Author of Debtors' Prison
- Barbara Ehrenreich
In Debtors' Prison: The Politics of Austerity Versus Possibility, Robert Kuttner blends economics with historical contrasts of effective debt relief and punitive debt enforcement, making clear that universal belt-tightening, as a prescription for recession, defies economic logic. Above all, Kuttner shows how austerity serves only the interest of creditors—the very bankers and financial elites whose actions precipitated the collapse. Lucid, authoritative, provocative—a book that will shape the economic conversation and the search for new solutions.
In his book, Obama's Challenge, Robert Kuttner argued that there was no middle ground; Obama would either be "a great president or a failed president." Expanding on this point in A Presidency in Peril, he presents a unique insider view and hard-hitting assessment of politics. The release of these two acclaimed books marks what has proven a distinguished career in journalism for Kuttner. He has been a columnist for BusinessWeek for twenty years, national staff writer for The Washington Post during the Watergate era, national policy correspondent for the New England Journal of Medicine.
A compelling public speaker, Kuttner can address a variety of audiences. He is unique in the passion he brings to his speeches and his ability to render complex economic issues in plain, clear English. Currently co-editor of The American Prospect, a magazine that he founded in 1989, Kuttner is a distinguished senior fellow at the think tank Demos.
Austerity Won't Cure a Weak Economy
Both political parties are now committed to the idea that the road to recovery is paved with sacrifice. The Democrats want more in the way of tax increases on the rich, while the Republicans prefer spending cuts. But either way, the idea of a “grand bargain” that takes $4 trillion out of public budgets over a decade is a bad idea, says Robert Kuttner. In this talk, Kuttner explains why austerity doesn’t work, using examples from the real-time experiment in both Europe and America since the 2008 recession. In Europe, the economy is back in recession with unemployment is approaching 13 percent. In the U.S. the $270 billion down payment on a decade of budget reductions has already cut this year’s growth rate in half. Kuttner shows his audiences why we need to focus on jobs and recovery first, before trimming the national debt, and explains how austerity cripples economic recovery, despite what many politicians and journalists say.
The Double Standards of Debt
Corporations can shed their debts by going through bankruptcy. And big banks have unloaded trillions of dollars of toxic debt onto the Federal Reserve and the taxpayers. But homeowners who have mortgages worth more than the value of the house can’t lighten their load through the bankruptcy system. Nor can college students. Nor can small countries. In this talk, Robert Kuttner explores the bizarre double standards of debt, and suggests ways to fix our broken system. The public debt gets all the publicity, but government has plenty of capacity to finance its debt, and at low interest rates. It is private debt that is strangling the recovery. If debt relief is good enough for big corporations and banks, argues Kuttner, it’s good enough for regular people.
In this talk, Kuttner argues that we are destroying the life chances of the next generation by saddling students and graduates (and dropouts) with what is now a trillion dollars of college debt. The system makes college success and life success more a matter of whether you come from an affluent family that pays the freight so that you can graduate debt free, than your own merit and determination. Kuttner offers concrete solutions to the ballooning student debt issue, such as a debt amnesty for people who’ve made ten years of payments and a college debt refinancing program at the government’s own low borrowing rate. My making these and other changes, Kuttner says, we could save students and debtors tens of billions of dollars a year, and ensuring that the next generation isn't straddled with life-altering debts.
Austerity is Bad Economics
Both political parties are outdoing each other to cut the budget deficit. It's true that deficits do need to come down over time, but a deep recession is not the time for austerity. That course only throws more people out of work. In World War II, we went much deeper into debt in order to defeat the Nazis. As a side effect, we invested massively in science and technology, recapitalized American industry, and re-employed American workers. All that investment finally ended the Great Depression, and powered the postwar boom. After the War, the nation grew its way out the debt. Today, we need the same scale of national commitment, without the war. Making the issue deficit-reduction, rather than robust recovery, puts the cart before the horse, and could prolong the recession. This is a time to invest in America's people and its competitiveness. Deficit reduction is much easier when you have a prosperous and growing economy.
