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Tuesday, February 08, 2011

"Obama's Deal with the Chamber of Commerce"

I think it would be fair to say that Robert Reich is unhappy with Obama's attempt to make peace with the Chamber of Commerce:

Obama’s Deal with the U.S. Chamber of Commerce, by Robert Reich: “We can, and we must, work together,” the President told the U.S. Chamber of Commerce today. “Whatever differences we may have, I know that all of us share a deep, abiding belief in this country, a belief in our people, a belief in the principles that have made America’s economy the envy of the world.”
Really? I’ve been watching ... the Chamber for years, and all I know is it has a deep, abiding belief in cutting taxes on the wealthy, eroding regulations that constrain Wall Street, cutting back on rules that promote worker health and safety, getting rid of the minimum wage, repealing the new health-care law, fighting unions, cutting back Medicare and Social Security, reducing or eliminating corporate taxes, and, in general, taking the nation back to the days before the New Deal.
So what, exactly, is the deal Obama is pitching to the Chamber?
He said his administration will “help lay the foundation for you to grow and innovate,” by eliminating “barriers that make it harder for you to compete - from the tax code to the regulatory system,” and by completing more trade deals. In return, the President said he wants businesses to hire more Americans. ...
American businesses ... profits are soaring. And one reason they’re doing so well is they’re holding down costs, especially payrolls. So why would they ever agree to add more workers now? ...
Not long ago I debated a conservative economist who argued American workers had priced themselves out of the global labor market and would therefore have to settle for lower real wages and benefits before they’d be hired back in large numbers. By his logic, many health and safety regulations would also have to be compromised or abandoned, since they also make American workers more expensive.
If this is the tacit bargain the President is offering business, it’s not a good deal for American workers. ... The alternative is to create lots of jobs with high disposable incomes.
In the short term, this means expanding the Earned Income Tax Credit ..., and cutting income and payroll taxes for everyone earning less than $80,000 a year – making up the lost revenues by raising the ceiling on Social Security payroll taxes and hiking marginal taxes on the rich.
In the longer term, this means investing in a world-class education for all the nation’s kids... Here again, we’d have to rely on the top 1 percent (who now take home more than 20 percent of all income) to foot the bill.
Might the CEOs and top executives who comprise the U.S. Chamber of Commerce go along with this? After all, they profess to be patriotic. As the President said, they “share a deep, abiding belief in this country, a belief in our people, a belief in the principles that have made America’s economy the envy of the world.”
I don’t mean to sound cynical but I doubt it.

Plus, how would we even enforce such a deal? Individual businesses will have no incentive to go along unless it's in their interests to do so (in which case no deal is needed). This seems, in the end, to be a pretty one-sided bargain.

    Posted by on Tuesday, February 8, 2011 at 11:07 AM in Economics, Politics, Unemployment | Permalink  Comments (38)


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