Tag: economy

Ten things the GOP Doesn’t want you to know about the debt!

the inconvenient truth that the nation’s mounting debt is largely attributable to wars, a recession and tax policies put in place under his party’s watch.

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From perspectives see:http://www.perrspectives.com/blog/archives/002215.htm

(N.B.: the author of this blog observes that the correct way to describe the results under each POTUS administration is to add the qualifying word ‘administration’  (and perhaps the definite article ‘the’) to each usage, e.g.: the Clinton administration – the POTUS signs laws passed by both houses.)

“Just two weeks after he seconded Treasury Secretary Tim Geithner’s dire warnings about the August 2 deadline to raise the U.S debt ceiling, House Majority LeaderEric Cantor walked out of the budget talks aimed at reaching a bipartisan compromise over deficit reduction. Like Arizona GOP Senator Jon Kyl, Cantor shifted the burden to Speaker John Boehner, Senate Minority Mitch McConnell and President Obama to “get over this impasse on taxes.”

For his part, McConnell promised that no deal to end the GOP’s hostage taking of the U.S. economy will include tax hikes. But while McConnell boasted that “If they couldn’t raise taxes when they owned the government, you know they can’t get it done now,” left unsaid was the inconvenient truth that the nation’s mounting debt is largely attributable to wars, a recession and tax policies put in place under his party’s watch.

Here, then, are 10 things the GOP doesn’t want you to know about the debt:

  1. Republican Leaders Agree U.S. Default Would Be a “Financial Disaster”
  2. Ronald Reagan Tripled the National Debt
  3. George W. Bush Doubled the National Debt
  4. Republicans Voted Seven Times to Raise Debt Ceiling for President Bush
  5. Federal Taxes Are Now at a 60 Year Low
  6. Bush Tax Cuts Didn’t Pay for Themselves or Spur “Job Creators”
  7. Ryan Budget Delivers Another Tax Cut Windfall for Wealthy
  8. Ryan Budget Will Require Raising Debt Ceiling – Repeatedly
  9. Tax Cuts Drive the Next Decade of Debt
  10. $3 Trillion Tab for Unfunded Wars Remains Unpaid

1. Republican Leaders Agree U.S. Default Would Be a “Financial Disaster”
Senator Pat Toomey (R-PA), Rep. Michele Bachmann (R-MN) and White House hopeful Tim Pawlenty are among the GOP luminaries who have joined the ranks of what Dana Milbank called the “default deniers.” But you don’t have to take Treasury Secretary Timothy Geithner’s word for it “that if Congress doesn’t agree to an increase in the debt limit by August 2, the United States will be forced to default on its debt, potentially spreading panic and collapse across the globe.” As it turns out, Republican leaders (and their big business backers) have said the same thing.

In their few moments of candor, Republican leaders expressed agreement with Tim Geithner’s assessment that default by the U.S. “would have a catastrophic economic impact that would be felt by every American.” The specter of a global financial cataclysm has been described as resulting in “severe harm” (McCain economic adviser Mark Zandi), “financial collapse and calamity throughout the world” (Senator Lindsey Graham) and “you can’t not raise the debt ceiling” (House Budget Committee Chairman Paul Ryan). In January, even Speaker John Boehner acknowledged as much:

“That would be a financial disaster, not only for our country but for the worldwide economy. Remember, the American people on election day said, ‘we want to cut spending and we want to create jobs.’ And you can’t create jobs if you default on the federal debt.”

2. Ronald Reagan Tripled the National Debt
Among the Republicans who prophesied the default doomsday scenario was none other than conservative patron saint, Ronald Reagan. As he warned Congress in November 1983:

“The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar.”

Reagan knew what he was talking about. (N.B. Really?  Only by accident). After all, the hemorrhage of red ink at the U.S. Treasury was his doing.

As most analysts predicted, Reagan’s massive $749 billion supply-side tax cuts in 1981 quickly produced even more massive annual budget deficits. Combined with his rapid increase in defense spending, Reagan delivered not the balanced budgets he promised, but record-setting debt. Even his OMB alchemist David Stockman could not obscure the disaster with his famous “rosy scenarios.”

Forced to raise taxes eleven times to avert financial catastrophe, the Gipper nonetheless presided over a tripling of the American national debt to nearly $3 trillion. By the time he left office in 1989, Ronald Reagan more than equaled the entire debt burden produced by the previous 200 years of American history. It’s no wonder Stockman lamented last year:

“[The] debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.”

It’s no wonder the Gipper cited the skyrocketing deficits he bequeathed to America as his greatest regret.

3. George W. Bush Doubled the National Debt
Following in Reagan’s footsteps, George W. Bush buried the myth of Republican fiscal discipline.

Inheriting a federal budget in the black and CBO forecast for a $5.6 trillion surplus over 10 years, President George W. Bush quickly set about dismantling the progress made under Bill Clinton. Bush’s $1.4 trillion tax cut in 2001, followed by a $550 billion second round in 2003, accounted for the bulk of the yawning budget deficits he produced. (It is more than a little ironic that Paul Ryan ten years ago called the tax cuts “too small” because he believed the estimated surplus Bush eviscerated would be even larger.)

Like Reagan and Stockman before him, Bush resorted to the rosy scenario to claim he would halve the budget deficit by 2009. Before the financial system meltdown last fall, Bush’s deficit already reached $490 billion. (And even before the passage of the Wall Street bailout, Bush had presided over a $4 trillion increase in the national debt, a staggering 71% jump.) By January 2009, the mind-numbing deficit figure reached $1.2 trillion, forcing President Bush to raise the debt ceiling to $11.3 trillion.

