If we put women back to work, lifted them out of poverty, and funded social services they rely on, fewer women would turn to abortion.

It seems the cat’s finally out of the bag these days: conservatives aren’t just concerned with saving the babies from abortions when it comes to reproductive rights. They are now outspoken about being against access to contraception — and some of them have even come out against non-procreative sex. Women’s rights activists have long warned that they were coming for our birth control; now it’s hard to deny they were right all along.

One big clue this whole time has been a simple fact: if conservatives are so hell-bent on preventing abortions, one of the best things they can do is support family planning services and access to contraception. Yet the last time we saw an openly pro-family planning Republican was the ’80s, when George H.W. Bush was in office. Meanwhile, all Republican 2012 candidates have signed personhood pledges that endanger many forms of contraception, Santorum himself has said birth control is bad, and I’ve lost track of how many times Republicans have tried to defund Planned Parenthood, which supplies contraception to low-income women. But as Irin Carmon laid out, the connection between increasing access to contraception and lowering abortion rates is very clear.

There’s another clue that this isn’t about saving the babies. It’s the blind eye conservatives have turned to the economic factors that are leading more women to turn to abortion. A new report, “Abortionomics: When Choice is a Necessity,” shows that “lower incomes and rising unemployment are affecting Americans’ choices about pregnancies,” and in the recession abortion rates, particularly among poor women, are on the rise. Stephanie Poggi of the National Network of Abortion Funds says, “A lot of women are… telling us, ‘I’ve already put off paying my rent, my electric bill; I’m cutting back on my food.’ They’ve run through all the options.” In lean times, a child can seem like an overwhelming expense.

It’s not terribly shocking that when incomes are strapped, millions are out of a job, and many are falling into poverty, women are thinking twice about having a child. Raising a kid in this country is not a cheap undertaking. For a two-parent couple making under $57,600, the USDA estimates the costs of raising a young child to be $10,950 a year. The total cost of taking care of that child until he or she turns 18 averaged $226,920 in 2010, up nearly 40 percent over the last decade. As one woman in the report puts it, “I totally cannot afford another child. I knew immediately [upon learning about her pregnancy] what I had to do.”

Those without a job don’t have the income to cover these kinds of expenses. Over 12 million people are unemployed right now; almost 6 million of those are women. One unemployed woman in the report who chose abortion says, “At this time I am not working and neither is my partner… We are unable to support a child under our present circumstances.” If Republicans are concerned about reversing the rise in abortion rates, they need to focus on putting people back to work making decent pay. Putting women to work in large part means spending money at the state level to keep them on public payrolls.

But even after women are back at work, we still have to wrestle with a big factor: the high number of women living in poverty who seek abortions. One study found that 69 percent of women having abortions in 2008 made incomes lower than 200 percent of the poverty line, while women in that income category make up only 35 percent of the overall population. In fact, the report says, “while abortion rates generally have declined over the last 20 years…rates have increased among low-income women.” And a lot of women have been falling into that category lately. Recent Census numbers show that women’s poverty rate rose to 14.5 percent in 2010, the highest since 1993. Their “extreme poverty rate” — those whose income is less than half of the federal poverty line — is at 6.3 percent, the highest on record.

The link between addressing poverty and lowering the abortion rate may be uncomfortable for conservatives like Mitt “I don’t care about the very poor” Romney, but it’s one of the most important factors. As the report notes, “low income women often have difficulty affording preventive contraception and sometimes address this problem by reducing frequency or dosage use, thereby increasing the risk of unintended pregnancy in the group most likely to decide they are unable to afford to support an additional dependent.”

And lastly, the point conservatives may enjoy the least: we need to increase spending on social services. As the report puts it, “As funding for social services declines, more women may be expected to determine that economic constraints make abortion the only viable option.” The report is mostly talking about services that provide access to contraception. But there are other services that we’re cutting back on that will impact the decision to have a child. For example, 37 states pulled back on child care support in 2010 due to tight budgets. Yet the average cost of full-time care ranges from $3,600 to $18,200 annually. That’s a huge part of the cost of raising a child, but we’re giving parents less support to pay for it.

