direct attacks on unions and collective bargaining.

This year, Republicans legislatures have once again gone on the offensive in Wisconsin, Michigan, and Pennsylvania, while Kasich is playing a somewhat different game in Ohio.  For example, after the 2012 Presidential election, Michigan Governor Richard Snyder extended the attack on organized labor and broke his promise not to enact a right-to-work law. Republican legislatures in all four states want to push their political advantage in hopes of turning at least two of these four rust belt states red in the 2016 elections. They are doing this by securing their base support on social issues such as abortion, immigration, and same-sex marriage while continuing their attack on unions and voting rights.

Kasich has taken a more arms length approach than fellow governors on wedge issues and stayed away from anti-union legislation.  Several conservative Ohio legislators have attempted to push right-to-work legislation, but taking a cue from Kasich, Republican legislators did not provide legislative support for the initiative, and it died in Committee.  No doubt, the last thing that Ohio Republicans want in 2014 is a repeat of the 2011 mobilization that brought together labor and community groups and defeated SB5.

While attacks on labor have decreased, Kasich is touting Ohio’s improving economy. At the 2012 Republican Convention, where Obama’s economic policies were being trashed, Kasich gave a speech touting all the economic improvements, tax cuts, and job creation in Ohio and bragging that Ohio was a great place to do business. Party leaders didn’t much like the speech, but Kasich’s “enterprise” approach made sense. Ohio has seen a substantial but uneven economic recovery, in part due, ironically, to the continuing benefits of the stimulus package and auto bailout and the growth of the oil and natural gas industry. The result has been that Ohio’s economy grew faster than the national average, and since 2011 the unemployment rate has fallen below the national average.

Even though that economic growth has primarily benefited whites, and minorities continue to lag in the current economic recovery, Kasich might have race on his side in 2014. In Ohio and elsewhere, Republican have pinned their 2014 election hopes on attracting white working-class voters who didn’t participate in the 2012 Presidential elections. Washington Post exit polls showed that about half of Ohio voters fall into this category, and 42% voted for the President. Nationally, only 36% of white working-class voters supported Obama. If Obama brought black and Latino voters to the polls in 2012, Republicans like Kasich hope that they can prevail in 2014 because minority voters won’t show up. Obama won’t be on the ticket, Ohio urban centers are being depopulated, and the Supreme Court has largely gutted the Voting Rights Act.  All of that could depress minority turnout, making the white working-class vote statistically more important to Ohio Republicans.

Overall, Kasich’s strategy of avoiding major mobilizing issues and following traditional Republican fiscal conservatism has resulted dramatic increase in his approval ratings. So solid does Kasich appear that some potentially strong Democratic candidates, such as Richard Cordray, former governor Ted Strickland, and Representative Tim Ryan, have decided not to run against him. The Ohio Democratic Party has been left with a weak gubernatorial candidate, Ed Fitzgerald, a one-term Cuyahoga County Commissioner who some see as a position jumper. To make matters worse, the ODP is being led by the same apparatchiks whom many blame for the 2010 Republican sweep.  That, in turn, led to redistricting that will make it impossible for Ohio Democrats to gain control the legislature in this decade.

So what could go wrong for Kasich? He must keep the most conservative elements of his party under control.  Already this year, conservatives nationally and in Ohio have pushed laws that attack poor whites, seniors, and women. Cuts to food stamps and Medicaid primarily hurt whites, for example.  In Ohio, 65% of households receiving food stamps and 61% of those on Medicaid are white. Also, despite widespread public support for same-sex marriage and less restrictive abortion policy, new Ohio Republican legislation dramatically restricts abortions.  Republicans are also fending off challenges to Ohio’s Constitutional ban on same-sex marriages. Changes in voter registration, which would primarily affect minorities and seniors, could work against Kasich by sparking another round of organizing and resistance.  Finally, a political scandal like the one that dogged Ohio Republican candidates in 2006 could help Democrats campaign on a clean up government message. One may be brewing over the lack of transparency in Kasich’s privatization of Ohio’s job development agency.

