Robert L. Borosage

Why Bernie Sanders Will Be a Significant Force at the Democratic Convention

The Democratic National Convention in Philadelphia in July seems set to continue the fierce nomination battle—and launch a major debate about what the party stands for.

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Corporate Profits Muscle Out The Public Opition

We're headed into the end game for health care reform. The president has put himself in the arena. The insurance lobby is unleashing the scare campaign. A strong bill will pass the House. But at this point, too many senators are still standing in the way.

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America in Free Fall

Free fall. The U.S. has lost private sector jobs for 10 straight months. One quarter of all businesses in the U.S. plan to cut payroll over the next year. Retail sales fell in October by the largest monthly drop on record. Auto sales have collapsed, driving the auto companies towards the precipice. Unemployment is up to 6.1 percent, with most analysts predicting it will soar past 8 percent over the next year. (That translates into unemployment among young minority men at rates of 50 percent or more). States are now facing $100 billion in deficits in operating budgets for the next fiscal year. Twelve million homes are "under water," worth less than their mortgages. The U.S. has joined Germany and Japan in what is becoming a global recession.

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Why Trust Paulson With Our Money?

Focused on the election? Might be a good idea to watch your pockets at the same time. Here's a glance at what's happening to the Wall Street bailout.

Hank Paulson is, no doubt, the most impressive of the Bush administration cabinet members (admittedly not a high bar). He made hundreds of millions on Wall Street, ascending to be the head of Goldman Sachs. Now, as Treasury secretary, he has brought in colleagues from Goldman to help manage the $700 billion bailout of troubled Wall Street banks, including Goldman, and ... Wait one minute. Doesn't something ring false here? Hank Paulson no doubt is honorable, but even he has conflicted interests. When the bailout bill was before Congress, a number of outside groups, including the Campaign for America's Future, pushed hard for the bailout to be managed by an independent agency, with an empowered board that included independent representatives of workers and consumers. Whatever the form of the bailout -- Paulson's initial demand for $700 billion left that undefined -- it was vital that the transactions be accountable to more than once and future bankers.

And now we know why. After initially proposing to buy toxic securities from the banks at inevitably elevated prices, Paulson sensibly decided to follow the British model and inject capital directly into the major banks in exchange for equity. The first nine banks -- Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Bank of New York Mellon and State Street Corporation -- are getting $125 billion. This, plus a guarantee of new debt over the next three years, is designed to reassure other banks of their solvency, and hopefully get them to resume lending to one another and to businesses.

But Paulson didn't exactly cut a great deal for taxpayers. He didn't get the terms that Warren Buffett demanded, putting up a lot less cash, to invest in Goldman Sachs. And as a New York Times editorial complained, he made government a passive investor, leaving in place the boards and the directors that led their banks into crippling losses.

Paulson made no demands that the banks begin lending again instead of just hunkering down, girding for future losses. And remarkably -- unlike the British -- he didn't demand that the banks stop paying out dividends to shareholders. Nor is it clear that bank regulators will perform the triage needed, merging and purging the banks of excess capacity.

That failure is likely to be very costly to taxpayers and very generous to the very folks who led us into this mess. In a New York Times op ed, David S. Scharfstein and Jeremy C. Stein show that dividends, if paid at current levels, will redirect more than $25 billion of the $125 billion to shareholders in the next year alone. One in five dollars will go out the door, and thus be unavailable to plug the large capital hole on the banks' balance sheets.

Will those dividends be paid? Most likely, since the directors and officers of the nine banks are leading shareholders. Scharfstein and Stein estimate their personal take will amount to $250 million in the first year, nothing to sneeze at.

Worse, Paulson does nothing to curb the bloated compensation levels that characterized Wall Street in the days of debauch. Jonathan Weil of Bloomberg Newsshows the effect. Morgan Stanley, for example, gets $10 billion in taxpayer dollars. Yet this year it has racked up $10.7 billion in employee compensation -- the vast majority not yet paid out -- even as its stock market value plummeted $34.7 billion since the beginning of the company's fiscal year. With taxpayers' help, Morgan Stanley may well pay those bonuses.

Weil reports that the "five families of Wall Street" -- Goldman, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Sterns -- lost about $83 billion in stock market value from the start of the 2004 fiscal year. At the same time, they reported about $239 billion in employee compensation. For every dollar of shareholder value destroyed, the employees pocketed almost three. And that was before they got taxpayer money. No one doubts that the bailout is needed to prop up the global economy. But under Paulson's plan, we may end up, in Weil's words, "throwing money at an industry that pays too many people more than they're worth, to perform services the world has too much of already."

What's needed is an independent agency with summary powers and an independent board, to work with the Federal Deposit Insurance Corporation and other agencies to sort out the solvent banks from the broke, those that need to be saved from those that should fail. And, as in the Chrysler bailout, a suspension of dividends to shareholders until the government has been repaid.

Now maybe Paulson is making the best choices possible given the extent of the crisis. He's got more information and is far better banker than the rest of us. But with $700 billion in taxpayers' money at stake, surely it would be wise to have an independent board that can hold him accountable.

How Do We Seize the Obama Moment?

