Posts Tagged Great Depression

Don’t Cut Social Security — Double It | Alternet

Posted by Michael B. Calyn in Economics, Government, Opinion, Perspective, Retirement, Social, Society on December 27, 2012


Don’t Cut Social Security — Double It

Fiscal cliff chatter about slashing the venerable program ignores its fundamental potential and underlying strength.

December 27, 2012

 

 

 

As the nation tiptoes closer to the fiscal cliff, a frightening number of leaders on both sides of the political aisle seem ready to push poor, beleaguered Social Security over the edge. Not only would that be a huge mistake for the nation’s future, but these leaders show a dreadful misunderstanding of the new challenges faced by the U.S. retirement system. Particularly in the aftermath of the largest economic collapse since the Great Depression, none of the proposals on the table are grappling with some stark economic realities. How we settle this New Deal legacy will decide fundamental questions about what kind of society America will be for generations to come.

Here’s the dilemma that the United States faces. Since World War II, individual retirement has been based on a “three-legged stool,” with the three legs being Social Security, pensions, and personal savings (the latter primarily centered around home ownership). But two out of three of these legs have been chopped back to blunted pegs, leaving the retirement stool as an unstable, one-legged oddity.

Pensions have always been the least broadly distributed asset, with only a third of elderly Americans (those 65 and over) earning pension income, a percentage which has been declining dramatically in recent years. A bit over a majority of these older Americans have income from personal savings, most of that residing in the value of their homes. But 86 percent receive Social Security payments (see Figure 1).

 

 

Even before the Great Recession, 40 percent of middle-income and 53 percent of lower-income Americans already were at risk of having insufficient retirement funds. But the economic collapse has taken its toll on two out of three of Americans’ primary retirement resources: pensions and savings/investment in a home.

Already Off the Cliff: Pensions, Private and Public

American pensions were some of the hardest hit in the world by the Great Recession, falling in value by over a quarter in 2008, with only modest recovery since then. But private pensions already had become a less steady leg of retirement security prior to the recent recession. Since the early 1980s, businesses have gradually shifted responsibility for pensions onto workers, with predictable results. In 1981, approximately 60 percent of private sector workers were covered by a pension with a guaranteed payout. Today only about 10 percent of private sector workers have guaranteed payout pensions. Meanwhile, 401(k)-type retirement contribution plans have gone from covering only about 17 percent of the private workforce to about 65 percent today (see Figure 3).

 

 

401(k)s and other defined-contribution plans have turned out to be an unreliable pillar of retirement security, not only because they don’t provide as secure a net but because many Americans are pretty lousy at managing their investments. A study by the National Bureau of Economic Research found that more than one-quarter of baby boomer households thought “hardly at all” about retirement and that financial literacy among boomers was “alarmingly low.” Half could not do a simple math calculation (divide $2 million by five) and fewer than 20 percent could calculate compound interest.

In the public sector, most workers still are covered by guaranteed payout pensions, but the number of public sector workers has declined dramatically in recent years, accelerating as a result of the Great Recession. There are now a million fewer federal employees than when Ronald Reagan left office, and public sector employment is at a 30-year low.

In addition, states have funded only about 80 percent of their pension liability, leaving a $3.32 trillion funding gap. Ohio and Rhode Island are in the worst shape, having underfunded their pensions by almost 50 percent of their gross state product. Other liabilities, such as retiree health and dental insurance, also are underfunded. City governments similarly are plagued by underfunded pensions, with Los Angeles underfunding its public pension liabilities by $3.53 billion, with an additional $2.43 billion owed for other employment benefits such as healthcare. As of June 2009, New York City public pension programs had liabilities that exceeded their assets by $39.9 billion with an additional $65.5 billion owed for other benefits.

So both the private and public components of the U.S. pension system are under severe strain, as the Great Recession combined with pre-recession patterns of rising inequality and a diminishing social contract have taken their toll. With fewer workers covered by pensions, this leg of the three-legged stool of retirement security is too short — and growing shorter.

Already Off the Cliff II: Home Ownership and Personal Savings

Now let’s examine the second leg of retirement well-being, personal savings centered around homeownership. For tens of millions of Americans, security in their elderly years has been directly linked to the value of their homes. Yet the rupture of the housing bubble illustrated in dramatic fashion the danger of over-reliance upon ever-rising home values for retirement security.

The Federal Reserve has estimated that homeowners lost approximately $8 trillion in home equity during the Great Recession, a 53 percent drop in the overall value of the national homeownership stock. About 14 million Americans — about 28 percent of all homeowners — are still underwater today, owing more on their mortgage than their home is worth. These homeowners are, in effect, flat broke if they have no other accumulated savings or retirement vehicle (see Figure 6, which shows the percentage of mortgages that are underwater).

 

This has been devastating for Americans’ retirement well-being because home ownership accounts for a large proportion of assets for so much of the population. As of 2008, only the top two income quartiles had accumulated enough equity from financial assets and pensions to weather the bursting housing bubble. The bottom 50 percent had not saved enough outside their homeownership to avoid severe wreckage to their retirement plans.

Thus, the second leg of the three-legged retirement stool has been broken down to a nub. And with home prices unlikely to recover soon, this loss in equity has significantly reduced the economic security of the lower and middle classes, which are less likely to have pensions and other assets such as private savings (beyond homeownership) to sustain them. Indeed, the bottom two income quartiles for those aged 65 and over depend on Social Security for at least 80 percent of their income, but even the second richest quartile still depends on Social Security for over 50 percent of its retirement income (see Figure 7).

 

 

In short, the collapse of the housing bubble when combined with the slow erosion of America’s pension system has hacked away two of the three legs of the retirement stool. In the future, the vast majority of baby boomers and other retirees will be almost completely dependent on the single leg of Social Security for their retirement. The retirement stool no longer is stable and secure, and suddenly Social Security, which always has been viewed as a supplement to private savings, is the only leg left for hundreds of millions of Americans.

Financial experts say it will take a monthly retirement income of about 70 to 80 percent of pre-retirement income levels — as well as $200,000 to $300,000 in personal savings — for the average American to have a secure retirement. Yet most older Americans have saved only a fraction of that. In 2010, 75 percent of Americans nearing retirement age had less than $30,000 in their retirement accounts. About half of all Americans are at risk of not having sufficient retirement income, and three-fifths of low-income households are at risk of not having sufficient income to maintain their pre-retirement standards of living at age 65 (see Figure 9).

