Star students? Worthy of flunking? Panels of economists, money managers and consumer advocates judge our most powerful players.
BOSTON (MainStreet) -- You may think the Occupy movement failed. In fact, it gets the highest marks from a range of experts comparing it with others of the nation's top economic players: President Barack Obama, the GOP candidates raring to face him in a general election, Congress and the Tea Party.
Of course, that may not be saying much.
It's hard enough to calculate a student's grade for the year before finals are turned in; harder still when there's a panel of graders running the gamut of crusty establishmentarian to young radical; and harder still when they're not grading actual students, but the nation's top economic players and prime users of weasel words and rueful excuses ("the dog ate my plan for cutting the deficit").
But America understands letter grades; most of its citizens have gone through a dozen or more years of being ranked on their work from A to F. So that's what we used when we set out to understand how economists, investment managers and consumer advocates saw the work of the people whose ideas are shaping our futures and filling -- or emptying -- our wallets.
Unfortunately, our experts also understand what it means to miss class and get an incomplete for the semester, and when it came time to grade their "students," they claimed the option to say so. You'll see one of our rankings averaging only two of a possible five letter grades. Some experts wanted very much to talk about our players but not give letter grades at all, even though we aggregated the results and left their individual calls ultimately anonymous. (Their comments are not.)
The report cards are still awfully intriguing.
Would you have guessed, for instance, that the Occupy movement -- that much derided, supposedly muzzy-headed agglomeration of hippies and hipsters, drug addicts and trustafarians -- would get the highest accumulated grade even when one economist gave it either an A (resulting in an A- for all economists and a B- for all three groups) or an F (resulting in a C+ for all economists and all three groups) "depending on which activist you talk to."
But whether it's a B- or a C+, it beats the combined C- scores for Obama, the GOP candidates and Tea Party. And it by far beats Congress' combined grade of D.
Read on for a further breakdown of how our experts felt about the Class of 2011. The short version is that they've all been so busy running for prom king and queen that there's not much of a race for valedictorian -- and our math club isn't even going to regionals.
Ellen Frank, professor of economics at the University of Massachusetts at Boston, senior economist at the Poverty Institute and author of The Raw Deal: How Myths and Misinformation about Deficits, Inflation, and Wealth Impoverish America; Stephen M. Miller, professor and chairman of the Department of Economics at the Lee Business School at the University of Nevada, Las Vegas; Jonathan A. Parker, the Donald C. Clark/HSBC professor of consumer finance at Northwestern University's Kellogg School of Management; Benjamin Powell, professor of economics at Suffolk University and senior fellow with the Independent Institute; and L. Randall Wray, professor of economics at the University of Missouri-Kansas City and senior scholar at the Levy Economics Institute of Bard College.
Jeff Auxier, president of Lake Oswego, Ore.-based Auxier Asset Management, which has $194 million in assets; James Dailey, a portfolio manager at TEAM Asset Managers, a Harrisburg, Pa.-based firm with $215 million in assets; Craig Hodges, president of Hodges Capital Management, a Dallas-based firm with $800 million in assets; Paul Nolte, managing director at Chicago-based Dearborn Partners, an investment firm with $3 billion in assets; Robert Pavlik, the New York-based chief investment officer with Banyan Partners, a firm with $1.2 billion in assets.
David Arkush, director of Public Citizen's Congress Watch; Christopher Elliott, author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals (Wiley, 2011) and founder of elliott.org; Chris Morran, senior editor of The Consumerist; Wes Moss, of Capital Investment Advisors and the host of Money Matters, a live financial advice show on Atlanta's 750 WSB-AM; and Tracy Van Slyke, co-director of The New Bottom Line, former publisher for the progressive news magazine In These Times and project director for The Media Consortium.
President Barack Obama
Who's at fault for the 1916-style trench warfare approach to economic policy in Washington: the unstoppable force or the unmovable object?