Electric. When Barack Obama receives the Democratic presidential nomination before 75,000 people in Denver's Mile High Stadium on the forty-fifth anniversary of Martin Luther King Jr.'s "I Have a Dream" speech, new possibilities will be born. A historic candidacy, a new generation in motion, a nation yearning for change. Even the cynics running the McCain campaign might be touched, if they weren't so busy savaging Obama as a vain celebrity not up to the task of leading a nation.

No one should be blinded by the lights. It will take hard work to turn the nomination into victory in a campaign that has already turned ugly. Moreover, even if victorious, Obama will inherit the calamitous conditions wrought by conservative failures -- a sinking economy, unsustainable occupations in Iraq and Afghanistan, accelerating climate change, Gilded Age inequality, a broken healthcare system and much more.

Obama will also be limited by the constricted consensus of an establishment not yet able to contemplate the changes needed to set this country right again. To be successful, his presidency will have to be bolder and more radical than now imagined.

A historic candidate, the forbidding conditions and the constricted consensus make it vital that progressives think clearly and act independently in forging a strategy over the next months. The following is a contribution to a rich and ongoing discussion. We invite others to join it at in the weeks to come.

A Sea-Change Election

The Obama nomination sets the stage for a sea-change election, one that could not only elect a Democratic President and increased reform majorities in both houses of Congress but also mark a clear turn from the conservative ideas that have dominated our politics for three decades.

In recent weeks, the media -- primed by a Republican strategy contrasting Obama's purported doublespeak with McCain's alleged Straight Talk -- have focused on Obama's compromises and backsliding. Much of the alleged retrenchment has been exaggerated. Some of it -- like his fold on the FISA wiretap bill, mixed signals on trade, the compromise on offshore drilling -- has been clear and deplorable. Many on the left were dismayed as the Obama campaign trotted out advisers from a Democratic bench that had championed the toxic Rubinomics brew of corporate trade and financial deregulation.

These concerns should not distract us from the central reality: this election features a stark ideological contrast. Although marketed as a trustworthy maverick, McCain accurately describes himself as a "foot soldier in the Reagan revolution" and attests that "on the transcendent issues, the most important issues of our day, I've been totally in agreement and support of President Bush." He is committed to the full Bush catastrophe: continued war in Iraq, more tax cuts for the wealthiest, more corporate trade deals, more deregulation, more hostility toward labor, more conservative social policies and reactionary judges. Indeed, he's Bush on steroids. McCain seeks not only to privatize Social Security but also to unravel employer-based healthcare, leaving people to negotiate alone with insurance companies liberated from regulation. His bellicose posturing on Iran and Iraq is as disastrous as his pledge of impossibly deep cuts in domestic programs. He embraces the corporate economic and trade agenda that has so devastated the American middle class. If he is defeated, it will mark the end of the Reagan era.

Obama clearly offers a change of course. His victory in itself will require overcoming the racial fears that have so long divided this country. He carries a reform agenda -- largely driven by progressives -- into the election: an end to the occupation of Iraq, using the money squandered there to rebuild America; affordable healthcare for all, paid for by raising taxes on the wealthy; a concerted drive for energy independence, generating jobs while investing in renewable energy and conservation. He is committed to empowering labor, to holding corporations and banks more accountable and to challenging our trade policies. A social liberal, his judicial appointees will keep the right from consolidating its hold on the federal judiciary. Obama may not be a "movement" progressive in the way that Reagan was a "movement" conservative, and he may have disappointed activists with his recent compromises, but make no mistake: his election will open a new era of reform, the scope of which will depend -- as Obama often says -- on independent progressive mobilization to keep the pressure on and overcome entrenched interests.

As this is written, an election Obama should win handily is locked in a virtual tie. Both the Obama and McCain campaigns treat the race as a referendum on Obama, with the former focused on getting Americans comfortable with trusting a young African-American with an unusual name, and the Rove minions in the McCain campaign intent on stoking the fears that enabled them to assemble a white majority party in the past.

Obama's campaign will not succeed without the independent efforts of progressive activists. One central task is winning support among wary white blue-collar workers, the core target of the Rovian poison. This will require persuasion as well as mobilization; the work of the AFL-CIO, Change to Win, Working America, religious groups and others with a base in these communities in swing states will be of critical importance.

Progressives generally -- and independent media and the blogosphere specifically -- can contribute by reminding voters there's a clear choice in this election, with McCain representing the same old, same old. While exposing McCain's doubletalk, his Bush-redux agenda and the money and interests behind the scurrilous right-wing independent expenditure campaigns, progressives can also help build support for reform. The new Health Care for America Now coalition, for example, has the resources to expose McCain's healthcare folly, thereby building a mandate for universal coverage. The antiwar movement should be challenging McCain's saber-rattling on Iraq, Iran and Afghanistan, helping to strengthen US support for a change in course. With gas prices at the center of American concerns, the environmental alliance around jobs and energy can consolidate support for a concerted drive toward energy independence, while challenging absurd claims that we can drill our way out of the crisis.

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The Great Corporate Tax Heist

Remember the old Steve Martin routine on how to make a million dollars and not pay taxes: "First, make a million dollars. ... Second, don't pay taxes." Turns out Martin's joke is standard operating procedure for corporations in the United States -- only, in comparison, Martin was a piker.