 

A single legged stool might be sufficient if that single leg was robust enough to stand on its own. But Social Security currently provides much less than the 70 to 80 percent of pre-retirement income needed to maintain pre-retirement standards of living. It is estimated to replace only about 33 to 40 percent of pre-retirement income for the average wage earner, compared to other nations like Germany or France where it replaces 70 percent (see Figure 10).

 

So the one-legged stool of the U.S. retirement system is looking like a rather odd piece of furniture, one that is increasingly unstable. For more and more Americans, the dream of a secure retirement is threatened. New solutions are needed to provide security to retiring Americans, both now and in the future.

The Solution: “Social Security Plus”– Expanding Social Security

An expansion of the Social Security retirement system — one of the most successful and popular social programs in American history — that converts it into a more robust retirement system would build upon the most stable component of the current system. Social Security already provides the major means of support for two-thirds of America’s retirees. Since its New Deal inception in the 1930s, and gradual expansion in subsequent decades, Social Security has become a mainstay of retirement security, firmly rooted in America’s cultural and economic landscape (as leaders like President George W. Bush discovered when he tried to privatize it).

The real problem with Social Security is not, as its critics say, that it is underfunded. Contrary to gloomy predictions, the program is on solid financial footing, with the Congressional Budget Office projecting that Social Security can pay all scheduled benefits out of its own tax revenue stream through at least 2037. The bigger problem is that Social Security’s payouts are so meager — far too low for the program’s new role as America’s de facto national retirement system. It only replaces about 33 to 40 percent of a retiree’s average final wage, which is simply not enough money to live on when it is your primary — perhaps your only — source of retirement income.

The gritty reality that the Obama administration and House Republicans must face is that the vast majority of America’s retirees cannot afford to watch them hack off part of the only leg that remains of the three-legged stool. Quite the contrary, we should make that leg more robust by doubling the current Social Security payout, and turning it into a true national retirement system called “Social Security Plus.” Doing so not only would be good for American retirees, but also would be good for the greater macro economy.

Doubling Social Security’s individual payout would cost about $650 billion annually for the approximately 53 million Americans who receive benefits. Here’s how to pay for it.

Step 1. Lift Social Security’s payroll cap that favors the wealthy.

Currently Social Security only taxes wages up to $106,800 a year, and any income earned above that is not taxed. The net result is that poor, middle class, and even moderately upper middle class Americans are taxed 12.4 percent (split between employee and employer) on 100 percent of their income, but the wealthy pay a much lower percentage. Millionaire bankers effectively pay a paltry 1.2 percent.

Making all income levels pay the same percentage — which is how Medicare works — is popular with Americans according to opinion polls, and would raise about $377 billion toward the $650 billion needed to double the Social Security payout. As a candidate in 2008, Barack Obama stated that he supported raising the cap on the Social Security tax to help fund the program.

Step 2. Cut out the business deduction for employees’ retirement plans.

With all Americans receiving Social Security Plus, employer-based pensions would be redundant, so businesses no longer would need the substantial federal deductions they currently receive for providing employees’ retirement plans. These deductions total a substantial $126 billion annually.

These two steps alone would provide three-fourths of the revenue needed to double Social Security’s payout.

Step 3. Cut or reduce other deductions that disproportionately benefit top income earners.

Other possible revenue streams should include ones that would reduce or eliminate unfair deductions in the tax code which currently allow the top 20 percent of income earners to reap generous deductions that barely help most low and moderate income Americans. These include deductions for private retirement savings, health care, homeownership and education.

Only higher income individuals have enough earnings to divert for savings or investments that allow them the luxury of enjoying considerable tax deductions for their 401(k)s, IRAs and pensions. The poor and middle class rarely can take advantage of these sorts of deductions because they don’t make enough income to benefit from itemizing deductions on their tax returns. As Josh Freedman pointed out recently in The Atlantic, in 2011 less than 30 percent of all filers itemized their taxes, and more than 80 percent of the benefits from itemized deductions went to individuals in the highest income quintile.

The same goes for the much vaunted home mortgage interest deduction. Those with annual incomes over $100,000 dollars received nearly 75 percent of the benefit from the home mortgage interest deduction in total dollars. Most middle class individuals would not see any increase in their taxes if the mortgage interest deduction were eliminated. Instead of buying a home as part of their retirement plan — which we now realize can be a risky undertaking — more people could put their money into Social Security Plus. Eliminating the mortgage interest deduction would raise another $100 billion to pay for Social Security Plus, and eliminating the other deductions would bring us close to the $650 billion mark.

An expansion of Social Security not only would be good for America’s retirees, it also would be good for the broader macroeconomy. It would act as an “automatic stabilizer” during economic downturns, keeping money in retirees’ pockets and stimulating consumer demand, especially since low and middle income people are more likely to spend an extra dollar on goods and services than are affluent individuals. Social Security Plus also would help American businesses trying to compete with foreign companies that don’t have to provide pensions to their employees, since those countries already have national retirement plans.

Moreover, unlike private pensions, Social Security benefits are portable when changing from one job to another. Every worker could contribute to her or his own retirement pension no matter where she or he worked. Those savings could be directed into a Social Security Plus system with investments restricted to Treasuries, instead of handing it over to mutual or pension fund managers who gamble on the volatile stock market with future retirees’ money (there is no evidence that the typical investment fund manager consistently beats the average return on Treasuries). And this system would be broadly fair, since even those higher income Americans who are having some of their tax deductions reduced would see part of it returned to them in the form of a greater Social Security payout.

In short, Social Security Plus would provide a stable, secure retirement for every American and contribute greatly toward a solid foundation from which to build a strong and vibrant 21st century economy. All Americans should have retirement benefits they can count on, not the crumbling casino of retirement overseen by the same Wall Street bankers and financial managers who drove the U.S. economy off the cliff.

 Don’t Cut Social Security — Double It | Alternet.

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Bill Black: Kill the “Fiscal Cliff” Instead of the Economy « naked capitalism

Posted by Michael B. Calyn in Economy, Government on December 25, 2012


Bill Black: Kill the “Fiscal Cliff” Instead of the Economy

Posted: 25 Dec 2012

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives

Everyone now agrees that the so-called “fiscal cliff” is a stupid policy that threatens our economy and our people. Everyone agrees why the “fiscal cliff” is stupid – it inflicts austerity at a time when it is likely to throw the nation into a gratuitous recession. Causing a recession leads to increased unemployment and a larger budget deficit. We have all seen austerity force the Eurozone into a gratuitous recession in which Italy, Spain, and Greece have Great Depression levels of unemployment.

