by Zach Carter, Media Consortium blogger

Congress returns from its April recess this week with financial reform at the top of its to-do list. With millions of Americans still bearing the brunt of the worst recession in 80 years, Congress needs to start protecting our economy from Wall Street excess, and repair the shredded social safety net that has allowed the Great Recession to exact a devastating human cost.

Big banks are an economic parasite

In an excellent multi-part interview with Paul Jay of The Real News, former bank regulator William Black explains how the financial industry has transformed itself into an economic parasite. Black explains that banks are supposed to serve as a sort of economic catalyst—financing productive businesses and fueling economic growth. This was largely how banks operated for several decades after the Great Depression, because regulations had ensured that banks had incentives to do useful things, and barred them from taking crazy risks.

The deregulatory movement of the past thirty years destroyed those incentives, allowing banks to book big profits by essentially devouring other parts of the economy. Instead of fueling productive growth, banks were actively assaulting the broader economy for profit. None of that subprime lending served any economic purpose. Neither do the absurd credit card fees banks charge, or the deceptive overdraft fees they continue to implement.

As Matt Taibbi explains in an interview with Amy Goodman and Juan Gonzales of Democracy Now!, banks didn’t just cannibalize consumers. They also went directly after local governments, bribing public officials to ink debt deals that worked wonderfully for the banks, and terribly for communities. In Jefferson County, Ala., J.P. Morgan Chase helped turn a $250 million sewer project into a $5 billion burden for taxpayers. The deal generated nothing of value for either citizens or the economy, but J.P. Morgan Chase was still able to line the pockets of its shareholders and executives. This kind of behavior was illegal, but the transactions involved were complex financial derivatives, which are not currently subject to regulation. To this day, nobody at J.P. Morgan Chase has been prosecuted for bribery or corruption.

Congress set to avoid tough regulations

There is a clear need for Congress to enact some firm restrictions against risky and predatory bank activities. But at the behest of Treasury Secretary Timothy Geithner, Congress is doing its best to avoid inserting any hard terms in legislative language, instead leaving the specifics to federal regulators to work out. As Tim Fernholz emphasizes for The American Prospect, this is an exercise in futility. Regulators already have the power to impose more stringent rules on nearly every arena of Wall Street business that matters (derivatives are a very noteworthy exception). If they wanted to fix things, they could do it without Congressional help. The trouble is, the financial sector has polluted most of the regulatory agencies, so that many regulators now act more like lobbyists for the banks they regulate, rather than law enforcers. Indeed, as I note for AlterNet, the top bank regulator in the U.S. spent over a decade lobbying for the nation’s largest banks before taking up his current job. If Congress doesn’t establish firm rules, regulators under future administrations would be free to simply undo any measures that the current agencies actually implement.

Megabanks equal mega risks

As Stacy Mitchell illustrates for Yes! Magazine, most of the problems in the financial sector are connected to the size of our banking behemoths. Big banks have enormous power—if they fail, the economy goes off a cliff. As a result, any responsible government wouldn’t allow any of our megabanks to actually fail. But knowing that the government will protect them from any true catastrophes, big banks take bigger risks—if the risk pays off, they get rich, if it backfires, taxpayers will suck it up. That puts the interests of big banks at odds with the public interest, and creates an economy where bankers don’t try to finance useful projects with a safe and steady return, but instead back crazy bets that just might pay off.

You can’t fix that problem with regulations or idle threats of taking down a big bank when it gets itself in trouble—the markets won’t believe it, and the banks will still take risks. The only solution, Mitchell notes, is to break up the banks into smaller institutions that can fail without wreaking havoc on the economy.

Economic inequality weakening the economy

All of this ties into rampant economic inequality in the United States. Since the 1970s, conservatives have waged a constant battle on the social safety net, shredding protections for ordinary people, while empowering corporate executives to take advantage of them. In an illuminating blog post for Mother Jones, Kevin Drum highlights the fact that average income has only rose from about $20 an hour in 1972 to $23 an hour today. This isn’t because workers were slacking off—productivity has increased at roughly five times that rate. In other words, nearly all of the economic gains since the Nixon era have accrued to the wealthy.