Wednesday, the Government Accountability Office (GAO) released a study on taxes paid by corporations. In what Sen. Byron L. Dorgan, D-N.D., mildly called "a shocking indictment of the current tax system," the GAO found that about two-thirds of corporations operating in the United States did not pay taxes annually from 1998 to 2005.

Now, most corporations in America are start-ups or small, mom-and-pop operations that have adopted a corporate form to lower their tax rates. And a greater percentage of large corporations do pay some taxes. But in 2005, with corporate profits reaching new heights as a percentage of national income, the GAO found that more than one-fourth -- 28 percent of large corporations -- paid no taxes. (It defined large corporations as those with assets of at least $250 million or gross receipts of at least $50 million.) They can tell you how to make $50 million and not pay taxes.

Not surprisingly, the income collected from corporations has been declining as a percentage of GDP, with the burden transferred to your income and payroll taxes. According to a study by the Treasury Department, from 2000 to 2006, an average of 2.2 percent of GDP was collected in corporate taxes. This compares to an average of 3.4 percent in other industrial countries. The nonpartisan Congressional Budget Office projects that, under current law, corporate revenues will decline to 1.9 percent of GDP by 2017.

Why is this important? Well, the Bush administration, led by Treasury Secretary Henry Paulson, and conservatives, led by John McCain, are mounting a major campaign to cut the corporate tax rate even more, arguing that we are crippled competitively by having a U.S. rate higher than any industrial nation other than Japan. "America has the second-highest business (tax) rate in the entire world," says John McCain. "Is it any wonder that jobs are moving overseas? We're taxing them out of the country." But the GAO study confirms what we already knew: Whatever the nominal tax rate, U.S. corporations pay an effective rate among the lowest in the industrial world.

Yet the core of the McCain economic agenda consists of breathtaking corporate tax breaks. He calls for cutting the top corporate rate from 35 percent to 25 percent and allowing corporations to write off investments in the first year. Combined, the Tax Policy Center wonks cost these at more than $1.3 trillion over 10 years. Len Burman of the Tax Policy Center estimates that in total, McCain would cut corporate revenues by about 50 percent from current levels. They'll be making hundreds of millions of dollars and not paying taxes. This is no joke.

To pay for these tax breaks, sustain the Bush tax cuts, add more tax breaks and balance the budget in four years, as McCain promises, will require heroic cuts in spending. Not military spending; McCain promises to increase that. How will he do this? On the stump, McCain promises to veto any earmarked spending. But that is a gesture, providing about $18 billion a year. (And he isn't exactly consistent. McCain often tells folks who defend a local project that it is the process, not the individual project, that he opposes.) Perhaps that's why McCain calls for raising Medicare taxes on seniors with incomes of $50,000 or more per year and taxing employer-based health care benefits for families. Working people and seniors will help pay the tab for the corporate tax giveaway.

It's hard not to wonder about the pure, contrary inanity of the current conservative position. Our military is by far the strongest in the world, while our trains are among the slowest and our sewers are collapsing. So they propose raising spending on the military and cutting domestic investment. We suffer gilded age inequality, with the wealthiest 15,000 families -- one one-hundredth of 1 percent of the population -- capturing fully one-fourth of the entire income growth from 2000 to 2006. Their average income rose from $15.2 million per year to $29.7 million per year. Meanwhile, the rest of us -- 133 million households that make up 90 percent of the country -- divided up 4 percent of the nation's income, adding about $305 to our average $30,354 income. So conservatives push for more tax cuts for the wealthy, while proposing to tax employer-based health benefits. Corporate profits (prior to the recession) have catapulted to what is by far the highest percentage of national income in the past half century. So they want to cut corporate taxes, inevitably increasing the burden on labor. The economic future looks dim because consumers, drowning in debt, are cutting back. So they suggest cutting taxes on corporate investments to generate new investments and growth -- as if companies don't need someone to buy the products they make.

Maybe that will be Steve Martin's next routine: how to sell more stuff and not have customers. Somehow, it doesn't sound so funny.

Your Health Care May Decide the 2008 Election

Now we're in the presidential campaign's silly season. The primaries are over; the conventions are yet to come. Americans are tuning out politics and dialing in baseball, the Olympics, vacations and the price of gas.

Barack Obama is traveling abroad, demonstrating that he really is a responsible driver. And John McCain seems intent on running into every pothole in the road. This week, he published an op-ed in the New York Post slamming Obama for agreeing with the Iraqi prime minister that the troops should be brought home by 2010. Sure, McCain admitted, "Iraq's army will be equipped and trained by the middle of next year," but it will still need a lot of help. "The Iraqi air force, for one, still lags behind, and no modern army can operate without air cover." Particularly not against the fearsome al Qaeda air force. And McCain didn't even mention the need to build Iraq a blue-water navy. The $3 trillion that Nobel Laureate Joe Stiglitz estimates we've squandered on the war -- about a billion a day in direct and indirect costs -- isn't nearly enough.

Americans will begin to tune in to the election again around the conventions. And in the fall, they'll start to take a closer look at who the candidates are and what they believe. Issues matter less in this assessment than broad measures of the candidate's character and sense about whether he has a clue.