President Barack Obama's supporters argue that the majority Republican House of Representatives swept into office during the 2010 midterm elections is holding up his American Jobs Act that would cut payroll taxes for employers and medium- to low-income employees, extend unemployment benefits, add infrastructure, modernize schools and upgrade foreclosed homes. His opponents say he's unwilling to hold the line on spending.
That particular bill seems headed toward a compromise agreement, but it's been as slow a slog to its signing as it's been for just about any economic legislation the president has supported this year. The president's meeting with the Senate and House majority leaders in an attempt to pass the federal budget and avert a government shutdown didn't work and it took a compromise on program funding to end the stalemate. The White House took an active role in crafting the Budget Control Act and raising the debt ceiling, but also shouldered some of the blame when Standard & Poor's downgraded the nation's credit rating.
Meanwhile, Obama's push to name a director of the Consumer Finance Protection Bureau created by the Dodd-Frank financial regulatory law has been blocked at every turn by Republicans who want the law restructured. Perhaps a successful run for a Massachusetts Senate seat by failed CFPB candidate Elizabeth Warren could be considered an Obama victory, but his muddled economic record in 2011 gives him a lot more to worry about in 2012 than Warren's political aspirations.
The economists' grade: D+
Why: Four gave grades. Wray is "glad to see that many of his economic advisers (all of them terrible) have jumped the sinking ship, but will the president replace them with anyone good? Not likely, given the way he treated Elizabeth Warren. By forcing her out, he showed us that he is not serious about reform." Miller agrees, more pithily, that it's a "big mistake to let others do the work on the group project." Frank simply thinks Obama's stimulus package should have been better, but Powell has some harsh words about "out-of-control spending" and "focusing on jobs rather than creating an environment of stable property rights and economic freedom that allows private investment to create productive jobs."
The managers' grade: D+
Why: Five gave grades. After some early pro-business efforts and because of bad advice, Hodges says of Obama, "Now he's being a hindrance. He's now the anti-business president." Auxier agrees that Obama-backed regulation is keeping small business from thriving and that he "doesn't understand what it takes to promote innovation and jobs" -- but sees much of his troubles as stemming from a crash of overleveraged finance firms he had nothing to do with. Pavlik is also sympathetic that the president's troubles are "not from a lack of trying, but he hasn't done anything that has helped anyone," mainly because, like Nolte says, he can't seem to bring people together. (Wrapping up the war in Iraq does mean spending less money there, though, Nolte says, and that's a plus.) In the end, Dailey says, "presidential power over the economy is very limited. I think he's overly criticized for his power over the economy."
The advocates' grade: C+
Why: Five gave grades. Obama frustrates consumer advocates for his failure to deliver on everything from a powerful health care bill to implementation of the Consumer Financial Protection Bureau, which some say could have been done through a recess appointment of a leader. "He reminds me of the kid in high school who promises he'll have fireworks and a light show for an oral report and stands up with just a wrinkled piece of paper," Morran says. Like Van Slyke, Arkush was even more harsh, saying the president repeatedly "flinched when he should have fought and compromised when he should have confronted," although he's started to turn around (and "It's about time. Let's hope he sticks with it and broadens the fight to other financial reform issues like ending 'too big to fail'"). Moss also faults Obama for failing to bring the parties together in Congress and doing nothing to bring down the costs of energy and health care. Elliott, while acknowledging "things could be a whole lot better," credits Obama with getting improvements such as the bureau started.
Republican presidential candidates
At various points in the past three months, Texas Gov. Rick Perry, Minnesota U.S. Rep. Michele Bachmann, former Godfather's Pizza magnate Herman Cain, former Massachusetts Gov. Mitt Romney and former House Speaker Newt Gingrich have all played front-runner in the race for the Republican presidential nominations. Their various missteps along the way, however, have made it unclear whether any of them actually want the job or would ever affect the economy in any tangible way.
