Blogs: Robert Borosage

McCain Pledges Allegiance to NAFTA

Robert Borosage — Tue, 01 Jul 2008 17:16:55 -0400

Arizona Sen. John McCain continues his rousing campaign tour of the swing states of NAFTA this week. He will celebrate July 3 in Mexico City after a jaunt through Colombia to pledge support for the pending free trade accord with that center of cocaine trade. He surely will increase his margin over Illinois Sen. Barack Obama among business elites in Mexico and Canada. Obama will travel to Zanesville, Ohio, once more exposing himself to McCain's jibes about embracing "protectionist" policies.

No, this isn't a joke. McCain is stumping Colombia and Mexico, a week after his visit to Ottawa, championing the North American Free Trade Agreement to business elites in those countries.

McCain's has a pat routine for these junkets. He piously intones homilies on the benefits of free trade: "We need stand up for free trade with no ifs, ands or buts about it. We let trade and globalization be politicized at our own peril." He repeats a sanctimonious pledge never to "dishonor" America by even contemplating any deviation from the "sacred" NAFTA treaty. He issues stern condemnations of the dangers of "mindless protectionism." And expresses his fervent faith in the ability of American workers to compete with anyone anywhere.

You can't teach an old dog new tricks, goes the old saw. And with McCain, it seems ever more obvious that you can't trust an old salt on a new ocean. He simply doesn't get it. For years, the trade debate featured the above mantra he repeats. Trade, by definition, benefited America. Sure, a few privileged union workers might lose their cushy jobs and padded salaries, but they would find new jobs in the expanding global economy. Americans would prosper from investments abroad, our financial services industry would capture the high end of the expanded world economy, we'd sustain our manufacturing edge by becoming more productive and we'd benefit from lower priced goods imported from abroad. The earth was flat, Tom Friedman taught us, and we're all the better for it.

Except it hasn't quite worked out like that. Productivity went up, but wages stagnated at best and insecurity increased. Corporations clubbed workers with the threat of moving abroad, and cut back on salaries, job security, and benefits like health care and pensions. Families went ever deeper into debt as the cost of basics—education, health care, retirement security, and now food and gas—soared. More and more workers lost good jobs, only to be forced into those that paid less with fewer benefits. And now with the global workforce effectively doubled as China and India and the former Soviet Union joined the global maw, it isn't just industrial workers at risk, but some 30 million jobs that could face offshoring, according to such sober free trade advocates as Alan Blinder. Financial services did prosper, until their greed and gambling blew up in the housing bubble.

The U.S. went further and further into global debt, running up trade deficits that are still $2 billion a day despite the decline in the dollar. Last month, the Chinese announced they were netting $2.5 billion a month—$100 million an hour—in foreign exchange. Their sovereign investment funds are now hunting for good deals across the world.

NAFTA, sold as a source of jobs for the U.S. and a solution to the immigration flows from Mexico, hasn't worked that way either. Our trade deficit with Mexico has soared from a basic balance before NAFTA to an all-time high of $74.3 billion last year. Mexico now exports more cars to the United States than the U.S. exports to the world. Immigration tensions grew as small farmers got displaced in Mexico by subsidized U.S. food exports, and started coming north in large numbers.

Elites found ways to protect themselves. Lawyers, doctors, prescription drug companies use licensing and patent laws to protect their wages and profits, but most Americans worry about how their kids were going to sustain a middle-class life style. Globalization isn't the only reason the middle class is declining—the war on labor, the worship of the CEO and other factors contribute—but it certainly is a significant reason.

And across the world, developing countries discovered the NAFTA model didn't work for them either. The countries that have enjoyed success—the Asian tigers, China—play by a very different set of rules. They target industries, and pursue aggressive mercantilist policies to capture export markets. They run up large foreign reserves to be able to protect their currencies from global speculators. China's bosses have been happy to lend us the money to keep buying the goods our companies were making over there—and will manipulate the value of their currency until they capture the markets they are seeking. But it is hard to argue, as McCain does, that free trade is spreading democracy across the world when the most successful economy is a communist dictatorship.

Now even champions of free trade, like former Treasury Secretaries Robert Rubin and Larry Summers admit this hasn't quite worked out as they hoped. Across the world, the revolt against the corporate trade model is growing. In the U.S., a majority —58 percent—of those polled in a January 2008 Wall Street Journal/NBC survey agreed that "globalization has been bad... because it has subjected U.S. companies and employees to unfair competition and cheap labor."

We face not a choice between "free trade" and "isolationism," as McCain claims, but the challenge of developing a serious strategy for sustaining a robust middle class in a global economy. It isn't a choice between keeping our word and "dishonoring" our commitments, but making a clear reassessment of how we get out of the hole we are in.

Sherrod Brown was elected to the Senate in 2006 through a campaign in Ohio focused on opposition to the trade treaties that have devastated manufacturing jobs in that state. He now has joined with other senators, unions, family farm groups, religious and public interest groups to put forth the TRADE Act. The bill calls for a halt on all new trade accords until the U.S. Comptroller General undertakes a comprehensive assessment of the benefits and the costs of our current agreements, looking at who has benefited—here and abroad—and who has suffered. The legislation then calls for developing a strategy that insures that the benefits of trade are widely shared, that we pursue a policy designed to benefit working people and Main Street, and not simply Wall Street. Obama has laid out elements of an alternative strategy that may form the basis of a new course.

McCain's response to this is like an Inquisition priest discovering free thinking in the pews. Doctrine is sacrosanct. Questioning it is dishonorable. He calls upon Americans to sustain the course we have been on, like lemmings marching stolidly to the sea.