In this assessment, I suspect that one issue, seldom mentioned now, is going to matter a great deal by November. Iraq will be big, no doubt; the economy bigger. But health care may just be the pothole that cracks up McCain's Straight Talk express.

People worry a lot about affording health care. Workers accept lower wages with employers that offer health care. They hang onto lousy jobs to keep their health care. Most labor negotiations and disputes center largely on the costs of health care. On this issue, attention is paid over kitchen tables across the country.

So this fall, Americans will discover an inconvenient truth about John McCain: He wants you to lose your employer-based health care. He thinks you aren't sufficiently conscious about the cost of your health care, and you are using too much of it.

His plan is designed -- with sugar and sticks -- to push you to negotiate on your own with the friendly insurance companies. He'll give you a tax credit -- $2,500 for an individual; $5,000 for a family -- to help you pay the price. And he'll revoke the tax exemption for any health benefits your employer provides. Under his plan, those benefits will be taxed as income. McCain says this will reduce our health care expenditures. He might be right. His preferred option -- health saving accounts -- generally features low monthly payments and very high deductibles. People tend to insure themselves against catastrophe and take a chance on routine health care.

On average, this will work pretty well if you are young and healthy and lucky. But if you are sick, if you have suffered serious illnesses in the past, if you have what insurers call a "pre-existing condition," or if you are older and at higher risk, you're in trouble. For many, insurance won't be available at any price. That's why Elizabeth Edwards noted that neither she nor McCain would be eligible for such coverage since both have struggled with cancer. Many more will find adequate coverage unaffordable. Others will have to choose between paying to see a doctor or buying the weekly groceries. You'll be more "sensitive to price," but you might not think that a good thing.

McCain extols the benefits of private health insurance, but he's never had to negotiate with insurance companies. He's been on government-provided health care virtually his entire life. He was raised on military health care, as the son of an admiral. He then went to the Naval Academy and to the military. A year after leaving the military, he was headed to the Congress and enjoying the best government-supplied health care of all.

For the 9 of 10 voters who have some kind of health insurance at work, the contrast will be clear. Obama will give them a choice between the health care they have and being able to buy into a public plan, something like Medicare. McCain will tax their employer-based health care and give them a break to negotiate their own deal with the insurance companies. At the same time, he will liberate the insurance companies from the state-based regulations that have provided some protection for consumers.

Invest in the Iraqi air force. Tax employer-based health care. Liberate the insurance companies. Leave you on your own on health care. If this keeps up, voters may decide it is time to take the keys away from the Straight Talk Express.

Wall Street Socialism

Editor's note: George W. Bush, apparently unaware of what the word "bailout" means, said this week of the Fannie Mae/ Freddy Mac ... rescue: "This isn't a bailout. The shareholders will still continue to own the company." To which we can only add: it's a good thing we didn't elect an elitist smarty-pants like Al Gore!


This weekend, Treasury Secretary Henry Paulson, former head of the Goldman Sachs investment house, provided us with a perfect demonstration of Wall Street socialism.

He announced that the Bush administration would seek congressional approval to bail out Fanny Mae and Freddy Mac, the government created, but privately owned, profit-making housing finance companies that hold or guarantee nearly half of the US mortgage market -- some $5 trillion in debt. Paulson seeks and will get an unlimited line of credit to guarantee their debt, as well as authority to purchase their shares to supplement their capital base. The Federal Reserve announced it was ready to provide lending while waiting for Congress to act. Paulson said the new subsidies were designed to sustain the two institutions in "their current form."

Perfect. The two institutions have always been more foul than fish. Created by the government in the 1930s to help lubricate the US mortgage market by buying mortgages from the banks so they would have the cash to make more mortgages, Fanny and Freddy were able to borrow money at a discount because of a widely shared assumption that the government would stand behind their debts if push came to shove. Their operations were regulated, limited by laws detailing what mortgages they could assume (they were essentially prohibited from diving directly into the subprime muck). But as they grew and profited, their executives pocketed lavish salaries and bonuses -- giving them an incentive to grow even more (and as we discovered earlier this decade, to cook the books). Last year, for example, the Chair of Freddie Mac took home a cool $18,289,575. Fannie Mae CEO Daniel Mudd reaped a 7 percent rise in pay to $13.4 million in 2007 while the company lost $2/1 billion and its shared fell 33%. Nice work if you can get it.

Obama Shows His Punch

Yesterday in Raleigh, North Carolina, Barack Obama opened the general election fight, taking the gloves off against the "tired and misguided [economic] philosophy that has dominated Washington for too long," and offering a clear challenge to the Bush-McCain economic misrule. In Washington before the National Federation of Independent Business, McCain counterpunched, suggesting the choice was between low taxes and "the largest tax increase since World War II."

This argument will be the big kahuna in this election. Despite ritual boosterism, soothing rhetoric and quiet prayers by Wall Street pundits, the economy is foul and likely to get much worse. We've lost jobs for five months in a row. Gas, food, health care costs are soaring. For workers, the mess is worse than the stagflation of the 1970s. Then growth was stagnant, while prices and wages were spiraling up. Now we've got stagflation squared -- with growth and wages stagnant, prices on basics soaring, while the value of homes, the largest investment Americans have, is plummeting.