Taken together, these conservative attacks, potential scandals, and union fears of right-to-work legislation following a successful reelection could make Kasich vulnerable to a broad mobilizing effort. But only if Ohio Democrats can develop a strong economic and legislative message and tap into Ohio’s organizing culture. Absent this, it seems likely that Kasich will win Ohio again. And if other rust belt governors follow suit and take a more moderate approach in the short term, this could mean problems for Democrats in 2014 and make the 2016 Presidential election much more competitive in these crucial states.

John Russo

Raising the Minimum Wage — The Right Way

Ever since President Obama took office I’ve periodically wished I had the ability to call the White House get him on the phone and say “Hey, you’re not doing it right!”  Let me be clear—I don’t mean he hasn’t done the right thing—just that he’s too often done the right thing the wrong way.

For example, like many economists and advocates for working families, including Paul Krugman and Robert Reich, I thought the President’s economic stimulus package was way long on help for the “Too Big to Fail” banks and other Wall Street institutions and way short on dollars for infrastructure projects, support for education and job training, and other programs that would have helped the working families who inhabit the nation’s Main Streets.

Same thing with health care reform.  Yes, it needed to be done. But he did it wrong.  Instead of a system that guarantees health insurers millions of new customers, does little to rein-in costs, and gives anti-reform advocates the ammo they need to scare small and medium sized businesses into opposing the plan, he could have done something simple: Medicare for all, or at least for all of us over the age of 55. Not only would this approach have made Medicare solvent by bringing younger, healthier people into the system, it would have given the government immense power to negotiate lower costs with providers.

Unfortunately, the same principle applies to the President’s proposed minimum wage increase.  It’s the right thing to do, but nine dollars an hour? Really?  At least in this instance Mr. Obama’s not alone in being wrong.  Predictably, the Republicans and their bosses in the business community, led by the U.S. Chamber of Commerce, the National Federation of Independent Business, and the National Restaurant Association, became apoplectic seconds after the words “raise the minimum wage” rolled off the President’s tongue during the State of the Union address.

Their reaction was as predictable as the specious claims they make about the cataclysmic effect giving the folks at the bottom of the economic ladder a boost will have on the economy.  Business leaders wail and gnash their teeth any and every time raising the minimum wage is proposed, including back in 2006 when labor led the successful effort to win voter approval of an Ohio Constitutional amendment that both raised the wage and indexed it to inflation.

The fact that their dire prognostications have never come to pass—last time I checked people are still doing business in Ohio despite the onerous burden of having to pay workers a whopping $7.85 an hour, and Costco is thriving despite paying starting employees more than $10 an hour –apparently doesn’t matter to them or to the members of the media who give their ludicrous contentions credence by repeating them.

Unfortunately, President Obama’s proposal was every bit as predictable in nature and scope as the arguments against it.  Raising the minimum wage $1.75 is fine as far as it goes—which isn’t far enough.  Had the President and his advisors really given the issue some thought they could have crafted a plan that would have both insulated the administration from criticism and gone a long way toward addressing the income inequality that plagues the working class and the middle class and has the U.S. economy stuck in neutral.

Here’s the deal.  Part A:  raise the minimum wage to $9 per hour for the vast majority of employers.  Their protestations to the contrary, it won’t bankrupt them or force them to cut jobs.  Especially when they begin ringing up the additional sales Part B of the plan generates: raising the wage to $15 per hour for full time and $11 per hour for part-time workers employed by the nation’s largest companies.

There’s little doubt that companies like Wal-Mart will attempt to avoid paying the higher wage by eliminating full-time employees or turning to temp services for workers.  To stop them, the law must include provisions that prevent employers from moving workers from full-time to part-time status and that classify temps as employees of the corporation using them.  Those two provisions would help ensure that companies comply with the letter and spirit of the law.

Which firms would qualify as “large” under the plan?  Those that directly employ 100,000 or more and average 80 workers per location.  Under this definition franchise operations like McDonalds and most other fast food chains would be exempt.  In addition, the increase would have little or no impact on large employers like IBM, UPS, FedEx and others who already pay above the proposed new minimum.

