Robert Reich: given SCOTUS ruling, "we need the "Shareholder Protection Act""

amborin

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Sat Jan-23-10 07:37 PM
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Robert Reich: given SCOTUS ruling, "we need the "Shareholder Protection Act""

Edited on Sat Jan-23-10 07:55 PM by amborin

http://robertreich.org/

"Friday, January 22, 2010
Five members of the Supreme Court have defied logic by assuming that corporations are people. They are not. They are legal fictions, nothing more than bundles of contractual agreements. They are owned by their shareholders.

So what do we do now, other than wait for another Supreme Court opening, and for the President to appoint another Justice who understands this?

Push Congress to enact the �Shareholder Protection Act.�

For many years, anti-union lobbyists have pushed what they call �pay-check protection� laws, supposedly designed to protect union members from being forced, through their dues, to support union political activities they oppose. Under such laws � already in effect in several states � no union dues can be spent for any political purpose unless union members agree.

The same principle should protect shareholders from being forced to spend their share of corporate earnings in favor of or against a particular candidate. Surely a First Amendment that protects corporate free speech protects individuals no less.

Under a shareholder protection law, shareholders would not have to spend their share of corporate earnings on candidates who they personally oppose. If a company dedicates, say, $100,000 to a particular campaign in a given year � directly, or indirectly through a front organization � shareholders who don�t want their money used this way would get a special dividend or additional shares representing their pro rata share of that campaign expenditure. (Mutual funds and pension plans would have to notify their shareholders of any such political activity among the companies they�ve invested on their shareholders� behalf, and seek their shareholders� permission.) This way, corporate money for or against a particular candidate would be paid for only by shareholders who wanted to spend their portion of company earnings on it."

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Robert Reich on Obama's new banking reform proposals:

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"The President deserves at least two cheers. Why not three? It took him over a year to finally get here. The House has already completed its work on financial reform and may be reluctant to start over. The Senate is in disarray since Chris Dodd, chair of the Banking Committee, announced recently he wouldn�t seek reelection, and is poised to compromise with Wall Street on a number of big issues. Neither chamber has shown any interest whatsoever in resurrecting Glass-Steagall or limiting the size and risk of big banks. In other words, much of the game is over.

It�s possible, of course, that Congress could go along with Obama�s new proposals. A populist backlash against the big banks is growing among Americans who can�t understand why Wall Street is back to its old ways even though most Americans are worried about losing their jobs and homes as a result of Wall Street�s massive implosion in 2008. And they�ve never been able to understand why taxpayers bailed out Wall Street while Main Street still languishes.

A cynic might conclude that Obama�s born-again populism is for the cameras. Scott Brown�s upset victory in Massachusetts revealed the strength of I�m-mad-as-hell populism in the electorate right now. Add in the $150 billion of bonuses the Street is about to bestow on itself and the outrage meter could blow. With sky-high unemployment and surly voters, Democrats have to show they�re on the side of the people, not the powerful, as Al Gore put it in the last days of the 2000 election (too late to help himself).

For almost a year now, Democratic pollsters have been pointing out how much the public hates the bank bailout and despises Wall Street. But there was no reason for Democratic leaders in Congress or the White House to pay much attention. After all, it was a Republican president and a Republican Congress that came up with the bank bailout plan to begin with. Some stalwart Republicans had grumbled about it, of course, but Republicans have always been on the side of Wall Street and big business and weren�t likely to call for strong measures to prevent the Street from getting into trouble again."

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Robert Reich on Why the Senate HCR is so unfair:

The dirty little secret under the hood is that less than 4 percent of the variation in the cost of current health-care plans has to do with how many benefits they provide. Most plans that cost more do so because (1) a particular set of employees is older and tends to get sicker than the average set of employees (that�s true for a lot of old rust-belt firms), (2) the plan is offered by a small business that lacks bargaining clout with insurers (small businesses pay, on average, 16 percent more for the health insurance they provide, per capita), (3) the work that employees do subjects them to greater risk of medical problems (health-care workers, for example), or (4) most employees are women (who tend to have higher health-care costs than men because women are the ones who bear children). Plans could also cost more but deliver average benefits because (5) insurers in the area don�t face much competition (one main reason for the public option).