Here’s the short version of why austerity is a self-destructive response to the Great Recession. A recession occurs when demand to purchase goods and services falls and the economy contracts, causing increased unemployment. This simultaneously causes tax revenues to fall and government expenditures for programs like unemployment compensation to increase. The fall in revenues and increase in expenses causes the federal budget deficit to grow rapidly.

Austerity is a policy of raising taxes and/or cutting governmental spending for the purported purpose of cutting the deficit. If one raises overall taxes in response to the Great Recession the result is a reduction in private sector demand. If one cuts governmental spending the result is a reduction in public sector demand. The result of reducing private and public sector demand in the recovery phase from the Great Recession, where overall demand is already grossly inadequate, is to throw the nation back into recession or even a depression. That causes the budget deficit to grow. A policy of austerity undertaken under the claim that it will reduce the deficit causes a gratuitous recession that leads to a massive loss of wealth, far higher unemployment, and in increased deficit. That is why austerity is a policy that is the self-destructive economic analogy to the medical insanity of bleeding patients.

We have known that austerity is an idiotic response to a severe crisis for 75 years. The U.S. was in the midst of a strong recovery from the Great Depression until FDR’s neo-liberal economists convinced him in 1937 that is was essential that the U.S. adopt an austerity program to reduce the federal deficit. Austerity forced our economy back into a Great Depression.

It was only the stimulus of federal spending in World War II that brought the U.S. out of the depression. During World War II and for the remainder of that decade the ratio of debt-to-GDP was at or near historically record levels. The result was the greatest industrial expansion in history, full employment (including a massive influx of women), strong economic growth, and sharply declining deficits and debt-to-GDP ratio because the growth led to large increases in revenue and the low unemployment greatly reduced spending on the unemployed. We also defeated the Axis powers, created Social Security and the GI Bill, and began an extraordinary expansion of our housing stock to house the baby boom.

We learned many lessons from the catastrophic failure of austerity and the extraordinary success of stimulus in this era. The U.S. adopted a fiscal system of “automatic stabilizers.” These are counter-cyclical (they push in the opposite direction of the business cycle) fiscal effects that are designed into the system and do not require new legislation once the recession or inflation begins. The result of these automatic stabilizers has been to reduce the severity and duration of recessions. Indeed, studies show that the larger the national governmental role in the economy, the less volatile the economy. This makes sense because the stabilization function should be more effective if the stabilizers are larger relative to the economy.

Unfortunately, these sensible counter-cyclical policies that make theoretical and common sense and have repeatedly worked in the real world were forgotten by many due to a campaign of deficit hysteria funded by Pete Peterson, a Republican billionaire financier who has made it his mission in life to destroy the safety net. His ultimate goal is to privatize social security so that Wall Street can receive hundreds of billions of dollars in fees investing our retirement funds.

I’ve explained in a prior column how the fiscal cliff was created through an insane bipartisan deal in August 2011. The fiscal cliff was always a terrible job-destroying idea that also began to unravel the safety net by cutting Medicare. Everyone involved in creating the fiscal cliff acted irresponsibly and inhumanely in seeking to inflict austerity, cause a recession, and unravel the safety net.

What is forgotten, however, in discussions of the idiocy of creating the fiscal cliff is that it was part of a broader bipartisan deal intended to inflict even more self-destructive austerity and even greater damage to the safety net. The fiscal cliff was an act of idiocy in pursuit of a policy of depravity called “the Grand Bargain” that was actually the Grand Betrayal.

The bipartisan madness has increased since the August 2011 budget deal. Today, the parties are simultaneously screaming (1) that the fiscal cliff is a disaster because it imposes austerity and will cause a recession and (2) that it is essential that we agree to a Grand Betrayal that will inflict even greater austerity and cause an even more severe recession. Indeed, the Grand Betrayal mandates austerity over a decade so it is likely to cause and/or deepen multiple recessions. The Republican and Democratic variants of the Grand Betrayal are doubly destructive and inhumane because they cut the safety net. President Obama wants to begin to unravel the safety net and cut social programs even though an overwhelming majority of Democrats oppose it and even though doing so will inflict even greater austerity. That will cause a deeper recession and likely make the deficit larger, so it is as nonsensical as it is cruel.

During this this entire financial farce I have been unable to get the dominant media to make the most obvious point. Since we all agree that austerity (the fiscal cliff) is a terrible idea that will cause a recession and likely increase the deficit we must logically conclude that all variants of the Grand Betrayal are austerity programs that must be defeated in order to prevent a recession that is likely to increase the deficit. We should all be opposing any cuts in the safety net because they would inflict austerity. An overwhelming majority of Democrats and a majority of Republicans also oppose cuts in the safety net as inhumane.

So why don’t the Democrats and Republicans stop trying to do a deal that will inflict austerity? Why not simply repeal the Budget Act of August 2011? That would kill the fiscal cliff. Repeal would kill austerity, prevent the recession, save the safety net, increase growth, and shrink the deficit. All versions of the Grand Betrayal (Republican and Democratic) inflict austerity, are likely to cause a recession, begin to unravel the safety net, destroy growth, and increase the deficit.

Under the same logic we should be able to agree on two related actions – renew the extension of long-term unemployment compensation and renew the moratorium on collecting the payroll tax. These policies are superb counter-cyclical programs and have the added advantage of reducing human misery and inequality. Republicans and Democrats have agreed in the past on the desirability of both actions.

 Bill Black: Kill the “Fiscal Cliff” Instead of the Economy « naked capitalism.

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America’s open secret: Middle-class decline – Salon.com

Posted by Michael B. Calyn in Economy, Government on August 26, 2012


 

SUNDAY, AUG 26, 2012

America’s open secret: Middle-class decline

It’s become a national emergency, but where is our FDR?

BY DAVID WOOLNER, NEXT NEW DEAL

 

America's open secret: Middle-class decline

 

Graphic shows unemployment statistics (Credit: AP)

 

This originally appeared on Next New Deal.

In the 1930s, the president and Congress responded to the economic crisis with immediate action. Why haven’t today’s policymakers done the same?

Sometimes I get bored sitting in Washington hearing certain people talk and talk about all that Government ought not to do— people who got all they wanted from Government back in the days when the financial institutions and the railroads were being bailed out in 1933, bailed out by the Government. It is refreshing to go out through the country and feel the common wisdom that the time to repair the roof is when the sun is shining.