The plan would affect retailers like Wal-Mart, Target, Macy’s, Kroger’s, Home Depot, and Lowe’s along with America’s biggest banks—the folks responsible for the 2008 economic implosion would.  (Here’s an important side note: although most people equate low wages with retail, bank employees are grossly underpaid, and financial institutions are infamous for aggressively opposing union organizing drives.)

Using Wal-Mart as an example and assuming that 40% of the company’s 2.1 million workers are full time, their aggregate annual wages would climb from $17.4 billion to $26.2 billion.  Annual wages for the retail giant’s 1.2 million part-timers would jump by nearly $5 billion, from $12.5 billion to $17.2 billion.  In all, the increases would pump an additional $14 billion into the hands of Wal-Mart workers every year.

Imagine the staggeringly positive impact this one policy would have on the economy when the wages of the more than 3.5 million people who work for America’s other large corporations are factored in.  Billions of dollars will be spent on homes, cars, clothes, food, dining out, movies, electronics, and other goods.  People who now live paycheck to paycheck will actually be able to save and plan for the future. In short, millions of working families will have an opportunity to grab a piece of what has become a fading American Dream.

The increases would also help reduce the deficit—something Republicans should love.  Higher wages will generate more income and sales tax revenue.  As salaries rise, so will the flow of dollars into Social Security and Medicare, especially when tens of thousands of workers are no longer eligible for the Earned Income Tax Credit because they’re earning a living wage.  Finally, government spending will fall because the legions of low-wage workers at Wal-Mart and other firms that now receive government benefits will no longer need them.

But instead of a bold plan that could end decades of wage stagnation, we get a small across-the- board increase that simply won’t get the job done.  Someone get me the number for the White House.  I need to call Barack and tell him he’s doing the right thing the wrong way.

Again.

Leo Jennings

The White Vote in 2012 & the Obama Coalition

I’ve had it with “the white working class.”  Not the actually existing part of the working class that is white, which is composed of complex and interesting people most of whom don’t vote like I think they should, but rather the fictional character who got so much attention during this year’s election campaign.

The fictional character is a white guy who works in a decrepit factory or drives a truck.  He drinks boilermakers (not wine and never a latte) and is good at bowling rather than golf.  Depending on political point of view, he is a “culturally confused but good-hearted racist” or a “salt-of-the-earth real American who loves God and guns and hates both gays and Wall-Street bankers.”

As a demographic category that divides white voters without bachelor’s degrees from those who have that “middle-class” credential, the “white working class” concept makes sense to me, but only if its use fulfills two conditions that the political media apparently cannot manage:

  • First, that we always keep in mind that “white working class” is a demographic category that clumps together more than 45 million voters who share two characteristics and only two – race, as conventionally defined, and the absence of a bachelor’s degree.  The category includes women and men of all religions (and varying levels of religious commitment) and regions. They come from big cities, suburbs, small towns, and isolated shacks in all parts of the country.  It includes Bill Gates and other fabulously rich people who never completed bachelor’s degrees, and it leaves out the many factory workers, truck drivers, waitresses, and retail clerks who did. That is, like all concepts, “white working class” is a convenience for getting a hold on the big picture, but it grossly simplifies a much more complex and varied social reality.  We need to constantly remind ourselves that there is not now, never has been, and never could be a “typical” white working-class person.
  • Second, that as a demographic category for the purposes of electoral analysis, “white working class” is valuable only as part of a comprehensive discussion of the white vote in U.S. elections.

I’ve made the first point before, more than once.  Here let me concentrate on the second by detailing my conclusions about how the concept has played out in the 2012 presidential election.

After much pre-election discussion of how the “white working-class” would vote, the major news media who commissioned the massive election-day exit poll have not reported on their websites how this group actually voted.  In fact, the websites listing that information — voter-category by voter-category, state by state — in 2012 have less than 1/10th the information that CNN had (and still has) on its web site for 2008.   But here’s what I can report based on what is available on Fox News, CNN, and the New York Times, plus some numbers from reporters who have access to the poll’s internals – most importantly, “The Obama Coalition in the 2012 Election and Beyond” by Ruy Teixeira and John Halpin.

