Saturday, March 15, 2014

Editorial: GOP Needs ACA Backlash


The Big Lies Republicans tell about “Obamacare” may have helped Republicans hold onto Florida’s 13th Congressional District in a special election March 11 as right wingers tested their messages claiming the Affordable Care Act threatened cuts in Medicare.

In the race to succeed the late GOP Rep. Bill Young in Pinellas County, Republicans filled the airways with ads that linked Democrat Alex Sink, the former state chief financial officer, to the health reform law, which she never voted on but tepidly supported and said she would try to fix. David Jolly, a Republican lobbyist, beat Sink by 48.4 to 46.6 percent. Sink led in the early vote, 48.5 to 46.2 but Jolly overtook her in the election-day vote. Democrats had high hopes in a district President Obama won with 50.7% in 2012, but Sink was a lousy candidate from outside the district who embraced austerity and was open to cuts in Social Security and Medicare that Republicans originally proposed — and she still made it a close race. Constant references to the “Obamacare mess” helped carry the day for Jolly in a low turnout election. Democrats will get another shot at the seat in the fall, when increased turnout due to what likely willl be a heated governor’s race could give the Democratic congressional candidate a better chance. And it would help if the candidate ran as a Democrat.

Right wingers have been trying to erode support for the Affordable Care Act by lying about it for the past four years. In a recent episode, the Koch Brothers-funded Americans for Prosperity PAC ran ads in Michigan claiming that Democratic US Rep. Gary Peters’ vote for Obamacare made Julie Boonstra, a 49-year-old cancer patient from Dexter, Mich., change her insurance plan and make her medication so “unaffordable” that she could die. Peters is running for the US Senate this year against Republican Terri Lynn Land.

The Detroit News checked the ad’s claims and found that the Blue Cross Premier Gold plan, which Boonstra was complaining about, will save her at least $1,200 compared with her former insurance plan she preferred that was ended because it didn’t meet the ACA’s coverage requirements. When advised of the details of her new plan, Boonstra said that the idea that it would be cheaper “can’t be true. ... I personally do not believe that.”

Kevin Drum of MotherJones.com noted of Boomstra, “it sure seems as if she’s been bamboozled by a bunch of fanatic Obamacare haters who have caused her a ton of pain and misery. Boonstra had some genuine problems with the rollout of the exchanges, just as many people did, but once that finally got straightened out, she ended up with coverage that was both better and less expensive than her previous plan. There’s no reason for her to be so anxious about her continued care.

“But she never really learned that. For purely venal political reasons, AFP found itself a woman fighting cancer and proceeded to stoke her fears of her new health coverage in order to get a TV ad made. A TV ad. These are people who, if there’s any justice, should not be sleeping easily at night. They are swine.”

But more people are learning the truth about the Affordable Care Act, as 942,000 people enrolled in private health insurance plans via the ACA’s health insurance exchanges in February, the US Department of Health and Human Services reported. So far more than 4.2 million people have gotten health coverage through the exchanges. Federal officials hope to get more than six million enrolled by the March 31 deadline to get insurance coverage (see healthcare.gov or call 1-800-318-2596).

An additional 4.4 million working poor have been found eligible for expanded Medicaid and the Children’s Health Insurance Program through federal marketplaces. And 260 million Americans who already had insurance coverage now have new standards and safeguards for their insurance, including free preventative care, an end to lifetime limits on healthcare costs and insurance companies no longer can deny coverage for pre-existing conditions.

The threat of losing insurance has kept millions of Americans tethered to dead-end jobs, particularly if they or their family members had chronic health problems. They are now able to retire and/or start their own business and still find affordable insurance.

Meanwhile, Republican “leaders” in 25 states are still preventing more than five million working poor Americans from getting Medicaid through the federally funded expansion. Health experts estimate that Medicaid shutout could cause 17,000 unnecessary deaths. (Subsidies are available for people making from 100% to 400% of the federal poverty rate to buy private insurance through the state exchanges, but since the law did not anticipate that states would be so mean-spirited as to pass up federal assistance that would pay nearly the entire cost of providing Medicaid for those living in poverty, the law did not provide subsidies for the working poor to buy insurance.)

Now that people are getting a better look at what the law really does, support appears to be increasing. A CNN poll conducted nationwide March 7-9 and released March 11, found that 39% of Americans support the health care law, up from 35% in December, while 57% said they opposed the measure, down five points from December. But those “opponents” included 12% who said they opposed the law because it’s not liberal enough — they want single payer.

Joan McCarter of DailyKos.com noted that most of the support was gained among college-educated people and those making $50,000, a good demographic to have on your side politically. Will that make Republicans rethink their approach on Obamacare? Probably not, but it does make life more complicated for them. It also shows that it’s smart politics for Democrats to keep campaigning on the law, but to talk about how they want to make it even better.

Kevin Drum also noted that ever since the law passed in 2010, about 40% of the country has opposed it, while more than 50% have either supported it or said they wanted it to go further. “This goes a long way toward explaining the supposedly mysterious result that lots of people oppose Obamacare but few want to repeal it,” Drum wrote.

While the corporate news media has focused on the “disastrous” Obamacare rollout in October which prevented many people from signing up during the first month of its operation, less attention has been paid to the poor customer service offered by the insurance companies that were the backbone of the old system and expect to profit from the new millions of customers.

The editor recently spent a few hours on the phone with customer representatives of a major insurance company, trying to straighten out a billing problem on a policy that is independent of the healthcare exchange. In January, I got a notice that the payment was not being automatically withdrawn from my checking account, as it was supposed to be. So after waiting on hold for 40 minutes I finally talked to a rep who “fixed” the automatic payment — or so I thought. Then in early March I was informed that my coverage would be terminated for lack of payment. This time I spent more than an hour on hold before I talked to a rep, who told me it looked like my coverage was intact, but if I wanted, I could talk to a billing specialist. After another 20 minutes on hold, I was connected with someone in the billing department, who discovered that my payments were being automatically withdrawn from my checking account, as my credit union statement indicated, but those payments were being credited to someone else. A week later the insurance company is still trying to straighten it out, and despite assurances that my coverage is intact I fear there is a 50-50 chance that if I show up at a doctor’s office with my insurance card, I’ll be told the insurance company says they’ve never heard of me. I hope to get it squared away by March 31.

So don’t tell me the federal government does a worse job providing insurance than insurance companies do. And Democrats shouldn’t be afraid to attack Republican efforts to prevent people from getting health care in this midterm election year. — JMC

From The Progressive Populist, April 1, 2014
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Wednesday, March 5, 2014

It’s time the West, Russia and Ukraine think about exchanging Crimea for money, stability and non-interference

By Marc Jampole

When representatives of nations get together to carve up territory to fabricate other nations, their process usually resembles that of unethical sausage makers. Take the abominations created by the winners of World War I: Yugoslavia was created out of Croatia, Bosnia, Slovenia and other geographical territories containing discrete cultures. Slovak-speaking Slovakia and German-speaking Bohemia were stitched together to form Czechoslovakia.  Modern Iraq comprises two territories that had frequently been in cultural clash since the Akkadians and the Sumerians of ancient times, plus land on which Kurds lived.