Many aren't making it. Home foreclosures are the highest since the great depression. One in six homes in America is worth less than the mortgage. With prices down 14% from last year, Americans have seen $2.5 trillion in wealth erased. No wonder credit card debt has soared, and workers are rifling retirement accounts.

President Bush and John McCain say the "fundamentals are strong," so the downturn is a "rough patch." As the president left for Europe, he once more celebrated our "open and flexible" economy, with "some of the deepest and most liquid capital markets" [he's apparently been AWOL the last months], arguing that the "long term health and strong foundation of our economy will shine through and be reflected in currency values."

Bush and Republicans in Congress have been resisting any new stimulus measures, arguing that the $600 rebate checks going out in the stimulus package are just kicking in, and that things will get better.

Not likely. Gas prices will chew up the rebates -- while racking up rising trade deficits. And beginning in July, states and localities will be laying off teachers and police, deferring construction projects as they struggle with rising deficits. And the banks staggered by the collapse of the financial bubble are now about to face the rising credit card, auto loan and mortgage defaults that come with an economic downturn.

Why are we in this mess? Obama put the blame for this directly on the Bush-McCain economic strategy. The current crisis, he argued, wasn't simply "some accident of history," or "an inevitable part of a business cycle." It was the "logical conclusion" of a "worn dogma" that has failed this country.

Obama called for a second short term $50 billion stimulus, for aiding homeowners facing foreclosure through no fault of their own, and for extending unemployment benefits for those workers caught in the economic ebb tide. Bush and Congressional Republicans have resisted these measures.

But he also began to contrast his longer range strategy for rebuilding America to the failed trickle-down, market fundamentalism and fiscal irresponsibility of the past years: "For eight long years, our president sacrificed investments in health care, and education, and energy, and infrastructure on the altar of tax breaks for big corporations and wealthy CEOs -- trillions of dollars in giveaways that proved neither compassionate nor conservative.

And with McCain pledging to sustain that same course -- top end tax cuts and cuts in domestic spending -- Obama draws the contrast:

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Time to Target Wal-Mart

Wal-Mart must feel like a piñata these days -- everyone's lining up to take a shot at it. This week, 7,000 house parties are being held to screen Robert Greenwald's blockbuster documentary, "Wal-Mart: The High Cost of Low Price." The inspector general of the Labor Department censures its sweetheart deal that promised to give Wal-Mart notice before any future investigation of illegal child labor practices. Legislators from the L.A. City Council to the U.S. Senate are introducing legislation to curb the giant's public subsidies. Communities are rejecting Wal-Mart's demands for subsidies and zoning exemptions. Right-wing groups are furious Wal-Mart is taking the Christ out of the Christmas holidays. It's gotten so bad that Wal-Mart has created a war room staffed by veterans of political campaigns to wage the PR battle.

Why Wal-Mart? For one thing, it's hard to avoid. It is the world's largest private corporation, employing more than 1.6 million "associates" worldwide -- more people than Ford, GM, GE and IBM combined. The company serves 138 million customers per week worldwide and has outstripped any competitor. In 2004, it pocketed $10.3 billion in profits, on sales of $285 billion, more business than Target, Sears, Kmart, J.C. Penney, Safeway and Kroger combined. There are upward of 3,800 Wal-Mart stores in the United States today, in addition to nearly 1,600 locations in countries from Mexico to China. Wal-Mart alone is China's eighth-largest trading partner. It accounts for over 10 percent of our annual trade deficit with China, with over 70 percent of its products made in China.

If Wal-Mart's size is a problem, its policies are a threat. Wal-Mart is the model "low-road" corporation in the global economy. Its efficiency is celebrated; but its exploitation is caustic. The average pay of a Wal-Mart employee is $8.23 per hour, or an average yearly income of $14,000 -- not enough to lift a family out of poverty. Wal-Mart is infamous for requiring workers to work overtime off the books. It's been cited for locking workers in plants overnight. The company has been hauled into court for discriminating against female employees. And it is viciously, rabidly anti-union, crushing any attempt by its workers to organize to gain a fair share of the profits they help generate.

But Wal-Mart doesn't merely follow the low road; it drives its suppliers and its competitors into the same race. When Wal-Mart comes to town, it purposefully wipes out small mom-and-pop stores, leaving small towns looking like they were hit by a neutron bomb -- buildings intact, but people gone. Wal-Mart also undercuts big competitors that have unions and pay decent wages and benefits. They must slash wages, cut back on benefits or hang it up.

Given its size in the United States, Wal-Mart is a major force in driving wages down and forcing cutbacks in benefits. It is a central reason why we have an economy in which CEO salaries are up, stocks are up, but wages are down.

In China, Wal-Mart pushes its suppliers to lower their costs, generating sweatshops in which young workers -- primarily women -- are forced to work grotesque hours at subsistence wages. According to The Washington Post, Wal-Mart even pressures its suppliers to pay less than the Chinese minimum wage.

Wal-Mart also exploits taxpayers, for it is what Ronald Reagan would denounce as the leading corporate welfare queen. It's estimated that Wal-Mart's government subsidies total a whopping $2.7 billion, or $2,100 per employee. An internal memo to the board leaked recently reported that "our [health care] coverage is expensive for low-income families, and Wal-Mart has a significant percentage of associates and their children on public assistance." In fact, nearly one-half of the children of Wal-Mart employees are either on Medicaid or have no insurance at all.