As the only sitting members of Congress in the crowd, Bachmann and Texas Rep. Ron Paul have made their ideas on the economy quite clear through their votes. Renowned libertarian Paul has voted to extend the Bush tax cuts, repeal Obama's health care overhaul and stop funding of National Public Radio, but has broken with the party when it comes to extending the Patriot Act, approving the GOP's budget plan and funding the wars in Iraq and Afghanistan. Bachmann, meanwhile, was no fan of the budget compromise but also voted against expanding the Bush tax cut.
Cain made the most noise about the economy thus far, slamming Social Security, bank bailouts and the heightened debt ceiling and floating his "9-9-9" plan to replace current taxes with business transaction taxes, personal income tax and a federal sales tax of 9% apiece. Right now, that's the centerpiece of a suspended campaign. That's the biggest problem for the GOP candidates: Economic game plans such as Romney's vow to decrease the corporate tax to 25%, open free trade to South Korea, Colombia and Panama and cut all non-defense spending by 5% are just plans right now.
That's just fine by current front-runner Gingrich, the only candidate who can boast -- with varying degrees of correctness -- about his role in passing multiple balanced budgets. Whether his plans translate to 2012 reality, however, remains to be seen.
The economists' grade: D-
Why: Two gave grades and two gave "incompletes," but mostly they gave the candidates a bit of a bashing. "Surely these cannot really be the candidates? There must be someone waiting in the wings," Wray says, while Frank sees them bringing to the table "absolutely nothing. They have nothing to propose" and being so "ideologically blind to the way the economy works that it frightens me that any one of them might be in power." Miller, too, thinks the Republican candidates are "trapped in an ideological pit ... stubborn students who do not come to class to learn, since they know it all. Must repeat the class." Powell didn't want to offer a grade on mere political promises, but singled out Paul as wanting to take some steps in the right direction.
The managers' grade: C
Why: Three gave grades and one gave an "incomplete." Nolte and Pavlik agree the candidates lack cohesive programs to fix things ("If they have plans, I must've missed it," Pavlik says), and Dailey is rolling his eyes over the candidates' combined "nonsense about immigration. It comes back to arithmetic. If we put up fences and all this stuff to stop immigration, it makes our problems worse from a budget, fiscal and economic perspective." He sees too much rhetoric and too much reliance on high-IQ advisers ("Larry Summers syndrome"), but Hodges sees the candidates as flawed but having "some very pro-business policies, especially when it comes to energy and infrastructure things, especially tax policies" and Auxier likes that they're "offering solutions besides raising taxes ... You want a business CEO who loves the business and who isn't in it for the money. These people don't seem like they're in it for the power."
The advocates' grade: C-
Why: Four gave grades and one gave an "incomplete." "They haven't turned in any assignments. When a paper's due, they turn in notes," says Morran, complaining of candidates' mass of rhetoric but lack of ideas that can actually be implemented, while Van Slyke says too many members "fight for the 1%." Moss, though, loves the spotlight put by Cain and Perry on simplifying the tax code and hopes Gingrich and Romney pick up the theme, while Elliott has heard good if vague ideas about free enterprise and less regulation -- but also "a lot of silliness." "Hiring kids to replace janitors?" Elliott says of a Gingrich proposal. "Come on! I've met Newt and like him, but I don't know what he was smoking that day."
Unlike groups such as the Tea Party and Occupy, which get graded on their accomplishments and attempts at forcing change in the U.S., Congress gets criticized for what it didn't do: everything.
Gridlock in Congress is not a new development, but the 112th U.S. Congress brought the cacophony to new heights. It began in January with a petty disagreement between Democrats and Republicans over the reading of a modified version of the U.S. Constitution. By April, there was a real possibility of a government shutdown and 800,000 furloughed government employees as the two sides bickered. A deal was struck at the eleventh hour, but only after a one-week deadline extension to allow more bickering.