When people don’t have access to strong and improving income, they finance things with credit. But if wages never actually improve, that debt becomes a significant burden. When an entire society finds itself overly indebted, people stop buying things, and the economy tanks. The predation in the American financial sector makes this problem even worse.

But political theatrics are even trumping efforts to provide relief to those hit hardest by the recession. Sens. Jim Bunning (R-KY) and Tom Coburn (R-NE) have blocked the extension of unemployment benefits twice in the past month. As Kai Wright emphasizes for ColorLines, that recklessness puts up to 400,000 Americans at risk of losing their unemployment checks. That’s a human tragedy—hundreds of thousands of people will have no way to pay the bills. It’s also bad for business, since those people won’t have any money to buy things that businesses produce. It is, in short, short-sighted economic insanity.

The economy is supposed to work for everybody, not just the rich, not just bankers. For that to happen, politicians have to establish meaningful regulations to make sure finance works for the greater good– and safety nets to make sure that anyone who falls through the cracks doesn’t see her life prospects permanently diminished.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

By Zach Carter, Media Consortium Blogger

By proposing financial reforms that won't curb Wall Street excess, U.S. policymakers have offered an unacceptably weak response to our enormous financial crisis. If voters don't demand that their elected representatives help workers and consumers instead of simply boosting corporate profits, the economic downturn will last for several more years and leave the economy vulnerable to another bank-induced meltdown.

The banks have unbelievable lobbying clout. In an interview with Cenk Uyger of The Young Turks, Heather Booth,  executive director of Americans for Financial Reform, describes how one-sided the Wall Street reform fight has been. Despite broad public support for a fundamental financial overhaul, going up against the bank lobby is, as Booth describes, "a David and Goliath fight." It's basically Americans for Financial Reform against every major corporation in the U.S.

Booth notes that the Chamber of Commerce has vowed to spend $100 million on a campaign to defend the "so-called free enterprise system"--you know, the "free market"--in which corporate lobbyists spend millions of dollars to write the rules of the economic game. Just seven financial lobby groups have spent a massive $147 million peddling influence over the past two years.

In fact, as Janine Wedel observes for Salon, the U.S. economic system is starting to look an awful lot like the clannish systems of government that looted Eastern European countries in the early 1990s. Today, the public good takes a backseat to the narrow interests of powerful corporations.

With the Obama administration working with advisers from Citigroup and Goldman Sachs, we're not just watching Wall Street write its own regulations. We're watching the financial sector re-write the official role of the government in the economy. In this new role, the government's top priority is securing profits for corporate America.

"The intertwined coterie of financial and policy deciders in the United States is creating not only the financial architecture of the future, backed by the power and billions of the state, but, more generally, new relationships between the bureaucracy and the market," Wedel writes.

GRITtv's Laura Flanders echoes this theme in an interview with John Perkins, author of Confessions of an Economic Hit Man, and journalist Russ Baker. Lobbyists have so thoroughly hijacked the U.S. economy, Perkins argues, that the nation's government now resembles those of Latin American nations he worked with in the 1980s and 1990s.

"I don't think the U.S. president has much power these days, to be honest with you. . . . It's the big corporate executives who call the shots today, and let's face it, they financed Obama's campaign," Perkins says.

The very efforts the government deployed to save the financial system are being perverted to create another disaster. In a five-part interview with Paul Jay of The Real News, Jane D'Arista, an influential economist and author of The Evolution of U.S. Finance, explains how Wall Street destroyed itself over the past decade. By borrowing massive amounts of money, Wall Street was able to place bigger bets in the capital markets casino, resulting in huge profits when those bets paid off. But when the bets backfired, the losses were just as massive. Companies couldn't pay them off, so the government stepped in to support them.

One of those support mechanisms came from the Federal Reserve, which began making incredibly cheap loans to firms that engaged predominantly in speculative trading. The Fed used to lend exclusively to commercial banks, which used the money to make loans that helped grow the real economy. But now those loans are being used to support risky securities trading, so we're seeing big profits in the financial sector, without much help for workers and consumers. This is a major long-term problem--if the economy can't keep pace with the Wall Street casino, those speculative trades are going to backfire and we'll be right back to the chaos of September 2008, only with an even weaker economy.