4. Republicans Voted Seven Times to Raise Debt Ceiling for President Bush
“Reagan,” Vice President Dick Cheney famously declared in 2002, “proved deficits don’t matter.” Not, that is, unless a Democrat is in the White House.

As Donny Shaw documented in January 2010, Republican intransigence on the debt ceiling only began in earnest when Bush left the White House for good.

The Republicans haven’t always been against increasing the federal debt ceiling. This is the first time in recent history (the past decade or so) that no Republican has voted for the increase. In fact, on most of the ten other votes to increase the federal debt limit that the Senate has taken since 1997, the Republicans provided the majority of the votes in favor.

As it turns out, Republican majorities voted to raise the U.S. debt ceiling seven times while George W. Bush sat in the Oval Office. (It should be noted, as Ezra Kleindid, that party-line votes on debt ceiling increases tied to other legislation is not solely the province of the GOP.) As ThinkProgress pointed out, during the Bush presidency, the current GOP leadership team voted 19 times to increase debt limit. During his tenure, the U.S. national debt doubled, fueled by the Bush tax cuts of 2001 and 2003, the Medicare prescription drug plan and the unfunded wars in Iraq and Afghanistan. And Mitch McConnell and John Boehner voted for all of it and the debt which ensued because, as Orrin Hatch later explained:

“It was standard practice not to pay for things.”

5. Federal Taxes Now at a 60 Year Low
Even as Vice President Biden leads bipartisan negotiations to trim at least $1 trillion from the national debt, Republican leaders faithfully regurgitate the refrain that tax increases are “off the table.” In one form or another, Mitch McConnell, Eric Cantor and just about every other conservative mouthpiece parroted Speaker John Boehner’s line that:

“Medicare, Medicaid – everything should be on the table, except raising taxes.”

Which purely by the numbers (if not ideology) is an odd position to take. After all, as a percentage of the U.S. economy, the total federal tax bite hasn’t been this low in 60 years.

As the chart representing President Obama’s 2012 budget proposal above reflects, the American tax burden hasn’t been this low in generations. Thanks to the combination of the Bush Recession and the latest Obama tax cuts, the AP reported, “as a share of the nation’s economy, Uncle Sam’s take this year will be the lowest since 1950, when the Korean War was just getting under way.” In January, the Congressional Budget Office (CBO) explained that “revenues would be just under 15 percent of GDP; levels that low have not been seen since 1950.” That finding echoed an earlier analysis from the Bureau of Economic Analysis. Last April, the Center on Budget and Policy Priorities concluded, “Middle-income Americans are now paying federal taxes at or near historically low levels, according to the latest available data.” As USA Today reported last May, the BEA data debunked yet another right-wing myth:

Federal, state and local taxes — including income, property, sales and other taxes — consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8% of income before rising slightly in the first three months of 2010.“The idea that taxes are high right now is pretty much nuts,” says Michael Ettlinger, head of economic policy at the liberal Center for American Progress.

Or as former Reagan Treasury official Bruce Bartlett explained it this week the New York Times:

In short, by the broadest measure of the tax rate, the current level is unusually low and has been for some time. Revenues were 14.9 percent of G.D.P. in both 2009 and 2010. Yet if one listens to Republicans, one would think that taxes have never been higher, that an excessive tax burden is the most important constraint holding back economic growth and that a big tax cut is exactly what the economy needs to get growing again.

6. Bush Tax Cuts Didn’t Pay for Themselves or Spur “Job Creators”
That Republican intransigence persists despite the complete debunking of two of the GOP’s favorite myths.

The first tried and untrue Republican talking point is that “tax cuts pay for themselves.” Sadly, that right-wing mythmaking is belied by the massive Bush deficits, half of which (as the CBPP chart in section 3 above shows} were the result of the Bush tax cuts themselves. As a percentage of the American economy, tax revenues peaked in 2000; that is, before the Bush tax cuts of 2001 and 2003. Despite President Bush’s bogus claim that “You cut taxes and the tax revenues increase,” Uncle Sam’s cash flow from individual income taxes did not return to its pre-dot com bust level until 2006.

The second GOP fairy tale, as expressed by Speaker Boehner, is that “The top one percent of wage earners in the United States…pay forty percent of the income taxes…The people he’s {President Obama] is talking about taxing are the very people that we expect to reinvest in our economy.”

If so, the Republican’s so-called “Job Creators” failed to meet those expectations under George W. Bush. After all, the last time the top tax rate was 39.6% during the Clinton administration, the United States enjoyed rising incomes, 23 million new jobs and budget surpluses. Under Bush? Not so much.

On January 9, 2009, the Republican-friendly Wall Street Journal summed it up with an article titled simply, “Bush on Jobs: the Worst Track Record on Record.” (The Journal’s interactive table quantifies his staggering failure relative to every post-World War II president.) The dismal 3 million jobs created under President Bush didn’t merely pale in comparison to the 23 million produced during Bill Clinton’s tenure. In September 2009, the Congressional Joint Economic Committee charted Bush’s job creation disaster, the worst since Hoover:

As David Leonhardt of the New York Times aptly concluded last year:

Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed? The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7.