He pretends this is an American tradition, claiming that "every time the United States has become protectionist... we've paid a very heavy price." But this ignores the entire history of this country's rise—with sharp eyed mercantilist trade policies behind tariff walls—to a world economic power with a broad middle class. "Yankee traders" were famed for cutting a tough, practical deal, not for sacrificing their interests for ideological principles.

Nor is McCain such an innocent. He says we mustn't "politicize" trade accords, but trade accords are already heavily politicized. Every trade agreement—particularly NAFTA—features fierce lobbying over every clause. McCain knows this because his entire campaign is staffed from top to bottom by corporate lobbyists, many of whom have earned a hefty buck lobbying to influence and pass trade accords. If McCain is elected, their clients know that they are in line to be first to the trough.

Saint John doesn't sully his rhetoric with these unseemly realities. He seems to want to make trade policy a centerpiece of his election campaign, and doing so will surely help him raise some dough. Obama should take him up on it. Let McCain stump the business elites of Mexico City, Bogota and Ottawa. Obama can join Sherrod Brown championing the concerns of working people in Zanesville and Flint and Pittsburgh. Let voters decide which candidate has his priorities right.

This post originally appeared on HuffingtonPost.com.

Time for a Grand Inquest into Bush's High Crimes

Robert Borosage — Wed, 25 Jun 2008 10:09:41 -0400

One of House Speaker Nancy Pelosi's first acts upon taking the gavel was to rule impeachment off the table. She wanted Democrats to focus on challenging the president on the war and on kitchen table concerns — from energy to education to health care. With Democrats now enjoying an increasing margin in generic polls and looking towards gaining seats in both the House and the Senate, the strategy certainly hasn't hurt politically.

But the constitutional implications are far more disturbing. This was dramatized as the Congress debated the Foreign Intelligence Surveillance Act reform legislation that will provide retroactive immunity to the telecommunications companies for warrantless interception of the conversations of Americans — and by implication, retroactive acceptance of the president's authority to order such wiretaps.

We have witnessed a staggering abuse of power by President Bush. Even former Bush Justice Department officials now charge him with trampling the Constitution. Bush has claimed the prerogative to declare an endless war without congressional approval, to designate someone an enemy without cause, to proceed to wiretap them without warrant, arrest or kidnap them at will, jail them without a hearing, hold them indefinitely, interrogate them intensively (read torture), bring them to trial outside the U.S. court system. He claims that executive privilege exempts his aides — even the aides of his aides and his vice president's aides — from congressional investigation. He claims the right to amend or negate congressional laws with a statement upon signing them. And much more.

Even this Supreme Court, stacked with activist right-wing judges enamored of executive national security powers, has rebuked the president on some of these claims, particularly around the treatment of alleged enemy combatants. But many of Bush's claims will escape judicial determination.

And there is the rub. According to the leading case on presidential powers, if Bush's extreme assertions of power are not challenged by the Congress, they end up not simply creating new law, they could end up rewriting the Constitution itself. Inaction can alter the Constitutional division of powers by establishing the president's claims as authority that the Congress or the courts may not infringe.

The Steel Seizure case — Youngstown Sheet and Tube v Sawyer, 343 U.S. 579 (1952), remains the leading case on presidential power. In Youngstown, a six-member majority of the Court joined in overturning President Truman's executive order nationalizing the steel plants to end a strike during the Korean War. Justice Black wrote the opinion for the Court, but the historically influential opinions were penned by Justices Robert H. Jackson and Felix Frankfurter, both Democratic appointees. Frankfurter laid out the argument for a sort of common law of constitutional amendment:

Deeply embedded traditional ways of conducting government cannot supplant the Constitution or legislation, but they give meaning to the words of a text or supply them. It is an inadmissibly narrow conception of American constitutional law to confine it to the words of the Constitution and to disregard the gloss which life has written upon them. In short, a systematic, unbroken, executive practice, long pursued to the knowledge of the Congress and never before questioned, engaged in by Presidents who have also sworn to uphold the Constitution, making as it were such exercise of power part [343 U.S. 579, 611] of the structure of our government, may be treated as a gloss on "executive Power" vested in the President by 1 of Art. II.

In Youngstown, Jackson concurred, arguing that the president's powers vary as to whether he acts with congressional authority (his greatest power), in the absence of it, or in opposition to it:

When the president acts in absence of either a congressional grant or denial of authority, he can only rely upon his own independent powers, but there is a zone of twilight in which he and Congress may have concurrent authority, or in which its distribution is uncertain. Therefore, congressional inertia, indifference or quiescence may sometimes, at least as a practical matter, enable, if not invite, measures on independent presidential responsibility. In this area, any actual test of power is likely to depend on the imperatives of events and contemporary imponderables rather than on abstract theories of law.

When a president egregiously abuses his power — particularly in areas relating to the rights of American citizens — remedies are often difficult. The Supreme Court is reluctant to arbitrate a power struggle between two co-equal branches. That is why the Constitution prescribes the specific remedy of impeachment for crimes and abuses of power — "high crimes and misdemeanors" — and empowers the House and Senate to sit in judgment whether the actions are to be accepted or condemned.

What the Court said in Youngstown is that if presidents assert a prerogative, such the power to make war without a congressional declaration — systematically, with unbroken regularity, with the knowledge of the Congress and are never questioned — then that practice becomes a Constitutional power that cannot be infringed upon by the Congress or the Courts.

Thus, Congress must formally object to President Bush's abuses or it risks by "indifference or quiescence" contributing to the powers of our imperial presidency.