While Wal-Mart is driving down wages and driving up public health care costs, its CEO and its owners are making out like bandits. The Walton family is the richest in the world. And they use their private wealth to foster their low-road policies. The Waltons donate millions to politics. Most goes to Republicans who defend their low-wage sweatshop practices, while 20 percent goes to buy a few business Democrats and divide the opposition. They are leading contributors to the voucher movement seeking to privatize education, and staunch advocates of the free trade policies that have stymied efforts to link trade access to the right to organize, environmental protection or even a crackdown on sweatshops.

Across America, people are starting to realize the stark reality: Wal-Mart's triumph is the defeat of middle-class America. If Wal-Mart sets the pace, Americans will pay the price, in declining wages, rising health care costs, longer hours, worse workplace conditions and rising personal taxes to offset soaring corporate subsidies.

America as we know it can't afford Wal-Mart. We can't sustain a $200 billion annual trade deficit with China, but Wal-Mart drives that deficit. We can't afford to subsidize the health care costs of the largest employers in the country -- even as declining wages starve our public coffers. We can't afford to allow sweatshop labor access to the largest distribution network, without accelerating a global race to the bottom.

In the Gilded Age of the 19th century, America faced a similar problem: corporate behemoths, private fortunes amassed from exploiting workers, unions banned, politicians bought. It took a progressive movement to put new rules around the marketplace -- to break up monopolies, create the 40-hour work week, institute the minimum wage, the right to organize, environmental protection, and workplace health and safety laws.

Now a new progressive movement is beginning to emerge. Once more, its agenda is to ban sweatshops, lift wages, empower workers and curb corporate power.

And surely Wal-Mart is and must be that movement's first target. The question isn't why Wal-Mart gets such bad press. The question is why Wal-Mart hasn't been confronted sooner.

Life Of The Party

For a nanosecond after November's election defeat, the Democratic unity forged by the radical provocations of George W. Bush seemed intact. From the corporate-funded Democratic Leadership Council (DLC) to Howard Dean's new Democracy for America, Democrats drew similar conclusions from the election about what needed to be done: Challenge the right in the so-called red states and develop a compelling narrative that speaks to working people – don't simply offer a critique of Bush and a passel of "plans." Champion values, not simply policy proposals. Don't compromise with Bush's reactionary agenda. Expose Republican corruption, while pushing electoral reform. Stand firm on long-held social values, from women's rights to gay rights. Confront Bush's disastrous priorities at home and follies abroad.

But this brief interlude of common sense and purpose quickly descended into rancor and division. Peter Beinart of The New Republic and Al From of the DLC rolled out the tumbrels once more, calling on Democrats to purge liberalism of the taint of, Michael Moore and the anti-war movement. Apparently anyone who worries about the suppression of civil liberties at home, doubts that the reign of drug lords in Afghanistan represents the dawning of democracy, prematurely opposed the debacle in Iraq or isn't prepared to turn the fight against al Qaeda terrorists into the organizing principle of American politics is to be read out of their Democratic Party.

Then, normally staunch Democratic leader Nancy Pelosi floated for chair of the party former Congressman Tim Roemer, a New Democrat distinguished mostly for his opposition to women's right to choose, his vote to repeal the estate tax and his ignorance of grassroots politics. Consolidating its corporate backing, the DLC solemnly warned against "economic populism" or "turning up the volume on anti-business and class welfare schemes" – despite the corporate feeding frenzy that is about to take place in Washington and Bush's slavish catering to the "haves and have-mores," whom he calls "my base."

After a year in which progressives drove the debate, roused and registered the voters, raised the dough and knocked on the doors, the corporate wing of the Democratic Party is trying to reassert control. Its assault on and the Dean campaign – the center of new energy in the party – is reminiscent of 1973, when corporate lobbyist Bob Strauss became head of the party and tossed out the George McGovern mailing list, insuring that the party would remain dependent on big-donor funding.

This time, however, the entrenched interests aren't likely to succeed, no matter who becomes party chair. That's because progressives have begun building an independent infrastructure to generate ideas, drive campaigns, persuade citizens, nurture movement progressives and challenge the right. It includes a range of new groups such as, Wellstone Action, Progressive Majority, the Center for American Progress, Air America, Working America and America Coming Together, along with established groups that have displayed new reach and sophistication such as ACORN, the NAACP, the Campaign for America's Future (which I help direct) and the League of Conservation Voters. These groups – and their state and local allies – came out of this election emboldened, not discouraged. Just as the infrastructure that the right built drove the Republican resurgence, these groups and their activists – not the party regulars or the corporate retainers – will stir the Democratic drink.

The challenge to the electoral malfeasance in Ohio provided an early example. Inside the Beltway, protesting the president's electors was unimaginable. But progressive organizers, together with third-party activists, liberal lawyers, internet muckrakers and civil rights groups, kept the heat on. Rep. John Conyers responded with a report detailing the outrages in Ohio, where the secretary of state – shades of Katherine Harris – was co-chair of the Bush campaign. The Rev. Jesse Jackson and others called on senators to support progressive House legislators who were demanding a debate. When Sen. Barbara Boxer (D-Calif.) stood up, the public learned more about the shabby state of our democracy and the need for drastic electoral reform. The lesson is clear: When progressives move, Democrats will follow. "Don't expect this place to lead," says Rep. George Miller (D-Calif.). "Organize and force us to catch up."