Funny, with all this slicing and dicing of territory, no one in the Western European imperium of that era thought that either the Kurds or the Armenians deserved their own country. That certainly wasn’t the case when the Hashemite family lost the war to control the Arabian peninsula to the Saudis in 1930. Britain helped the Hashemites (a family, not a people or ethnic group) install themselves as royalty over most of the homeland of the Palestinians, AKA Transjordan.

Many of the geopolitical troubles over the last few decades derive from these decisions almost a century ago to impose statehood on badly mashed-up geographies.

The aftermath of World War II wasn’t much better, with the British botching the independence of the Indian subcontinent and the weird division of much of Africa into nation states that disregarded ethnic boundaries.

In the case of the Crimea, however, the Russians brought it on themselves, or perhaps it’s more correct to say that Khrushchev brought it on Russia by giving Crimea to the Ukrainian Soviet Socialist Republic (part of the Soviet Union) in 1954 for administrative reasons.

If you go back far enough in history, many have laid claim to the Crimean peninsula, including the Cimmerians, Bulgars, Greeks, Scythian, Goths, Huns, Khazars, Kievan proto-Russians, Mongols, Tatars, Ottoman Turks, Venetians and Genovese. But since the 18th century, the Russians and then the Soviet Union, dominated by Russia, controlled Crimea until the breakup of the Soviet Union. Almost 60% of the population identifies itself as Russian (36% are Tatars, who are primarily Muslims and just 12% are Ukrainians). Although Ukrainian is the official language, most people speak Russian, most government business is conducted in Russian and most TV and radio stations broadcast in Russian.

Never fear, dear readers. I’m not getting ready to support the recent Russian saber-rattling in Crimea, whether it is conceived as army maneuvers or an invasion.  Russia is dead wrong to try to use military power to control events in a neighboring nation, just as the United States was wrong to invade Argentina (1890), Chile (1891) Panama (1898), Dominican Republic (1903), Honduras (1907 and 1911), Haiti (1913 and 2004), Mexico (1914 and 1923), Guatemala (1920, 1954 and 1966), Grenada (1983) and Colombia (2003). Except for Mexico, none of these countries borders the United States. In none of these countries is English a dominant or even prevalent language. There is no deep American cultural history in any of these countries.

American presidents have always given the same reason for all these invasions: to protect American lives.  Sound familiar? Of course it does, because it’s the essence of Putin’s rationale for using military force in Crimea. Putin is as transparently devious as the United States has been in all of its invasions of neighbors. We were wrong in every single instance and Russia is wrong now.

But wrong doesn’t seem to matter much when large and militarily powerful nations flex their muscles in their sphere of interest.

Every option seems onerous for the West and especially for the United States, still broke from prosecuting two goalless and mismanaged wars. Civil war in Ukraine, a broader conflagration with Russia, or an economic boycott of the world’s leading producer of fossil fuels makes both the West and Russia suffer. Economies are so intertwined in the new world order that any major showdown will hurt both parties. Putin knows that misery to his people and loss of income to his friends will come, which is why he is moving carefully while asserting what he thinks is Russia’s right to hegemony. Similar concerns explain why the United States and our allies are also responding gingerly.

It’s time to start thinking creatively. Let’s start by making a distinction between the Crimea and the rest of eastern Ukrainian in which Russian speakers predominate. Where Russia ends and the Ukraine begins is subject to dispute in the eastern part of the Ukraine. It’s one flat prairie for a long stretch. Crimea, by contrast, although hanging on as if by one finger to Ukraine, is a discrete territory which in every way is more Russian than Ukraine. If I were dictating foreign policy for the United States and our allies, I would let Russia have Crimea in return for three concessions:
1.      Russia agrees not to interfere in any way in Ukrainian elections.
2.      Russia removes any troops it has from the non-Crimean part of Ukraine.
3.      Russia continues to provide support to the Ukrainian economy by selling natural gas to it at discounted rates and giving loan guarantees for at least 25 years.

The trade of Crimea for money and stability is not appeasement, as Russia will pay a price for the return of Crimea. It really is a win-win for everyone except for the small number of ultra-nationalist Crimean Ukrainians. It avoids both a military and an economic conflagration. The Ukrainians get a lot more out of the deal than the Mexicans, Guatemalans or Haitians did from U.S. invasions and Russia doesn’t really get that much—just return of a small piece of land over which it has had cultural control for many centuries. It corrects a mistake that Khrushchev made some 60 years ago.  Would that all the mistakes of the so-called nation-builders were that easy to correct.

Sunday, March 2, 2014

Editorial: Make Businesses Pay Their Way


President Obama got the ball rolling on a much-needed increase in the minimum wage with his Feb. 12 executive order that federal contractors pay at least $10.10 an hour. With Republicans blocking any effort to raise the federal minimum wage for other workers from the current $7.25, progressive advocates should take up the initiative at the state and local level and see if putting the wage hike on the ballot might goose low-income workers to get out to vote in November.

We think a living wage is a good deal not only for workers, but also for ethical business owners who already provide a fair wage and benefits for their employees. How can an ethical business owner compete with an unscrupulous business owner who pays the minimum wage and no benefits, forcing his employees to rely on food stamps, public assistance and charity to provide for their families? That amounts to socialism for businesses and gives the cheapskates an unfair advantage in the marketplace.

The Congressional Budget Office on Feb. 18 reported that a $10.10 minimum wage would mean higher earnings for 16.5 million workers, resulting in $31 billion in higher earnings, and it would lift nearly one million Americans out of poverty. The CBO also projected that the increase could decrease employment by 500,000 jobs, though economists said there is minimal evidence to support that projection and the additional money in workers’ pockets would stimulate businesses and actually cause a net increase in jobs.

The Gap Inc. announced Feb. 19 that it would set $9 as the minimum hourly rate for its US work force this year and $10 next year, resulting in a raise for 65,000 of its 90,000 employees. Even Walmart, which we count among the cheapskates, appears to be coming around, as the company announced it would not take a position on minimum-wage proposals so long as they didn’t target particular employers and had some provisions to “manage the impact,” like a phase-in period. Perhaps coincidentally, Walmart, like other retailers, had a tough Christmas season as cuts in food stamps and higher payroll taxes reduced disposable income for its core customers. Extra bucks in the working poor’s pockets go straight to Walmart’s bottom line.

One of the themes we hear from conservative economists is that people who prefer a higher minimum wage instead of an increase in the earned income tax credit are motivated by an anti-business animus. We don’t see it that way. Increasing the minimum wage and increasing the earned income tax credit are both ways to help the working poor. By increasing the minimum wage, we force businesses to provide something closer to a living wage. By increasing the earned income tax credit for low- to moderate-income working individuals and couples — particularly those with children — we force all taxpayers to subsidize skinflint business owners who are too cheap to pay a living wage that will support a family.

