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Daily Clips: May 12, 2017

To cut taxes on the rich Mitch McConnell is ok w/ Trump cover-up of Russia probe

Trump lawyer: Tax returns from past 10 years show no “income of any type from Russian sources,” with few exceptions

Why Trumponomics (see trickle down) won’t make America great again

The economist who helped write Trump’s tax plan in five Days

Quantitative easing, stock buybacks and other stuff

So, while stock buybacks and QE aren’t exactly the same they are similar in the sense that their efficacy is contingent on the specific environment and the implementation. There will be times when this is a good idea and times when there’s just better ways to implement policies that try to move the private sector needle in one direction or another.

Trickle Downer of the Week: The American CEO

The average S&P 500 CEO pulled in $13.1 million last year, a 5.6 percent increase from 2015. Meanwhile, the average employee only made $37,362. Think about that: Your typical head honcho makes nearly as much in one day as his typical employee makes in a year.

Daily Clips: May 10, 2017

Today is a genuinely sad day in American history. The worst part? If you would have told me in 2012 this was how the Republican Party would end up…I would have believed you.

They have become an awful group of legislators, so interested in their own power that they have sold out at nearly every key point in the last forty years. Democrats aren’t completely angelic, but the Republican Party stands alone in its utter betrayal of the American people.

James Comey’s firing is the moment of truth for the GOP

Calls for Independent Investigator, even from (a few) G.O.P.

Michael Flynn targeted by grand jury subpoenas, sources confirm

Mitch McConnell: Any new Russia investigations would derail current ones

Meaning without work?

In any case, the end of work will not necessarily mean the end of meaning, because meaning is generated by imagining rather than by working. Work is essential for meaning only according to some ideologies and lifestyles. Eighteenth-century English country squires, present-day ultra-orthodox Jews, and children in all cultures and eras have found a lot of interest and meaning in life even without working.

Leftist critique of Kristen Gillibrand

If Hillary Clinton’s closeness to Wall Street torpedoed her campaign — and more importantly, made her a poor agent of change — then Gillibrand has the same problem in spades.

And the rest of her record isn’t any better. Her unyielding, at-all-costs loyalty to Israel, her expedient shape-shifting, her questionable links to certain political figures — all make Gillibrand a suspect tribune for anti-Trump resistance.


The Case of the Missing Middle Class Wages

Hey, where’s that rich guy running with our paychecks?

Nobody reads Politico to discover something new. Campaign staff and their consultants read Politico in order to gauge how their latest spin played out in the DC Beltway. Celebrity politicians check Politico to make sure they’re mentioned. The media reads Politico to see what the dominant narrative for the day will be.

Every so often, Politico will break some news, or publish an editorial that reframes a debate. But the day-to-day grind of Politico—its bread and butter—is regurgitating known knowns for the DC crowd. It’s the outlet for pushers of conventional wisdom to promote and bolster conventional wisdom for other pushers of conventional wisdom.

All this brings us to a story by Danny Vinik titled “The economy keeps improving. Why aren’t wages?” Here’s the nut of the problem, as Vinik sees it:

Wages have grown just 2.5 percent over the past year, only slightly higher than inflation. Since 2010, nominal wages have grown about 2.5 percent each year, while inflation has averaged 2 percent. Perhaps most concerning, as the labor market has tightened, wage growth hasn’t accelerated.

Vinik talks to some economists who have “a few theories” about why wage growth hasn’t happened, and he boils their theories down to three main hypotheses:

  1. The economy still isn’t at full employment”
  2. Workers aren’t becoming more productive”
  3. Industries are too concentrated”

Let’s just say up front here: the conventional wisdom isn’t really interested in solving this problem. The conventional wisdom is interested in paying lip service to the problem while ensuring the status quo. And so of these three theories, two are completely wrong and one barely lands a glancing blow on the real problem. So let’s talk about the wrong theories first.

Full employment” is an economic term that gets pointed to a whole lot at moments like this where unemployment stats sink to a fairly low point. Basically what Vinik is arguing here is that the market should raise wages naturally when enough workers enter the job market.

So if this theory is correct, why isn’t the Invisible Hand—hallowed be its name—raising wages? Well, mainstream economists argue, it’s because there still aren’t enough workers in the job market. How many workers need to be in the job market for wages to start climbing? Unclear! And what could coerce the Invisible Hand into action? Tax cuts are one theory that Vinik floats, and we’ll come back to that after we look at the second and third items on his list.

