The first two Parts in this series began answering the question “what would u have him do?” It arose in the context of a Post at Naked Capitalism by Michael Hudson with some additions by Yves Smith. A commenter, objecting to the criticism of the President’s Knox College speech, issued the challenge in connection with the President’s promised effort to restore prosperity to the middle class and the poor.
In Part I, “Necessary First Moves,” I offered and described two of these: ending the filibuster, and using High Value Platinum Coin Seigniorage (HVPCS) to fill the Treasury General Account (TGA) with $60 Trillion in reserves. In Part II, I offered a number of proposals aimed at getting to full employment.
These included: a full payroll tax holiday; a guarantee of annual entitlement spending without regard to “trust fund” balances; State revenue sharing grants of roughly $1600 per person; and a Federal Job Guarantee program establishing jobs in local communities at a living wage with full fringe benefits. This third and last part will offer proposals for doing some economic and social justice to begin to right the wrongs the neoliberal globalizing political/economic/ideological system has inflicted on the American middle class and those living in poverty. Here are the proposals.
Fix the Health Insurance System
I want the President to ask Congress to pass John Conyers’s HR 676, enhanced Medicare for All bill, a full coverage, no co-pay health care insurance program. A simple, direct, 35 page piece of legislation, Conyers builds in a tax to fund this program; but the decision about whether it falls into deficit spending, or is “paid for”, ought to depend on whether full employment is reached or not. If it hasn’t, then this tax should be used as an automatic stabilizer, reduced according to a rule when the private sector is shedding jobs, increased as the private sector adds jobs, until the tax is fully re-imposed at full private sector employment, to prevent the economy from overheating.
Increase the minimum Social Security benefit
A simple idea, due to Warren Mosler, is to increase the SS benefit minimum to $2,000 per month for every retiree. This will be a positive boost to the economy, and it will provide a decent standard of living to middle class and poor retirees. But, in addition, it will provide redress for years of SS cost of living increases that didn’t take into account the rapid rise of medical care spending by retirees. Health care costs escalated much more rapidly than the CPI over the past few decades, but SS COLAs haven’t taken account of this increasingly disproportionate spending by older people on medical care and insurance.
Redeem all outstanding student loan debt and provide for Federal funding of free tuition at State Universities, Colleges and Community Colleges
Student loan debt has become an appreciable drag on our economy, and its existence is not fair, because college isn’t optional for middle class prosperity, and student loan interest rates are much too high given that banks have such low interest rates on their own loans. So, if we’re really committed to middle class prosperity, and to equality of opportunity, we have to do what many other nations are doing increasingly, and provide free or very low cost college educations for those wanting them who have graduated from high school.
TINA applies to this issue if it applies to anything. If we want to avoid plutocracy, then this is something we must do. HVPCS allows us to do it.
Put a stop to Too Big To Fail by ending, investigating, and penalizing control fraud
– After monitoring the big banks for control fraud, investigate them, find it, and then take them into resolution ending the existence of current Systematically Dangerous Institutions (SDIs); in the American banking system.
– Then proceed to investigate individuals responsible for control fraud in these institutions, prosecute offenders, and apply appropriate criminal penalties.
It’s hard to over-emphasize the importance of doing these two things. Apart from removing risks to the banking system and to the economy, the issue of moral hazard is an over-riding one here. I don’t know about you, but whenever I hear someone saying that we’re a nation of laws these days, I feel nauseated by the obvious dishonesty in such a statement.
Most of the nation may be subject to laws, but obviously the likes of Jamie Dimon, Lloyd Blankfein, Brian Moynihan, other big banksters, mortgage companies, MERS, loan officers, appraisers, and loan servicers are not. And neither are various high office holders and people in the intelligence community who have routinely violated the Geneva conventions, perjured themselves before Congress, performed surveillance in clear violation of the limits established in the Patriot Act, and who, in doing so, violated their oaths of office.
The existence of a system of laws that applies only to some of us and not to all of us and that is sometimes secret is simply repugnant, and corrosive to the legitimacy of government and to all laws. Anti-government feelings and cynicism about the legitimacy of government are already widespread in the United States. If the present failures to enforce the law continue to exist, we will see increasing mistrust in the government and rejection of it as an institution. I don’t think very many of us care to travel to the end of that particular road.