All hope is not lost. As Perkins and Baker emphasize in their interview with Flanders, citizens have to demand corporate accountability and a government that actually serves the public good. For much of the past decade in Latin America, governments have been elected that stood up to major corporations and demanded that they stop pillaging their nation's resources at the people's expense.

In addition to demanding much stronger reforms for the financial sector, we have to demand that the government respond seriously to problems facing workers. With the unemployment rate at 10.2% and expected to go still higher, we need jobs. As Steve Benen notes for The Washington Monthly, Obama's economic stimulus package helped stave off total economic devastation. What we need now is another stimulus to get people back to work, not just slow the pace of job losses.

"A bold, ambitious jobs bill can make a huge difference--the stimulus got us out of the ditch, a new effort can get us going in the right direction again," Benen writes.

And the only argument against this plan is that we "can't afford it." That is--the government's fiscal deficit is too high, and we just can't spend money to help people in real economic trouble.

But as Christopher Hayes writes for The Nation, the deficit excuse is pretty pathetic. Economic stimulus bolsters economic growth, thus improving tax returns for the government in the future. And any spending on any project can be taken out of the budget from other measures. Hayes notes that our massive military spending is almost never included in discussions about "fiscal responsibility." If we were really worried about how much it would cost to fix the economy, we could stop spending so much money killing people.

"Fiscal conservatism and deficit concern is nearly always code speak in Washington for something else," Hayes writes. "Most often, when someone in Washington says they're concerned about the deficit, what they're really saying is, 'I would like to make sure we have a government that focuses maximally on blowing people up.'"

The government has to start saying 'no' to corporate America. Corporate profits are not the same thing as a strong economy. We need to demand an economic policy that answers to workers, not just bank balance sheets.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

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By Zach Carter, Media Consortium Blogger

Eight months after President Obama was sworn into office, the foreclosure epidemic is even more dire and no laws have been passed to rein in Wall Street. While Obama has helped cushion the nation's economic fall with a stimulus plan and other proactive measures, much more aggressive action is needed to protect workers and homeowners from reckless financiers.

In an a piece for The Nation, John Nichols dissects Obama's recent speech on the one-year anniversary of Lehman Brothers' bankruptcy. Obama praised the Bush administration's bank bailouts and advocated for regulatory reforms, because after eight months in office, we still haven't seen any new financial regulations. Quoting a recent New York Times article on the status of the federal budget deficit, Nichols notes:

"It is not programs that care for the children of immigrants or aid to poor countries that emptied the Treasury, and it is not the 'threat' of healthcare reform that worries serious economists. The federal government has become 'the guarantor against risk for investors large and small' while doing little to restrain CEO greed or to protect the citizens, consumers and communities that have been battered by banksters."

There are some signs of hope, however. Obama's decision to appoint Daniel Tarullo, a former assistant to President Bill Clinton on international economic policy,  to the Federal Reserve Board of Governors appears to be paying off--though its been sorely underreported in the mainstream press. Salon's Andrew Leonard highlights a Wall Street Journal story indicating that Tarullo is close to securing major restrictions on bank pay practices. That's extremely good news: blockbuster bonuses don't just fuel inequality. Bankers "earn" those paydays by taking on huge levels of risk so their companies can book short-term profits. Banks were literally rewarding their top managers and executives for sabotaging the global economy.

Unfortunately, Obama has also appointed deregulatory crisis-causers to major regulatory positions. The most recent outrage, as David Corn and Daniel Schulman detail for Mother Jones, is Republican Scott O'Malia's appointment as a Commissioner of the Commodity Futures Trading Commission (CFTC). The CFTC oversees a wide array of important trade activities, including much of the oil and energy market. O'Malia has a history of lobbying against regulation in these very markets. He spent years peddling political influence for an electricity company, Mirant, which has a history of stretching the law to profit at the public's expense. In 2003, the year after O'Malia left the company, Mirant paid about $500 million to settle charges that it illegally ripped off California citizens during the state's electricity crisis.

Presidents typically allow very few members on top regulatory panels to come from the opposite political party--the idea is to prevent independent regulatory agencies from becoming political hatchet teams. Unfortunately, Obama's other appointments have been questionable as well.