They want the financial budget balanced. But they want the human budget balanced as well. – Franklin D. Roosevelt, October 1937

Next New Deal

 

A recent study by the Pew Research Center has confirmed what millions of Americans have realized for some time now: that the middle class has endured its worst decade since World War II. With declining home values, falling wages, and skyrocketing higher education costs, the median wealth for the middle class fell by 28 percent over the past decade, while the wealth of higher income families rose slightly. The same sad story holds true for middle class incomes, as government data now shows that we have finally managed to break the half-century-long streak that saw inflation-adjusted family income rise in every decade between 1950 and 2000, but not in the decade ending in 2010. Thanks to these and other economic trends, the overall size of the American middle class has also shrunk, down to just 51 percent of the population as compared to 61 percent of the population four decades ago.

One might assume that these alarming statistics—and the fact that the U.S. unemployment rate has been above 8 percent for more than three years—would lead to something like a crisis atmosphere in Washington, a recognition that this is no ordinary economic downturn, but a great national emergency made all the more worrisome by the onset of the worst drought in more than 50 years. But instead of acting, members of the House and Senate have elected to go on their usual five-week summer recess, confirming in the minds of most Americans that the principal blame for their current troubles and for the decline of the middle class lies with Congress.

Roughly three-quarters of a century ago, in similar circumstances, the reactions of both the public and the government was exactly the opposite. From the day he assumed office, FDR identified the collapse of the U.S. economy as an unprecedented national emergency, not unlike the onset of war, that must be countered by “action and action now.” Indeed, his first move as president was to call Congress back into an “emergency session” that launched the most productive period in U.S. legislative history—15 major pieces of legislation in 100 days, including such “emergency” measures as the 1933 Banking Act, the Glass-Steagall Act, and the Truth in Securities Act, all of which helped provide the regulatory structure needed for the U.S. banking and financial sector to thrive for decades to come.

But FDR’s characterization of the economic crisis as an emergency did not end there. He would continue to describe the nation’s woes in the 1930s as a “national emergency” and would continue to demand the cooperation of Congress in meeting both the short-term and long-term challenges that the nation faced as it climbed its way out of the Great Depression. It was this spirit to act—in both parties—that gave us the major provisions of the New Deal and that laid the basis for that remarkable 50-year period of expansion of the middle class that may now have sadly come to an end.

Given the level of inactivity on Capitol Hill, it would appear that the steady and sharp decline in the size and economic wherewithal of the American middle class does not represent a crisis to the members of Congress. But for the millions of Americans out of work or underemployed, the millions of Americans who now face the very real prospect that they will not be able to attain the same level of economic prosperity as their parents, this is no garden-variety recession. It is a deep structural decline that may forever change the way they and their children lead their lives.

In short, we remain in the midst of a very real national emergency that demands the same sort of response taken by the president and Congress more than three-quarters of a century ago: “action and action now.” Until Congress recognizes, this, however, one suspects that little will change, except that the long, steady decline of the American middle class and American way of life will continue.

 America’s open secret: Middle-class decline – Salon.com.

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Obama: Romney’s economic plan is return to Bush failures – The Hill – covering Congress, Politics, Political Campaigns and Capitol Hill | TheHill.com

Posted by Michael B. Calyn in Politics on August 6, 2012


 

The Hill Newspaper

 

Obama: Romney’s economic plan is return to Bush failures

By Amie Parnes - 08/02/12 09:23 PM ET

LEESBURG, Va. –  President Obama said the country would be “setting our sights low” and “settling for something less” if voters choose his opponent Mitt Romney– and Romney’s proposed economic plan– in November.

Speaking before a crowd of 3,000 in this Washington suburb, Obama decried Romney’s plan which he said would cut education spending, slash investment in science, voucherize Medicare–adding to the deficit— and ask the middle class to pay an extra $2,000 so “folks at the top can get another big tax break.”

“They will do exactly what they promised,” Obama said of Republicans. “But you know what it means is that, that vision to me means we’re setting our sights low. It means we’re settling for something else. It means that we’re no longer embracing the basic tenant that helped make this country great and that is that everybody can make it and everyone does their fair share, everybody gets a fair shot. Everybody is playing by the same set of rules.”

During his 25-minute speech, Obama–who has been to Virginia 39 times during his presidency– said the nation shouldn’t return to the policies of former President George W. Bush, which he said led to the worst economy since the Great Depression.

He attributed part of his win in 2008 to frustration from voters, who weren’t satisfied with Bush policies: “Let’s face it, part of the reason why we had so much energy in 2008 was because we understood we had seen a decade where that basic bargain wasn’t being met,” he said.

But he said the policies he has put in place during his administration would help continue to strengthen the middle class in his second term, should he be reelected. 

“It’s given us a sense of what it means to move forward and not back,” he said.

At the same time, a day before the July jobs numbers are released, Obama acknowledged that there is some frustration that the economy under his administration isn’t growing fast enough.

“No one’s satisfied with the pace of growth,” he said “No one’s satisfied even with all the jobs we’ve created. We’ve got to create more.”

Obama is expected to address the jobs numbers at the White House on Friday.

 Obama: Romney’s economic plan is return to Bush failures – The Hill – covering Congress, Politics, Political Campaigns and Capitol Hill | TheHill.com.

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A Challenge on Middle-Class Tax Cuts – NYTimes.com

Posted by Michael B. Calyn in Congress, GOP, Government, Legislation, Opinion, Perspective on July 11, 2012


The Need to Agree to Agree

Published: July 9, 2012 

 

 

Taxes are supposed to be complicated and contentious. Yet, speaking from the White House on Monday, it took President Obama less than 15 minutes to make a strong and sensible case for letting the high-end Bush-era tax cuts expire at the end of 2012. Citing well-documented facts, he pointed out that tax cuts at the top have failed to promote economic growth and have blown a hole in the federal budget.

Under his plan, Americans who make more than $250,000 a year — the top 2 percent of taxpayers — would see their tax rates go back up next year to the levels from the Clinton years, while those making less than $250,000 — the remaining 98 percent — would have their tax cuts extended through 2013.

In calling for cooperation from Congress, Mr. Obama said that the point is to “agree to do what we agree on”: extend the middle-class tax cuts. As a matter of fairness and responsible policy making, he said, the majority of Americans, and the broader economy, should not be held hostage again to another debate over the merits of tax cuts for the wealthy.

Unfortunately, it is not a message Congressional Republicans want to hear, committed as they are to preserving tax cuts for the rich at all costs. It is not even what some Democratic leaders want to hear, including Nancy Pelosi, the House minority leader and Senator Charles Schumer of New York, both of whom voiced support on Monday for Mr. Obama’s approach but have advocated in the past for extending the tax cuts for households that earn up to $1 million a year, a level that would please wealthy campaign donors.

