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Only one budget proposal for fiscal year 2016 wisely deals with the real needs of Americans both in the present and the future. That's the Congressional Progressive Caucus's budget: The People's Budget: A Raise for America. Unlike the slash-and-burn Republican budgets proposed in the House and Senate that would, in the words of Bill Scher, turn the federal government into a "shell of its former self," the People's Budget takes a New New Deal approach.

It's not a formula for wild spending. In fact, it's quite frugal. And it invests in projects designed to improve the well-being of all Americans instead of engaging as the Republican budgets do in giving the one percenters yet another boost.

That's why we are urging readers to sign the petition and become a citizen co-sponsor of the People’s Budget.

Like the CPC's previous efforts—The People's Budget (FY 2012), the #Budget for All (FY 2013), the Back to Work Budget (FY 2014) and the Better Off Budget (FY 2015), the People’s Budget for FY 2016 represents a stark contrast to the Republicans' safety-net shredding proposals and is quite different from President Obama's budget as well. Isaiah J. Poole at the Campaign for America's Future writes:

“I just have to tell you as a member of the budget and appropriations committee … that the [House GOP] budget is rigged; it slashes every initiative that was developed and formed under the War on Poverty 50 years ago,” said Rep. Barbara Lee (D-Calif.). By contrast, “we make historic investments in housing, in food assistance, in workforce training so that the American Dream is open to everyone,” she said, while refocusing military security spending by reining in waste and the undue influence of defense contractors.
You can read a quick comparison of the People's Budget and the budget proposals of President Obama, the House and Senate in this infographic from the National Priorities Project.

The House Republican budget would whack $5 trillion out of federal spending over the next 10 years. Most of this comes from programs meant to help low- and moderate-income Americans. While doing this, it would add another $400 billion to the already bloated Pentagon budget and reduce taxes for the wealthy and corporations. The Senate budget plan is slightly different but with the same direction. Austerity for the 99 percent, feasting for the 1 percent.

The People's Budget takes a different path altogether. It focuses on accelerating sustainable economic growth, putting federal money into programs designed to create 8.4 million new jobs by 2018, fixing our crumbling infrastructure, aiding state and local governments, targeting tax credits and building public works programs. These programs would generate huge returns, raise living standards and go far to heal the economic wounds created by the Great Recession and its aftermath.

Head below the fold for some detailed analysis on the People's Budget.

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By Rachel Goldfarb, originally published on Next New Deal

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The Roosevelt Institute has produced the Daily Digest five days a week since 2009, but its time has now come to an end. Today will be the final Daily Digest; however, we hope you'll subscribe to our weekly e-mail updates to stay in the loop with all the exciting work we're doing here at the Roosevelt Institute. You can also stay in touch with us on Facebook and Twitter. Thank you for reading!

Corporate Borrowing Now Flows To Shareholders, Not Productive Investment: Study (IB Times)

Owen Davis reports on J.W. Mason's new white paper, "Disgorge the Cash," explaining how the paper fits into a growing body of research that suggests flaws in our basic understanding of economics.

How is it that amid stiff market competition and increasing debt loads, companies have found so much money to spend on shareholders?

A new paper by Mason helps explain the trend. Starting in the 1980s, Mason argues, corporate executives increasingly prioritized pleasing shareholders over making the meat-and-potatoes investments of the kind that built the transistor, the 747 and the middle class. As a result, he writes, “Finance is no longer an instrument for getting money into productive businesses, but getting money out of them.”

Mason’s study joins a growing body of research that suggests some of our most basic assumptions about the economy might be off -- or at least woefully outdated.  “A lot of our ideas about corporate finance are still based on this older idea of how the world works,” Mason says.

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By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Why Companies are Rewarding Shareholders Instead of Investing in the Real Economy (WaPo)

Lydia DePillis looks at Roosevelt Institute Fellow J.W. Mason's new white paper on how the shift towards increased shareholder payouts since the 1980s has decreased corporate investment.

If you’ve noticed the steep upward trajectory of the stock market over the past few years, looked around and wondered why cash doesn’t appear to be raining down upon your friends and neighbors, you’d be justified in wondering: What’s going on here? If corporate America is doing so well, shouldn’t we feel like things are getting better, too?

In the past several years, profits have been increasingly paid back out to shareholders, rather than invested in hiring more people and paying them better. And lately, companies have even been borrowing money to make those shareholder payouts, because with interest rates so low, it’s a relatively cheap way to push stock prices higher.