Women choose to terminate pregnancies for all sorts of reasons and should be able to access abortion care when they do. Tight budgets aren’t the only reason to choose not to have a child. But economic factors that prevent families from having children should be high on conservatives’ list. If we ease those families’ financial situations, they may not have to turn to terminating a pregnancy. But instead conservatives are fighting access to contraceptives, cutting off funding for services that would make life easier for women living in poverty, and blocking job creation policies.

Bryce Covert is Editor of New Deal 2.0.

Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Instead of spending the money to train new teachers, we could focus on putting laid off teachers back to work and keeping them there by paying them better.

News came out today that President Obama is announcing a new plan to spend $100 million on training 100,000 new teachers over the next decade. Responding to a call from American businesses to provide more high-skilled workers, Obama’s plan will focus on training more STEM teachers — aka those teaching science, technology, engineering, and math.

Spending more money on education is a healthy priority, but is this the right tactic? The plan seems to presuppose that there is a dearth of teachers right now. Yet the opposite is true — we’ve been laying them off in droves in response to tight state and local budgets. So there is a whole pool of people that we could put back to work doing what they already want to do. The number of jobs in “local government education” — in other words, elementary school teachers — has been falling steadily since February 2008, according to the BLS. We’ve lost 217,900 of those jobs since then, and things aren’t getting much better, even with seemingly good signs in the latest jobs report. Those education jobs were down 9.6 percent since December.

So rather than enticing and training a new army of teachers, perhaps we could start by putting the ones we’ve already got back to work. It would likely be a lighter lift to retrain them. And it would help ease the ongoing womancession.

But this plan also misses a larger problem: that we lose teaching talent because we don’t value the profession enough. If you’re educated in STEM, which some report pays 87 percent higher than the average private sector job, why would you go into teaching, an under-paid and under-appreciated field?

This is a serious problem for our education system. A report from McGraw-Hill lays out some recommendations on how the U.S. can take on the fact that its butt is being kicked on global test scores. The numbers are pretty embarrassing: on average, American students came in 15th in reading, 19th in science, and 27th in math. So what was the report’s number one recommendation for changing those figures? Raise the status of the teaching profession. The report notes that the countries with the top scores are also those that typically pay teachers better. In fact, our high school teachers work longer than other countries, yet we spend less on teacher salaries than the average OECD country. This is a big reason that nearly 50 percent of new teachers leave the profession within the first five years, according to a 2005 NEA report. Their reasons for leaving were poor pay and poor working conditions.

I applaud the idea of spending $100 million on education, particularly in a “recovery” period still taking a heavy toll on those working in that sector. But there may be much better uses for the money, and in all reality we need a much larger sum to make real change in our education system. We do need to recruit more people to the teaching profession. If we help people stay in those jobs by firstly employing them and then paying them what they deserve, we may take care of the problem.

Bryce Covert is Editor of New Deal 2.0.

Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Budget cuts for police departments and court systems mean justice won’t be handed out evenly — or at all.

We can all recite the opening of Law and Order. “In the criminal justice system, the people are represented by two separate yet equally important groups: the police, who investigate crime; and the district attorneys, who prosecute the offenders.” As much as the show gets wrong about the real world, this narration gets it right: it takes both law and order (i.e. police and court systems) to serve justice to the people. Yet neither of those services is free. We are officially in an age of austerity and our justice system isn’t immune to the ravages of budget cutting. We’re getting justice on the cheap, and like that electric blanket you bought at the dollar store, it’s just not functioning correctly.

It’s no secret that state budgets have been hit hard by the recession and that the stimulus money that helped patch the holes is mostly gone. Public employees have been in the spotlight as they’ve been laid off and their bargaining rights have come under attack in response to the financial crunch. On the order side of the justice equation, police departments are no exception to the squeeze. By the end of 2011, 12,000 police officers were expected to have lost their jobs. That drop would be the first job decline in law enforcement in 25 years. This is just a sign of larger financial troubles. As a Justice Department report on the situation put it, it is “no longer a fiscal possibility” for governments to allocate half of their budgets to public safety. “The economic decline has severely affected law enforcement agencies’ operating budgets across the nation,” it states, leading to over one third of departments in a survey to report budget drops of more than 5 percent since 2009.