But it’s a message that needs to be sent, loud and clear, over and over. There will never be consensus for solving the nation’s budget problems without first ending the lavish tax breaks at the top. In the near term, letting the high-end tax cuts expire would raise much-needed revenue without harming the recovery because tax increases on high-income Americans do not cut into consumer spending nearly as much as middle-class taxes. The revenue that could be raised — about $850 billion over 10 years — would be a significant step toward reducing the deficit and financing programs to spur the economy.

Mr. Obama laid out the broad issues. Now he needs to drive these points home.

THE TAX INCREASES WOULD BE MANAGEABLE Reverting to Clinton-era tax rates for those making more than $250,000 annually would mean increases in the top rates to 36 percent and 39.6 percent from 33 percent and 35 percent currently. It would also mean raising the tax rate on investment income, which is highly concentrated among the wealthy, to 20 percent from 15 percent. No one is being bankrupted or punished. They are being asked to pay more after an extended period of super-low rates. The 15 percent rate on capital gains investment income, for example, is the lowest such rate since the Great Depression.

MILLION-DOLLAR EARNERS DON’T NEED A BREAK Extending the tax cuts to those earning $1 million a year would cost the government $366 billion in lost revenue over 10 years, compared with extending the tax cuts only to those making less than $250,000 a year. That amount would have to be made up by cutting federal spending in critical areas like Medicare, Medicaid, education and food safety.

SMALL BUSINESSES ARE SPARED Republicans argue that letting the high-end tax cuts expire will hit small businesses and impede hiring. That is nonsense, and based on an overly broad definition of “small business,” which counts any taxpayer who reports business income as a business owner, including lawyers and accountants working in partnerships, corporate executives who sit on other firms’ boards and shareholders in “S-corporations,” business organizations that can employ thousands of workers. Using a more reasonable definition of small business — for instance, having income and deductions of less than $10 million — a recent Treasury analysis found that only 2.5 percent of small-business owners would face higher taxes from the expiration of the Bush tax cuts. Of those who would be affected, most are unlikely to reduce hiring or investment because of ample deductions for business expenses.

The strength of Mr. Obama’s argument is unlikely to sway Republicans. But he’s right on fairness and the facts, and will, we hope, prevail in this debate.

 A Challenge on Middle-Class Tax Cuts – NYTimes.com.

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The Death of the American Dream | breezespeaks

Posted by Michael B. Calyn in Economics, Economy, Editorial, Employment, Open Rant Forum, Opinion, Perspective, Society, Wealth on June 13, 2012


The Death of the American Dream

Posted on June 12, 2012   

 

 

Want to participate in the American Dream, go buy a lottery ticket.  It will give you a better chance of acquiring that house on the corner with the white picket fence than hard work ever will.

The net worth of the average American family dropped from $126,000 to $77,000 between the years 2007 and 2010.  A large chunk of that decline is due to the housing bubble that burst at the beginning of the Great Recession, but another factor is the stagnation, or outright decline, of wages paid to the working man.  Americans, especially the middle classes, have grown poorer through no fault of their own.  They have little to no savings, and many of their homes are underwater.

On the flip side, the top 10% of our nations earners saw a rise in income.  How is this possible, or fair, when the rest of us don’t have two nickles to rub together.  American corporations are sitting on piles of money – see Exxon Mobil and General Electric – while doing nothing for the country that helped make them successful.  Instead, they are outsourcing jobs overseas in search of more profits.  Where does it end.

The decline of the middle class, combined with the prosperity of the wealthy elite, has led to a disparity in income not seen since the Great Depression.  Historically, the middle class is the engine that drives our economy.  The rich can not, or will not, support the economy on their own.  Yet the middle class, with their loss of income, are incapable of stopping the current trend.  Disposable income is nonexistent when you make minimum wage.

Most families I know have two wage earners yet are barely making ends meet, and any savings they may have had have been erased by the last three years of the recession.  They see their kids on weekends and after work, that is if they aren’t working six-day weeks or overtime.  Is that any way to live?

For most Americans, their home is their main investment.  Stocks are for the rich and well to do.  But because the housing bubble burst, people will have to put off retirement until their late sixties or early seventies (and the way things are, due to Social Security and Medicare being in dire straights, the delay will be mandatory.)  People working into their seventies will not be an aberration, it will be the norm.  All because the rich want to get richer, and to hell with everyone else.

Greed will be the death of capitalism, and we are seeing the beginning of the end.  There is enough money to go around, but no one wants to share.  The numbers don’t lie.  Hard work will no longer help you get ahead, not at minimum wage, which is what the new jobs pay, and unions are a dying breed.  You are on your own, as even the government has businesses best interests at heart.  The people come second (if that high.)

This country was founded by elite white men for elite white men, and it has never changed.  So get out there and play the lottery, and maybe you too can retire before you’re seventy.  And if you happen to pass a poor person panhandling on the street you can tell him just what the rich people tell him, “Get a job, you lazy bum.”

And life goes on.

 The Death of the American Dream | breezespeaks.

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In Economic Deluge, a World That Can’t Bail Together – NYTimes.com

Posted by Michael B. Calyn in Economics, Finance, Global Affairs on June 3, 2012


In Economic Deluge, a World That Can’t Bail Together

By FLOYD NORRIS

Published: June 2, 2012

 

Less than four years ago, with the world’s financial system in danger of collapsing, major countries managed to come together on a coordinated course that averted a global depression.

Jock Fistick/Bloomberg News

Chancellor Angela Merkel of Germany has urged greater austerity.

Thierry Charlier/Agence France-Presse — Getty Images

Europe’s central bank president, Mario Draghi, has called for a common form of deposit insurance and regulation.

Central banks pumped vast amounts of cash into economies, and banks were bailed out, with vows that they would be subject to stronger regulation.

By early 2009, financial markets had bottomed out and begun strong recoveries. Economies were slower to follow; by last year, slow growth seemed to be the global pattern, spurring hope that the crisis had passed.

But within the last few weeks, much of that hope seems to have faded.

In Europe, the crisis has grown worse, not better, and the disputes among European leaders have intensified as much of the Continent appears to have drifted into a new recession. In China, growth remains robust by Western standards. But concern is rising over the possible end of a property boom that had been fueled in part by local government borrowing and spending.

In the United States, which had been an oasis of relative calm with a growing economy and rising employment, job growth in May, reported Friday, was a puny 69,000. To make the outlook even gloomier, earlier numbers were revised lower. That capped a series of three disappointing monthly reports.

Moreover, there seems to be little willingness — or perhaps lit-tle ability — for the major countries to act together again. Squabbles have grown, some countries are in fiscal distress, and others face daunting domestic problems. The European situation is the most pressing. Banks are under pressure in many countries, for a combination of reasons. They did not raise as much capital as they might have when markets were more buoyant last year. In some cases, they appear to have been slow to recognize their real estate loan losses.