So by taxing so-called Cadillac plans, the Senate bill would actually end up taxing the Chevy plans of a large portion of the middle class. And as time goes by, a still larger portion, since the Senate plan is geared to the overall rate of inflation rather than to the (much higher) rate of increases in health-care costs.

Defenders of the Senate plan say not to worry. Employers who bear the tax and therefore have an incentive to cut back on health care for their employees will make it up to employees in higher wages. But anyone taking even a passing glance at today�s labor market knows this is wishful thinking. Employers have no incentive to raise wages when almost everyone is worried about keeping their jobs. (Besides, a dollar�s worth of tax-free health benefit is worth more than a taxable dollar of wages.)"

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Robert Reich on what might be ahead for the economy:

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"Double-dip recession (10 percent likelihood). The commercial real estate market craters, carrying with it hundreds of regional banks and exposing how much junk is still on the books of major Wall Street banks. This triggers a long-awaited �correction� in the Dow and pushes the nation into another recession. Job losses rise. By November, the unemployment rate is back over 10 percent.

Stalled recovery (20 percent). Fearing inflation and overly confident of the strength of the recovery, the Fed stops buying up debt instruments and starts raising rates. These acts choke off the recovery. Unemployment remains at 10 percent.

Jobless recovery (40 percent). The stimulus remains in full force, the Fed keeps interest rates low, firms replace inventories and expand production. But with the average workweek hovering around 33 hours, employers don�t add new jobs; they just have current workers put in more hours. Result: No drop in unemployment.

Solid recovery (20 percent). Demand surges, employers decide to expand capacity. But they don�t add American jobs. Now that foreign workers have access to much of the same equipment and can be linked up to the U.S. so cheaply through the Internet, employers outsource abroad. Result: No drop in unemployment.

Strong recovery (10 percent). The recovery is strong enough for employers to start hiring American workers. Many jobless Americans who have been too discouraged to look for work to begin looking again. But because the BLS household survey (on which the official level of unemployment is based) depends on how many Americans are looking for work, the paradoxical result is for unemployment to remain in double digits.

In other words, I think the chances of unemployment being 10 percent next November are overwhelmingly high. But although voters are acutely sensitive to the rate of unemployment, they�re also influenced by the direction employment is heading. If it looks like jobs are coming back, they may forgive a high absolute level of unemployment � even one as high as 10 percent. But if it looks like jobs aren�t coming back, that we may be stuck with a high level of joblessness for years, voters will take out even more of their anxieties on Democrats next November..."

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Robert Reich on the current unemployment crisis:

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"The Labor Department reports that 85,000 jobs were lost in December. The official rate of unemployment (which measures how many people are looking for jobs) held steady at 10 percent nonetheless. That�s because so many more people have stopped looking. Reportedly, 661,000 Americans dropped out of the labor force last month, deciding there was no hope of finding a job. Had they continued to look, the official unemployment rate would have been 10.4 percent.

These statistics mask an even more troubling reality. Since the start of the recession in December 2007, around 8 million jobs have been lost. But this doesn�t include all the people who, in a growing national population, would have entered the labor market had there been jobs for them. These �never entereds� amount to an estimated 2.5 million. So, in truth, the national economy is down by 10.6 million jobs overall. There�s no way to make this up for years.

The most painful political truth for Democrats is the nation won�t possibly be out of this jobs hole by the presidential election of 2012, even if the recovery is vigorous. Do the math. In order to get out of the hole, we�d need an average monthly increase of 400,000 jobs between now and then. But even at the peak of the 1990s jobs boom, the highest we ever got was 280,000 jobs a month. At the peak of the last recovery, in 2005, we got no higher than 212,000 jobs a month. Bottom line: Obama will be going into an election year with a higher total level of unemployment than before the Great Recession. He will have to argue that, were it not for his policies, things would be even worse. Counter-factuals like this do not sit well on bumper stickers.

Almost 40 percent of the jobless have been without work for over six months. That�s a record. People who have been out of the labor force for more than six months have a particularly hard time getting back in. Many never do.

What worries me most about all this is the trend line. If we were coming out of a recession with any potential strength in the job market, we�d at least see growth in the length of the average workweek. But there�s no sign of any growth. The average workweek held steady in December at 33.2 hours. Employers aren�t even giving their own workers more hours."

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