Obama appointed Gary Gensler Chairman of the CFTC earlier this year, despite his record as a leading advocate against the regulation of complex financial products called derivatives in the 1990s. Gensler won the battle on blocking derivatives regulation, a move which helped drive the global economy into a massive recession in less than a decade. Much of the problem has to do with their complexity. Many people who traded these products did not understand just how risky they were. And as former Lehman Brothers investment banker Sony Kapoor explains in an interview with Paul Jay of The Real News, this confusing complexity was intentional. By making new financial derivatives hard to understand, major Wall Street brokerages like Lehman and Goldman Sachs were able to overcharge for them.

Some derivatives enabled other destructive economic activities. Credit default swaps provided insurance against losses from loans. If a bank was worried that a loan would not be paid back, they could go to AIG and buy insurance. The bank would pay a modest monthly fee to AIG, and if the loan ever went bust, AIG would pay the bank the full value of the loan. The swaps actually encouraged reckless subprime lending. And while plenty of Wall Streeters failed to recognize the risk associated with derivatives, almost everybody knew that subprime lending was a disaster in the making. But since Wall Streeters didn't want to give up huge short-term profits associated with subprime lending, credit default swaps allowed them to have their cake and eat it too. Banks could book the outsized profits from subprime lending, but insure themselves against the inevitable losses by going to AIG for insurance. In effect, these crazy derivatives were actually fueling the subprime lending boom.

And the foreclosures spawned by exotic mortgages are nowhere near their peak. Laura Flanders of GRITtv interviews Rosemary Williams and Ann Patterson, two Minneapolis homeowners with adjustable-rate mortgages (ARMs) trying to fight off foreclosure. During the housing boom, banks pushed millions of borrowers into ARMs--loans that start with a low interest that resets higher after a few years--without worrying about whether they could afford the higher payments. Those loans are only beginning to reset now, with the vast majority scheduled to pinch pocketbooks over the next two years.

The government's support for citizens laid off as a result of the recession has not been generous. Obama fought hard to pass his economic stimulus package immediately after entering office, helping create some jobs and providing a very modest expansion of unemployment benefits to laid-off workers (I do mean modest--it's an extra $25 per week). But while the stimulus package helped slow the economic plunge, the private sector is not likely to start hiring new workers for years, as Roger Bybee notes for In These Times. The social cost of unemployment, Bybee emphasizes, is absolutely enormous. For every 1% increase in the unemployment rate that is sustained over six years, 47,000 people actually die, while prisons and mental hospitals are flooded with inmates and patients.

Congress would be happy to sweep financial regulation under the rug and pretend the problem has passed. Obama is capable of making good decisions on the economy, but he'll have to go to the mat for reform if we want any hope of fully recovering from the Bush era.

This post features links to the best independent, progressive reporting about the economy and is free to reprint. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

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By Zach Carter, TMC MediaWire Blogger

Low-wage workers are struggling to navigate the current recession. A new study conducted by a team of academics reveals that the majority of workers at the bottom of the economic ladder have been shorted on their paychecks as recently as last week. But the compensation crisis looks very different on Wall Street, where excessive pay tied to risky activities helped set the economy on its crash course. Despite the resulting deep recession, pay for high-level U.S. financiers remains over-the-top, even as low wage workers struggle to navigate the downturn.

The U.S. has made a few gestures toward scaling back executive compensation for banks that it bailed out under the Troubled Asset Relief Program, but the rules have amounted to little more than window-dressing, according to a paper published last week by the Institute for Policy Studies. The paper's authors, Sarah Anderson and Sam Pizzigati, found that ten of the 20 largest bailout banks have reported stock option compensation for 2009, and the top five executives at those companies have scored a full $90 million so far this year. That's just through stock options. The number gets even more obscene if you include bonuses, salary and other payouts.

As Anderson and Pizzigati explain in a companion piece published in AlterNet, bank executives collected huge bonuses based on the profits from subprime loans during the housing bubble. Since subprime mortgages were more expensive than traditional loans, profits were high--until borrowers stopped being able to pay back their predatory, unaffordable debt. Suddenly the banks were all busted, but the executives had already made a killing.