Congress' ineptitude truly took the spotlight in July and August during the debt ceiling negotiations. With the threat of a U.S. default running up against concern over the ballooning debt levels, Democrats and Republicans took the debate all the way to the Aug. 2 deadline, which is when the Treasury estimated its borrowing ability would have been depleted. Even though an agreement was forged, the brinkmanship in Congress resulted in a downgrade of U.S. debt by Standard & Poor's, the first time the U.S. has lost a prestigious triple-A rating in history.
In the aftermath, a 12-member committee was formed as part of the August budget control act. The so-called Super Committee was tasked with finding $1.5 trillion in deficit reductions to be made over a 10-year period -- and despite roughly two months to complete the job, failed. And even though $1.2 trillion in automatic cuts were triggered by the committee's failure, some congressional members are now trying to backtrack on that.
As a result, last month a CBS News poll found that Congress' approval rating dropped into the single digits (which Democrats probably feel is unfair given Republicans' oversized contributribution to the lack of legislating). At 9%, it was an all-time low rating for the members of government. For a little context, during the Gulf oil spill in 2010, reviled oil giant BP(:BP) had an approval rating of 16%. During the Watergate scandal, Richard Nixon's approval rating at its lowest was still above 20%.
And the poll was taken before the failure of the Super Committee.
The economists' grade: D-
Why: Four gave grades. As is nearly universal, the word "gridlock" captures much of the complaints about Congress, voiced here by Miller. Even worse, Powell and Parker see Congress taking the country down the same path as bankrupt countries in Europe. The other economists agree there have been some serious missteps, "beginning with the ridiculous grandstanding over the debt ceiling, then the insistence that the budget be balanced at a time when we need more government spending and not less, and refusing to negotiate seriously on taxes. I think Congress deserves an 'F' and I suspect most of the American people feel that way," Frank says. Wray is even more to the point: "Debating about self-imposed debt limits? How dumb can you get? Look, bozos, you approved a budget, so let the Treasury spend up to the budgeted amounts," he says.
The managers' grade: D
Why: All five gave grades. Four were largely horrified by Congress -- in fact, Dailey says the houses have notched a "horrific year" from a policy and leadership perspective, participating in "blatant political posturing" but "can't get past third-grade arithmetic." Nolte agrees Congress fails because its members "won't make a touch decision that will jeopardize their chances of getting reelected," and Pavlik says that "if my employer assigned me a task, I'd be out of work if I didn't complete it. I wish they were out of work in Washington. They just don't care. I'm sure the special interest groups would love to give them an A++, but the American should give them a failing grade." Hodges also doesn't know "how they justify their existence. There's nothing being accomplished." Auxier, though, thinks there's at least healthy discussion going on.
The advocates' grade: C-
Why: Four gave grades, with Van Slyke summing up her grade in that single, recurring word: "gridlock" and Elliott asking "Have they done anything?" Or, as Arkush asked, "Is it possible to give negative numbers?" and blasted Republicans in Congress for protecting "reckless and predatory banks that tanked the economy," working to repeal the Dodd-Frank Act and blocking needed stimulus. "It's hard to imagine a more shameful performance," Arkush says, while, like others, Morran saw signs of actual anti-consumer sentiment (including the roadblocks thrown in the path of the Consumer Financial Protection Bureau). Moss was encouraged by seeing ideas such as U.S. Rep. Paul Ryan's plan for federal entitlement caps being floated, even though he was "very frustrated" by failures on debt limits and the Super Committee.
The Tea Party
For two years, the Tea Party has been a controversial force -- a grassroots movement with insanely rich benefactors (such as the Koch brothers) and establishment leaders (such as Dick Armey) -- loud and proud in its disgust of free-spending Washington, the "socialist" agenda of President Barack Obama, mandates on business (such as EPA regulations) as well as individuals (mandated health care coverage) and perceived efforts to erode constitutional rights such as the right to bear arms (for which there are no actual examples; the Obama administration has not acted on gun issues). Welfare and entitlement programs, as well as foreign aid, were hot-button issues that led to fiery rhetoric at countless rallies throughout the nation.