That’s according to a new paper from the Roosevelt Institute, a left-leaning think tank that's launching a project exploring how the financialization of the economy has unlinked corporates from the well-being of regular people.

Read J.W. Mason's paper, "Disgorge the Cash: The Disconnect Between Corporate Borrowing and Investment," here.

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By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Annual Bank Profit Falls for First Time in Five Years (WSJ)

Victoria McGrane says the trend is primarily because seven of the 10 largest banks posted lower earnings, while other parts of the banking sector, like community banks, are thriving.

The vast majority of the nation’s 6,509 banks reported increased earnings for 2014, the FDIC said in its quarterly report on the health of the banking industry. But seven of the 10 largest banks posted lower earnings than the previous year, driving the industry total below its 2013 level.

The decline illustrates the postcrisis shakeout occurring at the biggest banks, which are wrestling with new rules that have slowed—or in some cases stopped—banks from engaging in certain business lines and legal woes from conduct preceding the 2008 meltdown.

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By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Free the Middle Class (USA Today)

Senator Elizabeth Warren and Representative Elijah Cummings argue that bringing back a strong middle class requires government intervention.

For too long, government has worked for the rich and powerful. Government needs to work for America's middle class again.

America's middle class is about opportunity. People create their own opportunity: they work hard, get an education and make smart decisions. But government also plays a role. Investments in schools give people a chance to get an education. Investments in infrastructure like roads and bridges, power grids and communications networks make it more profitable to create jobs here at home. Investments in medical and scientific research provide the foundations for an innovation economy. We do it on our own AND we do it together.

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By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

College as a Catalyst for Civic Engagement (Medium)

Roosevelt Institute | Campus Network member Zach Lipp builds on a recent column by Frank Bruni, arguing that liberal education should develop the skills of civic engagement, not just citizenship.

Do colleges and universities exist to promote learning and citizenship or to produce skilled workers? New York Times columnist Frank Bruni took readers to this gulch in two recent columns. In one column, Bruni reflects on a particular lecture on Shakespeare’s “King Lear” as transformative. But many politicians dismiss such learning as superfluous. Bruni mentions Wisconsin Governor Scott Walker’s recent proposal that state universities shift their missions toward “work force needs.” This debate is not new — but the divide between the two sides seems to be growing. “In a democracy,” writes Bruni “college isn’t just about making better engineers but about making better citizens, ones whose eyes have been opened to the sweep of history and the spectrum of civilizations.”

As a current college student, I see the merits in both sides. Politicians have a point: for many students, college is explicitly pre-professional. However, Bruni is also correct: liberal education exists to develop citizens. I’d expand on Bruni’s argument. The role of colleges in fostering citizenship extends beyond simply opening students’ eyes to history. College years function as a pivotal time for civic engagement.

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By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Set the Wayback Machine for Housing Finance Reform, But to When? (CLS Blue Sky Blog)

Roosevelt Institute Senior Fellow Brad Miller lays out the history of Fannie Mae and Freddie Mac to argue for a stronger government role in creating a safe and affordable mortgage market.

The lesson of experience, therefore, is that for the vast majority of Americans, the housing finance system was a spectacular success when dominated by government agencies acting for the public good and a catastrophic failure when dominated by Wall Street in pursuit of profit. Republicans and Democrats alike, however, now favor “reform” to reduce the role of government and “bring back private capital” to the private-label securitization market. Many proposals would hand Fannie’s and Freddie’s profitable business to Wall Street along with cheap government reinsurance against catastrophic losses, and do little to support affordable housing.

In short, many proposals for housing finance set the Wayback Machine to 2005. For Wall Street banks, it would be a return to the glory days of housing finance, only with less competition and even more taxpayer subsidies.

Those days were not so glorious for homeowners and investors, however.

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By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

The Big Lock-In (Medium)

Roosevelt Institute Fellow Susan Crawford explains how Comcast is trying to dominate online video to the point where consumers wouldn't even see that other alternatives exist.

As TV viewing shifts from traditional TV sets to mobile devices and tablets, Comcast’s cloud-based Xfinity platform will be right there. Eventually, we’ll all have box-free set-top boxes: the network itself will include Xfinity’s navigation menus, instruct any device in the home how to download DVR recordings and stream live TV, and watch carefully for video viewing patterns — so as to better place ads.

To get there, Comcast is licensing Xfinity for free to other cable distributors, set-top box makers, and computer-chip manufacturers, ensuring that its platform is widely adopted. Then, when it’s everywhere, it will be controlled remotely by its masters. Two years ago, Matt Zelesko, Senior Vice President at Time Warner Cable, said this free licensing would “drive collaboration across the [cable] industry.”