But the most important factor may be that national governments are weak — in every way possible. There is no doubt that some countries could not afford to bail out their banks again; some, in fact, now rely on those same banks for loans to keep the governments functioning at a time when private investors are unsure about their creditworthiness. The president of the European Central Bank, Mario Draghi, suggested last week some type of common European deposit insurance and bank regulation, but there seems to be no consensus.

Nearly every major government in Europe has been thrown out by unhappy voters when an election rolled around, the latest being France. It is not a matter of left versus right. The only major leader to have been re-elected since 2008 is Chancellor Angela Merkel of Germany, but recent state elections there have been won by the opposing party, and even the German economy seems to be losing strength.

The most worrying electoral situation is in Greece, which seems to be mired in permanent recession and unable to comply with the rigid demands for austerity made by its European partners. With one election ending in deadlock among a variety of parties, it will try again on June 17. Many fear that the result could be a disorderly exit for Greece from the euro zone. Others think it could lead to the end of the euro altogether.

For governments that need to borrow money, this is either the best or the worst time ever. It is hard to believe just how low rates are for Germany and the United States. The yield on two-year United States Treasury notes is about one quarter of 1 percent. But comparable German notes this week were yielding one one-hundredth of a percent. At that rate, the government could borrow a million euros and pay 100 euros a year in interest.

But other countries have difficulty borrowing money at all, and pay far higher interest rates to get what money they can. It is not that anyone thinks the yields available on German and United States government bonds are attractive. It is that those bonds are deemed safe by fearful investors.

If throwing cash at the problem was the solution to the last crisis, now many deem that the cause of the current problems. Greece spent its way into its predicament while failing to collect the taxes it was owed and hiding the problem from the rest of Europe. But Spain was running budget surpluses before its own real estate bubble burst, leaving the government reeling. Yet all the troubled countries are being told — largely by Germany — to adhere to rigid austerity. With a common currency, it is hard to see how some of the countries can return to international competitiveness.

In the United States, the ease of borrowing has not made it politically easier to increase the pace of spending. Instead, there is the possibility of “Taxmageddon,” the threat that the unwillingness of politicians to compromise could lead to a combination of big automatic spending cuts and tax increases in 2013 that could devastate economic growth. All this is taking place in the midst of an election campaign that is widely expected to be the nastiest ever.

Moreover, the consensus that financial regulation should be strengthened and standardized has evaporated. In Europe and the United States, banks say that institutions across the Atlantic have unfair advantages, and regulators complain that the other continent has not taken the needed steps.

In the United States, a major push by the banks to weaken rules may or may not have been badly damaged by the multibillion-dollar trading loss suffered recently by JPMorgan Chase. But many in Congress, primarily but not exclusively Republicans, have gone back to the old belief that it was excessive government regulation that created the problem.

The widespread pessimism could dissipate as rapidly as it accumulated. Some surprisingly good economic news in the United States and China would help. More important would be for Europe’s leaders to reach agreement on a course of action that offered hope for recovery in the most stricken areas of the Continent while assuring that the common financial system would have the support of common institutions if needed. Europe has previously managed to cobble together something when disaster appeared to loom, and perhaps it could do so again.

Germany — the country that would have to pick up most of the bill to rescue its neighbors — could decide that not spending the money created greater dangers. The United States could find ways to help out despite fiscal pressures and Congressional hostility to foreign aid. A new consensus on common bank regulation could emerge. But, for now at least, the outlook is far darker than it seemed to be only a couple of months ago.

 In Economic Deluge, a World That Can’t Bail Together – NYTimes.com.

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U. of C. MBA grad spurns job market for alternative energy startup – Chicago Sun-Times

Posted by Michael B. Calyn in Economy, Education, Employment, Schools, Society on May 29, 2012


U. of C. MBA grad spurns job market for alternative energy startup

BY SHARON COHEN May 27, 2012 11:16PM

Story Image 

This May 2, 2012 photo shows Daniel Shani on the University of Chicago campus. In June 2012, at 25, Shani graduates with an MBA from the university’s Booth School of Business. Up next: a job heading his own company, Energy Intelligence LLC, an alternative energy startup based in Massachusetts. Many of his classmates will join high-powered financial, consulting and marketing firms. But he’ll be his own boss, trying to convert a bold idea into a successful venture. (AP Photo/M. Spencer Green)

Updated: May 28, 2012 2:13AM

 It’s a time when hope collides with economic reality, when the relief of that last class and the thrill of holding that diploma give way to the next big step — finding a job.

For the Class of 2012, the optimism of graduation is clouded by the uncertain aftermath of the worst economic slide since the Depression.

Last year, graduates 24 and younger posted a 9.3 percent jobless rate; since then, there have been signs of progress. Unemployment averaged 7.2 percent during the first third of this year, compared with 9.1 percent in the same period in 2011. And one survey estimates that about 7 percent more new college grads will find work this year than a year ago.

But the job market is still tight and graduates — whether they’re embarking on a career from high school, college or in mid-life — are entering a work world where salaries have not rebounded since falling during the recession.

For thousands of new graduates making the big transition this spring, there are pressures to find jobs quickly, pay off loans and, in some cases, start a second career, all against the backdrop of the slow-healing economy.

A degree and debt

Now that Chad Larsen-Stauber has a teaching degree, the inevitable question races through his mind: What will come first — a job or the bill for the first installment on his hefty loans?

The 26-year-old who just received his master’s degree in education from the University of Illinois-Chicago knows that in three months, he’ll have to start paying off debt of about $100,000.

“This is going to be looming over my head the next 20 years,” Larsen-Stauber says. “You’ve borrowed all of this money and it just comes due all of a sudden. When you’re already going into a low-wage job and you know that a third of your salary is immediately going to be eaten up … that’s really frightening.”

But not unexpected.

Larsen-Stauber is working with loan companies on payment plans; about 75 percent of his debts are from grad school. It seems overwhelming, but he says, “there never has been a regret in my mind. I knew when I started this program, I was 100 percent sure. … If there was one job that I ever wanted, it was to be a teacher.”

Larsen-Stauber realized that three years ago when he received a bachelor’s degree in communication. On graduation day, his parents posed a question: “’If you had to work the rest of your life and you never had to worry about money, what would you do?’”

Larsen-Stauber moved back in with his parents in the western suburbs, became a teacher’s assistant for a year, working with autistic and Down syndrome students in a middle school. Then he enrolled at UIC for a graduate degree.