When Pelosi took impeachment off the table, impeachment was reduced to being a rhetorical protest vehicle for progressives like Dennis Kucinich or Russ Feingold. But Congress need not convict President Bush to impeach him for high crimes and misdemeanors. And arguably, the House need not even impeach the president to hold a grand inquest into the powers that he has claimed, registering a formal objection to them. The Judiciary Committee in the House should formally convene that inquest, no matter what the decision is on impeachment. For if Pelosi's sensible political judgment results, as it has to date, in a show of congressional "inertia, indifference or quiescence," the Democratic majority in Congress may have gained a dozen seats at the cost of relinquishing its own powers, and putting the rights of Americans at risk.

A New U.S. Strategy in the Global Economy?

Robert Borosage — Wed, 18 Jun 2008 02:43:43 -0400

America's banker isn't happy.

At the World Trade Organization, China's representatives call on the U.S. to halt the decline of the dollar that has contributed to the rising price of food and oil (and racked up staggering losses in the value to China's $1.5 trillion in dollar reserves). China's leaders blame Washington's "warped conception" of market deregulation for the financial crisis that is rattling the world economy. Liu Mingkang, the chairman of the China Banking Regulatory Commission, scorned distorted US policies: "Does moneymaking or doing business justify the regulators in ignoring their duty for prudential supervision and their job of preventing misbehavior?"

Perfect. The Bush administration is so lame, it is getting lectures from the communist governors of China on how best to regulate the market.

And when China talks, the U.S. better start listening. Our trade deficit with China last year jumped to an all-time high of $256.2 billion, the largest deficit ever recorded with a single country, and the equivalent of nearly one third of America's total trade deficit. The Chinese have over $1.5 trillion in U.S. dollar reserves, and are now creating sovereign investment funds to purchase U.S. companies and properties at bargain level prices. China's willingness to lend us the money we use to buy the goods they make with the jobs our companies have taken there enables us to spend far beyond our means. When your banker calls, you answer the phone.

This week, Treasury Secretary Paulson meets with his Chinese counterparts in Annapolis for what is called the Strategic Economic Dialogue. Generally the U.S. comes with a list of complaints about Chinese mercantilist economic policies—the manipulation of their currency, the violation of copyright and patents, the protection of their markets. The Chinese deny or ignore the accusations, offer a few criticisms of the U.S. and go on with business as usual.

As Annapolis will once more demonstrate, U.S. policy toward China is simply befuddled. The problem is that while the Chinese have a clear economic strategy, the U.S. global strategy is the byproduct of corporate lobbies and Wall Street political muscle.

The Chinese routinely flout the rules of the global marketplace, but under the Clinton administration, the U.S.—driven by companies eager to set up shop in China and bankers eager to cut the deals—gave China permanent most-favored-nation trading status and then let them into the World Trade Organization without insisting on reforms or setting up decent enforcement mechanisms for standards everyone knew the Chinese did not and would not follow. About the only thing the U.S. pushed for in the negotiations was to try to open up Chinese financial markets to U.S. banks, a clear reflection of a trade policy that, in Illinois Sen. Barack Obama's words, has been made for "Wall Street, not Main Street."

It isn't clear how long the old game can last. The dollar has lost about half its value to the Euro, and U.S. exports are beginning to rise. But the Chinese (and the Japanese) have pegged their currencies to the dollar and not allowed a similar adjustment (The Chinese have allowed the renminbi to rise only about 20 percent to the dollar since 2005). The result is that the U.S. trade deficits with China keep rising; the Chinese keep pocketing more and more dollars. The Chinese are importing inflation that is ever more difficult to control. And the U.S. is exporting manufacturing jobs, and now service jobs, generating a backlash against trade generally that could grow much uglier.

What America needs is a clear strategy to sustain its middle class in a global economy that has just integrated over 2 billion workers in China, India and the former Soviet Union. Neither the Bush administration nor Arizona Sen. John McCain shows any sign of having ever thought seriously about this fundamental challenge to U.S. security. McCain seems satisfied to prate about the benefits of free trade, and accuse Obama of believing America can't compete.

This week in Flint, Mich., Obama called for the U.S. to develop its own national economic strategy, and began by putting forth elements of a "competitiveness agenda" for the U.S. He vowed to raise taxes on the wealthy, capture some of the money now being squandered in Iraq, and invest in a concerted drive for energy independence, seeking leadership in the green industries of the future; in education and training, from pre-school to affordable college; in a world-class modern infrastructure from broadband to fast trains; in research and development to keep the U.S. the world leader in science and invention. While conservatives were grousing about "tax and spend," sensible observers might be more worried about whether his commitments were commensurate with the size of the challenge. ($10 billion a year in an investment bank for infrastructure won't build many bridges, much less seed modern transit.)

On trade itself, Obama called for "strong and smart trade policies," promising enforceable protections of labor rights and the environment, insisting on enforcement of current accords, saying "we need tougher negotiators on our side of the table -- to strike bargains that are good not just for Wall Street, but also for Main Street"

Obama argued that "allowing subsidized and unfairly traded products to flood our markets is not free trade... We cannot stand by while countries manipulate currencies to promote exports, creating huge imbalances in the global economy. We cannot let foreign regulatory policies exclude American products." China was not mentioned by name.

With the depreciated dollar, U.S. trade would move toward relative balance with two major exceptions—the rising cost of imported oil and trade with China. The former requires a concerted drive for energy independence, which both Obama and, less credibly, McCain have called for. The latter requires a serious strategy toward a country which is now our leading creditor.