7. Ryan Budget Delivers Another Tax Cut Windfall for Wealthy
Looking at that dismal performance, Leonhardt rightly asked, “Why should we believe that extending the Bush tax cuts will provide a big lift to growth?” At a time ofrecord income inequality which saw the incomes of the richest 400 Americans taxpayers double even as their tax rates were halved, that’s a fair question to say the least.

For Paul Ryan and the Republican Party, the answer is simple: because we said so.

As Ezra Klein, Paul Krugman and Steve Benen among others noted, the House Republicans “Plan for America’s Job Creators” is simply a repackaging of years of previous proposals and GOP bromides. (As Klein pointed out, the 10 page document “looks like the staffer in charge forgot the assignment was due on Thursday rather than Friday, and so cranked the font up to 24 and began dumping clip art to pad out the plan.”) At the center of it is the same plan from the Ryan House budget passed in April to cut the top individual and corporate tax rates to 25%.

The price tag for the Republican proposal is a jaw-dropping $4.2 trillion. And as Matthew Yglesias explained, earlier analyses of similar proposals in Ryan’s Roadmap reveal that working Americans would have to pick up the tab left unpaid by upper-income households:

This is an important element of Ryan’s original “roadmap” plan that’s never gotten the attention it deserves. But according to a Center for Tax Justice analysis (PDF), even though Ryan features large aggregate tax cuts, ninety percent of Americans would actually pay higher taxes under his plan.In other words, it wasn’t just cuts in middle class benefits in order to cut taxes on the rich. It was cuts in middle class benefits and middle class tax hikes in order to cut taxes on the rich. It’ll be interesting to see if the House Republicans formally introduce such a plan and if so how many people will vote for it.

We now know the answer: 235 House Republicans and 40 GOP Senators.

8. Ryan Budget Will Require Raising Debt Ceiling – Repeatedly
Largely overlooked in the media coverage of the Republican debt ceiling hostage drama is this: those 235 House Republicans and 40 GOP Senators who supported Paul Ryan’s 2012 budget bill voted to add $6 trillion to the U.S. national debt over the next decade. And that means, as Speaker John Boehner acknowledged, Republicans now and in the future would have to increase the debt ceiling – repeatedly.

Of course, you’d never know that based on the incendiary rhetoric from the leading lights of the Republican Party and their right-wing echo chamber. Senator Rand Paul(R-KY) said his vote to bump up the debt ceiling would come at the cost of a balanced budget amendment to the Constitution, “the last time we’re doing it.” His South Carolina colleague Jim Demint threatened to filibuster the increase, even if it meant the GOP’s “Waterloo.” The number two House Republican Eric Cantor (R-VA) regurgitated that line, telling Democrats the GOP “will not grant their request for a debt limit increase” without major spending cuts or budget process reforms.” For his part, House Budget Committee Chairman Paul Ryan insisted, “We won’t raise, just simply raise, the debt limit,” adding, “We will vote to have spending cuts and controls in conjunction with the debt limit increase.” As giddy right-wing bloggers like Patterico described the right-wing’s scorched earth strategy:

If Republicans are going to vote to raise the debt ceiling — and not to do so will indeed cause financial chaos — they have to extract concessions sufficient that they can credibly say: this is the last such vote we will ever have to have.

Sadly, as Ezra Klein of the Washington Post explained last month, “Republicans can’t meet their own deficit and spending targets.” The Ryan plan to privatize Medicare, slash and convert Medicaid into block grants, and deliver another tax-cut windfall for the wealthy nevertheless “blows through both their spending and debt caps”:

House Republicans voted to make the Ryan budget law. But the Ryan budget includes $6 trillion in new debt over the next 10 years, which means that to become law, the Ryan budget would require a substantial increase in the debt ceiling. But before the Republicans agree to increase the debt ceiling so that the budget they passed can become law, Republicans are demanding the passage of either a balanced budget amendment that would make the Ryan budget unconstitutional or a spending cap that the Ryan budget would, in certain years (and if you’re using more realistic numbers, in all years), exceed.

It’s no wonder Klein’s Washington Post colleague Matt Miller deemed the Republican budgetary horror story “The Shining – National Debt Edition” before concluding that Boehner’s “awe-inspiring hypocrisy on the debt limit” is one of those moments of “political behavior that can only be dubbed Super-Duper Hypocrisy So Brazen They Must Really Think We’re Idiots.”

9. Tax Cuts Drive the Next Decade of Debt
“President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying,” the New York Times’ David Leonhardt explained in 2009, adding, “The economic growth under George W. Bush did not generate nearly enough tax revenue to pay for his agenda, which included tax cuts, the Iraq war, and Medicare prescription drug coverage.” That fall, former Reagan Treasury official Bruce Bartlett offered just that kind of honesty to the born again deficit virgins of his Republican Party. Noting that the FY2009 deficit of $1.4 trillion was solely due to lower tax revenues and not increased spending, Bartlett concluded:

“I think there are grounds on which to criticize the Obama administration’s anti-recession actions. But spending too much is not one of them. Indeed, based on this analysis, it is pretty obvious that spending – real spending on things like public works – has been grossly inadequate. The idea that Reagan-style tax cuts would have done anything is just nuts.”

Which is exactly right. Thanks to the steep recession, as the Congressional Budget Office (CBO) and others have documented time and again, the overall federal tax burden as a percentage of GDP is now down to levels not seen since Harry Truman was in the White House. (The two-year tax cut compromise in December didn’t help any, adding $400 billion to the deficit this year and next.) But is the Bush tax cuts themselves, which Republicans want to make permanent and then (as the Ryan budget mandates) lower further, which account for much of the revenue drain into the future.