This has a real impact on our police force’s ability to prevent and respond to crimes. About half of the agencies that responded to a recent survey said budget cuts had or would cause changes in the services provided to their communities. That includes 8 percent of the departments that are no longer responding to any car thefts and 9 percent of departments that are no longer responding to any burglar alarms. At all.

But that doesn’t mean all crimes go unpunished. While offenses like theft, beatings, and even domestic abuse are falling to the wayside, drug enforcement is keeping apace. There were around 50,000 people arrested for marijuana possession in New York City last year, but an expose by the Village Voice showed NYPD officers were encouraged to downgrade or ignore other crimes. Part of this is due to the pressure of reporting lower violent crime rates, but there is also a monetary motive at work. Drug arrests bring in money in a variety of ways, but perhaps the most direct incentive is the competition among police departments across the country for federal anti-drug grants. As the Huffington Post reports, “The more arrests and drug seizures a department can claim, the stronger its application for those grants.” It also reports, “police can seize property from people merely suspected of drug crimes,” and most of the cash from those assets goes back to the department.

This is likely why the percentage of homicides solved by police in Chicago dropped from 70 percent since 1991 to under 40 percent, yet the overall number of drug arrests increased 264 percent between 1980 and 2003. The need to go after the money distorts which cases get solved and which suspects get pursued — and that will only get worse if budgets continue to be crunched.

Things aren’t much prettier back on the other side. Even if the police do pursue your case, once you’re in court you may not find you can take it much further. A report by the American Bar Association, “Crisis in the Courts: Defining the Problem,” blames cuts in funding. “The failure of state and local legislatures to provide adequate funding is effectively — at times quite literally — closing the doors of our justice system,” it says. This has led to “hiring freezes, pay cuts, judicial furloughs, staff layoffs, early retirements, increased filing fees, and outright closures.”

The cuts have had a real impact. Fourteen state court systems have had to shorten their hours or even the number of days they’re open. Twenty-two have tried to offset the cuts by increasing filing fees and/or fines. Fourteen states have laid of staff entirely. Not to mention the furloughs and pay freezes that can’t be motivating judges and clerks to perform their jobs to the utmost of their capabilities. All of these dysfunctions have meant that states face the dilemma of putting untried defendants in local jails or releasing potentially violent offenders because further pre-trial detention is either “constitutionally impermissible or practically impossible.”

Cuts to our court systems don’t just mean distorted justice; they are also the definition of penny wise but pound foolish. Fully funding a court usually makes up about only 1 to 2 percent of a state and local budgets. Yet the costs of court-related delays in foreclosure cases in Florida alone have been estimated to be almost $10 billion. With the soaring caseload continuing to roll in from the foreclosure crisis alone, it makes no sense to be cutting back on our justice system.

One sure way to deny equal justice to the citizens of this country is to continue starving police departments and court systems of funding. If we’d rather continue our history of blind justice for all, we’ll have to get much smarter about what we shield from the budget cutting axe.

Bryce Covert is Editor of New Deal 2.0.

Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Women make up half the workforce, get degrees in droves, and have their own careers. So it’s little wonder that a role that requires women give that all up is an awkward fit.

As long as there have been presidents in this country, there have been first ladies at their side. The role is traditionally to act as a homemaker and hostess, tending to the family and the White House. This was the purview of middle and upper class wives, after all. But now that we live in an era where women represent almost half of the workforce, pursuing independent careers and even sometimes acting as the breadwinner for their families, we’re still playing catch up. The role of first lady in particular continues to be murky and old-fashioned. Not elected, yet married to the most powerful man in the country. Highly influential, yet often resented for using that influence. And above all, educated and often professionally successful, yet expected to give up their careers. It’s an anachronistic role that has fossilized an older ideal of womanhood and wifeliness. And it traps many smart women. Enter Michelle Obama.

