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What Would You Have the President Do? Part III, Doing Some Economic and Social Justice

letsgetitdone's picture

The first two Parts in this series began answering the question “what would u have him do?” It arose in the context of a Post at Naked Capitalism by Michael Hudson with some additions by Yves Smith. A commenter, objecting to the criticism of the President's Knox College speech, issued the challenge in connection with the President's promised effort to restore prosperity to the middle class and the poor.

In Part I, “Necessary First Moves,” I offered and described two of these: ending the filibuster, and using High Value Platinum Coin Seigniorage (HVPCS) to fill the Treasury General Account (TGA) with $60 Trillion in reserves. In Part II, I offered a number of proposals aimed at getting to full employment.

These included: a full payroll tax holiday; a guarantee of annual entitlement spending without regard to “trust fund” balances; State revenue sharing grants of roughly $1600 per person; and a Federal Job Guarantee program establishing jobs in local communities at a living wage with full fringe benefits. This third and last part will offer proposals for doing some economic and social justice to begin to right the wrongs the neoliberal globalizing political/economic/ideological system has inflicted on the American middle class and those living in poverty. Here are the proposals.

Fix the Health Insurance System

I want the President to ask Congress to pass John Conyers's HR 676, enhanced Medicare for All bill, a full coverage, no co-pay health care insurance program. A simple, direct, 35 page piece of legislation, Conyers builds in a tax to fund this program; but the decision about whether it falls into deficit spending, or is “paid for”, ought to depend on whether full employment is reached or not. If it hasn't, then this tax should be used as an automatic stabilizer, reduced according to a rule when the private sector is shedding jobs, increased as the private sector adds jobs, until the tax is fully re-imposed at full private sector employment, to prevent the economy from overheating.

Increase the minimum Social Security benefit

A simple idea, due to Warren Mosler, is to increase the SS benefit minimum to $2,000 per month for every retiree. This will be a positive boost to the economy, and it will provide a decent standard of living to middle class and poor retirees. But, in addition, it will provide redress for years of SS cost of living increases that didn't take into account the rapid rise of medical care spending by retirees. Health care costs escalated much more rapidly than the CPI over the past few decades, but SS COLAs haven't taken account of this increasingly disproportionate spending by older people on medical care and insurance.

Redeem all outstanding student loan debt and provide for Federal funding of free tuition at State Universities, Colleges and Community Colleges

Student loan debt has become an appreciable drag on our economy, and its existence is not fair, because college isn't optional for middle class prosperity, and student loan interest rates are much too high given that banks have such low interest rates on their own loans. So, if we're really committed to middle class prosperity, and to equality of opportunity, we have to do what many other nations are doing increasingly, and provide free or very low cost college educations for those wanting them who have graduated from high school.

TINA applies to this issue if it applies to anything. If we want to avoid plutocracy, then this is something we must do. HVPCS allows us to do it.

Put a stop to Too Big To Fail by ending, investigating, and penalizing control fraud

-- After monitoring the big banks for control fraud, investigate them, find it, and then take them into resolution ending the existence of current Systematically Dangerous Institutions (SDIs); in the American banking system.

-- Then proceed to investigate individuals responsible for control fraud in these institutions, prosecute offenders, and apply appropriate criminal penalties.

It's hard to over-emphasize the importance of doing these two things. Apart from removing risks to the banking system and to the economy, the issue of moral hazard is an over-riding one here. I don't know about you, but whenever I hear someone saying that we're a nation of laws these days, I feel nauseated by the obvious dishonesty in such a statement.

Most of the nation may be subject to laws, but obviously the likes of Jamie Dimon, Lloyd Blankfein, Brian Moynihan, other big banksters, mortgage companies, MERS, loan officers, appraisers, and loan servicers are not. And neither are various high office holders and people in the intelligence community who have routinely violated the Geneva conventions, perjured themselves before Congress, performed surveillance in clear violation of the limits established in the Patriot Act, and who, in doing so, violated their oaths of office.

The existence of a system of laws that applies only to some of us and not to all of us and that is sometimes secret is simply repugnant, and corrosive to the legitimacy of government and to all laws. Anti-government feelings and cynicism about the legitimacy of government are already widespread in the United States. If the present failures to enforce the law continue to exist, we will see increasing mistrust in the government and rejection of it as an institution. I don't think very many of us care to travel to the end of that particular road.