As a recent analysis by the Center on Budget and Policy Priorities showed, over the next decade the Bush tax cuts account for more of the nation’s debt than Iraq, Afghanistan, TARP, the stimulus, and revenue lost to the recession combined:

10. $3 Trillion Tab for Unfunded Wars Remains Unpaid
Over the next ten years, the costs of America’s wars in Iraq and Afghanistan will decline as the U.S. commitments there come to an end. But almost ten years, 6,000 U.S. dead and over a trillion dollars after the attacks of September 11, it’s time to pay for our wars.

In May, the National Journal estimated that the total cost to the U.S. economy of the war against Al Qaeda will reach $3 trillion. In 2008, Nobel Prize-winning economistJoseph Stiglitz put the price of the Iraq conflict alone at $3 trillion.

But by 2020 and beyond, the direct cost to U.S. taxpayers could reach $3 trillion. In March, the Congressional Research Service put the total cost of the wars at $1.28 trillion, including $806 billion for Iraq and $444 billion for Afghanistan. For the 2012 fiscal year which begins on October 1, President Obama asked for $117 billion more. (That war-fighting funding is over and above Secretary Gates’ $553 billion Pentagon budget request for next year.)

But in addition to the roughly $1.5 trillion tally for both conflicts through the theoretical 2014 American draw down date in Afghanistan, the U.S. faces staggering bills for veterans’ health care and disability benefits. Last May, an analysis by the Center for American Progress estimated the total projected total cost of Iraq and Afghanistan veterans’ health care and disability could reach between $422 billion to $717 billion. Reconstruction aid and other development assistance represent tens of billions more, as does the additional interest on the national debt. And none of the above counts the expanded funding for the new Department of Homeland Security.

But that two-plus trillion dollar tab doesn’t account for the expansion of the United States military since the start of the “global war on terror.” As a percentage of the American economy, defense spending jumped from 3.1% in 2001 to 4.8% last year. While ThinkProgress noted that the Pentagon’s FY 2012 ask is “the largest request ever since World War II,” McClatchy explained:

Such a boost would mark the 14th year in a row that Pentagon spending has increased, despite the waning U.S. presence in Iraq. In dollars, Pentagon spending has more than doubled in 10 years. Even adjusted for inflation, the Defense Department budget has risen 65% in the past decade.

Even as the World Trade Center site was still smoldering, Republicans insisted Al Qaeda represented an existential threat to the United States. President Bush repeatedly compared 9/11 to Pearl Harbor and his war on terror to World War II. But he never asked Americans to join the military or sacrifice at home. Instead, Bush told us to go shopping and “get down to Disney World.”

From a public policy standpoint, post-9/11 America in no way resembles FDR’s response to Pearl Harbor. George W. Bush was the first modern president to cut taxes during wartime. Barack Obama was the second.

Its time, as Bernie Sanders, Al Franken and the Congressional Progressive Caucus each proposed, to begin paying for the unfunded conflicts fought in our name.”

Emphasis Mine

The Ideological Crisis of Western Capitalism

A decade ago, in the midst of an economic boom, the US faced a surplus so large that it threatened to eliminate the national debt. Unaffordable tax cuts and wars, a major recession, and soaring health-care costs – fueled in part by the commitment of George W. Bush’s administration to giving drug companies free rein in setting prices, even with government money at stake – quickly transformed a huge surplus into record peacetime deficits.

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Joseph E. Stiglitz, Project Syndicate From Truthout

“Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Even in its hey-day, from the early 1980’s until 2007, American-style deregulated capitalism brought greater material well-being only to the very richest in the richest country of the world. Indeed, over the course of this ideology’s 30-year ascendance, most Americans saw their incomes decline or stagnate year after year.

Moreover, output growth in the United States was not economically sustainable. With so much of US national income going to so few, growth could continue only through consumption financed by a mounting pile of debt.

I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government. Alas, that has not been the case. On the contrary, a resurgence of right-wing economics, driven, as always, by ideology and special interests, once again threatens the global economy – or at least the economies of Europe and America, where these ideas continue to flourish.

In the US, this right-wing resurgence, whose adherents evidently seek to repeal the basic laws of math and economics, is threatening to force a default on the national debt. If Congress mandates expenditures that exceed revenues, there will be a deficit, and that deficit has to be financed. Rather than carefully balancing the benefits of each government expenditure program with the costs of raising taxes to finance those benefits, the right seeks to use a sledgehammer – not allowing the national debt to increase forces expenditures to be limited to taxes.

This leaves open the question of which expenditures get priority – and if expenditures to pay interest on the national debt do not, a default is inevitable. Moreover, to cut back expenditures now, in the midst of an ongoing crisis brought on by free-market ideology, would inevitably simply prolong the downturn.

A decade ago, in the midst of an economic boom, the US faced a surplus so large that it threatened to eliminate the national debt. Unaffordable tax cuts and wars, a major recession, and soaring health-care costs – fueled in part by the commitment of George W. Bush’s administration to giving drug companies free rein in setting prices, even with government money at stake – quickly transformed a huge surplus into record peacetime deficits.

The remedies to the US deficit follow immediately from this diagnosis: put America back to work by stimulating the economy; end the mindless wars; rein in military and drug costs; and raise taxes, at least on the very rich. But the right will have none of this, and instead is pushing for even more tax cuts for corporations and the wealthy, together with expenditure cuts in investments and social protection that put the future of the US economy in peril and that shred what remains of the social contract. Meanwhile, the US financial sector has been lobbying hard to free itself of regulations, so that it can return to its previous, disastrously carefree, ways.