As a teacher, Larsen-Stauber expects his salary will put a crimp in his lifestyle. It’ll affect everything, from where he lives to his dreams of global travel. “The possibilities that seemed limitless at one point are very downsized,” he says. “In the end, it’s a small price to pay for what you want to do.”

He’s now finishing his student teaching, working with kids with learning and behavioral disabilities. By fall, he hopes to be a Chicago public school teacher.

“A lot of people are saying, ‘Take whatever job you can get. You can do anything for a year.’ …I’m going into this with an open mind. What I love to do is teach, and I will teach anywhere at this point.”

Taking a gamble

At 23, Daniel Shani launched his first business — an online professional networking site.

At 24, while in school, he was working on his second venture — an alternative outdoor advertising company.

In June, at 25, Shani graduates with an MBA from the University of Chicago Booth School of Business. Up next: a job heading his own company, Energy Intelligence LLC, an alternative energy startup based in Massachusetts.

Many of Shani’s classmates will join high-powered financial, consulting and marketing firms (93 percent of last year’s graduates had job offers within three months; the median starting salary was $107,000). But he’ll be his own boss, trying to convert a bold idea into a successful venture.

It’s a gamble, but he’s game.

“There’s probably a fine line between anxiety, confidence and craziness,” Shani says. “You absolutely need a very high tolerance for risk. I have given up amazing opportunities in terms of recruitment on campus. … [But] I’m more excited about building something from nothing.”

Shani already is talking with venture capitalists and corporations about financing and collaboration and has applied for two federal grants. Though the fragile economy could squeeze potential investors, he isn’t discouraged.

“I think now is a great time to start a business,” he says. “It’s so cheap today relative to any time in history to test an idea and put together a product.”

Energy Intelligence wants to embed devices in road surfaces, mostly busy streets and highways, that would capture some of the energy vehicles lose (through heat, friction and pressure on the pavement) when they slow down — for example, when they approach toll booths. That energy would be transformed into electricity and sent to the national power grid or directly to street lamps, toll booths, or illuminated signs, for example.

Shani has consulted with engineers and researchers on the technology and sought advice from the Argonne National Laboratory, which uses supercomputers to analyze traffic patterns and can test how the devices perform.

“I feel like I’m a problem solver,” he says. “Entrepreneurs first and foremost are looking to solve a problem. They’re much less drawn to the dream of glory and fame. It’s really not about the money. … I really would like to make a difference in the world.”

If he fails? There are many possibilities, he says.

But, he adds: “I can tell you where I won’t be — at a desk job following the same routine every day.”

Leaving the assembly line

In 15 years on a Chrysler line in Belvidere, near Rockford, Mike Szlamczynski never had reason to ponder a future with succotash, lobster bisque and fava beans.

Autos were his career, autos paid his bills. Then came the near collapse of Chrysler, the looming bankruptcy and a veteran assembly line worker facing middle age, anxiety and unnerving questions: “What happens if they close the doors? What will I do?”

Szlamczynski didn’t wait for an answer. He took a buyout, returned to college at age 41 and studied to be a chef. He wanted financial security, no more layoffs, no more fears of losing it all

“I was tired of worrying,” he says. “I had nothing to fall back on. If you have an education, that’s something they can’t take away from you. You have options. Before, I didn’t have any options.”

On May 12, Szlamczynski officially changed that. The man who dropped out of school 20 years ago after concentrating on fun more than work graduated from Blackhawk Technical College in Janesville, Wis., with an associate’s degree in culinary arts and a 3.8 average — “a huge accomplishment,” he says.

Most importantly, he left with a coveted commodity: a job as a cook at a casino-resort in New York state.

He had reservations about returning to the classroom.

“It was probably the scariest thing I ever had to do — to drive to the school the first day,” he says. “I’d been out of school for 20-something years. I didn’t know if I could do it. I thought there were going to be a lot of younger people out there, I’m going to feel way out of place. … But I said, ‘This is my last chance. This is my one shot. It’s do or die.’”

Szlamczynski found school transforming. “I talk more intelligently,” he says. “I think more intelligently. You just look at things differently. You just really appreciate things you didn’t know about before.”

Still, at 43, he’s naturally apprehensive.

“Can I do this? Am I cut out for this? … I’m really happy I do have a job and I don’t have to go searching. That’s a huge relief. It’s a whole new life,” he said. “And I’m following my dream.”

 U. of C. MBA grad spurns job market for alternative energy startup – Chicago Sun-Times.

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Racist Comments By Gingrich Hurts GOP With Minority Voters | Double Dip Politics

Posted by Michael B. Calyn in Opinion, Politics on January 18, 2012


Racist Comments By Gingrich Hurts GOP With Minority Voters

BY ANNABEL LEE

Newt Gingrich, a current candidate for President, is accused of being a racist by editorial pieces and various media outlets. Gingrich appears surprised by this assertion by the “liberal elite”, denying that he is racist in any regard. The facts tell a different story. The surprising aspect is not a GOP candidate is accused of being racist, but that more people aren’t calling him out for it. Rachel Maddow, a liberal commentator, provided a seven minute montage of Gingrich’s racist moments during the past decade. Juan Williams, a Faux News commentator, called Gingrich out for it, only to have Gingrich and the audience laugh the suggestion off.

Though, a GOP audience isn’t the best judge, having cheered Rick Perry’s execution record, a question regarding whether an American should be allowed to die because he did not possess health insurance posed to Ron Paul, and booed a gay soldier asking a question days after Don’t Ask, Don’t Tell was officially ended.

A quick look at Gingrich’s statements since 2007 shows a pattern of racism, whether intention or accidental.

1.    In 2007, Gingrich stated Spanish was the “language of the ghetto”. He continued saying that America should have English as a national language. He finished by stating government documents, manuals, and ballots should not be printed in a foreign language.

2.    In 2011, Gingrich accused President Obama of holding a “Kenyan, Anti-Colonial” worldview. This statement is completely nonsensical.

3.    Gingrich calls President Obama the “greatest food stamp President in history”. While more people are on food stamps under President Obama than any other President, Obama has faced the longest unemployment and recession since the Great Depression. The food stamp program was created following the Great Depression to prevent Americans from starving during economic turmoil. Additionally, it was Newt Gingrich who reformed the system, making it easier for people to obtain and stay on food stamps than previously possible.

4.    Gingrich says that unionized janitors should be replaced with children. He states that “certain people” lack a work ethic and are lazy. These are clearly stereotypes of the black community in America, with no basis of facts in American society or economic problems.