Katrina vanden Huevel emphasizes in The Nation that the U.S. government doesn't even try to tax this kind of income, much less regulate its connection to risk-taking. Billions of dollars in tax revenue are lost each year as financiers hide payouts in offshore tax havens, while on-the-books income from financial activities are taxed at arbitrarily low rates. Capital gains like stock price increases, for instance, are taxed at just 15%, while income from an ordinary paycheck is taxed at 35% for the wealthiest individuals.

While the U.S. dallies on executive pay, key leaders in Europe are moving to rein in risky compensation practices in the financial sector, as detailed in this video report over at The Real News. President Barack Obama will meet with U.K. Prime Minister Gordon Brown, French President Nicholas Sarkozy, German Chancellor Angela Merkel and other leaders of the G-20 in Pittsburgh later this month, and financial regulatory reform will be at the top of the agenda.

For ordinary workers, there are few positive signs in the current economy. The Washington Monthly's Steve Benen dissects the latest batch of unemployment numbers from the Labor Department. The good news is that the overall pace of layoffs seems to be abating. The bad news? The U.S. still lost a whopping 216,000 jobs in August. And broader measures of workplace woe are even worse. The unemployment rate does not include discouraged workers who have stopped looking for a job, and it doesn't include those who want to work full-time but have to settle for part-time employment. That statistic actually declined slightly in July, giving some economists cause for optimism. But the metric soared again in August, reaching the highest level on record.

And unemployment is not the only problem workers face. Both Tim Fernholz of The American Prospect and Elizabeth Palmberg of Sojourners highlight a New York Times story by labor reporter Steven Greenhouse, which details how low-wage workers are routinely cheated by their employers. According to a recent study, a full 68% of these workers report having experienced an illegal workplace abuse in the past week, such as being denied overtime pay or being required to work for less than minimum wage. On average, workers lost 15% of their weekly income as a result of this exploitation.

We have good laws to protect workers, but they just aren't being enforced. Companies have successfully intimidated their employees into not reporting blatantly illegal pay practices. The best way to resolve this situation is to expand unionization and give workers a stronger voice in the workplace, making it safe to speak out against abuses. And the best way to expand unionization is to enact the Employee Free Choice Act, which lowers barriers to creating a union. But the legislative process has been delayed by a smear campaign organized by executives and managers claiming that unions, and not corporate elites, are the actual source of workplace coercion.

"It ought to make your blood boil--especially as people decry union thugs 'intimidating' people into joining unions when that doesn't happen and most workers want to join a union," Fernholz writes.

The U.S. needs to get its economic priorities in order. We should be protecting low-wage workers from executive excess, not the other way around. President Obama will have an opportunity to coordinate that effort globally at the G-20 summit later this month. Let's hope he doesn't squander it.

This post features links to the best independent, progressive reporting about the economy and is free to reprint. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

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By Zach Carter, TMC MediaWire Blogger

After Ben Bernanke allowed an $8 trillion housing bubble to ravage the global economy and nearly destroy the U.S. financial system, President Barack Obama has decided he deserves another term as Chairman of the Federal Reserve. (The UpTake has video of Obama's announcement here.) As the Fed Chair, Bernanke has more economic power than any other person on the planet. By heading the committee that sets interest rates, he can control the economy's rate of growth or contraction; as head regulator of the largest banks, Bernanke has more influence over the rules of the economic game than anyone else.

Why is the Bernanke reappointment a mistake? Matthew Rothschild of The Progressive turns to Sen. Bernie Sanders, an independent democratic socialist from Vermont. Put simply, Bernanke is completely culpable for allowing an economic crisis to foment.

"Like the rest of the Bush administration, he was asleep at the wheel during this period and did nothing to move our financial system onto safer grounds," Sanders said.

Corporate media generally neglects to mention Bernanke's role at the Fed prior to 2008, and instead credits him with stopping a second Great Depression. It's true that the Fed has done everything possible to keep Wall Street from imploding, but Bernanke also repeatedly insisted that the subprime mortgage crisis would be "contained" as late as 2007 and made no plans for a situation that might prove worse than his rosy forecasts.

As William Greider explains for The Nation, it's a bit too soon to celebrate our economic salvation at Bernanke's hands. Small banks are failing at an alarming rate, job losses remain heavy and households are being squeezed by plummeting property values and growing credit card debt.