When Michelle Obama entered the White House, I was hopeful that we would see a return to the model of a strong first lady who stakes out an agenda. After all, she’s a Harvard-trained lawyer who had a career of her own. But I quickly became impatient. Mrs. Obama — or advisers — seemed more interested in preserving her sky-high poll numbers than giving her an aggressive agenda. She tackled obesity — but never touched agriculture policy or our health care system. She reached out to military families — but said nothing about our need to bring troops home.

I held her in contrast to Eleanor Roosevelt, who had tremendous influence on the White House and the country. But in an excerpt from her new book The Obamas, Jodi Kantor shows there may be more similarities between the two than I had been giving credit for. Kantor’s interviews “show that [Obama] has been an unrecognized force in her husband’s administration and that her story has been one first of struggle, then turnaround and greater fulfillment.” Something similar could be said about Eleanor Roosevelt, except perhaps the part about going unrecognized. Both women, successful professionally, struggled with their roles in the White House when they first arrived. Yet it seems that Obama may be starting to follow a trajectory similar to Roosevelt’s — exerting her influence over her husband’s administration and beginning to find her place. As well she should. The role makes little sense given the changes to our workforce, and smart, powerful women must make it their own.

Both women faced their coming roles with anxiety after their husbands won the election. As Kantor reports, “Even as Mrs. Obama dazzled Americans with her warmth, glamour and hospitality early in the presidency, she was also deeply frustrated and insecure about her place in the White House.” Nothing could be truer of how Eleanor Roosevelt felt about her coming duties. As Blanche Wiesen Cook wrote in her biography Eleanor Roosevelt, “After the election of November 1932, ER worried that her talents would not be used; that she would become a shut-in, a congenial hostess in the political shadows politically sidelined.” Obama tried to delay moving to the White House; Roosevelt went further and allegedly told friends she would run away with FDR’s bodyguard, Earl Miller.

This ambiguous and potentially confining role came for both women after highly successful careers that they were asked to drop upon taking up residence in the White House. Cook writes that Roosevelt “enjoyed many careers and was all in a day teacher, editor, columnist, and radio commentator” before the presidency. This was in the ’30s, before World War II opened the floodgates for women to enter the workforce, but it was a sign of changing times.

Obama was, of course, a Harvard-trained, practicing lawyer. She exemplifies the high numbers of women seeking higher education today and moving (albeit slowly) into male-dominated professions. Obama, unsurprisingly, at first chafed at the change: as Kantor writes, “A Harvard-trained lawyer, she had given up her career for what initially seemed to her a shapeless post, and she tried to wriggle out of some ceremonial events that she saw as not having much purpose.” Roosevelt also at first obliged grudgingly — although later on went back to work as a unionized reporter, among other roles.

Both of these stories display the inherent contradictions first ladies face. Both women were/are smart and successful, yet were/are supposed to give up all public roles, become the country’s hostess, and stand by their man. It’s little wonder that upon entering, Obama told her aides she

never wanted to be the kind of first lady who interfered with West Wing business… It was her husband’s administration, not hers, she sometimes said. She had little appetite or expertise for policy detail, and she knew the history of first ladies — like Nancy Reagan and Mrs. Clinton — who had been deemed meddlers, unelected figures who wielded unearned power.

That’s what tradition dictates. But it goes against her intelligence and skills. Once in, she told her advisers she “wanted a more central role in communicating the administration’s message,” particularly in selling health care reform. West Wing advisers declined, haunted by the ghost of Hillary Clinton past.

It’s taken some time to adjust, but it looks like Obama is warming to the fact that she can make this role what she wants. Kantor writes that later on, “Michelle Obama’s trajectory in the White House was changing. She was mastering and subtly redefining the role that had once seemed formless to her, and becoming more acclimated to her new life.”