The payoff for Comcast and its collaborators? They’ll be able to ensure that their own video on demand services are easy to find but users can’t search simultaneously across Vudu, Netflix, or YouTube. They’ll control video navigation and, thus, the user experience — and the profits that flow from it. Program guides, DVR recordings, and “pretty much everything but the volume control” on Xfinity-obedient devices will be governed from the cloud, according to Rob Rockell, Vice President of Engineering for Comcast. This is a very big deal.

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By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Obama Shames Companies Who Don't Want to Provide Health Insurance (Melissa Harris-Perry)

As guest host on Melissa Harris-Perry, Roosevelt Institute Fellow Dorian Warren examines the president's comments about a Staples policy that prevents workers from obtaining insurance.


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By Richard Kirsch, originally published on Next New Deal

Americans are looking for politicians who ask the wealthy to take responsibility for their fair share of our society.

According to former Treasury Secretary Larry Summers – who is emerging as a key economic advisor to Hillary Clinton – the big political challenge in addressing economic inequality is not to embrace “a politics of envy.”

No, Mr. Summers – it’s not the politics of envy. It’s the politics of responsibility.

Summers was quoted in The New York Times about “what has emerged as a central question of her [Hillary Clinton’s] early presidential campaign strategy: how to address the anger about income inequality without overly vilifying the wealthy.”

The rich may imagine that blaming them for the struggles of the rest of us is driven by envy, but that’s their own conceit to make them feel good. Americans don’t resent the rich. While we might fantasize about winning the lottery, we are not consumed by jealousy. What most Americans understand is that they are struggling financially because the wealthy have rigged the economic and political system to benefit them at the expense of the rest of us. That’s not envy: it’s reality.

Summer’s formulation is meant to give intellectual cover to the real problem that Democrats like Clinton face: taking on those who finance their political campaigns. As the Times puts it: “And she [Clinton] must convince a middle class that feels frustrated and left behind that she understands its struggles, even as she relies heavily on the financial industry and corporate interests to fund her candidacy.”

There is a way to connect with people without “overly vilifying the wealthy.” The politics I would recommend to Clinton and other Democrats is that of responsibility.

There are two senses in which we can have a conversation about responsibility. The first is in explaining who is responsible for the financial squeeze on American working and middle class families. The second sense is to describe the kind of responsible behaviors that we can insist those who are responsible undertake to rebuild opportunity and security. The two are related, as one needs to be clear on who is responsible in order to identify how to fix the problem.

For example, wages are stagnant because corporations engaged in concerted strategies to limit the proportion of profits shared with workers, including: busting unions, rather than negotiating with them; shipping jobs overseas rather than paying higher wages to American workers; and aggressively using campaign contributions and lobbyists to undermine labor standards (minimum wage; overtime protection; etc) and labor laws. Corporations spent their huge profits on stock buybacks and CEO pay, rather than better compensation for workers.

Then there’s Wall Street’s culpability for using its political clout to shred financial regulations and oversight while engaging in the orgy of financial speculation and predatory lending that triggered the Great Recession.

Or tax policy, where corporations pushed to reduce their proportion of taxes paid to the federal government and by the wealthy so that they now pay a lower share of taxes than the middle-class. The result:  working and middle class families pay higher taxes and more for public services. A glaring example is the enormous rise in the cost of public higher education, as funding for public colleges and universities has been slashed.

The economic story about who is responsible requires acknowledging the democratic story. One thing that Americans on the left and right agree on is that the wealthy and corporate lobbyists have hijacked our democracy. That’s not cynical – it’s true. And it is a major reason why so many have given up on government working for them, or solving the problems they face.

None of this is “over-vilifying the wealthy.” It is describing the reality that Americans understand. As we saw in the election this past fall, Democrats who fail to identify those responsible will lose, as base Democrats stay home and white working-class voters turn to Republicans who assign blame to the government and the poor.

Identifying those who are responsible, as I’ve done above, drives the power of solutions to address those problems. For example, corporate suppression of wages is fixed by: revitalizing labor law and enforcement; raising labor standards like minimum wage and earned sick days; creating new workplace protections, like paid family leave; changing the rules on stock buy-backs; and limiting CEO compensation.

Addressing the adverse impact of Wall Street’s drive for speculative profits calls for taxing speculative trading, breaking up the big banks, stopping predatory lending, and providing new, publicly backed mechanisms for financing the residential and community lending that banks have abdicated.