In 2010, candidates associated with the Tea Party proved a primary headache for Republicans and Democrats alike in midterm elections. Even though only about one-third of those candidates ultimately prevailed, it was clear the movement was evolving and forcing mainstream politicians to either adapt to their message or face the wrath of voters.
But how effective was the message this year? Without national elections, would the freshman class live up to its potential and promises, especially in a year much of the political dialogue was right in its wheelhouse -- a bitter debate over raising the debt ceiling and related budget-cutting and revenue-raising conflicts?
Our experts seem to have graded the Tea Party's success -- or lack thereof -- as something of a mixed bag.
The economists' grade: D-
Why: Two gave grades, one gave an "absent" and one gave a grade of "mixed." Parker is shaking his head over all the economic principles the Tea Party doesn't understand, while Wray thinks he sees the reasons: "They raised many of the right issues but got side-tracked by barely disguised racism and then taken over by the right wing of the Republican Party." That doesn't end it for Powell, though. "Any mass political movement has its share of nut jobs, including the Tea Party," Powell says, "but the basic 'shrink government' message is sound." Miller and Frank seem to stand with Wray, though, with Frank saying: "I don't understand what they stand for except for the idea that the Obama administration is doing things wrong. I don't know what they have proposed. Small government? What does that mean? What do they propose cutting, exactly? Most of the budget is comprised of Social Security, Medicare, Medicaid and national defense." (Miller's take: "Missing from class the entire semester with no completed assignments or exams. Did they pay their tuition?")
The managers' grade: C+
Why: All five gave grades. While Dailey criticizes the Tea Party for being "co-opted" by Republicans (as well as for playing a simplistic, unrealistic "blame game" that lacks detailed solutions), Pavlik and Nolte see it the other way around: They dislike the effect the Tea Party has had on Congress. It's "energized a part of the Republican party that has dug in its heels on tax increases ... and that's had an impact on the raising of the debt ceiling and the Super Committee. There's been an influence, but it's negative," Nolte says, while Pavlik prefers the word "detrimental ... it has brought a level of fear and animosity into the whole picture. People are angry, and they're angry at the wrong people. The people in Congress seem to be just paralyzed because they're looking over the shoulder as to how it will affect their votes from the Tea Party." The party gets credit from the economists for getting politicians talking about taxes and spending, but Hodges thinks its principles have failed beyond that. Auxier is the most positive, crediting the party with getting "back to the fundamentals that made this country great" including "trying to do away with the entitlement mentality" and eliminate regulations "to compete in a global economy."
The advocates' grade: C
Why: Three gave grades and one gave an "incomplete." Moss enthuses that the group has good ideas and "clear economic principles" -- smaller government and balanced budgets, for instance -- and has helped shape Republican candidates such as Cain. ("He wouldn't be where he was without the Tea Party," Moss says.) Others felt it was an interesting group that lost direction, such as Morran and Elliott, while Van Slyke was tougher, saying the group is too interested in cutting services "that help everyday people" in the name of a balanced budget, when austerity "does nothing to help the economy."
The Occupy movement
With the Arab Spring as model, Adbusters magazine as fuel and gridlock over debt ceiling talks as just the latest spark, opponents of radical economic imbalance started marching on Wall Street on Sept. 17 -- then sat down and started occupying it. A tent city went up in Zuccotti Park in downtown Manhattan then in cities around the country and world.
The occupations and marches drew attention, and soon everyone was talking about the 1% and the 99%. Occupy had changed the language and the nation's dialogue.
In mid-November the evictions began, and now Occupy's physical presence is gone from major U.S. cities. But as Adbusters' Kalle Lasn expected, that doesn't mean the end of the movement, just a shift indoors and more decision-making by social media and less by finger-wiggling at general assemblies.