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But matters are little better in Europe. As Greece and others face crises, the medicine du jour is simply timeworn austerity packages and privatization, which will merely leave the countries that embrace them poorer and more vulnerable. This medicine failed in East Asia, Latin America, and elsewhere, and it will fail in Europe this time around, too. Indeed, it has already failed in Ireland, Latvia, and Greece.

There is an alternative: an economic-growth strategy supported by the European Union and the International Monetary Fund. Growth would restore confidence that Greece could repay its debts, causing interest rates to fall and leaving more fiscal room for further growth-enhancing investments. Growth itself increases tax revenues and reduces the need for social expenditures, such as unemployment benefits. And the confidence that this engenders leads to still further growth.

Regrettably, the financial markets and right-wing economists have gotten the problem exactly backwards: they believe that austerity produces confidence, and that confidence will produce growth. But austerity undermines growth, worsening the government’s fiscal position, or at least yielding less improvement than austerity’s advocates promise. On both counts, confidence is undermined, and a downward spiral is set in motion.

Do we really need another costly experiment with ideas that have failed repeatedly? We shouldn’t, but increasingly it appears that we will have to endure another one nonetheless. A failure of either Europe or the US to return to robust growth would be bad for the global economy. A failure in both would be disastrous – even if the major emerging-market countries have attained self-sustaining growth. Unfortunately, unless wiser heads prevail, that is the way the world is heading.”

Emphasis Mine

see:http://www.truth-out.org/ideological-crisis-western-capitalism/1310127895

The Failure of The Free Market…

After all, the threat to a healthy democracy from concentrated wealth had been known to American leaders for generations.

chasdarwin2 Comments

From Alternet, By Robert Parry

If Ayn Rand and the Free Market Fetishists Were Right, We’d be Living in a Golden Age — Does This Look Like a Golden Age to You?

The lavish rewards flowing to the titans of industry have not exactly transformed society into a vibrant force for beneficial progress.

If the “free-market” theories of Ayn Rand and Milton Friedman were correct, the United States of the last three decades should have experienced a golden age in which the lavish rewards flowing to the titans of industry would have transformed the society into a vibrant force for beneficial progress.

After all, it has been faith in “free-market economics” as a kind of secular religion that has driven U.S. government policies – from the emergence of Ronald Reagan through the neo-liberalism of Bill Clinton into the brave new world of House Republican budget chairman Paul Ryan.

By slashing income tax rates to historically low levels – and only slightly boosting them under President Clinton before dropping them again under George W. Bush – the U.S. government essentially incentivized greed or what Ayn Rand liked to call “the virtue of selfishness.”

Further, by encouraging global “free trade” and removing regulations like the New Deal’s Glass-Steagall separation of commercial and investment banks, the government also got out of the way of “progress,” even if that “progress” has had crushing results for many middle-class Americans.

True, not all the extreme concepts of author/philosopher Ayn Rand and economist Milton Friedman have been implemented – there are still programs like Social Security and Medicare to get rid of – but their “magic of the market” should be glowing by now.

We should be able to assess whether laissez-faire capitalism is superior to the mixed public-private economy that dominated much of the 20th Century.

The old notion was that a relatively affluent middle class would contribute to the creation of profitable businesses because average people could afford to buy consumer goods, own their own homes and take an annual vacation with the kids. That “middle-class system,” however, required intervention by the government as the representative of the everyman.

Beyond building a strong infrastructure for growth – highways, airports, schools, research programs, a safe banking system, a common defense, etc. – the government imposed a progressive tax structure that helped pay for these priorities and also discouraged the accumulation of massive wealth.

After all, the threat to a healthy democracy from concentrated wealth had been known to American leaders for generations.

A century ago, it was Republican President Theodore Roosevelt who advocated for a progressive income tax and an estate tax. In the 1930s, it was Democratic President Franklin Roosevelt, who dealt with the economic and societal carnage that under-regulated financial markets inflicted on the nation during the Great Depression.

With those hard lessons learned, the federal government acted on behalf of the common citizen to limit Wall Street’s freewheeling ways and to impose high tax rates on excessive wealth.

So, during Dwight Eisenhower’s presidency of the 1950s, the marginal tax rate on the top tranche of earnings for the richest Americans was about 90 percent. When Ronald Reagan took office in 1981, the top rate was still around 70 percent.

Discouraging Greed

Greed was not simply frowned upon; it was discouraged.

Put differently, government policy was to maintain some degree of egalitarianism within the U.S. political-economic system. And to a remarkable degree, the strategy worked.

The American middle class became the envy of the world, with otherwise average folk earning enough money to support their families comfortably and enjoy some pleasures of life that historically had been reserved only for the rich.

Without doubt, there were serious flaws in the U.S. system, especially due to the legacies of racism and sexism. And it was when the federal government responded to powerful social movements that demanded those injustices be addressed in the 1960s and 1970s, that an opening was created for right-wing politicians to exploit resentments among white men, particularly in the South.

By posing as populists hostile to “government social engineering,” the Right succeeded in duping large numbers of middle-class Americans into seeing their own interests – and their “freedom” – as in line with corporate titans who also decried federal regulations, including those meant to protect average citizens, like requiring seat belts in cars and discouraging cigarette smoking.

