Why Conservatives Can't Afford Government Default

As the deadline nears for national default if Congress does not raise the debt ceiling, the two parties appear deadlocked over ending tax breaks for the wealthiest Americans, which Republicans oppose, and deep cuts to Social Security and Medicare, which Democrats reject.  In our current political environment, and with Tea Partiers and pending Republican primaries in the mix, it is conceivable that leaders may allow the country to default for the first time in our history, with catastrophic results.  But doing so would be Armageddon not only for our economy, but for conservatives in America.

In order for conservatives to sell their world view of limited government, unregulated financial markets, and ever-lower taxes, they need government’s positive role in our daily lives, and in the economy, to remain invisible to the public.  When government’s image is as a giant, lumbering ogre—good for military defense, but too clumsy for any other purpose—the conservative take has resonance.  But when Americans are reminded that our federal government is about airline safety and mail delivery, healthy food and safe workplaces, Coast Guard and Internet, a different picture emerges. 

That’s why the last government shut-down worked so powerfully in President Clinton’s favor back in the 1990s.  Americans value the federal government’s role as protector of fair rules, opportunity, and the public interest, even as they are often skeptical about its competence.

Economists agree that national default would be devastating, with consequences ranging from collapsing financial markets to plummeting pension funds and 401(k) savings to the disappearance of loans Americans need to get a mortgage, buy a car, start or expand a business.  Unemployment would rise, and the economy could slip into another Great Depression.  Think of the financial chaos around the possibility of default by Greece, then multiply that by ten thousand.

If conservatives are irresponsible enough to let default happen, its dire consequences will dispel their depiction of the private economy as an efficient and independent actor that suffers when government gets involved.  It will remind Americans that the economy needs government, including government debt, to operate.

Building Community Through Equitable Access To Financial Services, Part 1

By Nathan Wilson:

I worked for several years as a Sous Chef at a well known Brooklyn restaurant. During the Black Out of 2003, three of the porters (from the Mexican state of Michoacán) stayed well into the night to help clean and put perishables on ice by candle light. Toward the wee hours, as we wrapped up, I offered to write them checks for all their help, but they didn’t have bank accounts. I was new to the city, and balked at how a person could function without a checking account. But they were not alone. Ensuring fair access to financial services for immigrants - including depository banking and loan lending (in particular mortgage lending) - is key not only to our economic recovery, but also to the well-being and stability of all of our communities. Limiting or discouraging access to mainstream banking services hurts all communities regardless of income.

By some estimates, more than 50% of all immigrants in the United States do not have bank accounts, compared to less than 20% of native born citizens.  (According to a recent survey, a mere 40% of non-citizen Mexican immigrants in New York had bank accounts.) Restrictive identification requirements and discrimination, coupled with the use of check cashers and remittance providers, has kept much of the immigrant community, in particular immigrants from Mexico and Latin America, away from financial service providers. Accordingly, many immigrants lack the ability to build the credit necessary to take out loans, apply for mortgages and other financial services.

A survey conducted by the NYC Immigrant Financial Justice Network found that a significant number of immigrants reported using check cashers for day-to-day transactions. Check cashing services charge exorbitant, per-transaction percentage costs. Banks can and often do business with undocumented workers, accepting various forms of identification to open bank accounts. (Banks are under no duty or obligation to inquire as to a person’s immigration status. Indeed, systemic inquiry into immigration status would likely constitute actionable discrimination.) Among the documents anyone can use to open a bank account is a valid passport, consular identification, or an Individual Taxpayer Identification Number (ITIN) issued by the Internal Revenue Service.

Finding Solutions

Protecting all people, not just immigrants, from the predatory practices associated with check cashers and other informal financial services (such as pawn brokers), protects our communities. In addition to extracting steep fees for their services, these businesses do nothing to help build positive credit histories and encourage investment in the local community. Maintaining a bank account is beneficial for numerous other reasons, such as filing a worker’s compensation claim. This is of particular importance for immigrants and other low wage workers, who are often engaged in work that can be dangerous, such as construction and restaurant work, and day labor. Without a clear, documented history of income, employers can understate an employee’s pay to reduce their own cost, cheating the injured worker of due compensation.

As part of the country’s path to economic recovery, we need to encourage immigrant participation in formal financial services. At a minimum, banks should not put onerous identification requirements on potential customers - they should accept all forms of valid identification such as passports, consular identification and ITINs.  Banks should also be more responsive to workers who do not receive steady paychecks, such as seasonal workers, for whom keeping a minimum balance is a challenge. This could include lowering or waiving minimum balance requirements, removing overdraft charges, and putting inactive accounts on hold without accruing a penalty.