Revenue raised from reversing tax breaks for corporations and the very wealthy can be used to invest in services families need like affordable child care and free community college, proposals in President Obama’s new budget.

Instead of vilifying the wealthy, the politics of responsibility can lift up corporate leaders and wealthy Americans who are examples of responsible behavior. President Obama has done this occasionally, for example, lauding Costco for its high pay and good benefits for big box stores. Last week, Aetna announced it was going to raise wages and benefits for its lowest-wage workers. Warren Buffett has a “rule” bearing his name, for proposing that the wealthy shouldn’t pay lower shares of taxes than their secretaries. Buffett’s example is particularly important because he’s calling for government action, not just setting an example through his own behavior.

The handful of corporate leaders who are acting responsibly are also acting in their own long-term self-interest. They understand that their businesses do better with workers who get paid decently. They realize they need an educated workforce. They may even comprehend that if workers get paid more, they’ll have more to spend, driving the economy forward.

The real emotional challenge in addressing inequality is not envy by the 99 percent for the 1 percent. It’s the very thin skins of the super-rich. President Franklin D. Roosevelt, born one of the 1 percent, understood this. FDR framed the question of wealth and responsibility brilliantly when he said:


Government can deal and should deal with blindly selfish men. But that is a comparatively small part – the easier part of our problem. The larger, more important and more difficult part of our problem is to deal with men who are not selfish and who are good citizens, but who cannot see the social and economic consequences of their actions in a modern economically interdependent community. They fail to grasp the significance of some of our most vital social and economic problems because they see them only in the light of their own personal experience and not in perspective with the experience of other men and other industries. They, therefore, fail to see these problems for the nation as a whole.

There were some prominent capitalists who supported New Deal programs, including banking reforms. But of the rest, FDR famously said, “I welcome their hatred.”

At the end of the day if Hillary Clinton or any other Democrat is going to champion the policies essential to rebuilding the middle-class and creating a new era of broad, sustainable prosperity, she will have to join FDR in applauding those businesses who worked for the benefit of all and welcoming the hatred of those who resist the fundamental changes needed to build an America that works for all of us.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.


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By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

How Democratic Progressives Survived a Landslide (TAP)

Bob Moser says that populist, localized campaign messages, not the party's own turnout strategy, saved a few key Democratic races in the 2014 midterm elections.

After every election, the losing side naturally tends to brood over where and how things went wrong. For Democrats this year, there’s no shortage of theories about the party’s avalanche of key losses in Senate, House, and statehouse contests. Perhaps it was wrong to sideline President Obama so thoroughly. Perhaps they shouldn’t have run away from the Affordable Care Act. Perhaps they still haven’t found the formula for turning out young and minority voters in midterms. Maybe it was just a bad map that couldn’t be overcome. Or maybe there had been, as the pundits chorused, no “coherent national message” for Democrats to run on.

You can find shards of truth in these tidbits of conventional wisdom, but it’s a gauzy, overgeneralized kind of truth. It’s more instructive to take a long look at what did work in 2014—at the candidates and campaigns that overcame the Republican drift. How did Democrats beat their odds in Arizona, Minnesota, New Hampshire, and Michigan even as they fell short in Iowa, Wisconsin, Florida, and Colorado? The closer you look, the clearer the picture becomes: They did it the way Kirkpatrick did. They ran with their populist boots on.

Roosevelt Take: Moser references Roosevelt Institute Senior Fellow Richard Kirsch's post-election analysis on winning populist messaging.

Follow below the fold for more.


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By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Our partners at As You Sow are hosting a webinar on excessive executive compensation tomorrow at 2pm EST. Register here.

Big Money Can’t Buy Elections – Influence is Something Else (Reuters)

Roosevelt Institute Senior Fellow Jonathan Soros suggests stronger small-donor matching funds and reforms to the Federal Election Commission to work around Citizens United.

To make citizen-funding work, rules must be implemented and enforced effectively enough to keep up with the lawyers and political operatives who will inevitably seek to skirt them. At the federal level, that means redesigning the Federal Election Commission.

The commission is now composed of three Democrats and three Republicans, with the consent of four members required to take any action. Experts offer a laundry list of reforms, but just changing it to a seven-member panel with no more than two of them affiliated with a political party, would dramatically alter its function.

The selective secrecy in election spending also must end. This could be easily accomplished under existing statutory authority by either the Federal Election Commission or the Internal Revenue Service. They could ensure that the sources of all political funds were disclosed to the public — not just to the politicians who benefit. Obviously, congressional legislation could help.

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