5.    Gingrich tells an audience that black people should demand jobs, not food stamps. Forget the fact that most Americans on food stamps are white, and many were middle class working people until the recession hit. This plays on a previous misconception of Gingrich’s. He believes food stamps are used and abused by minorities.

6.    2007, Gingrich claims that being bilingual is a danger to American society. Studies have been conducted, showing multilingual people are more creative and use more of their brain than monolingual persons. I am multilingual, speaking French, English, German, and am currently learning Spanish from my neighbors. Most people globally speak at least two languages. It is a very American idea to demand people only speak English.

These examples show potential racism from Newt Gingrich. They show a pattern of distrust and discern for facts, while attacking people who are different. Add his positions on immigration, homosexuality, and liberals, and you have a candidate showing very racists and elitist trends.

Despite all this, Republicans still vote for him, pay him large fees to speak, and purchase his books. None of this helps the GOP to appear inclusive, particularly in a time when Hispanic voters are a fast growing segment of the population.

Statistically speaking, the GOP should be able to attract Hispanic voters. The majority of Hispanic Americans are deeply religious, with Catholicism being the main religion. The majority are anti-abortion, anti-gay, and pro-immigration reform. These statistics point to a voting population in line with the GOP party.

Candidates like Newt Gingrich continually push the Hispanic voters away with comments like these. These voters find sharp disagreements with Democrats, yet vote with the liberals because Democrats often work with Hispanics to improve conditions, rather than attack them.

The Republican party would be best served by working with Hispanics. Rep. Marco Rubio (R-FL) has attracted large groups of Hispanics to his campaign events, primarily because he works with their leaders. Rubio does this with full understanding of the Hispanic community. Gingrich and the GOP candidates could learn from Rubio’s example.

Of course, the more the GOP candidates close their minds and their party doors to minorities, the happier the Democrats are. Democrats cover a varied population, one reason the Democratic party is so splintered. If the GOP is serious about running America, they can’t continue to push away Hispanic Americans simply because they speak Spanish.

After all, a Hispanic vote counts the same in an election as a billionaire’s vote, and there are more Hispanics than there are billionaires and millionaires.

 Racist Comments By Gingrich Hurts GOP With Minority Voters | Double Dip Politics.

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For God So Loved the 1 Percent … – NYTimes.com

Posted by Michael B. Calyn in Opinion, Politics on January 18, 2012


Campaign Stops - Strong Opinions on the 2012 Election

January 17, 2012

For God So Loved the 1 Percent …

By KEVIN M. KRUSE

Princeton, N.J.

IN recent weeks Mitt Romney has become the poster child for unchecked capitalism, a role he seems to embrace with relish. Concerns about economic equality, he told Matt Lauer of NBC, were really about class warfare.

“When you have a president encouraging the idea of dividing America based on the 99 percent versus 1 percent,” he said, “you have opened up a whole new wave of approach in this country which is entirely inconsistent with the concept of one nation under God.”

Mr. Romney was on to something, though perhaps not what he intended.

Holly Gressley

The concept of “one nation under God” has a noble lineage, originating in Abraham Lincoln’s hope at Gettysburg that “this nation, under God, shall not perish from the earth.” After Lincoln, however, the phrase disappeared from political discourse for decades. But it re-emerged in the mid-20th century, under a much different guise: corporate leaders and conservative clergymen deployed it to discredit Franklin D. Roosevelt’s New Deal.

During the Great Depression, the prestige of big business sank along with stock prices. Corporate leaders worked frantically to restore their public image and simultaneously roll back the “creeping socialism” of the welfare state. Notably, the American Liberty League, financed by corporations like DuPont and General Motors, made an aggressive case for capitalism. Most, however, dismissed its efforts as self-interested propaganda. (A Democratic Party official joked that the organization should have been called “the American Cellophane League” because “first, it’s a DuPont product and, second, you can see right through it.”)

Realizing that they needed to rely on others, these businessmen took a new tack: using generous financing to enlist sympathetic clergymen as their champions. After all, according to one tycoon, polls showed that, “of all the groups in America, ministers had more to do with molding public opinion” than any other.

The Rev. James W. Fifield, pastor of the elite First Congregational Church of Los Angeles, led the way in championing a new union of faith and free enterprise. “The blessings of capitalism come from God,” he wrote. “A system that provides so much for the common good and happiness must flourish under the favor of the Almighty.”

Christianity, in Mr. Fifield’s interpretation, closely resembled capitalism, as both were systems in which individuals rose or fell on their own. The welfare state, meanwhile, violated most of the Ten Commandments. It made a “false idol” of the federal government, encouraged Americans to covet their neighbors’ possessions, stole from the wealthy and, ultimately, bore false witness by promising what it could never deliver.

Throughout the 1930s and ’40s, Mr. Fifield and his allies advanced a new blend of conservative religion, economics and politics that one observer aptly anointed “Christian libertarianism.” Mr. Fifield distilled his ideology into a simple but powerful phrase — “freedom under God.” With ample support from corporate patrons and business lobbies like the United States Chamber of Commerce, his gospel of godly capitalism soon spread across the country through personal lectures, weekly radio broadcasts and a monthly magazine.

In 1951, the campaign culminated in a huge Fourth of July celebration of the theme. Former President Herbert C. Hoover and Gen. Douglas MacArthur headlined an organizing committee of conservative all-stars, including celebrities like Walt Disney and Ronald Reagan, but largely comprising business titans like Conrad Hilton, J. C. Penney, Harvey Firestone Jr. and J. Howard Pew.

In an extensive public relations campaign, they encouraged communities to commemorate Independence Day with “freedom under God” ceremonies, using full-page newspaper ads trumpeting the connection between faith and free enterprise. They also held a nationwide sermon contest on the theme, with clergymen competing for cash. Countless local events were promoted by a national “Freedom Under God” radio program, produced with the help of the filmmaker Cecil B. DeMille, hosted by Jimmy Stewart and broadcast on CBS.

Ultimately, these organizers believed that they had made a lasting impression. “The very words ‘freedom under God’ have added to the vocabulary of freedom a new term,” they boasted. Soon the entire nation would think of itself as “under God.” Indeed, in 1953, President Dwight D. Eisenhower presided over the first presidential prayer breakfast on a “government under God” theme and worked to promote public religiosity in a variety of ways. In 1954, as this “under-God consciousness” swept the nation, Congress formally added the phrase to the Pledge of Allegiance.

In the end, Mr. Romney is correct to claim that complaints about economic inequality are inconsistent with the concept of “one nation under God.” But that’s only because the “1 percent” of an earlier era intended it that way.

 For God So Loved the 1 Percent … – NYTimes.com.

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