So moving on: are workers not productive enough? “Traditional economic theory holds that workers’ wages will rise in line with productivity growth,” Vinik writes. He says that “as they become more productive, workers become more valuable to companies and can demand a raise.” Again, presumably, the Invisible Hand—praise be unto it!—would make this happen.

Except worker productivity has risen dramatically since the 1970s, and wages have stayed flat. A 2012 study showed that the minimum wage would have hit over 21 dollars per hour in 2012, had wages and productivity stayed tied together. They did not, and our national minimum wage is still $7.25, just as it was in 2012.

So that brings us to the third and final option on Vinik’s list. Are monopolies to blame? “In a world where workers can’t simply switch to a new industry — gaining new skills takes time, for instance — workers have little power to demand a pay raise,” he warns.

Which, okay. Yes, that’s a valid point. But throughout this post, Vinik ignores the easiest explanation for all this: Workers aren’t earning more because employers aren’t paying them more.

Simple? Yes. True? Also yes. And here’s another condition that Vinik doesn’t really examine: Union membership in the United States has precipitously declined since an all-time high in the 1950s, and without that collective bargaining power, individual Americans can’t successfully negotiate for better wages. Here’s a fun fact: the word “union” doesn’t appear in the piece at all.

You know what other word doesn’t appear in the piece? “Profits.” Here’s the St. Louis Fed’s chart of after-tax corporate profits:

That money is not going to wages. No mythical Invisible Hand is sweeping down from the heavens to redirect those profits into worker paychecks. That’s where the money has gone. That’s money that should belong in the pockets of workers. Instead, it’s going toward the top one percent.

Vinik should get credit for at least asking the right questions in his piece. Even promoters of the conventional wisdom can’t ignore the fact that wages are artificially low. But the simplest explanation is right in front of them. Those wages didn’t disappear. They aren’t being withheld by a mysterious Invisible Hand. They’ve just been funneled into the top one percent.

Yet corporate interests keep urging reporters like Vinik and politicians like President Trump and Speaker Ryan to promote tax cuts for the wealthy and deregulation for corporations as solutions to this problem. This is almost exactly like asking fire departments to put out house fires with gasoline. So many of America’s current problems—the sluggish recovery, the stagnation of rural areas, the lack of revenue to fund education and other essential government funds—can be traced directly to the inequality created by the working class’s missing wages.

If we were to raise the wage and ensure that middle class policies like a decent overtime threshold were in place, those profits would go to the middle class. Those people would then spend those profits on goods and services in their community, they’d invest them in education and nonprofits, they’d start their own small businesses. Everyone would be better off.

But as long as the conventional wisdom continues to serve the interests of the wealthy at the expense of ordinary Americans, you’re not going to see the obvious truth in Politico. What happens if this situation continues—if the wealthy continue to keep a grossly disproportionate share of profits that belong to 99 percent of all Americans? The answer to that question, funnily enough, can be found in an essay written by Nick Hanauer that was published in Politico about three years ago: “The Pitchforks Are Coming…for Us Plutocrats.”

Daily Clips: May 5, 2017

Apple plans to spend $1 billion to support advanced manufacturing jobs in the U.S.

U.S. job growth rebounds sharply, unemployment rate hits 4.4 percent

Most U.S. homes are worth less than before the crash

GOP can now turn their attention to taxes

In rare unity, hospitals, doctors and insurers criticize health bill

History will remember these 217 House Republicans for their inhumanity

The science of inequality: why people prefer unequal societies

Shining a Spotlight on Washington State’s Dirty Little Secret

In so many ways, Washington state is a beacon of progressive politics to the rest of the nation. Sure, we’ve got our share of conservatives here, but for the most part we’re a pot-loving, worker-friendly, transit-happy state. We protect the environment, we encourage innovative industries, we keep our wages high, and we do our part to end gun violence. We’d be a leftie heaven on earth, except for one thing: our tax structure is an absolute mess.

In this week’s episode of our podcast The Other Washington — be sure to subscribe on iTunesStitcher, or wherever you get your podcasts—Hanna Brooks Olsen, Goldy and I investigate our state’s regressive tax structure. For Washingtonians, Goldy explains, “if you earn over $500,000 a year, you live in the lowest-taxed state in the nation. But if you earn under $20,000 a year, you live in the highest.”