So it’s not anti-business to support a higher minimum wage; it’s anti-cheapskate. And honest business owners who pay their employees a fair wage should welcome an increase in the minimum wage, which puts them on a more level playing field with the chiselers.

Also, the business that refuses to provide health care for its minimum-wage workers forces local hospitals to provide that care, a large portion of which probably will be uncompensated. So cheapskate businesses are the real “takers” in today’s economy.

And when the discussion comes around to tax reform, as House Ways and Means Chairman Dave Camp (R-Mich.) just debuted a proposal to “simplify” the tax code, remember that the federal government needs to come up with revenue equal to about 20% of the gross domestic product to pay the bills, as Bill Clinton proved when he last balanced the budget in FY 2001. George W. Bush rejected the balanced budget with his cuts for the wealthy, and the national debt was off to the races.
Camp proposes to shrink the tax brackets to two — 10% and 25%, with a 10% surcharge for people earning more than $450,000 and a new tax on assets for big banks. But Republicans won’t agree to a tax on bank assets and any time they get the tax rate on the rich much below 39.6%, they have to make it up by increasing revenue from lower- and middle-income taxpayers. That’s just simple arithmetic, because cutting food stamps and making life miserable for poor people won’t make up the difference.

Plenty of Targets for Pentagon Cuts


Defense Secretary Chuck Hagel is proposing to cut the size of the Army from 490,000 before the sequester to approximately 440,000. In asking Congress for $496 billion for the 2015 fiscal year, which would cut the Pentagon budget by $75 billion over two years, Hagel also proposes to limit military pay raises across the board to 1%, and freeze pay entirely for generals and admirals for one year. The budget also proposes to reduce subsidies to military commissaries, which will make goods purchased there more expensive, limits housing allowances for military families and increases health insurance deductibles for families of service members and retirees.

Of course, $496 billion is not all the Pentagon is asking for. President Obama is expected to ask Congress to approve a separate $26 billion appropriation for aircraft and weapons systems and then there’s the off-budget overseas contingency account, which is about $85 billion this year and can be used to cover shortfalls in operating expenses. And the Pentagon budget does not include money spent on the CIA, the NSA and other secret agencies, at least $49 billion in 2013 (reduced from $53.7 billion by the sequester). More than two-thirds of that goes to private contractors.

It’s reasonable to reduce the size of the Army, which peaked at 570,000 during the height of the Iraq and Afghanistan wars, but it’s wrong to cut salaries and benefits of soldiers and veterans to reach arbitrary spending limits of the sequester. Markos Moulitsas noted at DailyKos.com (Feb. 25), “not only is proposing benefits and pay cuts wrong on policy, it’s wrong on the politics. You’d have to be a suicidal moron to vote for any such cuts, it doesn’t matter what district or state you represent. By including such cuts in the proposal, Hagel has guaranteed that the cuts — already controversial to begin with — are dead on arrival.”

There are plenty of places the Pentagon can cut before it gets to soldiers’ pay and veterans’ benefits. First, Hagel should cut weapons systems that are designed for threats that no longer exist, such as the Lockheed Martin F-35, a single-seat fighter designed to perform ground attack, reconnaissance and air defense missions with stealth capacity at a cost estimated by the Project on Government Oversight (POGO) at $181 million each for the Air Force version to $299.5 million each for the Navy carrier-capable version. It’s a fine aircraft, but no nation’s air force can challenge the battle-tested fighters and bombers we already have. In fact, the US spends more on its military than the next 10 nations (including our allies) — and the Pentagon spends six times more than China.

Military spending, at $682 billion in 2012, accounts for 20% of federal spending — as much as Social Security, or the combined spending for Medicare and Medicaid. Scott Amey of POGO noted that in 2010 Defense spent $72 billion on its 790,000 civilian workers ($108 billion if you include overhead) and $253.8 billion on military contractors. That’s a good place to cut.

It’s hard to find a figure on how much it costs to garrison the American Empire overseas, but in 2010, the White House’s bipartisan deficit commission suggested cutting US bases in Europe and Asia by one-third, which it estimated would save $8.5 billion in 2015 — which is low-balling it. Of course, when you have 11 aircraft carriers you have cruising military bases, at a cost estimated at $5.3 billion for Navy vessels and personnel. And the Navy will keep its carriers and get two new destroyers and two new attack submarines under Hagel’s budget. — JMC

From The Progressive Populist, March 15, 2014
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Saturday, March 1, 2014

Snake Oil

Graphic by Kevin Kreneck

Thursday, February 27, 2014

Richard Berman, right-wing PR hack, tries “red baiting” proponents of raising minimum wage

By Marc Jampole

Richard Berman is the kind of unethical public relations executive who gives the PR profession a bad name. His métier is to use right-wing money to establish and operate so-called think tanks that spew out spurious and misleading position papers, opinion articles and reports that support his clients’ positions on issues.

His Employment Policies Institute (EPI), for example, works diligently against raising the minimum wage, health care mandates for employers and mandatory sick leave. Berman tries to hide both the fact that his think tanks are propaganda machines and the names of his clients.  This deception often works, as he provides fodder for Fox News, the Wall Street Journal, Rush Limbaugh and other right-wing media.

Berman and EPI hit a new low in a full-page article in the New York Times that takes the form of an open memo to President Obama about the 600 economists that the President cited as favoring raising the minimum wage.  The memo essentially repeats quotes from or about (we’re never sure) eight of the 600 economists that suggest that they are Marxists or anti-American.  The first six are identified as Marxists, where as the seventh makes the mistake of criticizing U.S. foreign policy and the eighth questions the official account of 9/11. A legend at the bottom of the ad says, “Many of the 600 economists you rely on are radical researchers or full-time employees working at union-backed organizations.”

Calling opponents communists, Marxists or socialists is an old trick of the right wing that predates Wisconsin Senator Joseph McCarthy, who provoked the country into a massive witch hunt against so-called communists and fellow travelers in the late 1940s and early 1950s with lies about identifying huge numbers of communists working in government positions. McCarthy’s red baiting resulted in large numbers of teachers, film professionals, lawyers and others losing their jobs because at one time or another they had joined or went to meetings of left-wing organizations.  It took a lawyer for the U.S. Army to jolt the country out of this “red terror” with his comment that McCarthy had lost all sense of shame by accusing the army of harboring communists.

The ad is odiously misleading on many levels. Let’s start with the simple fact that there is nothing wrong with having socialist or Marxist leanings. It doesn’t mean that you are anti-democratic or anti-American. It also doesn’t mean that your economic research or analysis is suspect. Samuel Bowles, Immanuel Wallerstein, Richard Wolff and David Gordon are all well-known 20th-century Marxist economists or economic theorists who have published viable research.