Did someone say decision-making? The main slam against Occupy has been that its anarchical approach to activism produced muddy manifestos lacking in solid objectives. While the Tea Party has dragged the entire Republican party so far to the right it's going in circles -- resulting in pandering presidential candidates, dozens of officials elected with unsustainable bomb-throwing rhetoric, a rabid devotion to austerity and such inspiring moments as Congress giving a shared reading of the Constitution (abridged to avoid the messy bits about who's three-fifths of a person) -- Occupy has frustrated even its fans with a lack of clarity.
The most prominent Occupy presidential candidate: Buddy Roemer, a Republican unable to land a lectern at any of the 1,000 or so debates the party has been dragging itself through. The most prominent economic proposal: a call for a 1% tax on financial transactions with no buzz in America and no Congressional champion. (Bills by Oregon Democrat U.S. Rep. Pete DeFazio and Iowa Democrat U.S. Sen. Tom Harkin seek a tax of 0.03% on the purchase of a security. Yawn.)
It's not true, though, that the all-direct democracy, no-leader Occupy has no goals. In Boston, a survey found 10 points of essentially universal agreement among Occupiers, and those are reflected in lists as small as six elsewhere. Among the economic proposals endorsed, or at least not opposed, by the movement: revocation of corporate personhood as recognized by the Supreme Court's Citizens United decision; an end to the revolving door of politicians turning lobbyists; a progressive tax code; more protections for unions; reinstitution of Glass-Steagal, the act that kept banks behaving responsibly, and stricter regulations on corporate leverage rules (with MF Global and its 30% leverage the latest outrageous example of master-of-the-universe arrogance and idiocy); and more transparency and accountability at the Federal Reserve (given added oomph with Bloomberg Markets discovering the Fed secretly gave $7.8 trillion-with-a-T in 2009 to the banks that had wrecked the economy in the first place).
The economists' grade: A- or C+
Why: Three gave grades, one gave an "incomplete" and one gave a tentative grade of either A or F "depending on which activist you talk to." The economists say the Occupy movement started out well (with a belief "in creating a just society, whatever that means," Frank says) -- and "correctly identified the problem of big business benefiting from crony capitalism coming from big government handouts and favors," as Powell says -- but faltered. "Withdrew to the back row early in the semester and dropped the ball," Miller sums up, and Powell has a note for that as well: "They incorrectly perceive the nature of a market economy and focus on the distribution of wealth rather than its creation." Whatever the shortcomings, Frank says more people should be figuring out a way to translate the Occupy movement into political action, and Wray has a dramatic summation of why -- because Occupy is "the only source of hope at the moment. I like the way they have kept their demands general -- much like the Civil Rights movement and the student movement of the 1960s. The whole darned system is rotten to its core. It is impossible to come up with a short list of demands. But there is no doubt that Wall Street is the cancerous tumor from which the rot spreads."
The managers' grade: C-
Why: All five gave grades. Universally, the managers felt the Occupy movement had good ideas -- and credit its members with participating in democracy -- but isn't effective because, as Auxier says, "Their message isn't clear enough." The movement is right to call the country on its income inequality, they say, but Hodges thinks "they have no clue about how capitalism works" and Dailey feels the "movement has been co-opted by the anti-G20 anarchists who are up for a protest at any time."
The advocates' grade: B-
Why: Four gave grades. Morran says Occupy started out as a muddle and gained focus, including helping power Bank Transfer Day. Its very public and persistent protests mean that "at least people are actually discussing the problems," Morran says, "and that's never a bad thing," while Van Slyke also credits the movement with "shifting the narrative to look at gross income inequality" and showing "passion for the people." Elliott agrees, while bemoaning the movement's tactics and "convoluted" points. None of that's enough for Moss, who finds the movement's ongoing lack of clear leadership and statement of ideas flunkable offenses.
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