As the buildup to his inaugural address shows, Bush's provocative agenda, which unified movement progressives and party regulars in the last election, will help organize the opposition in Bush's second term. By posing a continued threat to America's future, Bush also provides the opportunity for movement progressives to frame a large argument about the country's values and direction. Progressives should be mobilizing unremitting opposition to Bush's wrongheaded course, and demanding the same from their elected representatives.

A majority of Americans already express doubts about Bush's handling of foreign and economic affairs and the Iraq War. These doubts will increase as Bush pursues an economic policy that rewards the few while the many lose ground, fails to respond to the broken healthcare system, opposes a living wage and defends trade and tax policies that accelerate the flight of jobs abroad and the decline of incomes and security at home.

Bush's drive to privatize Social Security, the centerpiece of his agenda, will expose the right and put Republicans at risk. Bush touts a fraudulent immediate crisis in a program that's in relatively good shape to rationalize deep cuts in benefits while borrowing $2 trillion so Wall Street can feed on the savings of citizens. Progressives will use the fight over privatization to contrast the benefits of shared security with the risks of the right's policies, which leave citizens on their own in a global economy of accelerating instability. Opposition will enable progressives to forge a broad coalition ranging from the Catholic Conference to the AARP and the AFL-CIO. This fight to defend America's most successful retirement and anti-poverty program can and must be won.

Bush's new budget will call for extending tax breaks for the wealthiest Americans while cutting investment in education and healthcare. This offends the common sense of most Americans and offers progressives the opportunity to challenge the President's perverted priorities while making the case for public investment in areas that Americans agree are vital to their families and our country's future. Bush's pledge to pack the courts with zealots will mobilize progressives in defense of equal rights, women's right to choose and corporate accountability. (Spooked by Sen. Tom Daschle�s defeat in South Dakota, many Senate Democrats are skittish about this battle, and will need to feel the heat from the activist base of the party.) The debacle in Iraq indicts the militarist unilateralism of the Bush administration and provides progressives with the obligation to push for an exit strategy from an occupation that a majority of Americans now oppose. In this effort, the anti-war movement can make strategic alliances with much of the realist establishment, from George Bush Sr.'s national security adviser Brent Scowcroft to growing portions of the uniformed military as well as intelligence and State Department professionals.

At the same time, progressives should develop and push positive ideas for change: minimum- and living-wage campaigns, progressive tax reform, strategic initiatives like the Apollo Project for good jobs and energy independence. A "blue-state strategy" – elaborating a state and local agenda on such issues as healthcare and education reform – can provide models and demonstrate the attractiveness of progressive ideas.

None of this will be led by the lobbyists and retainers of the Democratic Party machine, such as it is. In the House, minority leader Pelosi will keep the caucus generally unified in opposition to the Bush agenda, but House boss Tom DeLay brutally locks Democrats out of the room whenever he pleases. Progressive champions like Jan Schakowsky, Hilda Solis, John Conyers, new Black Caucus chair Mel Watt, Barney Frank and others will help guide and support outside progressive mobilizations. The barons of the Senate are less organized and more frightened, as illustrated by minority leader Harry Reid's bizarre public acceptance of the idea of Antonin Scalia as Chief Justice. Sens. Dick Durbin, Jon Corzine, Barbara Boxer and newly elected Barack Obama will help define the debate, but external pressure will be vital.

All stripes of Democrats agree on the need to persuade voters, not simply mobilize the base. But persuasion requires committed activists, passionate in their cause, ready to enlist and challenge their neighbors. Progressives haven't yet made up for the decline of union halls, nor matched the right's ubiquitous media clamor. But the pathbreaking house parties organized by and the Dean campaign, and the extraordinary training provided by Wellstone Action, provide new models for educating activists and encouraging them to organize their neighbors.

So forget about the chattering classes and the corporate wing of the party, now fantasizing about purging the new energies unleashed in the last election. What matters isn't what they say in Washington, but what progressives do on the ground across the country. We have just begun to build. The radical agenda of the Bush administration – and its abject failure – will continue to set the stage not for a retreat to the center but for a fierce, passionate reform movement.

A Post-Concession Reflection

John Kerry has conceded. George W. Bush will have a second term. By consolidating their hold on the South, Republicans have added to their majorities in the House and Senate. What is clear is a fundamental failure of leadership.  In the midst of a war – with 9/11 still searing our consciousness – Bush's policies and politics have deepened the divisions in this country.

Bush won votes by wrapping himself in the flag and by summoning the passions of his evangelical base.  Conservative evangelicals supplied his volunteers, turned out in large numbers and voted overwhelmingly for Bush. 

Bush's Narrow Base

The president split the popular vote with Kerry, but the narrowness of his base is striking.  The majority of Bush's support – 88 percent – came from whites. He lost African Americans nine to one. Asians nearly two to one.  Efforts to woo Hispanics earned all of 40 percent of their votes. Only in the South did Bush win a majority – losing the popular vote in the East, the Midwest and the West.