"Our cooperation is an irreversible and unstoppable current," China's new Vice Premier Wang Oishan said. "China needs the United States and the United States needs China." That is surely true—but the current current is unsustainable.

How can America benefit from the expanded trade and opportunity of a global economy, while avoiding a race to the bottom that erodes the American middle class that is the pride and the foundation of our democracy? How do we balance our relationship with China, even while engaging that country to join in the effort to address global warming? These are far more fundamental challenges to our security than the threat posed by the scattered extremists of al Qaeda.

While McCain is simply out of touch, Obama has put forth essential elements of a different course. He's called for the U.S. to get serious about developing a national strategy for the new global economy. But that can't be done without a much more candid debate about the big gorilla in the room —China, whose communist governors are happily lending us the rope to hang ourselves with.

Jason Furman and Obamanomics

Robert Borosage — Thu, 12 Jun 2008 11:30:37 -0400

The appointment of Jason Furman as economic policy director for the Barack Obama presidential campaign has caused a stir. Furman was executive director of the Hamilton Project, a project created by Citibank chair and former Treasury Secretary Robert Rubin, largely to explore how to sustain support for corporate trade policies. Furman himself is criticized for his work suggesting that Wal-Mart offers a business model worth emulating.

The criticism of the appointment reflects submerged concerns about Obama’s own posture on globalization. Furman is actually a progressive, formerly with the Center fur Budget and Policy Priorities, and broadly concerned with social justice. His campaign job is to organize economic advice for Obama, not define it, and by all accounts, Furman will be an honest broker. He is a far remove from former Visigoth Senator Phil Gramm or Carly Fiorina, the CEO sacked by Hewlett Packard, who have emerged as Sen. John McCain’s leading advisors.

But his appointment was clearly a signal by the Obama campaign designed to reassure Wall Street and the business community. And that is how it was interpreted by bankers and labor leaders alike. So the pushback isn’t surprising.

The real question is whether Obama understands that the current U.S. global strategy is unsustainable. The dollar has lost half its value to the euro, but our trade deficit remains high — driven by the cost of oil and still increasing imports from China. Workers responded to the long-term stagnation of wages by working more hours and taking on more debt. The country has been sustaining itself by taking on more debt, dependent on the kindness and the mercantilist appetites of strangers. Now, with the collapse of the housing bubble, the near-death implosion of the shadow banking system, that road is blocked.

We need a fundamental change of strategy in the global economy if we are to sustain a broad middle class. The thrust of the Hamilton Project was to see if growing public alarm could be placated with more investment in education and training, perhaps some greater help for workers losing decent jobs — even while putting priority on trade deals that protect the rights of bankers but not those of workers, and on balancing the budget over making the investments we need. That isn’t close to the new deal that is imperative.

The controversy really isn’t about Jason Furman. It’s about Barack Obama. Does he understand the scope of the change that will be needed? Or is he more concerned about reassuring Wall Street that the price won’t be too high? We’ll learn more about that over the next weeks, when he plans to lay out his long term strategy for the economy. One thing is clear. Obama is smart enough and Furman principled enough that he’ll hear the arguments from all sides. The real question isn’t what advice he gets; it’s what advice he decides to adopt.

On the Economy Debate, The Gloves Come Off

Robert Borosage — Wed, 11 Jun 2008 10:17:59 -0400

Monday in Raleigh, North Carolina, Illinois Sen. Barack Obama opened the general election fight, taking the gloves off against the "tired and misguided [economic] philosophy that has dominated Washington for too long," and offering a clear challenge to the Bush-McCain economic misrule. In Washington before the National Federation of Independent Business, McCain counterpunched, suggesting the choice was between low taxes and "the largest tax increase since World War II."

This argument will be the big kahuna in this election. Despite ritual boosterism, soothing rhetoric and quiet prayers by Wall Street pundits, the economy is foul and likely to get much worse. We've lost jobs for five months in a row. Gas, food, health care costs are soaring. For workers, the mess is worse than the stagflation of the 1970s. Then, growth was stagnant while prices and wages were spiraling up. Now we've got stagflation squared; growth and wages are stagnant and prices on basics are soaring, while the value of homes, the largest investment Americans have, is plummeting.

Many aren't making it. Home foreclosures are the highest since the great depression. One in six homes in America is worth less than the mortgage. With prices down 14 percent from last year, Americans have seen $2.5 trillion in wealth erased. No wonder credit card debt has soared, and workers are rifling retirement accounts.

President Bush and John McCain say the "fundamentals are strong," so the downturn is a "rough patch." As the president left for Europe, he once more celebrated our "open and flexible" economy, with "some of the deepest and most liquid capital markets" [he's apparently been AWOL the last months], arguing that the "long-term health and strong foundation of our economy will shine through and be reflected in currency values."

Bush and Republicans in Congress have been resisting any new stimulus measures, arguing that the $600 rebate checks going out in the stimulus package are just kicking in, and that things will get better.

Not likely. Gas prices will chew up the rebates — while racking up rising trade deficits. And beginning in July, states and localities will be laying off teachers and police, deferring construction projects as they struggle with rising deficits. And the banks staggered by the collapse of the financial bubble are now about to face the rising credit card, auto loan and mortgage defaults that come with an economic downturn.

Why are we in this mess? Obama put the blame for this directly on the Bush-McCain economic strategy. The current crisis, he argued, wasn't simply "some accident of history," or "an inevitable part of a business cycle." It was the "logical conclusion" of a "worn dogma" that has failed this country.