Amid the sluggish economy of the 1970s, the door swung open wider for the transformation of American society that had been favored by the likes of Ayn Rand and Milton Friedman, putting the supermen of industry over the everyman of democracy.

Friedman tested out his “free-market” theories in the socio-economic laboratories of brutal military dictatorships in Latin America, most famously collaborating with Chile’s Gen. Augusto Pinochet who crushed political opponents with torture and assassinations.

Ayn Rand became the darling of the American Right with her books, such asAtlas Shrugged, promoting the elitist notion that brilliant individuals represented the engine of society and that government efforts to lessen social inequality or help the average citizen were unjust and unwise.

The Pied Piper

Yet, while Rand and Friedman gave some intellectual heft to “free-market” theories, Ronald Reagan proved to be the perfect pied piper for guiding millions of working Americans in a happy dance toward their own serfdom.

In his first inaugural address, Reagan declared that “government is the problem” – and many middle-class whites cheered.

However, what Reagan’s policies meant in practice was a sustained assault on the middle class: the busting of unions, the export of millions of decent-paying jobs, and the transfer of enormous wealth to the already rich. The tax rates for the wealthiest were slashed about in half. Greed was incentivized.

Ironically, the Reagan era came just as technology – much of it created by government-funded research – was on the cusp of creating extraordinary wealth that could have been shared with average Americans. Those benefits instead accrued to the top one or two percent.

The rich also benefited from the off-shoring of jobs, exploiting cheap foreign labor and maximizing profits. The only viable way for the super-profits of “free trade” to be shared with the broader U.S. population was through taxes on the rich. However, Reagan and his anti-government true-believers made sure that those taxes were kept at historically low levels.

The Ayn Rand/Milton Friedman theories may have purported to believe that the “free market” would somehow generate benefits for the society as a whole, but their ideas really represented a moralistic frame which held that it was somehow right that the wealth of the society should go to its “most productive” members and that the rest of us were essentially “parasites.”

Apparently, special people like Rand also didn’t need to be encumbered by philosophical consistency. Though a fierce opponent of the welfare state, Rand secretly accepted the benefits of Medicare after she was diagnosed with lung cancer, according to one of her assistants.

She connived to have Evva Pryor, an employee of Rand’s law firm, arrange Social Security and Medicare benefits for Ann O’Connor, Ayn Rand using an altered spelling of her first name and her husband’s last name.

In 100 Voices: An Oral History of Ayn Rand, Scott McConnell, founder of the Ayn Rand Institute’s media department, quoted Pryor as justifying Rand’s move by saying: “Doctors cost a lot more money than books earn and she could be totally wiped out.” Yet, it didn’t seem to matter much if “average” Americans were wiped out.

Essentially, the Right was promoting the Social Darwinism of the 19th Century, albeit in chic new clothes. The Gilded Age from a century ago was being recreated behind Reagan’s crooked smile, Clinton’s good-ole-boy charm and George W. Bush’s Texas twang.

Whenever the political descendants of Theodore and Franklin Roosevelt tried to steer the nation back toward programs that would benefit the middle class and demand greater sacrifice from the super-rich, the wheel was grabbed again by politicians and pundits shouting the epithet, “tax-and-spend.”

Many average Americans were pacified by reminders of how Reagan made them feel good with his rhetoric about “the shining city on the hill.”

The Rand/Friedman elitism also remains alive with today’s arguments from Republicans who protest the idea of raising taxes on businessmen and entrepreneurs because they are the ones who “create the jobs,” even if there is little evidence that they are actually creating American jobs.

Rep. Paul Ryan, R-Wisconsin, who is leading the fight to replace Medicare with a voucher system that envisions senior citizens buying health insurance from profit-making companies, cites Ayn Rand as his political inspiration.

A Land for Billionaires

The consequences of several decades of Reaganism and its related ideas are now apparent. Wealth has been concentrated at the top with billionaires living extravagant lives that not even monarchs could have envisioned, while the middle class shrinks and struggles, with one everyman after another being shoved down into the lower classes and into poverty.

Millions of Americans forego needed medical care because they can’t afford health insurance; millions of young people, burdened by college loans, crowd back in with their parents; millions of trained workers settle for low-paying jobs; millions of families skip vacations and other simple pleasures of life.

Beyond the unfairness, there is the macro-economic problem which comes from massive income disparity. A healthy economy is one where the vast majority people can buy products, which can then be manufactured more cheaply, creating a positive cycle of profits and prosperity.

With Americans unable to afford the new car or the new refrigerator, American corporations see their domestic profit margins squeezed. So they are compensating for the struggling U.S. economy by expanding their businesses abroad in developing markets, but they also keep their profits there.

There are now economic studies that confirm what Americans have been sensing in their own lives, though the mainstream U.S. news media tends to attribute these trends to cultural changes, rather than political choices.

For instance, the Washington Post published a lengthy front-page article on June 19, describing the findings of researchers who gained access to economic data from the Internal Revenue Service which revealed which categories of taxpayers were making the high incomes.

To the surprise of some observers, the big bucks were not flowing primarily to athletes or actors or even stock market speculators. America’s new super-rich were mostly corporate chieftains.

As the Post’s Peter Whoriskey framed the story, U.S. business underwent a cultural transformation from the 1970s when chief executives believed more in sharing the wealth than they do today.

The article cites a U.S. dairy company CEO from the 1970s, Kenneth J. Douglas, who earned the equivalent of about $1 million a year. He lived comfortably but not ostentatiously. Douglas had an office on the second floor of a milk distribution center, and he turned down raises because he felt it would hurt morale at the plant, Whoriskey reported.