  • Class in itself had almost no impact on how people voted for president in 2012.  The middle class (folks of all shades and colors with at least a bachelor’s degree) voted 50/48 for President Obama, and the somewhat larger group of voters with no bachelor’s degree, the working class, voted 51/47 for the President.  Thus, because the middle and working classes voted basically the same, class by itself did not matter.
  • Race, on the other hand, makes a huge difference in how people vote.  Nonwhites (Black, Hispanic/Latino, Asian and Other) voted a little more than 80% for Obama while only 39% of whites did that – a difference of more than 40 percentage points.  Both the middle class and the working class gave Obama slight majorities based primarily on nonwhite voters who offset his 20-point loss among whites.
  • Among whites, the white working class is far from unique in giving Mitt Romney substantial majorities.  Nationally, working-class whites gave Obama only 36% of their vote, but middle-class whites, though slightly more favorable at 42%, also gave Romney a large majority.  Other demographics within the white vote show similar patterns.  Though there are important differences among white voters, most white demographics vote strongly Republican.  For example:
    • Women gave Obama a 55% majority, but not white women, who voted 56/42 for Romney.  White men, on the other hand, were even more strongly for Romney (62/35).  The gender gap is actually bigger among Blacks and Latinos than it is among whites.  Black women voted 9 points more for Obama than their male counterparts; Latino women, 11 points more, and white women, 7 points more.
    • Obama won a bare majority among Catholics (50/48), but lost white Catholics by 19 points – which, however, is a lot better than he did among white Protestants who he lost by 39 points.  On the other hand, Obama won substantial majorities among whites who self-identified as non-Christian or as having no religion.
    • Obama also famously won big (60/37) among young people aged 18-29, but the majority of whites in this age group voted for Romney (51/44).  On the other hand, no other white age group gave Obama more than 39% of their vote.
    • Where whites live matters a lot.  There were no exit polls in some states this year, and so far there is no breakdown of voters by both race and education (as there was in previous years).  From what we have, however, it is clear that the national white vote of 39% for the President hides a lot of variation – whites in Vermont and Alabama vote very differently (66% vs. 15% for Obama in 2012), as do whites in Iowa and Missouri (51% vs. 32% for Obama).  Likewise, whites in large and medium-sized metropolitan areas (250,000 and above) vote more Democratic than whites in the small-town and rural areas of the same states.

Though shrinking as a proportion of the population and thus of the electorate, whites are still a very large majority (72% of the 2012 electorate), and the 39% of us who voted for President Obama provided the bulk of his votes in 2012 (36 million vs. 29 million from nonwhites). But our voices would not have been heard without strong turnouts (against formidable efforts at voter suppression) and lopsided votes for Obama among nonwhites.  On the other hand, their voices would have been drowned out – and worse – without us.  That’s what a multiracial coalition looks like.  Though its weakest link, the white working class is a significant portion of the coalition, and not just in the Midwest battlegrounds.  Of Obama’s 65 million votes in 2012, 30% came from whites with bachelor’s degrees and 25% (more than 16 million) came from those without them.

Part of the reason progressive Democrats have focused on the white working class over the past decade is that among whites, they are much more likely to benefit from progressive economic programs than middle-class whites – programs like universal health care, enhancements of earned income and child tax credits, infrastructure spending, green manufacturing, and unemployment benefits and food stamps.  This has not worked yet to produce more white working-class voters for Dems, at least not at a national level, but the logic is good because all these programs disproportionately benefit working-class Blacks, Latinos, and Asians as well.  And that basic approach, as qualified and compromised as it has played out in practice, is working so far politically, if not economically.  As Teixeira and Halpin conclude:

President Obama and his progressive allies have successfully stitched together a new coalition in American politics, not by gravitating toward the right or downplaying the party’s diversity in favor of white voters.  Rather, they did it by uniting disparate constituencies – including an important segment of the white working class – behind a populist, progressive vision of middle-class economics and social advancement for all people regardless of race, gender, ethnicity, religion, or sexual orientation.