Obama called for a second, short-term $50 billion stimulus; for aiding homeowners facing foreclosure through no fault of their own; and for extending unemployment benefits for those workers caught in the economic ebb tide. Bush and Congressional Republicans have resisted these measures.

But he also began to contrast his longer-range strategy for rebuilding America to the failed trickle-down, market fundamentalism and fiscal irresponsibility of the past years:

"For eight long years, our president sacrificed investments in health care, and education, and energy, and infrastructure on the altar of tax breaks for big corporations and wealthy CEOs -- trillions of dollars in giveaways that proved neither compassionate nor conservative."

And with McCain pledging to sustain that same course — top end tax cuts and cuts in domestic spending — Obama draws the contrast:

John McCain and I have a fundamentally different vision of where to take the country. Because for all his talk of independence, the centerpiece of his economic plan amounts to a full-throated endorsement of George Bush's policies. He says we've made great progress in our economy these past eight years. He calls himself a fiscal conservative, and on the campaign trail he's a passionate critic of government spending, and yet he has no problem spending hundreds of billions of dollars on tax breaks for big corporations and a permanent occupation of Iraq — policies that have left our children with a mountain of debt.

In contrast, Obama calls for a "bottom-up prosperity," based upon his version of putting people first. He wants to invest in education and training. He'd generate millions of new jobs in a concerted drive for energy independence. He'll create a national investment bank to rebuild and modernize our aging infrastructure, and put people to work. He'll help make college more affordable. He'll offer middle-class families (generously defined as making under $150,000) a tax break, while raising taxes on the wealthy, shutting corporate tax loopholes, imposing an excess profits tax on the oil and gas companies, and using money saved from ending the Iraq war to invest here at home.

McCain scorns this as the old "tax and spend" policies that Americans can't afford, arguing that "Sen. Obama says I'm running for Bush's third term, seems to me he's running for Jimmy Carter's second." (Great line, except the stagflation is already here.) In his speech before the conservative National Federation of Independent Business, he called for not only sustaining the Bush tax cuts which he once opposed, but also adding new cuts (an estimated $300 billion a year) for corporations and the wealthy. He bizarrely emphasized "the estate tax," as "one of the most unfair taxes on the books," presumably because it applies primarily to the wealthiest 2 percent of America's fortunes.

McCain paints himself as the change largely by posing as the sheriff policing wasteful pork-barrel spending, in contrast to the wastrel ways of the Republican Congress and the Bush administration.

His plans earned Obama's scorn: McCain, he said:

is now calling for a new round of tax giveaways that are twice as expensive as the original Bush plan and nearly twice as regressive. His policy will spend nearly $2 trillion on tax breaks for corporations, including $1.2 billion for Exxon alone, a company that just recorded the highest profits in history. ... At a time when we're fighting two wars, when millions of Americans can't afford their medical bills or their tuition bills, when we're paying more than $4 a gallon for gas, the man who rails against government spending wants to spend $1.2 billion on a tax break for Exxon Mobil. That isn't just irresponsible. It's outrageous.

I have a different vision for the future. Instead of spending $12 billion a month to rebuild Iraq, I think it's time we invested in our roads and schools and bridges and started to rebuild America. Instead of handing out giveaways to corporations that don't need them and didn't ask for them, it's time we started giving a hand up to families who are trying pay their medical bills and send their children to college. We can't afford four more years of skewed priorities that give us nothing but record debt — we need change that works for the American people.

In this exchange, McCain is in trouble. Here, as on Iraq, he is arguing for carrying the Bush agenda forward, while three-quarters of Americans think we're on the wrong course. As Obama puts it, "We have tried it their way for eight long years and it has failed. It is time to try something new. It is time for a change."

We haven't witnessed this clear an ideological division since the 1964 Johnson-Goldwater face-off. For those who feared Obama couldn't throw a punch, he showed both a good jab and a decent left hook in pounding McCain on the economy. That's why the Republican posse is likely to scorn sparring about policy and turn this election into an alley fight, taking out the knives around patriotism, pastors and race.

Rebranding Republicans

Robert Borosage — Tue, 13 May 2008 12:10:26 -0400

"We're going to give you the change you deserve."
—House Minority Leader John Boehner

That's not a threat; it's a promise—from the Republican congressional leaders. Really. Led by perpetually tanned House leader John Boehner, Republicans have suddenly discovered that the country wants change—and they have decided to offer it to us. Washington is broken and they promise to fix it. They rolled out a new slogan—"the change you deserve"—to be followed by a new "American Families Program."

(The campaign ran into trouble from the start: An alert blog—Bluestem Prairie—revealed that the slogan is the registered advertisement for the anti-depressant Effexor XR—which, come to think of it, might just be what Boehner needs these days.)

Republicans for change; now that's a switch. Until last week, congressional Republicans have been systematically, resolutely and consistently committed to obstruction, not change. It was a clear strategy. No minority ever gets blamed if nothing gets done. After Democrats took over the majority of both Houses in 2006, Republicans set out to obstruct everything they could. Then they would run against a do-nothing Congress, accusing the Democrats of breaking their promises. Sort of like knee-capping the postman and then complaining about the mail being late.

They went about this with Tom DeLay-like discipline. The Senate minority set a new record for filibusters before the first session was over. The president issued a record number of veto threats. House Republicans perfected procedural tricks that would put sand in the gears. As late as last week, they switched their votes on a resolution celebrating mothers on Mother's Day simply to obstruct business on the Senate.