But even if you accept that Marxist economics is not a viable alternative to classical economic theory, the ad still smells like yesterday’s tilapia. For one thing, there’s the conflation of “radical researcher” and “union-backed groups.” Both radicals and unions are thrown into the same grouping. The not-so-hidden message is that there is something radical and inherently bad about labor unions.

Moreover, there is the use of the word “many” to describe the numbers of suspect economists on the list.  Why can’t Berman’s group give us an exact number? They found eight to smear, but that’s 1.33% of the 600. Take them off the list and there are still 592 economists who support raising the minimum wage. The ad is able to stipulate 45% as the exact percentage of those economists not labor specialists who support the minimum wage increase, leading me to believe that if there were many more than eight who had Marxist leanings, the ad would have used that number.

The ad’s implied accusation, of course, is that anyone who is on the left, has ever criticized U.S. policy or works for a union will “cook the books” in their research. All we have here is repellent name-calling, and is often the case, the name-callers are guilty of the crimes they accuse others of committing. Reputable academics have frequently found EPI’s research to be misleading or based on skewed or cherry-picked data.

What’s most interesting about Berman‘s pot pointing out the dirt smudges on the leftists’ kettles is that the people the ad implies are distorting their research all freely and openly admit the names of their organizations or political sympathies. Berman and his clients hide behind several layers of organizations.

This smear ad reflects the desperation felt by the right-wing and corporations. Theyknow that the current minimum wage must increase by 47% for it to have the samepurchasing power as it did in 1968. They know that a good part of the increased profit margins and profits that corporations enjoy compared to 30 and 40 years ago comes from squeezing down the salaries of all workers by suppressing adjustments to the minimum wage for inflation, killing unions and privatizing government jobs. They know that once the minimum wage goes up, they’ll have to give raises to other employees. They like the current arrangement in which a growing part of the income pie goes to owners and executives and a shrinking share goes to employees. They can see that people are fed up with the gutting of the middle class and ready to embrace a higher minimum wage. They understand that a higher minimum wage is probably inevitable.

Wednesday, February 26, 2014

As demise of Mt. Gox shows, anyone investing in bitcoins is a fool

By Marc Jampole

Money has always been based on faith, even when it was theoretically convertible to gold or another precious metal. Throughout history, governments and economies have sometimes used gold, silver or copper as money, putting their faith in the value of these metals to others. But sometimes they have also used beads or shells or anything that can be counted, stored and transported without deterioration. It would be unwise, for example, to use raspberries as currency, because they spoil so quickly.

A better name for money is “currency,” because the word contains a definition of what money does—allows objects and services to flow without encumbrance between people and organizations. The current of these goods and services—their exchange from person to person—would be much harder if there weren’t some easy thing to count, handle and transfer to serve as a medium of exchange. I can’t negotiate with the supermarket, dry cleaner and bus driver to have them take something I’ve written in return for groceries, cleaning services and in-town transportation. They will take my money, though, and fortunately other companies will pay me the same to write articles, commercials, brochures, blog entries and websites.  Multiply my situation millions upon millions of times and you’ll see how much we as a society depend on having currency. Money is the lowest common denominator of exchange value.

Currency creates value relationships between different items. A loaf of bread may cost three dollars and a ticket to a first-run movie may cost twelve dollars, meaning that theoretically a movie ticket is worth four loaves of bread, except during a famine when four tickets to the movie might not even be tradable for a single slice of bread.  

In using money, we engage in an act of faith—faith that what we accept will have just about the same value when we want to spend it.  Usually governments issue currency and our faith in the currency reflects are faith in the government and the economy it controls. 

Having more than one kind of currency issued by more than one source by definition creates a value relationship between the different currencies, similar to the value relation between all products and services. Any value relationship is subject to change. For example, the euro, which serves as currency for 23 countries, may be worth $1.40 one month and $1.25 another. Political and economic events and decisions can affect the relationship between two currencies, just as it can affect the relationship between specific goods and services.

Without money, it’s impossible to conceive of any kind of complex economy. And yet only our collective faith in any specific type of money will enable us—society—to use it. If we didn’t believe that it would be accepted as exchange value by others, it would have no value to anyone.

Which is why anyone who invested even one dime in bitcoins was and is a fool.

The Bitcoin system is a computer-controlled private network consisting of s series of private enterprises that have agreed to follow the same protocols for “printing,” distributing and setting the value of bitcoins. The bitcoins exist entirely as numbers in accounts; there are no physical versions such as coins and paper bills. You can’t go to a bank and get a few bitcoins. Like all currencies, bitcoin value floats and is determined on the open market. If you bought one bitcoin a year ago, it’s worth more today—that is, unless you were holding it at Mt. Gox, which just went under. In that case, you may have lost everything. If an American bank fails, the money in your account is insured (up to $250,000 per person per bank). No such protection exists for those holding their bitcoins at Mt. Gox.

I fail to see any advantage of using bitcoins over euros, dollars, yuan or other currencies. All of these currencies are subject to failure—except that individual institutions and businesses fail much, much more frequently than governments do.  Dollars are backed by the “full faith and credit” of the U.S. government and euros are backed by the full faith and credit of the EU. What backs bitcoins? The full faith and credit of the Bitcoin system? What’s that?

Other than currency failure, there is another drawback to bitcoins: Organizations and individuals have to agree to accept payment in bitcoins, whereas they all accept the currency of the country in which they do business. Only if and when a significant number of organizations begin recognizing bitcoins as currency will it have a true exchange value. But the rampant speculation that makes bitcoin’s exchange value jerk up and down dramatically serves as an impediment for corporations to accept them as payment. Who wants to accept a bitcoin worth $579 the moment you sell your product knowing it may only be worth $400 in a week? That’s speculation, which, by the way, is a polite way of saying “gambling.” That’s what buying bitcoins has been from the start—nothing but a gamble.

Some may argue that one could use the bitcoin to hedge against a decline in all world currencies.  What they’re really saying is that an artificial currency that exists only as numbers in computers is a better hedge against a regional or worldwide economic disaster than gold or silver—things that are finite (you can’t print more gold) that you can hold, barter and use to make things.

People are attracted to the bitcoin concept because it represents the pie-in-the-sky ultimate in privatization. Instead of using government-issued currency, we’ll use private currency. But the bitcoin adds nothing to make the economy, society or individual asset holders any richer or safer. In fact, the unusual speculation in bitcoins makes it less safe as an investment. It may go up significantly in value, but it’s just as likely to go down.

People like to speculate, especially rich folk who buy paintings, baseball cards and vintage cars hoping they will increase is value. But if you buy a Manet and suddenly the world hates Manets, you still have a pretty picture. With bitcoins all you have is a bunch of numbers on the screen.

I’ll stick to dollars, euros and yuan—with an occasional Swiss franc thrown in for balance.

Friday, February 21, 2014

Wall Street Journal & New York Times cover same event. In one paper, audience loves Christie, in other they hate him

By Marc Jampole

Today we saw a duel for spin control between our two most prominent newspapers, the New York Times and the Wall Street Journal.