I find the Democrats’ obsessive use of “middle class” irritating, and I’m not sure they’ve articulated anything I want to call “a populist, progressive vision” (as opposed to some of their actual programs), but it is worth appreciating the enormous accomplishment, however fragile and flawed, of what Teixeira and Halpin call “a multiracial, multiethnic, cross-class coalition” that put Barack Obama in the White House for a second term.

Jack Metzgar

Chicago Working-Class Studies

Jobs and the “Fiscal Cliff”

My relief that Mitt Romney was not going to be our president, with a Republican Senate along with the House of Representatives, barely lasted through Tuesday night.  By my lights, a lot of terrible stuff and a completely wrong direction in our policy and politics have just been avoided.  Whew!  But after months of both Republicans and Democrats talking about the lack of jobs being produced by our lackluster economy, with political reporters, operatives, and pundits hanging on the next unemployment report as if it might be vitally important for the future of the republic — by the end of the week our 8% official unemployment rate (and Romney’s oft-repeated “23 million unemployed and underemployed workers”) was again just one of those inconvenient realities that we’re going to have to live with.

President Obama’s victory speech Tuesday night looked ahead to his second term and promised to focus on “reducing our deficit” along with some other things (“reforming our tax code, fixing our immigration system, freeing ourselves from foreign oil”), with no mention of getting our economy growing at a rate that can reduce our debilitating unemployment and the damage it is doing to all of our lives, some of us much more than others.  Then, as the Wall Street Journal headlined two days later, “Political Focus Shifts to ‘Fiscal Cliff’,” and it’s all about budgets and the need for “shared sacrifice” and a “balanced approach” to easing the economy farther downhill rather than going off a cliff.

The fiscal cliff is not just about deficits.  It’s about jobs – jobs in an economy where there are not nearly enough of them for everybody who wants and needs them.  If the spending cuts and tax increases currently scheduled to take effect January 1st actually would take effect and then remain in place for all of 2013, it would reduce the federal deficit, at least at first, by more than $600 billion – that is, “cutting the deficit in half,” as the President once promised.  But it would also throw us back into recession and eliminate more than 4 million jobs.

Jobs and deficits are related.  Federal budget deficits (spending more than you take in in taxes) fuel economic growth and create jobs.  Likewise, stronger, faster economic growth creates jobs and, thereby, reduces federal budget deficits.  Without the annual $1 trillion deficits the federal government has been running since President Obama took office, we would still be in the Great Recession – or worse.  Right now, we need those deficits.  Cut them substantially, and you reduce economic growth and kill jobs.

Even though some Republicans deny it and almost no Democrats will say it, all the political players, including what is euphemistically called “the business community,” know these basic principles of macroeconomics.  They know that rapidly cutting the deficit in half – whether by cutting spending, increasing taxes, or some combination of the two in a so-called “balanced approach” – will send the economy back into its 2008-09 tailspin.  That’s why all the political players fear the fiscal cliff, and that widespread fear is also why we will not go over it.

But how we avoid the fiscal cliff matters.  And just avoiding it will at best leave us where we are, with a stagnant economy growing at 2% a year and with an official unemployment rate near 7% as far as the eye can see.  We also need to stimulate the economy immediately, get it growing fast enough so that it is creating 300,000 or 400,000 jobs a month (versus the recent trend of 150,000 a month).  This will increase the deficit in 2013, but it will also do more to cut the deficit in the long run than any spending cut or tax increase could do.

For a guide on how to avoid the fiscal cliff, see the Economic Policy Institute’s September policy brief, “A fiscal obstacle course, not a cliff” by Josh Bivens and Andrew Fieldhouse.  It’s very wonky and can be hard to follow in spots, but it’s only 13 pages of text.  And it has a wonderful table on page 7 that lists the various laws that expire at the end of this year and shows both how much each expiration will reduce the deficit AND how many jobs it will kill.  The fiscal cliff is not just the Bush tax cuts – which will lop $64 billion off the 2013 deficit if only the high-income cuts expire, but will also cut 102,000 jobs.  The cliff also includes Obama’s special recession-fighting unemployment compensation program (whose expiration will reduce the deficit by only $39 billion but will eliminate 448,000 jobs) and the expiration of the payroll tax cut (which will reduce the deficit by $115 billion but at the cost of killing more than one million jobs).