However, just a few decades later, Gregg L. Engles, the current CEO of the same company, Dean Foods, averages about 10 times what Douglas made. Engles works in a glittering high-rise office building in Dallas; owns a vacation estate in Vail, Colorado; belongs to four golf clubs; and travels in a $10 million corporate jet. He apparently has little concern about what his workers think.

“The evolution of executive grandeur – from very comfortable to jet-setting – reflects one of the primary reasons that the gap between those with the highest incomes and everyone else is widening,” Whoriskey reported.

“For years, statistics have depicted growing income disparity in the United States, and it has reached levels not seen since the Great Depression. In 2008, the last year for which data are available, for example, the top 0.1 percent of earners took in more than 10 percent of the personal income in the United States, including capital gains, and the top 1 percent took in more than 20 percent.

“But economists had little idea who these people were. How many were Wall Street financiers? Sports stars? Entrepreneurs? Economists could only speculate, and debates over what is fair stalled. Now a mounting body of economic research indicates that the rise in pay for company executives is a critical feature in the widening income gap.”

Jet-Setting Execs

The Post article continued: “The largest single chunk of the highest-income earners, it turns out, are executives and other managers in firms, according to a landmark analysis of tax returns by economists Jon Bakija, Adam Cole and Bradley T. Heim. These are not just executives from Wall Street, either, but from companies in even relatively mundane fields such as the milk business.

“The top 0.1 percent of earners make about $1.7 million or more, including capital gains. Of those, 41 percent were executives, managers and supervisors at non-financial companies, according to the analysis, with nearly half of them deriving most of their income from their ownership in privately-held firms.

“An additional 18 percent were managers at financial firms or financial professionals at any sort of firm. In all, nearly 60 percent fell into one of those two categories. Other recent research, moreover, indicates that executive compensation at the nation’s largest firms has roughly quadrupled in real terms since the 1970s, even as pay for 90 percent of America has stalled.”

While these new statistics are striking – suggesting a broader problem with high-level greed than might have been believed – the Post ducked any political analysis that would have laid blame on Ronald Reagan and various right-wing economic theories.

In a follow-up editorial on June 26, the Post lamented the nation’s growing income inequality but shied away from proposing higher marginal tax rates on the rich or faulting the past several decades of low tax rates. Instead, the Post suggested perhaps going after deductions on employer-provided health insurance and mortgage interest, tax breaks that also help middle-class families.

It appears that in Official Washington and inside the major U.S. news media the idea of learning from past presidents, including the Roosevelts and Dwight Eisenhower, is a non-starter. Instead there’s an unapologetic embrace of the theories of Ayn Rand and Milton Friedman, an affection that can pop out at unusual moments.

Addressing a CNBC “Fast Money” panel last year, movie director Oliver Stone was taken aback when one CNBC talking head gushed how Stone’s “Wall Street” character Gordon Gecko had been an inspiration, known for his famous comment, “Greed is good.” A perplexed Stone responded that Gecko, who made money by breaking up companies and eliminating jobs, was meant to be a villain.

However, the smug attitude of the CNBC stock picker represented a typical tribute to Ronald Reagan’s legacy. After all, greed did not simply evolve from some vague shift in societal attitudes, as the Post suggests. Rather, it was stimulated – and rewarded – by Reagan’s tax policies.

Reagan’s continued popularity also makes it easier for today’s “no-tax-increase” crowd to demand only spending cuts as a route to reducing the federal debt, an ocean of red ink largely created by the tax cuts of Ronald Reagan and George W. Bush.

Tea Partiers, in demanding even more cuts in government help for average citizens and even more tax cuts for the rich, represent only the most deluded part of middle-class America. A recent poll of Americans rated Reagan the greatest U.S. president ever, further enshrining his anti-government message in the minds of many Americans, even those in the battered middle class.

When a majority of Americans voted for Republicans in Election 2010 – and with early polls pointing toward a likely GOP victory in the presidential race of 2012 – it’s obvious that large swaths of the population have no sense of what’s in store for them as they position their own necks under the boots of corporate masters.

The only answer to this American crisis would seem to be a reenergized and democratized federal government fighting for average citizens and against the greedy elites. But – after several decades of Reaganism, with the “free market” religion the new gospel of the political/media classes – that seems a difficult outcome to achieve.

see:http://www.alternet.org/media/151426/why_do_people_believe_stupid_stuff%2C_even_when_they%27re_confronted_with_the_truth/

Bush Tax Cuts, a Decade Later: How They Helped Break the Economy

It seems hard to believe but, just a decade ago, the deficit didn’t exist and there were surpluses as far as the eye could see. The United States was on track to eliminate the national debt altogether by 2010, making the country debt free for the first time in nearly two centuries.

chasdarwin1 Comment

From Alternet. By Steve Benen | Sourced from Washington Monthly

It seems hard to believe but, just a decade ago, the deficit didn’t exist and there were surpluses as far as the eye could see. The United States was on track to eliminate the national debt altogether by 2010, making the country debt free for the first time in nearly two centuries.

Then 2001 happened. In fact, a year ago this week, George W. Bush’s tax policy became law, and to honor the occasion, Slate’s Annie Lowrey tried to “find something redeeming” to say about them. Alas ,she came up empty, concluding that they’ve “been a failure in every conceivable way.”