For starters, she’s begun to play a similar role within the administration that Roosevelt did: keeper of her husband’s conscience. The role of the West Wing advisors is often to figure out what deal is possible; these first ladies look for what deal is the right one. Cook wrote of Roosevelt, “FDR liked to boast that he was a “practical politician.” He knew how to compromise, make deals, be duplicitous. ER understood the nature of the game, but wanted some assurance that it would be played for the right reasons, the most needful causes.” Obama similarly, as it would seem from Kantor’s article, butted heads with advisers because she “cherished the idea of her husband as a transformational figure” and “she saw herself as a guardian of values.”

The idea that women are no longer confined to the kitchen and tending to children still makes some people queasy. But it’s been our reality for half a century. Our policies still haven’t caught up, and the role of first lady is perhaps even more outdated. Here’s hoping that Michelle Obama is allowed to take control of it, make it her own, and influence this country for the better.

Bryce Covert is Editor of New Deal 2.0.

Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Supporting family planning saves the government and low-income women money. The GOP should be challenged when it threatens to take that support away.

People tend to want to split debates along the line between economic issues and social ones. But that line isn’t always so easy to demarcate. Case in point: Contraception was a big item on the agenda at the first of two GOP debates this weekend, but many commentators were impatient for questions about the economy. Yet questions about women’s access to contraception have everything to do with the economy, and not just for the women who use it.

Investing in contraception access makes sense for the economy at large, particularly in an age of austerity. Globally, every dollar spent on contraceptive services saves $1.40 in maternal and newborn health care costs by helping prevent unintended pregnancies. More specifically, every dollar invested in contraceptive access saves $4.02 in Medicaid expenditures that would have gone to pregnancy-related care. But there’s still room to save more — half of all pregnancies in the U.S. each year are unintended, and those who consistently and correctly use contraception make up only 5 percent of unintended pregnancies, leaving the rest to many who can’t get what they need.

Access to contraception is also a class issue, and the class divide in unwanted pregnancies is growing. When Republicans threaten to defund Planned Parenthood or Title X funding, which subsidizes family planning services, they threaten to make it more difficult — or impossible — for low-income women to get the contraception they need. It’s a dire need that affects almost all women: virtually all those aged 15-44 who have ever had sex have used at least one method. The typical woman has to use contraceptives for about 30 years to achieve the number of children she wishes to have. And 43 million women — seven in 10 — are sexually active but don’t want to get pregnant. Hard to do without contraception.

Over 7 million of those women get contraception from publicly funded family planning clinics, and many will have nowhere else to turn if those clinics are defunded. One-quarter of all poor women who obtain contraceptive services each year do so at a place that gets Title X funding. Many of them likely do so because they have no insurance — four in 10 women of reproductive age don’t. This is part of why Title X-supported centers saved taxpayers $3.4 billion in 2008, or $3.74 for every dollar spent on contraceptive care, by helping these women avoid unwanted pregnancies. If these centers shut down, low-income women without coverage are hit first and hardest. They’re left with no other options.

But even women who are lucky enough to have health insurance may not be able to afford contraception. Many can’t afford the high co-pays. Contraception often requires a prescription, yet one in five health care providers report that most clients seeking contraception struggle to pay for the necessary doctor’s visit.

None of this is to dismiss the excruciating levels of unemployment we’re currently experiencing or the miserably low rates of economic growth. The GOP candidates better have something to say about how to fix the economy and put people back to work. But when they also have extreme views about whether women should be allowed or able to access contraception, it’s no small point for them or the economy at large. They’re making an economic move when they threaten to curtail access.

Bryce Covert is Editor of New Deal 2.0.

Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

The latest budget deal cuts Pell Grants, one more blow to the old system that helped students pay for college directly.

It’s no secret that college graduates are struggling under huge debt loads. The overall debt owed is set to hit $1 trillion this year.

Rising debt loads are fueled by two simultaneous trends: soaring tuition and falling assistance. As James Surowiecki writes, “Since the late nineteen-seventies, annual costs at four-year colleges have risen three times as fast as inflation.” And the days when a college education could be financed through government assistance like the GI Bill or Pell Grants are quickly disappearing. Grants used to cover two-thirds of financing an education. Now two-thirds of college financing comes from loans.