End the household debt and housing crises and the possibility of new SDIs arising again to corrupt the banking system

This will require a number of inter-related policies:

-- Have the Federally run big banks take big write-downs on mortgage principal to 90% of the current market value of homes;

-- Have them lower credit card interest rates to a few points over prime;

-- Assuming Medicare for All, HR 676, is passed first as specified above, then:

-- pass legislation allowing the Government to buy up the debts owed by consumers to the health insurance industry, and to providers, and to then cancel these debts;

-- pass legislation allowing previous owners of foreclosed homes involving MERS to take them back, while providing grants to the previous owners for fixing up the homes the big banks allowed to deteriorate; if the foreclosed homes have already been sold, provide government compensation to the previous owners equal to the equity existing before the housing crisis began.

-- pass legislation nationalizing the regional Federal Reserve Banks and requiring that their bank managers be Federal Senior Executive Service employees, and their employees be civil servants;

-- pass legislation prohibiting member banks of the Federal Reserve System from trading in derivatives or novel financial instruments, or from engaging in investment banking.

This policy proposal is both a “debt jubilee” for homeowners, and those threatened with financial hardship by our health insurance and provider systems and their financial practices, and also a restructuring of the banking system, so that SDIs cannot emerge again. In addition, it takes into account the wholesale mortgage fraud leading to the housing crisis; restitution to those victimized by the housing and economic crashes, and also provides for finding the people who committed the frauds and seeing that they are subject to the law. This last is necessary to eliminate the moral hazard in today's still existing “To Big To Fail” policies, and to help us to restore the rule of law to all, and not just to people the government finds worthy of prosecution and punishment.

Fix U.S. Infrastructure

Pass legislation to fix it over five years at $440 B per year. Do it with deficit spending if there's still unemployment; do it without such spending if there's full employment.

An “orwellian” speech?

The policies mentioned in this post and in Part II, among others in the areas of reinventing energy foundations, educational reform, creating a sustainable environment, and ending climate change, can all be implemented once we have austerity politics and the filibuster out of the picture (See Part I). Their effects will solve the problems mentioned, and, just as importantly, will reverse the growth of inequality in America by shoring up the economic security of the middle class and the poor, and restoring economic opportunity. In addition, the JG and infrastructure programs will enrich our stock of public goods and our supply of public and community services.

The policies that we can implement once “How we gonna pay for it” and austerity politics are gone, due to using High Value Platinum Coin Seigniorage, can create a Green New Deal. They can restore the promise of American Democracy to our children and Grandchildren, and bring the prosperity to the middle class and poor people that President Obama says he wants.

But two questions remain. First, does President Obama really want to create middle class prosperity as he says, or was his speech orwellian as Yves Smith and Michael Hudson suggest? And second, if by some small chance the President is sincere in his intention to pursue increased prosperity for the middle class and the poor, then how can a program like the one I've outlined be passed with the House of Representatives in the hands of the Republicans?

My answer to the first question is that the President did give an orwellian speech and that his speech and his current tour is for the purpose of building support to get the Republicans to accept a settlement including the President's much sought after “grand bargain” providing for major entitlement cuts in Social Security and Medicare. But assuming the President were to attempt to implement the kind of program I propose, then I think that simply proposing the program, and campaigning on it, in the context of a full public purse created by HVPCS, would place great pressure on the Republicans to pass at least a few of its elements.

If they did not, then only meanness would account for their failure to do so, when the money is there. The President and the Democrats could then run and win on the rejected part of the program in 2014, and implement it in 2015, whether or not the Republicans continued to oppose it.

So, all this and more too, is what I would have the President do. I blame him for not doing it. I blame him for not acting like one of the inheritors of FDR. And I also blame him for his constant mere lip service to Democratic ideals, accompanied by actions which continuously conflict with these ideals.

President Obama is a walking chasm between his rhetoric and his actions. And there is no way that those who ask: “What would u have him do?” can bridge that chasm. So, they need to stop asking that question, and also stop pointing out that “He can't do it alone.”

No one's asking him to do anything alone. He'll need the help of the Democratic Party, some Republicans, and many aroused American voters to get this done. What I'm pointing out however, is that he's not doing what he can be doing given the powers of his office, coupled with the possibilities for action and mobilization of his party and the American people. This situation has existed for the four-and-a-half years he's been in office. He's due plenty of blame for that, as well as our opprobrium.

He is not due sympathy from us because life is so tough for him. Life has been tough for many, many Americans since the crash of 2008, and for many others for decades before that. But for him, and in recent years, at least, it is a charmed play on a grand stage living in a bubble, and he has done very little as yet to help those who elected him in a state of national crisis.

So, I think he is not due sympathy, but a time of accountability for his actual performance. That's what we owe him, accountability, not rationalizations and excuses for his failure to perform in our interests, rather than in those of the rising plutocracy.

(Cross-posted from New Economic Perspectives.)

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Alexa's picture
Submitted by Alexa on

at the thought of either the corporatist Dems (or obviously Republicans) taking over both the House and the Senate.

Until we "pluck the vine" of corporatists, I believe that we're better off (as bad as that may be, in some ways) with gridlock.