Greider emphasizes that Bernanke repeatedly bailed out financial giants without demanding anything in return, which bodes poorly for any future economic crisis. Kenneth Lewis remains Bank of America's CEO, even though the company has needed $45 billion in taxpayer funds to date, and high-level Fed officials think Lewis may be guilty of securities fraud. On the one bailout where the Fed did assume ownership of the company and discharge it's top-level management, AIG, the deal was structured to funnel no-strings-attached money to other Wall Street companies. Goldman Sachs raked in $12.9 billion from the arrangement. It's one thing to funnel money to financial firms in the name of economic necessity. It's quite another to allow executives at those companies to be paid like princes and subsidize their shareholders.

As economist James K. Galbraith discusses in a piece for The Washington Monthly, it's not clear if Bernanke and Co. actually saved the economy. Even if the financial system gets back to normal functioning, that stability has been purchased with massive taxpayer support. In order to do just about anything involving finance in the United States, a company now needs a very explicit government seal of approval to convince investors that they're safe to do business with. Just ask Colonial Bank, which failed earlier this summer after being denied bailout funds under the Troubled Asset Relief Program.

But there has been secret support as well. Bernanke's Fed committed over $2 trillion in emergency loans to keep the financial system from collapsing during the crisis, and has refused to tell the public who got the money, and on what terms. We don't know who we saved, or at what the consequences of this massive bank support operation will be. Bernanke always believed that rescuing Wall Street would prevent major damage to the broader economy, but Galbraith questions whether the economy would be stronger if policymakers had focused more on direct aid to workers and homeowners, including an earlier, more robust economic stimulus package.

"Perhaps the right thing would have been less focus on saving banks, and much more on saving jobs, families, and homes."

Writing for In These Times, Roger Bybee profiles a new group called Americans for Financial Reform, which is  pushing for changes on Wall Street and fighting against business-as-usual at the Fed. The bank lobby is probably the most powerful interest group on Capitol Hill. Unfortunately, there hasn't been a strong and consistent voice urging lawmakers to protect the entire economy, rather than the banks. The very structure of the Fed makes it more responsive to Wall Street interests than those of the general public. Private-sector banks like Citigroup and Bank of America are shareholders in each of the Fed's regional branches, while private-sector bank executives sit on the board of directors at each branch. Since the boards get to name the regional presidents, private-sector bank CEOs are given major power to name their own regulators. Regional presidents also rotate through positions on the Fed's monetary policy board, making decisions to set interest rates.

The Fed's institutional structure, and its reliance on mainstream economists overly acquiescent to the financial sector has helped fuel the boom-and-bust bubble economy, as the Real News explains in this video piece.

In addition to the turmoil surrounding the Bernanke appointment, the recent budget deficit projections have been receiving a lot of attention lately. By throwing around a lot of big numbers that end in "trillion," deficit hawks have created the impression of crisis where none exists. The government will have a $1.6 trillion shortfall this year, equal to about 11% of the U.S. economy. That's the highest such number since the U.S. economy started to soar in the years after World War II, high enough to mobilize CNBC pundits to warn of financial apocalypse and a bankrupt U.S. government.

But as Robert Reich notes for Salon, it's not really worth getting too worked up over the current deficit projections. In a recession, countries want to run a deficit: the government needs to fill hole created by the drop-off in private-sector economic activity. If the U.S. doesn't run a big deficit, it will shed millions of additional jobs. And the country is nowhere near losing control of its currency. The federal debt stands at about 54% of our economic output right now, and is projected to reach 68% by 2019. But Reich notes that in 1945, the number was far higher: 120%. This number shrank dramatically over the next few years, not because of draconian cuts to government programs, but because the economy grew so much that the debt burden became less severe. We are nowhere near a crisis with the budget that compares to the current unemployment crisis, so pulling back spending right now doesn't make much sense.

Bernanke has always argued that the Fed chair's only duty is to control inflation. But managing the economy means not only attending to inflation, but making sure the true engine of economic growth--financially secure households--isn't sacrificed to the short-term interests of a few Wall Street elites. Bernanke failed to block that economic predation early in his tenure as Fed Chairman. If Bernanke is going to be with us for another four years, President Obama needs to find other ways to restore our economic balance.

This post features links to the best independent, progressive reporting about the economy and is free to reprint. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

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