Local government should encourage the establishment of Community Development Credit Unions (CDCUs). In addition to providing depository and savings services, CDCUs issue loans and offer remittance services. CDCUs are able to form intimate relationships within their communities, and use customer deposits to invest in local enterprises, improving the lives of everyone in the community.

Independent Action on Jobs

Conservatives in Congress and their echo chamber have backed President Obama, and the American people, into a dangerous corner.  Private sector job creation is desperately needed for our national recovery and to begin rebuilding the economic security of our people.  

Yet for a mix of political and ideological reasons, conservatives are blocking two of the critical steps necessary to achieve that goal: federal investment in private sector job creation and increased tax contributions from the wealthiest and most privileged Americans.  Both are needed in order to get Americans back to work and grow the economy while beginning to reduce the deficit.

The President, however, still has some cards to play.  His constitutional power includes the ability to expend existing federal resources in ways that best meet our national challenges, while calling on Congress to do the same.  Specifically, the President should issue an executive order directing federal agencies to prioritize job creation in transportation, housing, and other programs already funded by Congress.  He should focus those efforts on states and communities with the highest unemployment rates, and through the lens of equal opportunity.  And he should separately urge Congress to prioritize employment in pending legislation like the Surface Transportation Reauthorization Act that both parties agree must be passed soon.  As I’ve recommended before, federal agencies should begin using an Opportunity Impact Statement and requiring Opportunity Action Plans to ensure that federal funds are used most effectively to create greater and more equal opportunity.

These tools should be used to amplify the kind of strategies proposed by the President's jobs council, led by CEOs like American Express's Kenneth Chenault, who have called for measures to cut red tape, provide more loans, invest in energy efficiency and attract more tourists to the United States, among other things.

These efforts, most of which the President can take on his own, should be part of a broader narrative on what government can and cannot do to spur private job growth, and why doing all it can right now is crucial to getting our country on the right track.

A Call to End Indefinite Detention

The right to due process under the law is a cornerstone of America’s commitment to freedom and fairness. Protections against unfair imprisonment, mistreatment by law enforcement officials, and indefinite detention—guaranteed by the 5th and 6th amendments of the Constitution—are rights that no one living in the United States would or should be expected to go without.

Unfortunately, the right to due process ends at immigration enforcement. One of the many cracks in our broken immigration system is that undocumented immigrants are frequently detained for months or even years. In addition to violating our values, these detentions also have a fiscal price tag; a 2009 report from Human Rights First estimated that the United States spent $300 million on indefinite detentions from 2003 to 2009. Nobody benefits from a system that cannot process immigration violations and clogs an already overburdened detention system. Without real solutions, a lack of due process undermines the fairness and efficacy our justice system is based on.

The Supreme Court ruled that detaining undocumented immigrants is supposed to be a temporary measure that lasted only as long as it was “reasonably necessary to secure removal” of the person—it was never intended to be a punishment for a crime. Detaining immigrants for months or even years because we don’t know what to do with them not only doesn’t make sense, it violates our basic notions of due process. Due process isn’t just a right guaranteed to citizens--it applies to anyone in the United States. A speedier, more transparent trial and appeals process would go a long way toward making our immigration policies fairer and more effective.

To date, indefinite detention has been the result of organizational failure on an overburdened immigration system. Recently proposed legislation would codify indefinite detention for migrants who cannot be returned to their home countries. American citizens have perhaps come to expect a level of gridlock in Congress, but no one should accept the legalization of a broken status quo. Our values, and our sense of equal justice, demand better.

If we want to end indefinite detention, the process starts with greater accountability from the Department of Homeland Security to end these prolonged detentions and create greater transparency. If one group can be denied due process, none of us will be safe to enjoy the rights that America stands for.

A Congratulatory Note to Our New Grads (With a Caveat)

By Robert Valencia

My niece—who is pursuing a degree in psychology—asked me a week ago to review her essay on the American Dream for one of her English courses. Her essay began explaining what the “American Dream” ought to be: economic mobility, home ownership, and better education. But the remaining two pages offered a gloomy viewpoint: the American Dream has become more and more elusive for her.

Though she’s two years shy from obtaining her bachelor’s degree, her disappointment in finding a job (or in her case, a paid internship) very much reflects not only what our latest Public Opinion Monthly found with regard to the mounting pessimism surrounding the “Dream” premise, but also the economic outlook many of the brand-new college graduates face today. According to a recent article from The New York Times, employment rates for new college graduates have fallen sharply in the last two years in tandem with their starting salary: $27,000, down from $30,000 for those who joined the workforce in 2006 to 2008.