If the President doesn't get a "Grand Bargain" soon (and I have a C-Span video to post that says Dems are going to get "it" in September), without a doubt he would be able to pass and implement the many cuts to Medicare, and possibly even all the cuts to Social Security that Bowles and Simpsons Fiscal Commission recommended.

Not to mention all the tax increases that will result from the implementation of the Chained CPI AND the "tax overhaul," which is currently underway.

Remember--if it weren't for the "Tea Partiers," the Grand Bargain would have already passed.

Pathetic to think that the Tea Party bunch are the only thing standing between the American People, and the commencement of dismantling Social Security and Medicare.

It is appalling, the unmitigated "gall" which Establishment Dems display when they present the "Grand Bargain" as a "jobs program."

And from what I've seen, apparently some of "the base" is actually buying into this ridiculous notion. DKos has done a great deal to help perpetuate this myth.

I never thought I'd live to see the day that the Democratic Party led the charge.

This is truly surreal. {Sigh.}

katiebird's picture
Submitted by katiebird on

I think that even Grayson and Warren and the Sanders play the rotating villain game.

It seems to me that the only way regular people can Occupy Congress (again? ever?) is to prove that we do hold their fate with our votes.

And the only way I can think of to prove that is to vote the bums out by voting for someone else's bums. And then vote THEM out. And so on. If a Democrat is in office, vote for the Republican. If a Republican, vote for the Democrat. Repeat until they start coming home to listen to constituents.

(remember when phone calls were running 200+ to 1 AGAINST the Bank Bail Out? How did that turn out?)

At some point, maybe someone will actually listen to what we're saying:

End the Wars
Jobs for Everyone
Medicare for Everyone
Tax the Rich

At that point (I'm thinking) both parties will be destroyed and we can start over.

letsgetitdone's picture
Submitted by letsgetitdone on

I agree with a campaign to get this done. It would not be successful in every case. But everyone would have to fight for their seats in reaction to such a campaign and many more Congresspeople who don't serve their constituents would be turned out than otherwise. If the first campaign based on this defeated 15 Senate incumbents and 10 House members, the fear of God would be put into the remainder. And, in the next campaign, every one of our legislative office holders up for reelection would take care to compile an indisputable record of service to their constituents, which is exactly what we want.

letsgetitdone's picture
Submitted by letsgetitdone on

I agree, Alexa. But clearly, if the President BOTH gets the repeal of the filibuster and fills the public purse with $60 T, then that will mean that he's decided to go another way than austerity because it will be very hard for him to explain cutting Medicare and SS with $53 T in the banks after he immediately pays off the intra-governmental and Fed-held debt. Were that highly unlike confluence to occur, the President could then only intend create full employment and start repairing the middle class in earnest. Then he'd be in a position to pressure the Congress into implementing an agenda of the sort I've outlined.

That said, however, I don't for a moment believe the President is bent on building prosperity for most Americans. I think he's been lying in his speeches and that he intends to drag us further toward plutocracy, so he and his family can get very, very rich when he retires in 2017.

As for whether any version of the "Grand Bargain" will be passed in the Fall, I really don't believe it will be that easy. Obama's lame duck days are coming fast now, as a result of the backlash from the surveillance state crisis. If he loses big there by failing to stop legislation limiting the scope of NSA activities, Democrats may conclude that they will gain nothing by continuing to support him, contrary to their old electoral interest on the Grand Bargain. So, we will see if he can get it through. I don't think it will be easy and I also think it will be his last chance to get it through because once 2014 starts there is no way Democrats will buy chained CPI or more cuts to Medicare in an election year for the sake of long-term deficit reduction when the deficit is falling precipitously.

Finally, on DKos, as you may know I've been blogging over there too. I post to the Money and Public Purpose Group Blog which is an MMT group, and also to the Pushing Back Against the Grand Bargain Group Blog, which is dedicated to stopping the Grand Bargain. I have the distinct impression that these days many of the most widely read bloggers over there are anti-grand bargain. Here's the list for the Pushing Back Against the Grand Bargain Group. Posting there has been dominated lately by one "poopdogcomedy" who is not one of the well-known bloggers at Kos, but if you scan the list and go back to its inception earlier this year you'll find many posts that received much attention there, all of which were opposed to the Grand Bargain. DKos may have been for the Grand Bargain some time ago; but I don't think it is now.

Alexa's picture
Submitted by Alexa on

I said,

"It is appalling, the unmitigated "gall" which Establishment Dems display when they present the "Grand Bargain" as a "jobs program."

And from what I've seen, apparently some of "the base" is actually buying into this ridiculous notion. DKos has done a great deal to help perpetuate this myth."