They blocked the resolution to set a date to get the troops out of Iraq. They blocked extending health care to children. They blocked allowing Medicare to negotiate lower prices on prescription drugs. They blocked overturning subsidies to big oil and investing them in alternative energy.

But despite their success in gumming up the works, the strategy hasn't been working out too well for them. Congress has grown less popular, but increasing majorities think the solution is to throw out Republicans, not Democrats. Twenty-nine Republicans looked at the race and decided to retire. Republicans suffered stunning special election defeats in former House Speaker Dennis Hastert's seat in Illinois (to an anti-war candidate) and in a solidly Republican district in Louisiana (despite their running ads painting the Democrat as an Obama clone). Former House Speaker Newt Gingrich warned that they faced "real disaster" this fall unless they changed course. "We can't win solely by tying our opponents to Barack Obama and his liberal views," Boehner concluded. "We also have to prove Republicans are agents of change."

"Our brand is still under repair," Boehner noted in a presentation for his Republican colleagues. So he called out the marketing gurus. Over the next week, he promises to roll out a new agenda to go with the new slogan. With the open seats, Republican candidates not scarred by the past can run as agents of change. If John McCain, a 35-year veteran of the Beltway, can market himself as a maverick for change, why not the House Republicans?

But Boehner's rollout is likely to run into craters a lot more perilous than the slogan pothole. Every Republican candidate for Congress will have to answer a few basic questions: Are you with Bush and McCain on sustaining the war in Iraq? Do you support Bush and McCain's economic policies—the tax cuts, the corporate trade deals, the privatization of Social Security, the unraveling of employer-based health care?

If you are not with Bush and McCain, why should Republicans support you? If you are with them, why would the eight in 10 Americans looking for a fundamentally new direction vote for you?

But no one believes in the magic of marketing more than politicians, eager to repackage themselves as the new Coke. Forget consistency. Forget conservatism. Boehner and his colleagues aren't worried about learning from the failures of the past years. They are worried about survival. And a snappy slogan, a new bumper sticker, and a fresh jingle may be the best hope they have.

This article originally appeared on The Huffington Post.

A Little Love for Big Oil

Robert Borosage — Thu, 01 May 2008 10:27:01 -0400

Oil companies report record profits. Gas is headed towards $4 a gallon. A caravan of more than 100 truckers rallied in Washington Monday to protest diesel fuel prices already over that mark. Across the country, Americans are getting pinched by rising fuel and food prices.

So politicians, as Rev. Jeremiah Wright would say, "do what politicians do." Arizona Sen. John McCain offers up a temporary "gas tax holiday," suggesting the Congress suspend the 18.4-cent federal tax for the summer, at a cost of about $10 billion in money earmarked for highways, bridges and other transportation projects. Not to be outdone, New York Sen. Hillary Clinton instantly agrees, adding she'd replace the money to the highway fund with an excess profits tax on oil companies. Both immediately scorn Illinois Sen. Barack Obama as "elitist" for saying that it is a "bad idea." Now this exchange will be a staple of the talk shows whenever gas prices go up.

Now neither McCain, married into a $100 million fortune, ushered about in his wife's corporate jet, nor Clinton are exactly convincing populists. But McCain knows this is political gold, offering folks "a little bit of relief so they can travel a little further and little longer and maybe have a little bit of money left over to enjoy some other things in their lives."

Only there's one small problem with this tax cut: The oil companies are likely to pocket most of it.

Rising demand for gas and oil has driven prices up around the world. In this country, the oil companies say their refineries are pumping out as much gas as they can, so prices are likely to rise even higher this summer as Americans set out on family vacations. They can sell all the gas they can produce at $3.50 to $4 a gallon, including the 18 cents in gas taxes. So McCain and Clinton revoke the gas taxes. Is there any reason to think that the oil companies won't continue to sell their gas at the $4 a gallon that it already commands, and pocket the difference?

Economist Dean Baker of the Center on Economic and Policy Research calls it a "summer tax break for Exxon," noting, "We have a fixed amount of gas entering the market, the question is simply what price clears the market. If we reduce or eliminate the gas tax, the price doesn't change, the lower tax will simply allow Exxon and other oil companies to keep more profits."

This is economics 101, a subject that McCain admits is "not something I've understood as well as I should." (He later denied making the statement.) Obama isn't an economist either, but he's had experience with gas tax holidays in Illinois. As The Washington Post reports, Obama voted for a six-month suspension of Illinois' gas tax in the summer of 2000 when prices soared to a then-obscene $2 a barrel. The state lost about $175 million in revenue; the price of gas fell by an average of 3 percent, suggesting that about 60 percent of the savings were passed on to consumers.

But any increased demand that might have resulted in Illinois from cutting the tax could be accommodated by transferring gas from another state. In a federal program, any increased demand from an initially lower price would drive that price back up to its current market clearing levels. There are only two ways to lower the price—increase supply or decrease demand. McCain and Clinton's tax cut would do neither of these.

That, of course, won't stop either of them from peddling the tax and from scouring Obama for being "out of touch." For Clinton, this is just part of the "kitchen sink" she's throwing at Obama. For McCain, inconvenient truths don't seem to matter. He knows what he thinks and doesn't want to be confused with facts. Capital gains tax cuts always generate more revenue. Al Qaeda is the biggest threat in Iraq. Corporate trade deals don't hurt wages. Privatization of Social Security will make seniors more secure. And don't worry, big oil won't charge what the market will bear for the price of gas.

A version of this post appeared on HuffingtonPost.com.