In the face of these pressures facing graduates, the government might be expected to offer more assistance. And Obama announced an executive order in October that tries to ease burdens. It allows grads to cap repayments on their federal loans at 10 percent of their discretionary income come January (which is two years before it was already set to happen). After 20 years, all the remaining debt on those loans would be forgiven — five years earlier than it would have been without his order. On top of this, some borrowers with more than one federal loan can consolidate them, which could reduce their interest rates (slightly). But even that most immediate impact, consolidating loans, is only likely to save the average borrower between $4.50 and $7.75 a month, a barely noticeable sum.

Now news came out this week that the last-minute budget deal to fund the government and avert a shut down included cuts to Pell Grants. The maximum grant will be preserved at $5,550, but changes to the eligibility criteria will make as many as 100,000 recipients ineligible. The maximum amount a family can earn without contributing anything toward tuition will drop from $30,000 to $23,000. It also retroactively limits the number of semesters that a student can use grants, from 18 to 12. In sum, these changes will mean less money for fewer people to pay for a college education.

Even as the government has shifted further and further away from directly subsidizing higher education — i.e. giving out money that doesn’t have to be paid back — it is still subsidizing education costs. It just does so through multiple tax breaks for student loans, which are far less visible to the average American. And the cost of these tax code subsidies isn’t cheap. As my colleague Mike Konczal notes, the government shells out about “$22.75 billion… through the tax code to make college tuition and student debt more manageable.” This means that in order to finance an education, the government is basically assuming students and their families will take on huge debt burdens.

Compare that number to the total cost of the Pell Grant program. It cost the government $36.5 billion in 2010. While that’s a larger sum, the government is still shelling out both amounts — but only looking to cut money from the aid that doesn’t entail students miring themselves in debt.

Those tax subsidies should also be compared to what it would cost the government to simply provide free public higher education: by Mike’s estimate, $15-$30 billion. If the government is looking to save money, it could do worse than shifting funds lost to tax breaks that subsidize indenture to giving out aid directly through either grants or simply free public ed. In fact, if it no longer had to lose money through tax breaks or pay out money for Pell Grants, the savings of free public colleges could be pretty nice.

Because this debt does have a real life impact on the students who carry it. As I’ve written before, research shows that higher debt loads narrow the career choices students make upon graduation. By cutting down on direct aid and therefore pushing more students toward debt, the government is complicit in Wall Street’s brain drain. And this debt can hang over them for an entire lifetime. Almost 10 percent of people ages 55-64 still have student loan debt. The bankruptcy code doesn’t allow this type of debt to be discharged.

As unemployment rates and income levels make clear, a college education is an important asset. The government has choices it can make in how it helps people finance those educations. One path leads to debt loads that skew students’ life courses. Why would we choose that one?

Bryce Covert is Editor of New Deal 2.0.

Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

As states pull back on support for childcare services, single mothers will have an even harder time building wealth and staying out of debt.

Single mothers aren’t faring very well in the recovery. Their unemployment rate was 12.4 percent in November, up from 11.7 percent in June 2009. An unemployed single mother will clearly need help with at least one thing to go out and get another job: childcare. And those who have jobs are still trying to make ends meet, potentially working longer hours and in need of someone to care for their children. But just as the need for childcare assistance is surely rising, states are cutting back. A new report from the National Women’s Law Center shows that those in need of assistance were worse off this year compared to last year in 37 states when it came to income eligibility limits to qualify, waiting lists, copayments, reimbursement rates, and eligibility for assistance to parents looking for a job.

Denying women support for childcare will directly impact their ability to save and their need to take on debt. As a report from NYU Wagner, “At Rope’s End,” says, “The hefty costs associated with single parenthood, which include childcare, housing, food, health insurance, among others, decrease the likelihood that, even with a stable income, these mothers will be able to accrue wealth.” And paying for childcare is no small cost. The average price of full-time care can range from $3,600 to $18,200 annually, according to the NWLC report, and At Rope’s End estimates that this cost accounts for over three-quarters of single mothers’ monthly expenditures.