As you might expect, this massive inequality causes some enormous problems. We talk about how a lack of revenue is screwing up basic state functions like education. We compare Washington to other states (we even suck when compared to libertarian New Hampshire) and we discuss what our awful tax structure might mean for our state’s future.

Special guest Misha Werschkul from the Washington State Budget and Policy Center joins Hanna to talk about how we came to be the worst state in the nation on taxes, and what solutions might look like. It’s not just a matter of rolling out an income tax: Werschkul discusses a proposal to create a capital gains tax that would only affect the wealthiest Washingtonians.

And it’s important to remember that it’s not just individuals who are suffering under our tax system. Werschkul says the tax is regressive for small businesses, too: “if you’re a small business in Washington state and you are frustrated by the business tax,” she says, “you probably have a reason to be that way because other businesses aren’t paying their fair share.” Those huge corporations enjoy lots of loopholes and advantages that middle-class business owners don’t.

This is not a partisan problem: both Democrats and Republicans have contributed to our state’s awful tax structure, and the inaction we’re seeing from both parties is only making things worse. Voters have considered changing the tax code before, but those proposals have gone down in flames. We talk about why that is, and why we might finally be ready for change.

I hope you’ll listen to the episode. It’s a great primer for anyone who wants to understand how we got to this place and why our politicians sometimes seem paralyzed when it comes to enacting big progressive ideas. In future episodes of The Other Washington, we’ll dig into more solutions and explore exciting ideas for what we can do once we finally—finally!—establish a more equitable tax structure that lives up to our reputation as one of the most progressive states in the nation.

Daily Clips: May 3, 2017

Trump: Crazy Like a Fox, or Just Crazy?

Democrats say they need a better economic message. Ohio’s Sherrod Brown thinks he has one.

Wall Street lawyer Jay Clayton confirmed as Trump’s SEC Chair

We’re finally having the health-care debate we need

The Kansas experiment

Sam Brownback cut taxes dramatically in Kansas. As a Republican governor of a Republican state, he was going to enact the dream. Taxes on small businesses went down to zero. Personal income taxes went down. The tax rate on the highest income bracket went down about 25 percent. Brownback promised prosperous times for the state once government got out of the way.

Reviving productivity is a moral imperative

Trump, Pence lobby U.S. Rep. Dave Reichert in all-out effort to pass GOP health-care plan

Daily Clips: May 2, 2017

Republicans still short of votes to pass U.S. healthcare overhaul

Why Republicans are still desperate to pass a health bill absurdly quickly

The Trump tax plan’s devilish details:

Trump advisers insist that big cuts in tax rates would pay for themselves by generating strong economic growth, a highly speculative claim, to put it gently. They also claim they’d add revenue by eliminating most tax deductions, though not the politically popular write-offs for charitable contributions and home mortgage interest. But the plan doesn’t specify which deductions would go, citing only the ones for state and local taxes paid.

Economics, not identity, is key to reviving American liberalism

The United States of Work:

Against this bleak landscape, a growing body of scholarship aims to overturn our culture’s deepest assumptions about how work confers wealth, meaning, and care throughout society. In Private Government: How Employers Rule Our Lives (and Why We Don’t Talk About It), Elizabeth Anderson, a professor of philosophy at the University of Michigan, explores how the discipline of work has itself become a form of tyranny, documenting the expansive power that firms now wield over their employees in everything from how they dress to what they tweet. James Livingston, a historian at Rutgers, goes one step further in No More Work: Why Full Employment Is a Bad Idea. Instead of insisting on jobs for all or proposing that we hold employers to higher standards, Livingston argues, we should just scrap work altogether.

Meet Bob Ferguson, the Washington State Attorney General who shut down Trump’s Muslim ban

The absurd amount of entitlements that go to rich people

Seattle soda tax will now include diet products because of equity concerns

The Top One Percent Is Sick of Your Bad Attitude, America

Things are going great for American Airlines! The company’s stock price has doubled over the last four years. Late last year, Warren Buffett’s investment group Berkshire Hathaway bet hugely on the airline industry, and they bought more American stock than any other company. As everyone knows, Buffett doesn’t invest for the short-term: he only puts his money behind businesses that he believes have a prosperous and sustainable future ahead of them.