The spin concerned how to interpret the response that New Jersey Governor Chris Christie received in his first town hall meeting since the Washington bridge scandal burst into national consciousness a few months ago.  It was the 110th town hall meeting Christie has held since assuming the mantle of Governor of the Garden State. These town hall meetings have come to symbolize the image of Christie that the mainstream media liked to portray before Bridgegate: open, direct, frank, straight-talking, action-oriented. This town hall meeting took place somewhere in Republican-leaning Monmouth County near the Jersey coastline that Superstorm Sandy battered.

The headlines in the print versions say it all:
WSJ: “Christie Style Is on Display” (which in the Internet version became the more objective “Christie Hosts First Town Hall Since Scandal”)
NYT: “Christie Finds Hostility in Setting He Once Ruled” (which was also changed in the Internet version to “For Christie, Awkward Return to a Setting He Once Ruled” 

The first sentences of the respective stories—in print and online—seem to be describing different events:

WSJ
He consoled displaced Superstorm Sandy victims, joked about his undying love for Bruce Springsteen and even used salty language at times as he bantered with detractors and admirers.
It was mostly vintage Chris Christie on Thursday at the Republican governor's first town hall meeting since last June

NYT
When Chris Christie started to talk over a complaining questioner, a signature tactic of the bellicose, pre-scandal governor, the audience here briefly turned on him.
“Answer the question,” some shouted.
When he took a microphone from a long-winded speaker, the man startled Mr. Christie by snatching it right back.

Each story builds on the basic idea established in the print version of the headline and the first paragraph. The NYT version basically shows a hostile crowd fed up with Christie. The WSJ version depicts an accomplished and popular politician using his skills to have the audience eating out of his hand.

The rival newspapers even differ in where they say the meeting took place:  the dateline in the Times reads Port Monmouth, NJ, while the dateline in the Journal says the meeting occurred in Middleton, NJ. When you input the two place names into Google Maps, they show up as being about four miles away from each other, but we’re definitely talking about the same meeting. We can recognize three or four of the same people in the same position relative to the meeting room in the photos used in both papers.

Which story is true? As a progressive who abhors the crony capitalism at which Christies seems to excel, I want to side with the Times version of the facts and a careful reading of the two stories does reveal that the Times has more specific detail. But based on my decades as a news media analyst, I’m guessing that they’re both wrong—and they’re both right. 

The centrist New York Times and the right-leaning Wall Street Journal are both trying to define the storyline going forward: The Journal wants Christie to recover and be the victorious GOP hero in 2016, whereas the Times—I’m not sure what the Times wants when it comes to the Christie story, but let’s assume that despite liking Christie in the past, it has turned against the big guy because of Bridgegate.

We see different media and different political leaders and parties vie to control public perception of a story all the time. Centrists and left-leaners saw only the mostly good news in the Congressional Budget Office analysis of the impact of raising the minimum wage to $10.10 an hour on various aspects of the economy, whereas right-wingers clutched to the probably wrong estimate that such an increase would lead to a three tenths of one percent increase in unemployment. The rollout of the Affordable Care Act and the investigation of the Benghazi incident are two other recent examples of different parties and media outlets trying to place a different spin on the same facts.

But just as often, the entire mass media goes with the same spin, and usually it’s wrong. Let’s take two examples from four years ago:
  • All the media invoked the Glenn Beck rally on Constitution Mall in Washington, D.C. as proof of the ascendancy of the Tea Party in the lead-up to the 2010 Congressional elections and as proof that the media should be covering only Tea Party campaigns. But the most reputable sources estimated that the rally attracted 85,000, the same number who attended the mostly ignored and forgotten union-oriented rally in favor of progressive policies at the same location a few weeks later. Why was one the symbol of a political sea change while the other wasn’t?
  • A 2010 study by the National Center for Health Statistics revealed that that more than 61% of all women live with someone else in a romantic or sexual relationship sometime in their lives without the benefit of marriage. All the news media, top to bottom, ignored or buried this finding, preferring instead to report that the study showed people who cohabit are 6% less likely to be together 10 years after marriage than people who don’t live together before getting hitched. Instead of presenting a truly dramatic change in social mores, the mainstream media preferred to depict a threat to the institution of marriage.

In both of these stories, myths and political desires superseded a concern for the facts or their real significance. These stories exemplify my belief that at the end of the day, most mainstream media really do agree on the big stuff. Before questioning this opinion, try to find the last time the Times published any story that supported or discussed lifting the cap off income that must be assessed the Social Security tax. Or go back to see how the Times initially covered the Occupy Movement or the proposal by New York Mayor (then candidate) Bill De Blasio to tax those who make a million a  year or more to pay for universal pre-K.   The Times’ position on Occupy and pre-K funding was similar to the Wall Street Journal’s until the people spoke and made their position clear.

What’s a poor truth-seeker to do? For one thing, we should be aware of the predilections and prejudices of all media. We should learn to suspect the reports when they seem to go against common sense or they don’t have a lot of specifics. Beyond that, it’s probably wise to read a variety of media from the left, right and center, and to make sure that the stories come from different sources. For example, you can typically read hundreds of versions of the same story using the same facts but with slightly different headlines every day, since most of the stories we see are reprints, interpretations or revisions of original sources. Quite often whether you read the story in the St. Louis Dispatch or the Los Angeles Times or see it on the local CBS affiliate in Denver, it’s the same story written by the same Associated Press, Gannett or Bloomberg News reporter. If you really want to know what the news is and what it means, you’ll have to consult several independent sources, something that’s much harder to do since the consolidation of ownership of media outlets. 

Wednesday, February 19, 2014

CBO estimate on additional unemployment from raising minimum wage is probably wrong

By Marc Jampole

The announcement by the bipartisan Congressional Budget Office (CBO) that raising the minimum wage to $10.10 an hour will lead to 500,000 jobs disappearing is just wrong. Now I’m not saying that the report’s authors are lying or stupid, just that they are making the wrong assumptions or looking at the numbers in the wrong way.

The CBO admits that its numbers are a guess at best, but that admission is buried in the fine print.  In Appendix A to its report, CBO says that it reviewed a large body of research on what it calls “employment elasticity.”  In economics, elasticity is how sensitive one economic variable is to another. A simple example of elasticity is price: If we double the price of a product, how many fewer people will buy it? Clearly, doubling the price of something that people need or want very badly such as milk or a college education will have less impact on demand than doubling the price of a luxury, such as a meal at a fancy restaurant or jet skis. Or consider what would happen if twice as many people suddenly wanted something of which there was a finite amount, like gold in times of economic turmoil. But twice as many people wanting Doritos might not lead to such a dramatic rise in the price of each box, because, as the man says, “We’ll make more.” Many factors go into creating a relationship between two economic variables.

One truism of economics is that the higher the price the lower the demand. Economists accept it as a given, much as mathematicians accept as a given that the shortest distance between two points is a straight line. But in some cases, demand is more elastic (stays the same or close to the same unless there is a steep price increase), as college education has proven to be.