Bivens and Fieldhouse use these calculations to show how a jobs-sensitive strict cost-benefit analysis would lead to renewing (and even enhancing) federal government spending programs rather than renewing any of the tax cuts, while also showing that tax cuts targeted to lower- and middle-income workers create more jobs than those going to the wealthy and other high-income earners.  Tax increases do kill jobs, just as Republicans always say, but cuts in government social spending kill many, many more.

There is a lot of complicated economics here, and the politics of avoiding the fiscal cliff may be even more complicated.  I sympathize with the President and Congressional Democrats for having to work through these daunting problems while dealing with House Republicans.  But the President started on the wrong foot Tuesday night by focusing on “reducing our deficit.”  That’s a job killer if you do it now and if you do it the wrong way.  With an economy growing at 2% (at best) and an unemployment rate hovering around 8%, the very last thing we need now is to reduce our deficit.  Rather, first we need to preserve our deficit and the jobs it is supporting.  And then we need the President’s American Jobs Act with its increased spending for infrastructure and for state and local governments to hire and rehire “teachers, cops, and firefighters” – namely, the stuff he campaigned on, the promise of “Forward.” Reducing our deficit and a long-term plan for managing our accumulating national debt are for later, not now.  Right now we need jobs, millions of them.  And we need our newly elected President paying attention to that in a way he has not since February of 2009.

Jack Metzgar

Chicago Working-Class Studies

Obama Will Cruze to Victory

“And the winner is…”

(Drum roll—sound of envelope being ripped open.)

“…Barack Obama.”

I’m going to be honest about this: when it comes to predicting the outcome of the 2012 presidential contest I’ve been downright Romneyan.  It’s not something I’m proud of, but unlike the GOP nominee who can’t remember what he believed an hour ago, I haven’t developed a case of Romnesia or tried to Etch-a-Sketch my shifting prognostications out of existence. What hasn’t changed is my belief that the outcome of the presidential contest in Ohio would determine who would occupy the White House for the next four years.

A little over a year ago—and months before he had sewn up the GOP nomination–I believed Romney was on a clear path to victory in the Buckeye state.  He was the least buffoonish character in the cast of clowns that was seeking the Republican nod, he was and would continue to be awash in campaign cash, and his record as a Senate candidate and governor of Massachusetts would enable him to move from the far right-wing toward the center after he secured the nomination.

Other factors also pointed to a Romney win. Though recovering, the economy was weak, unemployment was uncomfortably high, and President Obama was being blamed—his job approval rating was hovering at 42%.   The Democratic Party’s dispirited and disillusioned base had not turned out in 2010, enabling the GOP to capture every statewide office.  White working-class males who had never been enthralled with Mr. Obama remained skeptical if not downright hostile, and the state’s conservatives were eagerly awaiting the opportunity to toss him out of office. Ohio was, in my opinion, ripe for the taking.

Obviously, my opinion has changed. Since mid-summer I’ve been calling the race for the President and, despite some trepidation caused by his lackluster performance in the first debate and the public’s and the media’s willingness to give Romney a pass for being the most disingenuous and dissembling candidate to ever seek the presidency, I am confident Mr. Obama will win Ohio tomorrow on his way to racking up a comfortable margin of victory in the Electoral College.

Why do I now believe that Mr. Obama will prevail in a contest he could easily have lost?

Regardless of the billion dollars spent by the candidates, political parties, and Super PACs to air more than 1,000,000 TV ads, President Obama will win Ohio and the White House because he thought it was a good idea to save the domestic auto industry and Mitt Romney did not.

The President will win because his commitment to an industry that employs one in eight Ohioans has strengthened both the state’s economy and his standing among working-class voters. This issue has provided voters with an unobstructed view of the difference between the two candidates, their credibility, and the effect each man’s philosophy of government could have on the future of our nation.