So naturally, American’s leadership did what any smart business would do when it’s staring down a brighter future: it invested in its people. They gave their pilots a 7 percent raise, and increased pay for flight attendants. This is good thinking; even employers like Wal-Mart now understand that businesses don’t succeed unless they pay their employees a decent wage.

From a business standpoint, those raises make sense; employees who are paid decently are happier, they leave jobs less often, and they do better work. And from an economic standpoint, it works out, too. Those American employees will be able to spend that extra money in businesses in all the cities they travel to. Why would anybody be against this decision? What kind of short-sighted punk would argue against a sensible investment in the future?

Well, uh. Meet Kevin Crissey. The Los Angeles Times reports on his response to American Airlines paying its employees more:

“This is frustrating. Labor is being paid first again. Shareholders get leftovers,” Citi analyst Kevin Crissey wrote in a note to clients. Investors showed their displeasure by sending American Airlines Group Inc.’s stock down 5.2% to $43.98 on Thursday.

The arrogance of this statement is breathtaking. Airlines, simply, wouldn’t succeed without pilots and flight attendants. The planes wouldn’t fly. The customers wouldn’t board and exit the planes. Without those employees, nobody would be able to fly American. Businesses aren’t just a series of blinking lights on a computer screen on Wall Street: they are goods and services provided by people, for people.

And if you don’t serve those people—the employees and the customers—there’s no money for investors like Crissey to push around. You have to pay labor first, or there’s no business. Shareholders do, literally, get the leftovers: because they invested in the business, they get to enjoy all that profit that workers earn for the business and that customers pay into the business. This is some real cart-before-the-horse thinking.

I want to be perfectly clear, here: complaining about Crissey is not going to help anything. While expressing his frustration at workers “being paid” is horrendous behavior, Crissey does not deserve to be the subject of an internet witch hunt. Shaming him until he apologizes, as is custom on Twitter these days, would not make a whit of difference.

Crissey, and all the Wall Street bros who knocked American Airlines down a peg, aren’t the problem. Singly, they’re not powerful or important enough to be the root cause of a problem. They’re just a symptom of a larger problem in America today. They are the physical manifestation of the one percent’s growing entitlement.

Earlier this month, the email aggregation service Unroll.Me took a lot of internet fire for selling customer email information to Uber. This behavior was strictly legal and clearly well within Unroll.Me’s terms of service, but a lot of users were horrified to discover that their Lyft recepts were anonymized and sold in bulk to Uber. Users of Unroll.Me—including, full disclosure, myself—quit the service in large numbers.

The head of Unroll.Me, Jojo Hedaya, issued an apology that was crammed full of all the Silicon Valley cliches you’d expect, but nothing really changed. Unroll.Me lost the trust of a lot of its customers, but on the other hand, a lot of its customers didn’t notice or care. We’ve seen this play out before. The scandal has become old news. Some of us have learned our lessons, and it’s time to move on.

Well, uh. Meet Perri Chase. She’s the former co-founder of Unroll.Me, and she wrote a Medium post defending Hedaya, calling him “literally one of the most incredible humans I have ever met” (emphasis hers.)

Chase’s Medium post is an amazing display of techie entitlement. She huffs:

What exactly do you think is going on in your FREE gmail inbox? And honestly, anonymized and at scale why do people care? Do you really care? Are you really surprised? How exactly is this shocking?

Or maybe you just hate yourselves because you think Uber is gross but you use them anyway and “why are these tech founders such assholes” that they have to ruin your experience where you need to delete your apps?

Obviously, Unroll.Me users do care or they wouldn’t be quitting the service. It’s a known fact that people don’t read the Terms of Service. It’s not smart, but everyone does it: I do it. You, unless you’re a fastidious lawyerly type, likely do it, too. Who has the time to read all that fine print?

But Chase doesn’t care about that. The thing that bugs her is that ignorant, self-hating users dare express their unhappiness in the general direction of “my sweet, sweet friend Jojo.”

“We always cared deeply about our users and Jojo still really does,” Chase concludes. “You will just have to trust me on that.”

Okay, but why should we trust you on that? Because you’re you? Because we, the unwashed masses—your customers—aren’t qualified to know what’s good for us? Because we’re dumb enough to get upset when we discover that our data is being used in ways that we find distasteful?

Look, I worked in retail for a dozen years. I understand that the customer is not always right. Sometimes customers are flat-out wrong. But for those in power to argue that workers and customers are not only wrong, but are insolent to even request what’s rightfully theirs? That’s a new dynamic, and it’s more than a little scary.