“Employment elasticity” measures how the market will respond when the minimum wage is raised (or lowered).  But all the measurements use methodologies, each of which employs a different series of variables and makes a different set of assumptions. Appendix B of The CBO’s report lists dozens of methodologies and studies of methodologies that it considered. Some concluded that raising the minimum wage would have a negligible effect on unemployment; some said as many as a million jobs would be lost.  Instead of weighing the relative merits of each, the CBO took an average. That’s what the 500,000 is—the midpoint in a bunch of generated by a  bunch of different methodologies. And the methodologies only measure teen unemployment! CBO uses another set of methodologies to infer the effect of raising the minimum wage for the entire economy based on what happens to teens, our most inexperienced and unskilled workers.

I’m inclined to believe the studies that show a minimal impact on unemployment by raising the minimum wage to $10.10 and seven Nobel prize-winning economists, four former presidents of the American Economic Association and more than 600 other economists agree with me.  The Nobel laureates and professors are going to give you their mathematically based models. Let me tell you what happens in the real world.

In the real world, a business increases its profit by either growing its market or lowering costs. Every successful company is constantly looking at both. Part of cost-cutting is to make sure your labor costs are as low as possible. So in theory—let’s call it the efficient company theory—no business ever hires someone they don’t need and can’t make money from because it would unduly raise costs.  In a like manner, no business ever lets someone go just because they cost too much without replacing that person because they need someone to do the job (having not hired too many to begin with).

Now the real world is a little messier, as the following examples suggest: A large business may reevaluate labor needs every six months (or two years) and within the six month period have too many (or too few) employees but hasn’t gotten around to making the routine adjustment. A small business owner may have lost a large share of her business, but is reluctant to lay off people in case business turns around in a month or two. A new labor-saving technology is on the market and a business is evaluating it.  A company will not refill a position once someone retires. Or how about the real estate profession during the bubble that was destined to end? In all these cases, companies are carrying excess labor, and a rise in the cost of labor may make them change their minds quickly.  These job losses aren’t caused by the increase in wages. The job loss was activated before the increase in wages.

I would consider these job losses to be noise or leakage in the economic system, similar to the concept of the natural rate of unemployment, which is the unemployment rate that occurs with full employment, stemming from the fact that there are always people looking for jobs and employers looking for workers. I’ve read that the natural rate of unemployment used to be 4% but is now higher.

What I’m saying is that any increase in unemployment because of an increase in the minimum wage is nothing more than noise (or friction as Milton Friedman and others called it). I’m not saying that the noise or friction that prevents companies from being one hundred percent labor efficient is that same 4+% as the friction that explains why unemployment never falls below a certain floor. But even if it were only one tenth as much, that would still compute to hundreds of thousands of jobs that these methodologies may be counting as losses because of a rise in the minimum wage to $10.10. The noise factor almost certainly explains why some estimates are so much lower than others.  

The 500,000 who CBO is predicting will lose their jobs if the minimum wage reaches $10.10 would raise unemployment by three tenths of a percent. That’s 500,000 out of more than 166 million jobs. So even if CBO is right, it sounds like they are measuring noise for the most part, which in this case means the number of jobs that would have been lost no matter what. 

Saturday, February 15, 2014

CBO SAYS: REALLY, GOP, WE DIDN’T SAY OBAMACARE WOULD KILL 2.5M JOBS


In a reflection of just how committed Republicans are to lying about that Congressional Budget Office report on how many people might end up leaving their jobs as a result of the Affordable Care Act, CBO Director Doug Elmendorf felt compelled to put out another memo, this one reiterating what was clearly stated in the actual report: As many as 2.5 mln people may choose to leave full-time work when they have the option of getting affordable health insurance somewhere, Joan McCarter noted at DailyKos.com.

One of the “Frequently Asked Questions” in the memo is “Will 2.5 Million People Lose Their Jobs in 2024 Because of the ACA?”

Elmendorf answers, “No, we would not describe our estimates in that way.

“We wrote in the report: ‘CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5% to 2.0% during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor.” The reason for the reduction in the supply of labor is that the provisions of the ACA reduce the incentive to work for certain subsets of the population. ...

“Because the longer-term reduction in work is expected to come almost entirely from a decline in the amount of labor that workers choose to supply in response to the changes in their incentives, we do not think it is accurate to say that the reduction stems from people ‘losing’ their jobs.”

Dean Baker wrote at HuffingtonPost.com (2/12) that the withdrawal of people from the labor market would likely have a positive effect on those who want to work. “At a time where we still have millions of people unemployed or underemployed, the people who retire or cut back hours to be with kids will be opening up jobs for younger workers unable to find work or full-time jobs. Since we have a Congress that is unwilling to take the steps to increase demand in the labor market, the best way we may have of increasing job openings is by reducing supply.

“The reduction in labor supply is also likely to have a positive impact on wages. In fact, the CBO numbers implied that wages would on average increase as a result of the ACA. While it projected hours worked would fall by between 1.5-2 percent, it expects that compensation will only fall by 1%. This implies an increase of 0.5-1 percent in average hourly compensation.”

THOUSANDS WILL DIE FROM MEDICAID OPT-OUT


As many as 17,000 Americans may die as a result of the refusal of 25 states to accept federal funds to expand Medicaid to cover families who live in poverty. Researchers at Harvard Medical School and the City University of New York estimate that between 7,115 and 17,104 deaths will be attributable to the lack of Medicaid expansion in opt-out states.

Medicaid expansion in the opt-out states would result in 712,037 fewer persons screening positive for depression and 240,700 fewer individuals suffering catastrophic medical expenditures. Medicaid expansion in these states would have resulted in 422,553 more diabetics receiving medication for their illness, 195,492 more mammograms among women age 50-64 years and 443,677 more pap smears among women age 21-64.

The study, “Health and Financial Harms of 25 States’ Decision to Opt Out of Medicaid Expansion” by Sam Dickman, David Himmelstein, Danny McCormick, and Steffie Woolhandler, was published on the HealthAffairs.org blog (1/30).

In Texas, the largest state opting out of Medicaid expansion, the researchers found 2 mln people who would otherwise have been insured will remain uninsured due to the opt-out decision. Medicaid expansion in Texas would have resulted in 184,192 fewer depression diagnoses, 62,610 fewer individuals suffering catastrophic medical expenditures, and between 1,840 and 3,035 fewer deaths.

GOP BLOCKS MEDICAID FOR NEARLY 6M



Approximately 5.8 mln of the poorest Americans who would have been eligible for Medicaid had their states expanded the program under the Affordable Care Act will either go uninsured or be forced to find other, more expensive means of health coverage, according to a detailed new county-by-county analysis by the Urban Institute.

