Two Pieces of Good News from Washington

Speaker of the House John Boehner allowed a straightforward “clean vote” on raising the debt ceiling instead of holding the world economy hostage again. Many right-wingers are outraged. Maybe one day Congress will get rid of the debt ceiling altogether, since raising it merely allows the government to borrow money to pay bills Congress has already approved.

Secondly, Janet Yellen testified before Congress for the first time in her new role as chairman of the Federal Reserve. It’s hard to understand why President Obama initially seems to have preferred someone else for the job. There is a nice, clear summary of her testimony from John Cassidy at the New YorkerThis is his conclusion (calling her “dovish” means she’s not an “inflation hawk”, i.e. fighting inflation isn’t her one big priority):

She’s a historic figure. I am not just referring to her gender. I’m talking about her approach to policy making, and the emphasis she puts on creating jobs and reducing unemployment. “Since the financial crisis and the depths of the recession, substantial progress has been made in restoring the economy to health and in strengthening the financial system,” she said toward the end of her prepared remarks. “Still, there is more to do. Too many Americans remain unemployed, inflation remains below our longer-run objective, and the work of making the financial system more robust has not yet been completed.”

It’s been a long time since we’ve had a Fed chief come to office declaring that unemployment is too high, inflation is too low, and that we need to keep those Wall Street bounders in check. (Bernanke ended up saying some of these things, but he didn’t start out saying them.) In a post last year, I suggested that Yellen could be the most dovish Fed boss since … the Great Depression, and I noted that, “if Yellen does take over from Bernanke next February, there’s no reason to doubt that concern for the unemployed will remain her leitmotif.” Nothing she said today was inconsistent with that description.

Take This Job and Keep It!

It appears that Congressional leaders and the President are nearing an agreement to end the government shutdown and raise the debt ceiling. Rational people will applaud this development, even if the agreement merely buys some time until our next crisis.  

Then there are people like Rep. Tim Huelskamp, Republican of Kansas. He is reported to have said: “Anybody who would vote for that in the House as a Republican would virtually guarantee a primary challenger.”

Let’s see. Vote to end the shutdown and raise the debt ceiling, thereby putting thousands of people back to work and avoiding a possible financial meltdown and worldwide recession, or have competition in next year’s primary election. That’s a tough choice, all right.

Rep. Heulskamp was first elected to Congress in 2010. Nobody ran against him in 2012, not in the primary and not in the general election. He has a well-paying government job for life and nobody’s going to take it away, whatever happens to the rest of us.

But he isn’t a key player here. He’s one of the Tea Party radicals who is sure to vote against any reasonable agreement. It’s the Speaker of the House and the so-called “moderate” Republicans who have to decide whether to protect the general welfare, even if it means risking their jobs.

Selected Reading On The Mess We’re In

Historian Sean Wilentz makes a forceful argument in favor of Obama invoking the 14th Amendment to protect the world’s economy:

… the president would have done his constitutional duty, saved the country and undoubtedly earned the gratitude of a relieved people. Then the people would find the opportunity to punish those who vandalized the Constitution and brought the country to the brink of ruin.

The New York Times editorial board is justifiably outraged that many people living in Republican-run states will still lack health insurance next year — they’ll earn too little to be covered by the Affordable Care Act and too much to be covered by Medicaid:

Their plight is a result of the Supreme Court’s decision last year that struck down the reform law’s mandatory expansion of Medicaid and made expansion optional. Every state in the Deep South except Arkansas has rejected expansion, as have Republican-led states elsewhere, [although] there is no provision in the ACA to provide health insurance subsidies for anyone below the poverty line … those people are supposed to be covered by Medicaid… Eight million Americans who are impoverished and uninsured will be ineligible for help of either kind.

Of course, Congress could easily fix this problem, but that would require You Know Who to cooperate.

At Jacobin, Shawn Gude writes about the fundamental tension between capitalism and democracy, in the context of living-wage legislation in the District of Columbia:

The controversy throws into sharp relief one of our era’s great unspoken truths: Capitalist democracy, if not an oxymoron, is less a placid pairing than an acrimonious amalgamation. The marriage that Francis Fukuyama famously pronounced eternal is in fact a union of opposites. Inherent to capitalism is inequality, fundamental to democracy is equality. Class stratification, the lifeblood of capitalism, leaves democracy comatose. The economic “base,” to put it in classical Marxian terms, actively undermines the purported values of the political superstructure.

And finally, Nobel Prize-winning economist Joseph Stiglitz argues that we can undo the decisions that got us into this mess:

We have become the advanced country with the highest level of inequality, with the greatest divide between the rich and the poor… The central message of my book, The Price of Inequality, is that all of us, rich and poor, are footing the bill for this yawning gap. And that this inequality is not inevitable. It is not … like the weather, something that just happens to us. It is not the result of the laws of nature or the laws of economics. Rather, it is something that we create, by our policies, by what we do.  

We created this inequality—chose it, really—with laws that weakened unions, that eroded our minimum wage to the lowest level, in real terms, since the 1950s, with laws that allowed CEO’s to take a bigger slice of the corporate pie, bankruptcy laws that put Wall Street’s toxic innovations ahead of workers. We made it nearly impossible for student debt to be forgiven. We underinvested in education. We taxed gamblers in the stock market at lower rates than workers, and encouraged investment overseas rather than at home.

Meanwhile, the Swiss are voting on whether to guarantee everybody a minimum monthly income of $2500 francs ($2800 dollars). They’re also voting on a proposal to limit executive pay to no more than 12 times what the company’s lowest-paid workers earn. Who knew that the businesslike, orderly Swiss were a bunch of commies? Or maybe they’re just fed up with rising inequality, even in Switzerland.