David Broder: The Democrats' Worst Nightmare

Robert Borosage — Fri, 25 Apr 2008 10:14:31 -0400

David Broder’s April 24 Washington Post column on Arizona Sen. John McCain, entitled “The Democrats’ Worst Nightmare,” concludes with this little nugget:

“Yet, in pointing to those vulnerabilities in her rival, Clinton has heightened the most obvious liability she would carry into a fight against McCain. In an age of deep cynicism about politicians of both parties, McCain is the rare exception who is not assumed to be willing to sacrifice personal credibility to prevail in any contest.”

What possibly could Broder be drinking? Has he forgotten:

The John McCain who initially voted against the Bush tax cuts as irresponsible giveaways to the wealthy, but now embraces them, a change in position justified only by his desire to “prevail” in the “contest” for the Republican nomination?
Or the John McCain who had the votes in his hand to outlaw the administration’s grotesque torture policies, and instead caved to support the bill that empowered President Bush to define what torture is, a flip-flop motivated only because of the potential cost of his position in the upcoming election?
Or the McCain that went from denouncing Jerry Falwell and Pat Robertson as “agents of intolerance” in 2004 to doing exactly what he denounced—“pandering to outer reaches of American politics—by kissing their rings in the run-up to the 2008 nominating contest?

Why the utter nonsense reported as accepted fact? Here as so often, Broder, the widely respected dean of Washington punditocracy, is a mirror of conventional wisdom. And as TV host Chris Mathews notes, “The media loves McCain. We’re his base.”

But can’t reporters love the guy without drinking the Kool-Aid? McCain has now put forth an economic plan that adds an astounding $300 billion dollars a year in corporate and top-end tax cuts to a commitment to make Bush’s tax cuts permanent. This is an utterly irresponsible and fantastical posture at a moment the economy is headed into recession and the dollar is already sinking.

The commentariat will have to decide whether their affection for McCain overcomes their commitment to common sense. Their choice should be instructive. If they follow Broder, that will be the Democrats' worst nightmare.

McCain’s Economic Remedy: A Double Dose of the Same

Robert Borosage — Wed, 16 Apr 2008 13:40:30 -0400

On Wall Street, the masters of the universe have turned to prayer and worry beads. At the Federal Reserve, a full night’s sleep is a fading memory. Across Main Street, the recession is starting to hit, stores are shutting down, bankruptcies are spreading, houses are being foreclosed or abandoned. The pain of the recession is just beginning to hit.

But Sen. John McCain, the Republican presidential nominee in waiting—owner of 10 homes and, by marriage, one of the wealthiest men in the Senate—simply doesn’t get it. On Monday, he delivered what the campaign billed as a major address on the economy. And while McCain says he understands people are hurting, he hasn’t allowed this to clutter his thinking.

States across the country are starting to slash spending on Medicaid and schools, as declining tax revenues force harsh budget cuts, which in turn will add to the recession. But John McCain offers not one word about emergency aid to states and cities, dollar for dollar the most efficient counter to recessionary pressures.

Over 250,000 workers have lost their jobs in recent months; they face dim prospects and an unemployment system with more holes than net. There's not one word from John McCain about extending unemployment benefits or covering those left in the cold.

Over 2 million manufacturing jobs have been lost over the last seven years; wages aren’t keeping up with the costs of basics. America is selling off assets or borrowing from abroad at the rate of $2 billion a day to cover unsustainable trade deficits. John McCain shovels up only the same corporate trade policies that dug us into this hole.

A shadow banking system, stoned on risk and complexity, threatens to bring down the whole shebang. Already the Federal Reserve has thrown up about half a trillion dollars in guarantees to stave off the furies. McCain offers nothing about how to bring this system under accountability and control.

What is McCain concerned about?

First, foremost and repeatedly, he is outraged by earmarked spending by the Congress which he vows to veto if president. This is cute, but a joke. Earmarks total less than $15 billion a year in a $2.7 trillion budget. Erasing them all will make utterly no difference in our economic posture.

Second, the senator believes that the U.S. spends too little on its military and too much on domestic programs such as education, the environment and public health. He believes George Bush hasn’t lowered the taxes of corporations and the wealthy enough.

The reality is that we already spend more than the rest of the world on our military, which is the largest source of waste, fraud and abuse in the federal government. Domestic investment has been starved by conservative presidents and congresses over the last thirty years. Corporate loopholes riddle the tax code. Billionaire hedge-fund operators already pay a lower tax rate than their secretaries. Inequality has reached levels not seen since just before the Great Depression. Yet McCain’s proposed tax cuts would increase our national debt to lavish billions on oil and pharmaceutical companies already enjoying record profits.

While offering up another round of tax cuts for the wealthy, he does say that Bill Gates and Warren Buffett and their ilk can pay for their own prescription drugs. He then goes on to define as rich anyone making $80,000 a year or more, all of whom will be on their own.

Otherwise, McCain, like George Bush, recycles the old platitudes of the market fundamentalists—about lower taxes, free trade, smaller government, less spending. Forget the global debt, the $12 billion a month squandered in Iraq, the financial crisis, the deepening recession. For Sen. John McCain, Bush’s only mistake has been that he hasn’t been extreme enough. The senator should do well with all of those Americans who are yearning for even more of the same.

Bringing the White Working Class Into the Progressive Majority

Robert Borosage — Thu, 10 Apr 2008 22:00:56 -0400

These are excerpts of remarks delivered April 9 at the Conference on a New New Deal in Washington, sponsored by the Franklin and Eleanor Roosevelt Institute.

Let me offer a simple set of propositions.