Sy Mukherjee notes at ThinkProgress.org (2/11) that 25 states and the District of Columbia have committed to accepting generous federal funds to raise Medicaid eligibility to all Americans earning up to 138% of the Federal Poverty Level (FPL). Had every state expanded Medicaid — as the law originally intended — the Urban Institute estimates that 10.3 mln poor and uninsured adults would be newly eligible for the program.

Instead, just 4.4 mln uninsured low-income adults will become eligible in the pro-expansion states, while 5.8 mln will be shut out of Medicaid in the other half of the country — including more than 1 mln in Texas, where a quarter of workers are uninsured. And since the ACA did not expect states to refuse Medicaid expansion, it did not provide insurance subsidies for people earning poverty wages. So 27% of uninsured adults in states refusing Medicaid expansion would have been eligible for coverage had their states accepted it, and nearly 5 mln of these Americans are expected to fall into a coverage gap where they make too little money to qualify for the health law’s private insurance subsidies but too much to qualify for their state’s existing Medicaid program.

Opposition to the Medicaid expansion also disproportionately impacts poor people of color. An analysis by the Kaiser Family Foundation (KFF) found that approximately 60% of uninsured black Americans, 51% of uninsured Hispanics, and 53% of uninsured people of color generally have incomes below the Medicaid expansion threshold. In fact, the White House sent out a fact sheet to reporters (2/11) claiming that more than 95% of eligible uninsured Latinos would qualify for “Obamacare” subsidies or Medicaid coverage if every state agreed to expand Medicaid.

Consequently, existing health disparities among these groups in these states — which already struggle with public health issues such as obesity and diabetes — are expected to get even worse.

States that have expanded Medicaid have seen robust enrollment to date. For instance, West Virginia has already cut its uninsured population by a third thanks to the expansion. A recent study by Avalere Health concluded that between 1.1 and 1.8 mln of Americans who enrolled in Medicaid between October and December of last year became newly eligible under expansion. If the Urban Institute’s and Avalere’s figures are correct, than somewhere between 25% and 41% of the newly eligible working poor have already enrolled in government health plans.

But Medicaid expansion is still on precarious footing in red states. Arkansas Republicans, who struck a historic agreement with Democratic Gov. Mike Beebe and the Obama administration to implement an alternative, private plan version of the Medicaid expansion, have reversed course and are now considering nixing the hugely popular program. More than 80,000 low-income Arkansans would be kicked off their health plans if the GOP successfully repeals the so-called “private option.”

One of those residents would be 40-year-old Anita Geiger, a receptionist who works 15 hours a week at a school for disabled children. Geiger had a physical for the first time in five years after enrolling in a private option plan — particularly fortuitous because she found out she suffers from hypertension, which puts her at risk for a stroke, and can now afford medication for her condition. When the New York Times asked her how she feels about the prospect of being kicked off her plan by conservative lawmakers, she tearfully replied, “Have them walk in my shoes. I’m working, I’m going to school, I’m trying to better myself, and this is a help.”

Food Fight Fizzles


The $956 billion farm bill that President Obama signed into law on Feb. 7, after three years of wrangling and brinksmanship between the House and Senate, got mixed reviews from progressive advocates.

It’s a complicated bill, covering nearly 1,000 pages. The farm bill funds everything from school lunches and food stamps to soil conservation and crop insurance. It sets agriculture policy for five years but it allocates spending for 10 years. The biggest spending item is the food stamp program, now known as the Supplemental Nutrition Assistance Program (SNAP), which helps 47 million Americans. Over the next decade the farm bill cuts food assistance by $860 million a year, or about 1% of the total. That will cut benefits for roughly 850,000 families by an average of $90 a month, but it could be counted as a win since House Republican leaders wanted to cut $4 billion a year from food assistance. That would have tossed 3.8 million financially stressed families from the program.

The conference agreement included none of the draconian House provisions and it removes virtually no low-income households from SNAP, Robert Greenstein of the progressive Center for Budget and Policy Priorities reported. The SNAP cut tightens a loophole that allowed 17 states to stretch the benefit formula to boost the assistance above what it would otherwise be, he noted.

The bill continued subsidies for big agribusiness, despite both chambers previously committing to cut those subsidies. It eliminates direct payments amounting to $4.5 billion a year, which were paid to farm owners whether they actually farm or not. But the farm bill also increases crop insurance subsidies by nearly $6 billion; at least the farmer would have to incur a loss before collecting payments.

Among the highlights of the bill, according to Steph Larsen of the Center for Rural Affairs, is “conservation compliance,” which requires farmers receiving crop insurance subsidies to provide a minimum level of conservation, and Sodsaver, which would help preserve grasslands in six states. But the bill also cuts $4 billion from conservation programs.

On rural development, funding for rural programs is dangerously low, but the bill includes funding for two of the center’s high-priority programs — the Value Added Producer Grant program and the Rural Microentrepreneur Assistance program.

The bill provides continued funding for training and mentoring for beginning farmers and ranchers, with a new emphasis on veteran farmers.

The bill also allows colleges, universities and state departments of agriculture to grow hemp (the non-intoxicating variety of marijuana) on an experimental basis for industrial uses without being penalized by the federal government.

Sen. Tom Harkin (D-Iowa), former chairman and now a senior member of the Agriculture, Nutrition and Forestry Committee, said the bill “is a sound, balanced, bipartisan bill. ... This agreement is not perfect and each side had to give a little. For example, I had hoped the bill could do more for conservation, but recognize the limitations of this budget environment. So too did conferees have to negotiate on support for modest food assistance. I take solace in knowing that no one who needs this assistance will be kicked off the program.”

However, the Center for Rural Affairs ended up opposing the final Farm Bill. Traci Bruckner, the center’s senior associate for agriculture and conservation policy, said the conference committee stripped out bipartisan reforms, which passed both House and Senate, and which would have tightened the definition of being “actively engaged” in farming. The current definition allows mega-farms to gain additional payments by defining passive investors as qualified farmers, even though those investors provide no real labor or management on the farm, she said.

The Environmental Working Group credited Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) with pushing some of the positive features, including new conservation requirements for farm businesses that collect crop insurance subsidies and more funding for local and organic farmers. “But those important provisions are outweighed by new, expanded and largely unlimited subsidies that do too much to help the largest and most successful farm operations at the expense of family farmers and the environment,” said Scott Faber, EWG’s vice president of government affairs.

Still, many progressive producers were just relieved to get the bill through Congress. “The president’s signature brings closure to a long process of negotiations, sacrifice and compromise,” National Farmers Union President Roger Johnson said. “The result is a solid piece of legislation that provides an adequate safety net in times of need, aids the hungry, protects the environment, creates jobs, keeps Country-of-Origin Labeling (COOL) intact and helps bolster rural economies.

“I am pleased that we now have certainty for our family farmers, ranchers, fishermen and hungry Americans. NFU will continue to work with the administration and policymakers on the implementation of this bill so that the US agriculture industry can continue to provide feed, fiber and fuel for our country and the world.”

