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Richard (RJ) Eskow

Richard (RJ) Eskow

Posted: July 5, 2010 01:06 PM

The War For Financial Independence: The Call to Surrender

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There's a new conventional wisdom forming in Washington, DC this July 4th, one that transcends party lines and the usual classifications of "left" and "right" as they're understood in that city. It's only being recognized now, because it deals with a number of different economic issues, but the underlying theme is the same: The American dream of financial independence and security is gone. The sooner you accept that and raise the white flag the easier it will be, so stop struggling.

Theyre saying the ideal of "life, liberty, and the pursuit of happiness" is dead. Deal with it.

Why, there hasn't been this much unanimity among Washington elites since - well, since they "knew" there were weapons of mass destruction in Iraq. Here's what they "know" now: The United States is doomed to a future of staggeringly high unemployment. Social Security is part of our national deficit and, like that notorious village in Vietnam, we need to destroy it in order to save it. And we must face an open-ended future where the public treasury and personal security are held hostage to the whims of a few "too big to fail" banks.

Some of these "conventional wisdoms" have been around for years, while others are forming as we speak. Most of them began as politically partisan ideas, but have only been Sacred Truths for a few months. Yet they're already acquiring the false gravitas of ancient received wisdoms. What's the common thread behind these three ideas? They provide a rationale for not resisting the enormous political influence of corporations and wealthy Americans.

The last few days - ironically, those that led up to our celebration of Independence - saw a sudden rash of white-flag declarations. This latest wave of surrender demands involves joblessness. First Digby noted that Jonathan Alter said the following in an interview with Chris Hayes on the "Ed Show" : "We are going to have to accustom ourselves to some higher than, you know, old normal percentage of unemployment. You know, I don't know whether it's seven percent, six percent, whatever."

Before the viewer could utter a Scooby Doo "ruh-roh," The New Republic published a piece by William Galson called "America Will Never Be the Same." In reviewing a Pew study's findings on the Great Recession's impact, Galston writes: "... (W)e do have reason to believe that ... we're in for a slow recovery and historically high levels of unemployment for much of this decade." And, as if on cue, CNN Money published an piece called "7.9 million jobs lost - many forever."

In an article entitled "Spend or Scrimp? Two Sides in a White House Debate," we learned this week that those in the White House who are "focused on deficits - or at least on positioning Mr. Obama to show his concern -- are his chief strategist, David Axelrod, other political advisers and Rahm Emanuel, the White House chief of staff, according to Democrats."

Axelrod says, "it's my job to report what the public mood is," as if the President were merely a passive observer of public opinion and not a potential shaper. Adds Axelrod, "I've made the point that as a matter of policy and a matter of politics that we need to focus on (deficits)." And what better way to erode resistance to that approach than by building a consensus among friendly liberals? The new consensus view: It's impossible to provide the sorts of stimulus that would be needed to address high unemployment, so "we" (by which is meant the jobless - not "we" at all) have to accept it.

Am I suggesting a White House-led conspiracy to undermine stimulus thinking? No. The White House understands that some stimulus will be needed. As with most such consensus thinking, "a conspiracy of shared values" is more than enough. And, as with all Washington trends, a "consensus" is formed by persuading liberals to adopt right-wing ideas, not the other way around. "We'd all love to bring unemployment down," the thinking goes, "but it's just not going to happen."

Let's be clear: Every American who is condemned to long-term unemployment has been shut out of the American dream. When DC insiders encourage us to accept that fixing the problem is too politically challenging, they're telling us that we as a nation must accept profound economic misery for millions of our fellow citizens.

They're also telling us to accept a more racially-divided nation, with a race-based gap in unemployment so severe that it could rightfully be called "jobs apartheid." When African American unemployment is virtually double that of whites and we're asked to accept that structural unemployment is here to stay, we're being told that Martin Luther King's dream of economic equality between the races is one we can no longer afford.

Bear in mind, there has been no NAFTA-like change in the US job situation to explain these new unemployment figures. The Great Recession, not outsourcing, took this last wave of jobs. Why can't we work to rebuild our economy on a firmer foundation and get many of those jobs back? The answer comes, in large part, because of fear of what Paul Krugman calls the "invisible bond vigilantes." The fear - or the stated fear - is these bogeymen will make sure that bond markets don't invest in the United States unless we slash government spending. (As Krugman points out, the "wisdom of the market" says they like our government's actions just fine, but that's apparently beside the point.)

Cui bono - who benefits? One can only speculate. If a government that has spent trillions to rescue the banking industry now spends billions to get people back to work, that could result in a drive for greater taxation of those who benefited from the bank bailout. The same with the new "bipartisan" assault on Social Security. Social Security's minor long-term financial problems could easily be fixed by raising the contribution levels. But that would render it politically immune to being used as a piggy bank for fixing tax-cut-driven deficits. They want to use it as a regressive tax on middle-class earnings instead. What's more, cuts to Social Security would drive more people to invest their savings with the very banks that created that deficit - a double win for Wall Street.

Banking interests are one reason there's been little support so far for economist Robert H. Frank's proposal - a program that restructures consumer debt through direct Federal loans to credit card holders buried by what they owe. Morally, it's no different than the bank bailout. The benefits for the overall economy (in increased spending) would be immediate and real. But the right people don't benefit so it hasn't become part of the Washington consensus.

Americans need jobs, and jobs would benefit the economy. Social Security is one of the most stable government programs we have. And Federal actions should benefit the entire economy and its participants, not just a few wealthy bankers. These are the kinds of truths our nation's founders once called "self-evident."

In the halls of government nowadays, unfortunately, self-evident truths aren't what they used to be.
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Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light.

He can be reached at "rjeskow@ourfuture.org."

Website: Eskow and Associates

 

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