The China Playbook
China has a formula for displacing the United States as the world's economic leader, but it takes America to play along. The Chinese system is a hybrid that, in theory, is not supposed to work--one part aggressive, entrepreneurial capitalism, one part totalitarian communism. The Beijing regime offers American industry subsidies, docile and well trained workers. As a condition of entry, China demands that US-based companies share proprietary technology with Chinese partners. The whole system violates the trade norms of the World Trade Organization, but many American corporations have made their separate peace with China, and the US government is reluctant to play hardball to change the terms of engagement. In the short run, this co-dependency is good for corporate earnings. In the long run, it divorces the interests of American firms from the American economy. A more balanced strategy of trade with China is possible, but it will take more US leadership.
Don't Count America Out
A recent article in the magazine Foreign Policy was titled, "American Decline: This Time it's Real." In the 1930s, democracies mired in depression were said to be no match for efficient dictatorships. We all remember the 1970s, when stagflation, high unemployment, and the rise of Japan led to proclamations of America's "imperial overstretch" and inevitable decline. Then came the abrupt end of communism, the Japanese financial collapse, and two decades of rising US prosperity and job-creation. Today, pessimists point to the rise of China, the looming national debt, persistent unemployment, partisan blockage, and the dwindling influence of Washington to control events on the Arab street. But don't count America out. We still out-innovate the rest of the world. There is no currency on deck to replace the U.S. dollar. Our problems are serious, but all have solutions. The question is whether we have the national resolve and political will make those solutions happen.
The Education Wars
The impulse was a noble one. Trade more accountability for more federal aid, so that "failing schools" would turn into success stories Better yet, it was bipartisan, cosponsored by no less than George W. Bush and Ted Kennedy. But a decade later, the promise of NCLB is mired in high-stakes testing, excessive claims for charter and voucher schools, burdens on school districts of unfunded liabilities, and a "Race to the Top" pot of federal incentive money that has far more losers than winners. Poor kids are still being left behind, and the US still lags the performance of other nations on test scores. But if nothing else, the education wars have forced us to ask harder questions. Out of this tug of war over education policy, we may yet recognize models that help more kids succeed without scape-goating teachers or destroying classroom creativity.
The Attack on the Middle Class
For at least three generations, Americans have looked forward to passing along a better life to their children. But today's young adults face a double whammy. For more than two decades, the costs of making it into the middle class have been outstripping incomes--the costs of college, homeownership, decent health insurance and the expenses of raising kids--have soared while incomes have been nearly flat. Since 2007, on top of that trend we've had a severe jobs recession, again concentrated among the young. So is the Millennial Generation just fated to be a lost generation? Are young Americans victims of unlucky timing? Not at all--they are victims of bad politics and bad policies. Broadly shared postwar prosperity did not just happen. It was the result of deliberate measures during boom years that created ladders into the middle class. Those ladders can be re-created if we change our politics.
The Attack on Public Institutions
Give the Tea Party this--they are dead serious. The attack on government would cut public support for everything from preschool, college aid, health clinics, and help for the disabled to regulation of prudent banks, clean drinking water and safe food. A major assault on Social Security, Medicare, and Medicaid is next. Did Americans vote for this program when they cast ballots in November 2010 against the incumbent Democrats? Not according to the polls. These uses of government are broadly popular--and so are the progressive taxes needed to pay for them. So what is it about our politics that is creating an America that most Americans don't support? And what will it take to reclaim an effective democracy and a responsive government?
Debtors' Prison: The Politics of Austerity Versus Possibility
One of our foremost economic thinkers challenges a cherished tenet of today’s financial orthodoxy: that spending less, refusing to forgive debt, and shrinking government—“austerity”—is the solution to a persisting economic crisis like ours or Europe’s, now in its fifth year.
Since the collapse of September 2008, the conversation about economic recovery has centered on the question of debt: whether we have too much of it, whose debt to forgive, and how to cut the deficit. These questions dominated the sound bites of the 2012 U.S. presidential election, the fiscal-cliff debates, and the perverse policies of the European Union.