The auto rescue demonstrates that government can exert a positive impact on the economy.  Unlike TARP and the President’s overall stimulus plan, which primarily benefited Wall Street, the auto rescue paid off for Main Street, especially Main Streets across Ohio.  It preserved good-paying, blue collar manufacturing jobs, enabled GM and Chrysler to invest nearly one billion dollars in new plants and equipment, and positioned the companies to compete effectively in the global marketplace.

Yes, there was pain involved.  The thousands of union members who lost their jobs, the car dealers who were forced to close, and the Delphi retirees whose pensions shrunk will tell you just how much.  But it’s also important to note that the auto rescue forced fat cat members of the 1% to join the working families who make up the 99% in paying the price for mistakes made by corporate America.  Along with being fundamentally fair, the substantial “haircut” that bond-holders and other investors were forced to take was an essential element of the financial restructuring that put the two auto companies on the road to recovery and literally saved millions of jobs.

In the end, the auto rescue bolstered Mr. Obama’s electoral prospects because it produced tangible results for American workers—the type of tangible results that have yet to be generated by the larger stimulus plan or health care reform.  The type of results Romney and the Republicans can’t lie about or distort.  The results are as real as the paychecks that millions of workers receive each week, as real as the thousands of Chevy Cruzes that roll off the Lordstown assembly line each week, as real the pride workers feel when they read that the car they make is the best-selling model in America.

Unfortunately for Mr. Romney, everything that’s wrong with his politics, his campaign, and his philosophy was encapsulated in his stance on the auto rescue as expressed in these 84 words from an op-ed he wrote for the New York Times:

Let Detroit Go Bankrupt

If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

Clearly, Mr. Romney was dead and demonstrably wrong.  That inconvenient truth and the fact that the op-ed can be read by anyone who visits the Times’s website hasn’t prevented Mr. Romney from attempting to flip-flop on this issue as he has on so many others, including abortion, health care, the environment, and gay rights.

But no matter how he twisted and turned, no matter how much he lied, he couldn’t get out from under the op-ed.  He could never gain traction in Ohio where voters–white working class voters in particular–were living the success of the President’s plan.

How did Mr. Romeny deal with his inability to pull ahead in the state he had to win?

He simply told bigger lies in TV and radio spots that claimed Chrysler was moving production of its Jeep models to China and GM was shipping jobs and capital overseas.  The ads were so misleading and offensive that Chrysler and GM officials vehemently denounced them, the media finally held him accountable for dissembling, and the public reacted with anger and revulsion.

Predictably, his poll numbers started to slip.  Romney had finally been hoisted on the petard of his own mistruths.

Tomorrow, the man who rescued the domestic auto industry will defeat the man who wanted to let it die and then lied about it.  That says a lot about Ohio voters.  Confronted, at last, with the undistorted, incontrovertible truth, they are poised to reward a President who did the right thing with four more years in the White House.

Now that we know who will win, the big question—the one that will obviously be discussed once the dust of the election clears—is what Mr. Obama will do with the opportunity Ohioans are about to give him.  Will he, as he did with the auto rescue, focus on investing in Main Street by making sure that working-class families have a real chance to grab their piece of the American Dream or will he revert to Wall Street-centered policies that undermined his credibility, dampened the enthusiasm of the Democratic base, and placed his prospects for reelection in jeopardy?

I have a prediction, but I’m not ready to make it public just yet…

Leo Jennings

“Job Creators” and “Capitalists Like Me”

It’s one thing when one of the world’s wealthiest capitalists argues that he is not being taxed fairly because he is not being taxed enough, as Warren Buffett did last August.  But it’s quite another when a wealthy capitalist explains why the kind of gross inequality of income the U.S. now has is actually bad for business.  That’s what Nick Hanauer did in a TED University talk last month about “job creators”:  “In a capitalist economy, the true job creators are consumers, the middle class. And taxing the rich to make investments that grow the middle class, is the single smartest thing we can do for the middle class, the poor and the rich [emphasis added].”