Some of the lucky members of the Class of 2010—56 percent—have held at least one job during the spring semester. However, some the jobs these graduates attain do not necessarily require the skills they learned in college; we hear stories from chemistry majors working in retail stores or Latin American studies graduates tending bar or waiting tables. What’s more, many of these students are having trouble paying student loans, which have reached a median of $20,000 for graduates in the classes of 2006 and 2010.

To make matters worse, some researchers point out that many of our new graduates are not being taught the necessary critical thinking and writing skills during their undergraduate years. NYU Professor Richard Arum co-authored the book Academically Adrift: Limited Learning on College Campuses, a study that shows a large number of students who showed no progress on initial tests of critical thinking, complex reasoning, and writing. The book went on to say that many of them had minimal exposure to rigorous coursework, and that the average student only spent 12 to 13 hours per week studying. The authors believe that academic investments have become a lower priority, as many schools prefer to invest in “student centers, deluxe dormitory rooms, and expensive gyms.”

As we approach a new electoral cycle, it is imperative to remind our elected officials that expanding economic and educational opportunities for all must be paramount in their political agenda. Despite such a bleak outlook, our recent graduates deserve a fair chance to achieve their full potential, and where they start out in their lives should not predetermine where they end up. Our country should adopt programs like student loan counseling (for recent grads) and worker retraining (for the more experienced workforce) that will in turn strengthen our economy.

All in all, we salute all the new graduates in the prime of their professional lives—an effort that in the end will pay off financially and intellectually, even though unemployment and other negative factors stand in their way for now. And here is perhaps a note of relief: We’re all in this together, and it’s our responsibility as a society to create and hold on to basic tools and resources to provide security for ourselves and our families. To read more about The Opportunity Agenda’s work on economic recovery and opportunity, click here.

Biweekly Public Opinion Roundup: 2010 is "The Year of the Woman?"

Women bring something different to the table; a perspective that is distinct from men’s. Both experiences are equally important, and both need to be incorporated in to decision-making and represented in power-circles if we hope to embrace all viewpoints and make progress as a society. Yet advancement for women and for gender equality seems to have stagnated, and considering how far we are from equality, stagnation is tantamount to decline. When it comes to the percentage of women in national legislatures, the United States ranks 90th in the world, with women holding 90 of the 535 (16.8%) of the seats in the 111th US Congress. These numbers did not improve in the latest election.  Recent public opinion research shows that a gender gap persists in perceptions of gender inequality, and sexist messaging not only undermines a female candidate, it significantly reduces her favorability among voters.

There's more...

Biweekly Public Opinion Roundup: Latinos, Politics and the Elections

As an emerging demographic group in the United States, and as a growing percentage of the electorate, the political concerns of Latinos – and trends in their voting behavior – need to be well understood and acknowledged by policymakers and elected officials. Historically, Latinos tend to strongly support Democratic candidates, believing that Democrats are more concerned with the issues that are important to this key constituency. Latinos differ from the general population on many major issues, and there is divergence among Latinos - between the native-born and foreign-born - especially pertaining to immigration. Understanding the Latino vote in the 2010 election is crucial, as this constituency is a must-win for the presidential election in 2012.

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After the Election - Reclaiming Our Story

Whatever the results this Election Day, it’s clear that visionary progressive ideas will be less welcome at the start of the next Congress. And that’s saying something, given their track record in this Congress.

But with that reality comes a new opportunity: the chance to tell our own story as progressives, instead of having it told for and about us. We have a new chance to articulate our vision for America, and how it can bring, not just change for the sake of change, but positive and transformative change that can move us forward as a nation.

If we thought—or perhaps still wanted to believe—that the White House or progressives in Congress would effectively do that job for us, then November 3rd will be a day to set aside that notion. We should, of course, work and vote for lawmakers who share our values and goals, and push back against those who don’t. But the days of them speaking for us should be over.

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The Economic Recovery and Opportunity

The Opportunity Agenda has created a series of tools for advocates and policymakers to use as they advocate for equal opportunity in the economic recovery process.

Our most recent tool is a new report, Economic Recovery and Equal Opportunity in the Public Discourse: An Analysis of Media Content and Public Opinion (PDF). This report analyzes mainstream media coverage and a large body of public opinion research regarding America’s economic recovery and the ways in which it is affecting different communities and groups within our society.

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Midterm Elections in the Public Discourse

Pollsters are almost entirely focused on the upcoming elections.  Many are predicting substantial victories for the GOP, and analyze what is driving or curbing the enthusiasm of the electorate.

Harvard Poll:  Millennial Generation's Enthusiasm is Waning

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