Class mattered – even though Kerry was unable to sustain an economic message amid the barrages of the campaign.  According to exit polls, Bush lost majorities of all those making $50,000 and less – and won majorities of those making more than that.  His biggest margin came from those making more than $100,000.  His base remains the "haves and the have mores," as he famously put it.

The president won overwhelming majorities among those who considered the war on terrorism or morals the most important single issue. But, tellingly, he lost three-quarters of voters who considered Iraq the most important issue and three-quarters who thought the economy and jobs the most important. Kerry's candidacy was propelled by anti-war sentiment and economic discontent.  Kerry also won vast majorities of those who thought health care or education was the most important issue. 

Some argue that the strength of the president's evangelical base suggests America is headed toward a new era of prohibition and moral reaction.  But John Kerry was the most secular of candidates.  He championed science against the forces of moral reaction.  He stood clearly for liberal social issues from civil unions to women's right to choose.  He was a liberal senator from Massachusetts, as the president delighted in repeating. Kerry's campaign may mark the beginning of a reaction not by the right – but by the center and left against the forces of intolerance. 

Amid record turnout, the mobilization driven by progressive groups from Americans Coming Together to to the AFL-CIO clearly transformed the race. First-time voters went for Kerry. Young voters went for Kerry. African American turnout was up dramatically. Union households sustained one-quarter of the electorate and voted in large majorities for Kerry. That mobilization won Pennsylvania and Michigan, drove the divide in Ohio and overcame the systematic Republican efforts at voter intimidation and suppression.

What's Next

Bush's victory will produce a second-term president with a mandate for little beyond patriotic and pious posturing.  A majority of Americans have shown that they oppose his war and have no interest in his domestic agenda.  When the offensive starts in Iraq and the casualties rise, his popularity will plummet.  Were he to try to privatize Social Security, move to a flat tax or weaken Medicare, his party will suffer.  When the dollar falls or the economy slows, burdened by debt and oil prices, a broad majority will express their buyers' remorse.

The independent energy and organization that drove the Kerry campaign must continue to build.  Its potential was demonstrated in this election.  The sophistication exhibited by groups like, ACORN, U.S. Action, the Sierra Club and the League of Conservation Voters, Working America and many others provides the base for taking back the country – whether the White House is an ally or an enemy. 

Economics For Real People

The economy soared from July to September, growing by 7.2 percent. The stock market is up. Profits are up. Stock options and CEO salaries are up. The president says his tax cuts are working and we're on the right track.

But whose economy is he celebrating? Sure, the CEO economy is perking up. Millionaires, who will pocket an average $28,000 in tax cuts this year, are doing just fine.

But the kitchen table economy -- the things that parents worry about at night around the kitchen table -- is still in trouble. Jobs are down -- over three million private sector jobs have been lost since Bush took office. Nine million people are out of work. Another five million get by on part-time work because they can't find full time jobs. Incomes are down. Even during the torrid growth of the last three months, the economy continued to shed more jobs than it created.

Health care costs are up -- at staggering double digit rates. Companies are forcing workers to bear more of the burden, or dropping plans altogether. Retirement savings are still reeling from the stock market crash. Half of all workers have no pension at work, but those that do are up against companies bailing out of guaranteed pensions while cutting retirement contributions. School budgets are taking a hit across the nation, with preschool and after school programs -- essential to working parents -- among the first to take the hit. Tuitions at pubic universities are soaring -- up 14 percent last year alone -- as colleges scramble to cover cutbacks in state contributions. Interest rates are low, but families are deeper in debt. And personal bankruptcies are at record levels.

With the largest budget deficits in recorded history, the dollar losing 20 percent of its value since Bush took office, and interest rates near modern lows, it isn't surprising that the economy finally started to grow. But Bush has given away the store in tax cuts -- taking the country from projected $5 trillion 10 year surpluses to $5 trillion deficits -- while not doing squat to relieve the pressures felt by workaday people across this country.

Trickle down economics doesn't. Mr. Bush's tax cuts are creating more jobs in Shanghai than in Saginaw, while digging this country deeper in debt.

We need an economics that puts people first. Repeal those top-end tax cuts and use that money to put people back to work on investments that we need. Build schools and stop laying off teachers and police. Invest in renewable energy and efficiency, reduce our dependence on Persian Gulf oil, lower electric bill, and capture the green markets of the future. Modernize our roads, mass transit and aging water and waste systems. Make the economy cleaner and more efficient. Provide a drug benefit under Medicare and use the buying power to get the best price for everyone. Commit to a full employment economy, allow workers to form unions and empower them to gain a fair share of the profits and productivity that they are already generating.

Make the economy work for working people and the CEOs will do just fine. But surely we've learned by now that if you lard the benefits on the top, the yacht club can enjoy the party, while the rest of us pay the price.

President Bush and Treasury Secretary Jack Snow say their "jobs and growth" tax cuts are starting to work and the economy is coming back. Yet, in Snow's own projection, the president will end his term in office with the worst jobs record since Herbert Hoover in the Great Depression. The president's campaign coffers are filling with contributions from grateful millionaires. But one thing is clear. The economy they are celebrating isn't the economy that parents will worry over tonight.

Robert Borosage is co-director of the Campaign For America's Future.

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