Hanauer is a super-wealthy venture capitalist who was an early investor in Amazon.com and founded a couple of internet start-ups that were bought by Overstock.com and Microsoft – the latter for a tidy $6.4 billion.  In his TED talk he denied being a “job creator,” and with directness, humor, and plain-spoken common sense, he attacked the notion that folks like him create jobs.  It’s only 6 minutes long, but it sparked an internet fury when TED refused to post the speech on its web site, as it ordinarily does.  Time Magazine’s links-rich retrospective of the controversy that forced TED to post the speech can bring you up-to-date if you didn’t know about it.

Certifiably successful capitalists (and Buffett and Hanauer make Republican Presidential Nominee Mitt Romney’s $250-million net wealth look mediocre) arguing that they should be taxed more is the classic man-bites-dog story that is supposed to attract journalists.  In both cases Buffett and Hanauer did eventually get a fair amount of attention, but only because they are savvy entrepreneurs who made extraordinary efforts to get that attention.  Once attended to, however, they are treated as outliers, interesting personalities, eccentric curiosities – sort of like men who bite dogs – rather than initiating discussion about the issues they tried to raise.

Who or what creates jobs?  How could our tax system be fairer – and simpler?  And what is the connection between jobs and taxes?  These are big issues that should be at the center of the political debate in this year’s election, as the two mainstream political parties have very different answers to them.

First, there is a sense in which capitalists – whether investors, owners, or top management – do create jobs.  They make decisions to start or expand businesses that require new employees.  The question is why they decide to start or expand businesses.  Is it because they have a lot of spare money, or is it because they think they can sell lots more of the product or service they provide, thereby making a handsome profit?  In general, both spare money and profit opportunities based on potential consumer demand are necessary.  But what is more necessary at any given time varies in specific economic circumstances, and the question becomes an empirical one about our current circumstance.   Here’s where facts and figures matter, and we are fortunate to have an extremely clear set of them to answer these questions.

There is lots and lots of spare money in the hands of rich people and corporations, so much that they don’t know what to do with it all, and there’s not enough in the hands of workers and consumers.  This could be a temporary situation based on the continuing slow growth of the Great Recession, but the well-documented huge and growing inequality of income in the U.S. clearly suggests that there is a long-term and worsening problem of insufficient consumer demand.  When the top 10% get about half of all income, with the top 1% getting the lion’s share of that, the bottom 90% does not have sufficient income to provide the consumer demand that would provide enough profitable opportunities for capitalists to use their spare money to expand businesses and, thereby, create jobs.  This is what Nick Hanauer means when he says “the true job creators are consumers,” not “capitalists like me.”

The Republican economic program – whether Mitt Romney’s, the Ryan Plan that was passed in the House of Representatives more than once, or the approach of GOP state governors such as Wisconsin’s Scott Walker – responds to a diagnosis of the problem that will not stand empirical scrutiny.  Reducing taxes on corporations and wealthy individuals assumes that capitalist “job creators” are not creating enough jobs because they do not have enough spare money, which is clearly not the case.  Massive, if largely unspecified, cuts in government spending at all levels will further reduce total demand (the sum of consumer, investor and government spending) and, thereby, economic growth.  The combination of cutting these taxes and government spending will further worsen income inequality, making the insufficiency of consumer demand even worse – initiating a new and potentially “greater” recession, as it has in England.

The Democratic economic program – from President Obama’s weak and late-arriving American Jobs Act plus the tax plan in his 2013 Budget to the full-throated Congressional Progressive Caucus’s People’s Budget – increases taxes on top earners and increases government spending for a wide variety of activities that would increase the number of jobs and, thereby, overall consumer spending power.  It assumes that rich people and corporations have enough spare money and that workers and consumers need more.

These are startlingly different directions.  They cannot both be right, and compromise between them, besides being very difficult, would likely involve dilution not correction.  But these are the choices we face this year as American voters.  Both facts and logic favor the Democrats, but that will matter only if they, and especially the President, have the wit and courage to insist on explaining them to so-called “low-information voters.”  So far the President has favored gimmicks like the Buffett Rule rather than clear explanations of why a thorough redistribution of wealth and income is necessary and in the common good.  The President and other Democrats need to make their economic case clearly and boldly.  They should not wait for the occasional capitalist superstar to bite a dog.

Jack Metzgar

Chicago Working-Class Studies