The effects can be seen in single women’s wealth building and debt loads. Wealth is measured by subtracting total debt from total assets; single mothers have a median wealth of only $100. Meanwhile, over three-fourths of single mothers have some kind of debt, and the most common form is credit card debt. Almost half of single mothers — 47 percent — have that type of debt, and the median amount is $1,200. When childcare takes up three-quarters of your budget, the other expenses likely have to be put on plastic to make ends meet.

And of course credit card debt can quickly become an expense in and of itself. While about a quarter of single mothers have debt related to education and about 30 percent have debt to own homes, the interest rates are quite different. The 30-year fixed mortgage rate is at a record low of 3.94 percent. The interest rate on federal Stafford student loans is 6.8 percent and is 7.9 percent for PLUS loans. Compare that to the average credit card interest rate, 16.75 percent. Any revolving balance left on a credit card will quickly increase the amount of money owed. Not to mention that while student and home debt is certainly a heavy burden on many right now, they at least go toward paying for a potential asset. Credit card debt gets you nothing.

Childcare assistance is not just about the need to support young children’s development, or about helping unemployed single mothers get back to work, or making sure employers have female employees who are able to show up at work. Those are all issues. But it’s also about keeping single mothers out of debt and helping them build the wealth they need to provide for their families.

Bryce Covert is Editor of New Deal 2.0.

Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

If banks want to threaten capital strikes, the government should fight back by putting people to work and taking power away from banks.

Last week, Massachusetts Attorney General Martha Coakley announced she would be suing the five biggest mortgage servicers over robo-signing. The very next day, GMAC Mortgage said it would withdraw most of its lending in the state. It offered up the excuse that “recent developments have led mortgage lending in Massachusetts to no longer be viable.” What recent developments would those be? Asking mortgage companies to adhere to the rule of law?

This could be called, as Matt Stoller was quick to point out, a capital strike — a lender refusing to lend in protest of government policy. A capital strike is a theoretical situation in which lenders decide to shut down the economy by refusing to invest and hire workers in reaction to government intervention that forces them to make bad business decisions. Sound familiar? While banks saw their profits rise to $29 billion in the first three months of 2011, a 66.5 percent increase over the same period last year, the loans they gave out declined at the end of 2010 and hiring has been sluggish. They’re not investing and hiring.

Wall Street is not in all probability actually on a capital strike. Besides the fact that the idea of all the firms getting together and executing an organized action is far-fetched, the reason they’re not investing and hiring is because the economy (and therefore demand) sucks, not because the government hasn’t given them enough backrubs. While the term “capital strike” used to be thrown around on the far left, the John Boehners of the world are now using it as a threat against enacting any government policy that might hurt the business sector’s feelings. The idea is that if the government enacts too many regulations, raises taxes too high, and otherwise does things that business doesn’t like, we risk them shutting down the economy.

Capital doesn’t have a great reason to be on strike. Think times are bad? Firms are making a third more profit than they did before the recession. Feel overburdened by regulation? Only the large corporations are worried about new regulations — small businesses aren’t feeling affected. Taxes got you down? Taxes on corporate earnings are at a 60-year low.

So besides GMAC’s targeted action, it’s highly unlikely that Wall Street has gotten together and decided to strike against the government. What’s more likely, as Peter Frase suggests at Jacobin, is that the threat of a strike is having the same effect:

[J]ust as in a labor strike, sometimes you don’t actually have to go out on the picket line: you just have to convince the other side that you’re ready and willing to strike. Just as a union might use a strike authorization vote to increase its leverage at the bargaining table, so the right’s economic propaganda is designed to tilt the political playing field away from labor and toward capital.

This is what John Boehner claims to be so worried about and what makes so many inveigh against Obama’s supposedly anti-business policies. If we don’t placate Wall Street, it’ll shut down the whole economy! Do what it wants so that no one gets hurt!