End the household debt and housing crises and the possibility of new SDIs arising again to corrupt the banking system
This will require a number of inter-related policies:
– Have the Federally run big banks take big write-downs on mortgage principal to 90% of the current market value of homes;
– Have them lower credit card interest rates to a few points over prime;
– Assuming Medicare for All, HR 676, is passed first as specified above, then:
– pass legislation allowing the Government to buy up the debts owed by consumers to the health insurance industry, and to providers, and to then cancel these debts;
– pass legislation allowing previous owners of foreclosed homes involving MERS to take them back, while providing grants to the previous owners for fixing up the homes the big banks allowed to deteriorate; if the foreclosed homes have already been sold, provide government compensation to the previous owners equal to the equity existing before the housing crisis began.
– pass legislation nationalizing the regional Federal Reserve Banks and requiring that their bank managers be Federal Senior Executive Service employees, and their employees be civil servants;
– pass legislation prohibiting member banks of the Federal Reserve System from trading in derivatives or novel financial instruments, or from engaging in investment banking.
This policy proposal is both a “debt jubilee” for homeowners, and those threatened with financial hardship by our health insurance and provider systems and their financial practices, and also a restructuring of the banking system, so that SDIs cannot emerge again. In addition, it takes into account the wholesale mortgage fraud leading to the housing crisis; restitution to those victimized by the housing and economic crashes, and also provides for finding the people who committed the frauds and seeing that they are subject to the law. This last is necessary to eliminate the moral hazard in today’s still existing “To Big To Fail” policies, and to help us to restore the rule of law to all, and not just to people the government finds worthy of prosecution and punishment.
Fix U.S. Infrastructure
Pass legislation to fix it over five years at $440 B per year. Do it with deficit spending if there’s still unemployment; do it without such spending if there’s full employment.
An “orwellian” speech?
The policies mentioned in this post and in Part II, among others in the areas of reinventing energy foundations, educational reform, creating a sustainable environment, and ending climate change, can all be implemented once we have austerity politics and the filibuster out of the picture (See Part I). Their effects will solve the problems mentioned, and, just as importantly, will reverse the growth of inequality in America by shoring up the economic security of the middle class and the poor, and restoring economic opportunity. In addition, the JG and infrastructure programs will enrich our stock of public goods and our supply of public and community services.
The policies that we can implement once “How we gonna pay for it” and austerity politics are gone, due to using High Value Platinum Coin Seigniorage, can create a Green New Deal. They can restore the promise of American Democracy to our children and Grandchildren, and bring the prosperity to the middle class and poor people that President Obama says he wants.
But two questions remain. First, does President Obama really want to create middle class prosperity as he says, or was his speech orwellian as Yves Smith and Michael Hudson suggest? And second, if by some small chance the President is sincere in his intention to pursue increased prosperity for the middle class and the poor, then how can a program like the one I’ve outlined be passed with the House of Representatives in the hands of the Republicans?
My answer to the first question is that the President did give an orwellian speech and that his speech and his current tour is for the purpose of building support to get the Republicans to accept a settlement including the President’s much sought after “grand bargain” providing for major entitlement cuts in Social Security and Medicare. But assuming the President were to attempt to implement the kind of program I propose, then I think that simply proposing the program, and campaigning on it, in the context of a full public purse created by HVPCS, would place great pressure on the Republicans to pass at least a few of its elements.
If they did not, then only meanness would account for their failure to do so, when the money is there. The President and the Democrats could then run and win on the rejected part of the program in 2014, and implement it in 2015, whether or not the Republicans continued to oppose it.
So, all this and more too, is what I would have the President do. I blame him for not doing it. I blame him for not acting like one of the inheritors of FDR. And I also blame him for his constant mere lip service to Democratic ideals, accompanied by actions which continuously conflict with these ideals.
President Obama is a walking chasm between his rhetoric and his actions. And there is no way that those who ask: “What would u have him do?” can bridge that chasm. So, they need to stop asking that question, and also stop pointing out that “He can’t do it alone.”
No one’s asking him to do anything alone. He’ll need the help of the Democratic Party, some Republicans, and many aroused American voters to get this done. What I’m pointing out however, is that he’s not doing what he can be doing given the powers of his office, coupled with the possibilities for action and mobilization of his party and the American people. This situation has existed for the four-and-a-half years he’s been in office. He’s due plenty of blame for that, as well as our opprobrium.
He is not due sympathy from us because life is so tough for him. Life has been tough for many, many Americans since the crash of 2008, and for many others for decades before that. But for him, and in recent years, at least, it is a charmed play on a grand stage living in a bubble, and he has done very little as yet to help those who elected him in a state of national crisis.
So, I think he is not due sympathy, but a time of accountability for his actual performance. That’s what we owe him, accountability, not rationalizations and excuses for his failure to perform in our interests, rather than in those of the rising plutocracy.
(Cross-posted from New Economic Perspectives.)