Robert Kuttner makes the most powerful argument to date that these are the wrong questions and that austerity is the wrong answer. Blending economics with historical contrasts of effective debt relief and punitive debt enforcement, he makes clear that universal belt-tightening, as a prescription for recession, defies economic logic. And while the public debt gets most of the attention, it is private debts that crashed the economy and are sandbagging the recovery—mortgages, student loans, consumer borrowing to make up for lagging wages, speculative shortfalls incurred by banks. As Kuttner observes, corporations get to use bankruptcy to walk away from debts. Homeowners and small nations don’t. Thus, we need more public borrowing and investment to revive a depressed economy, and more forgiveness and reform of the overhang of past debts.
In making his case, Kuttner uncovers the double standards in the politics of debt, from Robinson Crusoe author Daniel Defoe’s campaign for debt forgiveness in the seventeenth century to the two world wars and Bretton Woods. Just as debtors’ prisons once prevented individuals from surmounting their debts and resuming productive life, austerity measures shackle, rather than restore, economic growth—as the weight of past debt crushes the economy’s future potential. Above all, Kuttner shows how austerity serves only the interest of creditors—the very bankers and financial elites whose actions precipitated the collapse. Lucid, authoritative, provocative—a book that will shape the economic conversation and the search for new solutions.
A Presidency in Peril
When Barack Obama took office in January 2009, he had an unprecedented chance to do what no other recent president could: seize the nation's financial reins from the corporate elite and return them to the American people. Progressives everywhere held out hope that their new leader would take advantage of the economic crisis he stepped into and enact bold policies that would evoke real financial reforms-putting Main Street in front of Wall Street, at last.
But that, writes Robert Kuttner, is not the way things turned out. Instead, America's best chance for radical financial reform turned into Wall Street's greatest victory. Obama filled his administration with allies of financial elites who were more interested in business as usual than in transformative change. As a consequence, Main Street remained mired in deep recession. Instead of being the instrument of economic renewal, Obama became the target of economic frustration. In this hard-hitting, incisive account, Kuttner shares his unique, insider view of how the Obama administration not only missed its moment to turn our economy around-but deepened Wall Street's risky grip on America's future.
Carefully constructing a one-year history of the problem, the players, and the outcome, Kuttner gives readers an unparalleled account of the president's first year. More importantly, though, Kuttner shows how we could-with swift, decisive action-still enact real reforms. This is a book not to be missed by anyone who wants to understand exactly how Wall Street won, and how Main Street can still fight back.
Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency
Barack Obama approaches the Presidency at a critical moment in American history, facing simultaneous crises of war, the environment, health care, but most especially in the economy. If he is able to rise to the moment, he could join the ranks of a small handful of previous presidents who have been truly transformative, succeeding in fundamentally changing our economy, society, and democracy for the better.
But this will require imaginative and decisive action as Obama takes office, action bolder than he has promised during his campaign, and will be all the more difficult given the undertow of conventional wisdom in Washington and on Wall Street that resists fundamental change. Decades of regressive politics and political gridlock have left America in its most precarious situation since the onset of the Great Depression. The collapse of the housing bubble continues, as does the financial meltdown it triggered; a revival of 1970s style stagflation threatens; incomes continue to lag behind inflation; our household and international debts pile higher; disastrous climate change looms; energy and food prices continue their escalation; and the ranks of un- and under-insured Americans grow, the clearest, and most heartless, example of America's destructive inequalities. Solutions to our multiple challenges do exist, but they won't be found in overly cautious or expedient quick fixes.
With his exceptional skill at appealing to our better angels, Barack Obama could be the right leader at the right time to re-awaken America to the renewed promise of shared prosperity coupled with responsibility towards future generations and the international community with whom we share the Earth. Invoking America's greatest leaders, Robert Kuttner explains how Obama must be a transformative president--or a failed one.