But as Frase points out, just because a group goes on strike — be it labor or capital — doesn’t mean we have to give in to their demands. When workers strike, management can either negotiate or try to break the strike. So if we follow the capital strike logic and assume that capital is threatening a strike (whether or not it would really do so), the government, as management, has the choice to negotiate or break the strike.

Wall Street got us in this mess. Why should we give in to its threat to strike? Instead, the government can break it — and the best way would be for it to spend money in pursuit of full employment. It would seem on first glance that full employment would be in the best interest of the banks: employed people can spend more money on goods, increasing demand, greasing the wheels of the economy and therefore profits. Yet we can look back to the 1930s and 40s to understand why full employment could be the best tool for breaking capital’s grip on our politics.

FDR also faced a slowdown in investment and called it a capital strike meant to take down his presidency and the New Deal. Roosevelt’s Assistant Attorney General Robert Jackson himself said the slowdown in investment was a “general strike — the first general strike in America — a strike against the government — a strike to coerce political action.” The New Deal was a concerted effort to get people back to work. Why was capital so dead-set against it? In 1943, economist Michal Kalecki asked the same question: “The entrepreneurs in the slump are longing for a boom; why do they not gladly accept the synthetic boom which the government is able to offer them?” His answer had two important points. Firstly, if raising employment is left solely to the laissez-faire market, then “capitalists [have] a powerful indirect control over government policy.” Anything to shake their confidence has to be avoided. Once the government takes over that function, though, that power is diminished. Secondly, those capitalists also lose power when workers aren’t as dependent on their current employer for a job. If under full employment a worker is almost guaranteed work, he has much better leverage to demand higher wages, better benefits, etc. from his employer. Either way, banks will lose their hold over the economy.

Breaking the threat of a capital strike in this way is a win-win. It first and foremost puts people back to work. But it also has the nice effect of loosening Wall Street’s stranglehold on politics. Its power will diminish. Sounds good to me.

Bryce Covert is Editor of New Deal 2.0.

Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

The top 1 percent holds a tiny fraction of consumer debt, letting them avoid the hassle of credit card disputes.

There was some good news from the New York Fed this week. Consumer debt fell about $60 billion in the third quarter of this year, and credit card accounts declined by 6 million. Overall, the number of open accounts is 23 percent below the peak in 2008 and balances have also fallen 20 percent.

Certainly some of that decline is due to charge-offs. But perhaps many more customers are jumping ship because of dissatisfaction with card companies and their terms. The newly operational Consumer Financial Protection Bureau established a Consumer Response office and a system for addressing consumer complaints when it launched in July. The Bureau just released a report on those complaints. Between then and October, consumers submitted 5,074 credit card complaints, which amounts to over 50 a day.

So what were people frustrated about? By far the largest complaint had to do with billing disputes, at 13.4 percent — you know, when the bank hikes your interest rate after the first year for no reason, or raises your already exorbitant annual fee, or puts your minimum payment toward the lowest interest rate account (all kosher under the CARD Act). The next largest complaint was about APR or interest rates, at 11 percent. When one woman reported an APR of 79.9 percent and the average interest rate is up to 16.75 percent, it’s not hard to see why. And while the CFPB breaks out complaints about fees, overall those frustrations make the top five at 8.5 percent.

Americans paid about $20.5 billion on penalty fees in 2009 . That doesn’t even include the extra principle they’re paying down due to interest. But not all Americans are worrying about how much income they’re losing to the banks.

A study by G. William Domhoff found that the top 1 percent of American households holds only 5 percent of consumer debt. The rest of us are saddled with the resulting 95 percent. This despite the fact that the 1 percent owns 40 percent of the wealth. It also has 62 percent of the country’s business equity, 39 percent of trusts, 38 percent of the stocks and mutual funds, and 28 percent of the non-home real estate (think vacation homes).

This means that while most of us struggle to pay our credit card bills each month, dodging fees and trying to avoid interest, it’s not a high concern for the 1 percent. Maybe they spend the extra time managing their vacation homes.

Bryce Covert is Editor of New Deal 2.0.

Cross-Posted From The Roosevelt Institute’s New Deal 2.0 Blog

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.