The National Family Farm Coalition counted as wins the retention of the COOL laws and the Grain Inspection, Packers and Stockyards protections; $4 billion allotted for livestock disaster funds; crop insurance payments linked to conservation compliance; and renewed funding for local and regional food systems.

NFFC Board President Ben Burkett said, “At least family farmers and ranchers are not wondering about the status of key programs, but many of the policies will continue to benefit corporate, export‐driven agriculture. 2014 is designated as the International Year of the Family Farmer, and we must keep in mind who real family farmers are and what they really need.”

Progressives doubtless would have gotten a much better farm bill if Stabenow and Harkin had been negotiating with Rep. Collin Peterson (D-Minn.), the ranking Democrat on the House Agriculture Committee, and if Nancy Pelosi had been calling the shots on the House podium. But since the left neglected to turn out enough voters to maintain the Democratic majority in 2010 and again in 2012, Stabenow and Harkin ended up haggling with House Ag Chairman Frank Lucas (R-Okla.) and Vice Chairman Bob Goodman (R-Va.) and they had to answer to a sizable House caucus in favor of doing away with food stamps altogether. Elections do matter.


Pete Seeger, R.I.P.


Pete Seeger, a great American troubadour and a hero in the struggle for civil rights during a dark period in our nation’s history, died Jan. 27 at a hospital in New York City. He was 94. The only time he wouldn’t “sing” was when Un-American House members in 1955 tried to force him to talk about his association with the Communist Party in the 1930s (actually, he offered to sing rather than testify). He was prosecuted for exercising his First Amendment right to keep his mouth shut about his participation in legal political activities. He was indicted in 1957 on 10 charges of contempt of Congress. He beat the rap in 1961 when an appeals court dismissed the indictment as faulty, but the blacklist kept him off network TV until 1968, when the Smothers Brothers put him on their variety show. In the meantime, he spread folk music everywhere he could, from schools to labor unions and civil rights rallies in the United States and around the world and wherever he went he urged everyone to sing out!

We’re proud that Pete was a subscriber to TPP and he bought a subscription for the New Orleans Public Library in 2006 as it was rebuilding its collection after Hurricane Katrina. (He let the subscriptions lapse — pay attention to those renewal cards and letters! — but we’ll reinstate the library subscription in his honor.) So long, Pete, it’s been good to know ya. — JMC

From The Progressive Populist, March 1, 2014
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Friday, February 14, 2014

Conservatives play Limbo Rock with proposals to lower minimum wage

By Marc Jampole

You can almost hear Chubby Checker intoning “How low can you go?” in the lowest register he could hit.

What made me think of Chubby’s hit, “Limbo Rock” is the limbo dancing that conservatives are doing with the minimum wage. It seems as if right-wingers are falling over themselves in advocating for a new minimum wage—that’s lower than the current paltry $7.25 an hour.  They want to reduce the incomes of our poorest workers as if the hourly wage were a Limbo bar and the object of the game was to lower it as much as possible.

In all cases, the right-wing Limbo-ists (or perhaps I should call them Limbaugh-ists) fervently declare that the lower minimum wage will benefit workers because it will enable businesses to hire more employees. The assumption—which common sense tells us is completely false—is that an employer will hire people they don’t need just because they can get them cheaply and that when wages rise, employers will fire workers whom they still need to operate their business. 

How low can you go?

How about $5.00 an hour, which is what retired public relations executive Robert G. Stayton thinks the minimum wage should be. His expertise, which he touts in an article titled “A Minimum Wage that Can Work” in the Wall Street Journal, is as a volunteer interviewer of the poor at a religious charitable organization in southwest Florida. Strayton pulls the $5 an hour number out of the air, just as he pulls out $3 as the future price of the McDonald’s $1 menu if the nation adopted the modest $10.10 an hour minimum wage that President Obama has imposed on government contractors for future contracts. Strayton’s math is shoddy: wages are one part of McDonald’s costs, which also include rent, utilities, raw materials and marketing. By increasing this one factor by 40% ($7.25 an hour to $10.10 an hour), he thinks the final cost will triple. I hope Strayton gets help with his taxes. If labor accounted for 75% of the cost of a $1 item (it doesn’t) and McDonald’s raised salaries 40%, then to maintain the same profit (not profit margin) would require Mickey D to sell the items for $1.30.   

Strayton provides no basis for his economic argument except a tired old theory that was disproven years ago. He does give an ethical basis for lowering the minimum wage, which is as insultingly condescending to the poor as it is self-serving for employers: “You'd think no one can value making $5 an hour. But for those in poverty, a primal need is immediate and reliable access to an income of one’s own. When one has nothing, anything becomes priceless. Watch the expression on the face of a poor person when you provide him or her with $2, $3 or $5 to put gas in a neighbor's borrowed car so he can bring free groceries, clothing, linens, housewares or furnishings from our organization back home. You'll see then the value of such a ‘trivial’ wage.”  That smile of a grateful poor person must make Strayton feel warm and fuzzy inside as he pours French Bordeaux into Baccarat glasses while enjoying the sunset from the deck of his yacht.

How low can you go?

How about $4 an hour, which is what Michael R. Strain is proposing in an article titled “A $4 Minimum Wage Can Get People Back to Work” published by Bloomberg News.”  Strain, a researcher at the notoriously anti-labor American Enterprise Institute, begins by bemoaning how little is being done by “our leaders in Washington” to address long-term unemployment in the United States, what he calls “the most immediate social and economic challenge facing the U.S. today.” 

Strain strains to show how much he cares about the unemployed. “Society owes these workers better -- creative public policies to help increase their chance of staying in the labor force. They want to work; they want to earn their own successes, to help the economy grow, and to support themselves and their families. But they can’t, in large part because they happen to be alive and working during a once-in-a-generation economic downturn.”

His answer is to reduce the risk to employers of spending $7.25 an hour for someone who has been out of a job for months or years, thus making employers more likely to hire the long-term unemployed. Strain couples this lower minimum wage with expanded earned-income tax credit or wage subsidies—federal transfer programs that supplement a worker’s wages with tax dollars.

In other words, Strain wants the government to subsidize businesses by allowing them to pay their workers even less than they do now. Strain is certain that employers will increase hiring, but why would they? If a company didn’t need the additional workers before, why would they need them now? What is more likely is that wages will go down and more employees of Wal-Mart, MacDonald’s and other low-wage companies will receive government assistance.  Right now 52% of fast food workers are using Medicaid, food stamps or the Earned Income Tax Credit programs. Do what Strain wants and that number will increase.

Strain calls it public policy, but I call it welfare for the wealthy, the only kind of economic stimulus program that conservatives like.

Shoddy math, false assumptions and a smug, self-serving moral tone always characterize these arguments against the minimum wage, extended unemployment benefits and food stamps.  All of it so they can steal more money from the poor. It’s pretty low, if you ask me. And just when you think that a right-winger has debased logic, reasoning and common sense as much as possible, another one emerges to lower the bar even more.

How low can they go? 
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