These stories of corporate arrogance seem to be popping up more and more every day. We recently saw what happened when United denied the basic humanity of its customers. Every time we go to a mall, we see how retail chains repeatedly ignore their commitments to customer service. When we go out to eat, we see restaurant owners complain about having to pay their employees a living wage. The entitlement is staggering.

Actually, it’s more than just entitlement. It’s derangement. It’s what happens when the balance between workers and owners is thrown out of whack, and when investors forget that an economy is more than just racking up points like life is some kind of pinball game. The dismissive, holier-than-thou attitude we’re seeing from Crissey and Chase and others is what happens when you’re repeatedly told that you’re a maker and everyone else is a taker. This is what happens when income inequality balloons out of control.

Happily, we seem to be reaching a turning point in this narrative. Customers and workers on social media are expressing their outrage in numbers that are impossible to ignore. People are speaking out on the left and the right against what they rightfully see as a system that has been rigged against them. Cities and states across America are starting to raise the minimum wage to sane levels again. It’s not an easy fight, but it’s a one that’s worth fighting.

Once we tighten that yawning gap between the haves and the have-nots, we’ll see less of this embarrassing behavior from investors and employers. From all the way over there, it’s hard for some of the wealthiest Americans to even recognize our basic humanity. It’s up to us to assert our worth, to tighten that gap, and to remind the one percent that we’re not “frustrations” or self-hating ignoramuses. We all—every last one of us—deserve respect. We are all American.

Daily Clips: May 1, 2017

American Airlines gave its workers a raise. Wall Street freaked out.

Why it’s hard to pay for Trump’s tax cuts:

One crucial question, though, is whether the tax breaks that Trump targets will generate enough savings to cover the cost — estimated at more than $6 trillion over 10 years — of what he wants to do, which is slash rates to 35 percent for top individual earners and 15 percent for corporations and pass-through businesses. If they don’t yield enough savings, his plan will boost budget deficits in a way that economists doubt would be offset by faster growth.

Trump says he’s considering moves to break up Wall Street banks: Top administration officials back return of Glass-Steagall Act.

Master negotiator Trump wanted $1.2B cut to National Institutes of Health. Instead it got $2 Billion boost.

Trump quote on the civil war:

He was really angry that he saw what was happening with regard to the civil war. He said, ‘There’s no reason for this.’ People don’t realize, you know, the civil war – if you think about it, why? People don’t ask that question, but why was there a civil war? Why could that one not have been worked out?

Trump’s tax cuts may be more damaging than Reagan’s

NYT Editorial Board nails Obama on his paid speech:

He wrote in 2006: “I know that as a consequence of my fund-raising I became more like the wealthy donors I met. I spent more and more of my time above the fray, outside the world of immediate hunger, disappointment, fear, irrationality, and frequent hardship of … the people that I’d entered public life to serve.”

Is it a betrayal of that sentiment for the former president to have accepted a reported $400,000 to speak to a Wall Street firm? Perhaps not, but it is disheartening that a man whose historic candidacy was premised on a moral examination of politics now joins almost every modern president in cashing in. And it shows surprising tone deafness, more likely to be expected from the billionaires the Obamas have vacationed with these past months than from a president keenly attuned to the worries and resentments of the 99 percent.

Daily Clips: April 28, 2017

Trump’s corporate tax cuts would increase deficit, and therefore are very unlike to pass

The Republican tax cut myth:

It’s worth remembering that the conservative Heritage Foundation made exactly the same argument about the 2001 tax cut that Secretary Mnuchin is making today. It issued a report on April 27, 2001 forecasting that by 2011, federal revenues would be higher with the tax cut than they would have been without it, due to higher economic growth, greater investment, and lower unemployment. In fact, real G.D.P. growth was half of what Heritage predicted and the unemployment rate was 50 percent higher. It predicted that federal revenues would equal $3.3 trillion in 2011 including the effect of the tax cut; revenues actually were $1 trillion less, $2.3 trillion.

American Airlines announces pay raises for pilots and shareholders freak

Trends in absolute income mobility since 1940

US economy has weakest quarterly performance in three years: So…is this still a part of the Obama economy?

Quote of the day:

Mr. Obama, who recently accepted a very lucrative speaking engagement on Wall Street, now looks like just one of the fortunate members of historically depressed minorities who mistake their own upward mobility for collective advance.