1. Conservatism has failed—and conservatives, while they cannot admit it, understand that. You’ve heard this before, but it is important to repeat it. The failure is not simply that of clueless George. Conservatism failed not because the Bush administration was incompetent, although incompetence has been its hallmark. It failed not because Bush and the DeLay Congress were corrupt, although corruption has been pervasive. Conservatism failed because it is wrong. Wrong about the world. Wrong about the economy. Wrong about the society.

Its imperial and military fantasies led directly to Iraq, surely the worst foreign policy debacle since Vietnam. Its market fundamentalism generated Gilded Age inequality, a Depression-era financial crisis, stagnant wages and rising insecurity, and left America the world’s largest debtor, dependent on the kindness of strangers. Their celebration of deregulation and scorn for government ended up poisoning our kids, with uninspected toxic toys and diseased lunch-room foods.

2. We are headed into not simply a change election, but an election that has the potential to mark a sea change, the end of the conservative era that Reagan launched in 1980 and the beginning of a new era of progressive reform. The election will take place in the midst of an unpopular war and a recession, with over three-fourths of the country looking for a dramatic change in course. Democrats will surely pick up seats in both the House and the Senate.

Democrats know how to snatch defeat from the jaws of victory. But the potential is there for an election that changes our course.

3. A new progressive majority is forming. You can see it in the Democratic victories in 2006; you can see it in the astounding turnout in Democratic primaries in 2008: young people turning out in unprecedented numbers; Latinos doubling their share of the primary vote; African Americans and single women raising their participation.

4. A key test of the viability of a new coalition will depend on the votes of the white working class, defined as white workers with less than a college education, still about half of the voting population. This was the heart of the Roosevelt coalition. And they are now the heart of the conservative coalition that dominated our politics over the last 30 years.

America has changed dramatically since the New Deal. As a recent paper by Ruy Teixeira and Alan Abramowitz points out, in 1940 three-quarters of the population 25 and older were high school dropouts or never went to high school; 5 percent had college degrees. In 2007, only 14 percent were high school dropouts; 29 percent had college degrees and another 25 percent had some college. The white working class now is composed largely of white-collar, not blue-collar workers—people in sales, clerical and service jobs, rather than in industrial jobs. This white working class is smaller than the New Deal working class, better off than the New Deal working class, more educated, more white-collar and far less unionized. In the 1940s, unions represented 60 percent of the Northern blue-collar workforce. Today, unions are less than 10 percent of the private workforce.

Since Nixon, Republican majorities have depended on winning a supermajority of white working class votes. Ronald Reagan won these voters by 61 percent to 35 percent in 1980. Al Gore lost them by 17 percent; Kerry by 23 percent. As minority voters become a greater percentage of our population and of the vote, the Republicans will seek to expand these margins among the white working class.

There are ongoing arguments about why Democrats do so badly in this population. Part of the explanation traces back to the Civil Rights movement, and the Southern strategy of the Republican Party begun under Nixon. By making itself the party of white sanctuary, Republicans anchored their party in the South and attracted voters alienated by the civilizing movements of the 1960s.

Some of the switch, as we’ve seen, came from cultural appeals and from the Republican claim after Vietnam to be the muscular party of national security.

But a large part of the decline, I would argue, came because Democrats stopped making sense on economics. As Kevin Phillips put it, Democrats went from "taxing the few for the benefit of the many" to "taxing the many on behalf of the few." Republicans made Reagan’s mythic “welfare mother” a racial cue to hard-pressed white workers. Democrats went from a policy of exporting goods to exporting jobs, and from a party anchored by labor to a party funded by Wall Street. Conservatives won the argument that government couldn’t really help, and they, at least, offered to cut your taxes—perhaps the only raise you might hope to see.

And then the corruption and incompetence of conservative presidents from Reagan to Bush helped prove their ideological point that government was the problem and not the solution. Now voters are convinced that government is controlled by entrenched corporate interests, wastes billions of taxpayers money and can’t organize a two-car funeral—and the past six years of the Bush administration has made that case.

Progressives have to prove that government can work. That it can make health care and college affordable. That it can help generate good jobs here at home. That it can curb the Wall Street casino and insure that increased profits and productivity are widely shared. We have to take reinventing government seriously, not as a slogan or a gimmick, but as a fundamental project of reform.

Two political conclusions arise from this analysis. First, progressives have a monumental stake in rebuilding the strength of the union movement. White working-class voters vote two to one Republican if they are not in unions. They vote two to one Democratic if they are union members.

It doesn’t take a rocket scientist to understand that is why Karl Rove and the Bush Administration have joined the business drive to crush the right to organize, and have done what they could to weaken unions and to convince Americans that unions are part of the past.

We have a great stake in turning that around, not simply by passing the Employee Free Choice Act, which is the centerpiece of reviving the right to organize, but by turning government at all levels into an ally of unions. “FDR wants you to join a union,” they used to argue in the 1930s. We have to make that slogan true for governors, mayors, legislators and the next president.

We should be focusing more and more resources and energy on our secret asset among white workers—women, particularly single women. As Page Gardner of Women’s Voices, Women’s Votes has shown, single women vote overwhelmingly on economic issues and overwhelmingly for Democrats and progressives. Bu they tend not to vote. They are low-information voters, too hard pressed to pay much attention. This year they are turning out in large numbers, and we should make certain—as we should with Latinos and young people—that we develop the vehicles to communicate with them, the ability to educate and mobilize them and the agenda that attracts them. If they turn out in large numbers, if we empower unions once more, if we consolidate our majorities among the new millennium generation and the new Latino voters, we can go a long way towards a new era of progressive reform.