Apologize--not at all well constructed statements, on my part.

I agree that there was a real constructive "burst" of anti-Grand Bargain fervor at DKos in the late Spring, early Summer--and that was wonderful. As is the "Grand Bargain" Group blog.

But what concerns, and puzzles, me is that this fervor seems to have dried up.

And what's with this "PoopDogComedy" character using this group blog to showcase his "marketing" of corporatist Dems, LOL? I've taken him to task more than once, when he's done this. ;-)

[Not his posting to this blog--although I think that it is highly inappropriate--but his total "skewing" of the facts, regarding the Dem candidates--mostly "centrists or downright conservadems."]

PDC wrote about one super conservative western Dem Senator as though he was the savior of the liberal movement.

So I went to the same Senator's official website, and posted a "blurb" directly off of it. It consisted of "garbage" that sounded like it was straight out of the "Club for Growth," regarding both tax policy and "entitlements."

At any rate, I didn't mean to criticize the "rank-and-file" bloggers who enthusiastically sponsored the "Grand Bargain" blogathon.

And thanks for all your posts both here and there.

But I have noticed that some staff writers (Laura and Joan, come to mind) will write a diary in support of "no cuts to Social Security and Medicare--Chained CPI, etc."--then turn around and start complaining about "the Sequester."

I have questioned this, since the Grand Bargain consists of "replacing the Sequester" with tax increases (mostly on the working and middle class--pretty much sparing "the wealthy" and corporations) and cuts to Social Security and Medicare.

They (Laura and Joan) can't have it both ways.

And I find it hard (if not impossible) to believe that they don't "understand" the nature and terms of the Administration's "Grand Bargain."

Those are the "folks" that I meant to criticize--not the "average Joe" or rank-and-file bloggers at DKos. ;-)

I truly believe that the Grand Bargain will be "struck," before the year is out.

I agree that they would not do it next year, so close to the midterms.

So, I believe that it will happen either by the end of this year, OR after the midterm elections.

My worst "nightmare" would be to see Dems control the House and Senate and White House for two years.

THAT would be a complete catastrophe, IMO.

I'd bet the farm that they would enact and implement the ENTIRE Bowles-Simpson proposal, "The Moment Of Truth."

After all--that IS the essence of the Dem Party's (and DLC's) long-sought-after "Grand Bargain."

[Please check out the C-Span video I'm posting featuring the long-time Christian Science Monitor reporter Gail Russell Chaddock--on the Grand Bargain happening in September.]

Submitted by Hugh on

No, this post was probably written before Obama's appearance at the Amazon warehouse in Tennessee, but if any further evidence of Obama's dishonesty was needed, that should have ended it. For Obama, the future of the middle class is to work at a deadend job at the Amazons of the world at a little over minimum wage. In fact, we don't need any further proof. Obama has been at war with the middle class and the 99% for the last 4 1/2 years. At this late date, we do not owe him even a cursory benefit of the doubt.

While I agree with the proposals in this post, I did not agree with those about the Jobs Guarantee in the last post. I think that the levels of what constitutes a living wage need to be costed out. Personally, I think at a minimum they should be between 50% to 100% higher than the $10/hr suggested, and that's for entry level. Some jobs can be filtered down through the local level, but more attention should be given to the workers and the creation of long term employment in the government sector and this would require not just entry level positions but positions at all levels. A re-industrialized America based on low pollution and renewable energy, community planning for a post-automobile world, long term jobs in education, healthcare, and assisted living, there are a lot big projects out there that need doing. I do not agree that a Jobs Guarantee that I would call a Right to a good, stable, meaningful job paying a living wage should be mostly a pool of temp work the private sector can hire from or fire into.

letsgetitdone's picture
Submitted by letsgetitdone on

Hugh, I think we agree on Obama. he intends nothing for the middle and working classes other than more economic misery while he enriches the wealthy. On my JG proposal, remember that the $10 per hour for the lowest cost areas in the US. The highest CPI area would have a JG wage on about $24.00; the Washington DC area about $20 per hour. the average across the country would be about $16.00 per hour. There would also be full fringe benefits on top of these wages, so you immediately have to multiply the wage rate value by 1.3.

Now, since the private sector would have to pay higher wages + fringes than these, as the economy accelerates wages would go up a good deal further even for the bottom jobs in the economy. I think it's reasonable to assume that to hire off the JG, private employers would have to add $2 or $3 per hour to the Government JG wage.

In addition, while the JG transition jobs would always be "lower level" jobs in some sense, they would not preclude the Government establishing higher level jobs of a more permanent nature of the kind you're calling for. Other Government programs in Federal, State, and local Governments would be generating those jobs. The JG program would be designed in such a way that JG work would not replace the need for higher level Government or private sector jobs.