Ten years ago this week, the policy’s conservative champions made bold predictions about what the tax cuts would do — massive job growth, vast new wealth, higher incomes, smaller government, and balanced budgets. None of these predictions proved to be even remotely true.

The fine folks at the Center on Budget and Policy Priorities put togetherseveral worthwhile charts this week to mark the 10th anniversary of this tragic mistake, but this one’s my favorite.

But the spectacular failure of the policy is really only part of the story. Indeed, to a certain extent, looking back at recent history only helps provide a salient foundation for the more important problem: the fact that we haven’t learned anything from the mistake.

Well, perhaps “we” is the wrong word. Some of us have learned quite a bit. But in the Republican Party, we have lawmakers who continue to insist that their votes in support of this monstrosity were fully justified. They won’t apologize, they have no regrets, and they’d rather cause a deliberate recession than any allow a single penny of tax increases to be imposed on anyone.

And on the presidential campaign trail, it’s arguably even worse. Tim Pawlenty is pushing a tax-cut plan that’s triple the size of Bush’s tax-cut package, convinced that it will — you guessed it — generate massive job growth, vast new wealth, higher incomes, smaller government, and balanced budgets.

Worse, in the process, Pawlenty is setting a bar and challenging his presidential rivals to follow him. He wants $11.6 trillion in tax cuts — will other candidates match that? Surpass it? The race is on to see which Republican presidential candidate can be the most ridiculously irresponsible, and the competition will no doubt be fierce.

We are, in other words, talking about a party that tried an ambitious and radical experiment, saw it fail, and decided what’s needed now is significantly more failure.

 I mind that Republicans got this wrong and we’ll be dealing with the consequences for many years to come, but I really mind that Republicans think they were right. As Ezra noted the other day, the party not only “hasn’t learned anything from the failure of the Bush tax cuts,” it’s actually managed to “unlearn some things, too.”

Emphasis Mine.

see:http://www.alternet.org/newsandviews/article/612959/bush_tax_cuts%2C_a_decade_later%3A_how_they_helped_break_the_economy/#paragraph2

Guidelines for Dem Success in Nov 2010

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Robert Creamer HuffPost:

“The first rule for Democratic success this November is the immutable iron law of politics: if you’re on the defense you’re losing. Who ever is on the offensive almost always wins elections.

That’s why Democratic victory requires that this election cannot simply be a referendum on the speed with which Democrats have been cleaning up the economic mess created by the Republicans and their allies on Wall Street. It must be a choice between Democrats who are charting a new path forward out of the economic ditch and the failed economic policies of the Republicans that drove us into that ditch in the first place. Democrats must make it clear that if the Republicans once again get their hands on the keys to the economy, those same, reckless failed policies will result in yet another economic catastrophe.

It’s fine, for instance, for Democratic office holders to explain the details of the Health Care bill. After all, the more that people know about it, the more they like it. But that explanation should not constitute the be all and end all of the Democratic health care message. We have to challenge the Republicans — who have been bought and paid for by the insurance companies — to justify their vote against preventing those companies from discriminating against people with pre-existing conditions. We have to challenge them to explain their proposals to eliminate Medicare and replace it with vouchers for private insurance.

The same goes in every arena. And it is doubly important because voters vote for people — not policy positions. Voters want leaders who are strong and self confident — not leaders who spend their days in a defensive crouch. They want leaders who stand up straight and defend their deeply held values — not leaders who bob and weave.

The thing we have to remember most is that Democratic positions on the issues – and the values that underlie them — are very popular. Voters generally respond very favorable to candidates who stand up for those values — for average Americans not the wealthy and special interests….”

Great Advice – lets use it.

Emphasis Mine.

see: http://www.huffingtonpost.com/robert-creamer/what-is-the-first-rule-fo_b_656841.html

Union, Yes! – Global Warming, No!

chasdarwin1 Comment

At the Ohio Conference on Labor in the New Energy Economy, held at the Crown Center Plaza in Cleveland on May 18, 2009, a gathering of laborers, unionists, activists, enviromentalists, and academics considered:

  o Can we create good, family- sustaining,  union jobs,

  o that thrive in a green, efficent, ecologically correct and economically sustainable environment,

  o and produce green products and services?

The conclusion?  Yes We Can!  We all breathe the same air, and when we all pull together, we will succeed!

Unions are not part of the problem, but an integral part of the solution; what has worked in the past is not part of the solution, but part of the problem.

Thanks to Sherrod Brown, Policy Matters Ohio, North Shore Federation of Labor, COWS, and the Apollo Alliance.

Feeling Depressed?

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Robert Reich, in Truthout: ”   The March employment numbers, out this morning, are bleak: 8.5 percent of Americans officially unemployed, 663,000 more jobs lost. But if you include people who are out of work and have given up trying to find a job, the REAL UNEMPLOYMENT rate is 9 percent. And if you include people working part time who’d rather be working full time, it’s now up to 15.6 percent. One in every six workers in America is now either unemployed or underemployed. ”

One of the interesting aspects of this economy is that we are hearing – for the first time in the general public, that the stated unemployment rate is low.  More: ”   All this means that the real economy will need a LARGER STIMULUS than the $787 billion already enacted. To be sure, only a small fraction of the $787 billion has been turned into new jobs so far. The money is still moving out the door. But today’s bleak jobs report shows that the economy is so far below its productive capacity that much more money will be needed.

This is still not the Great Depression of the 1930s, but it is a Depression. And the only way out is government spending on aVERY LARGE SCALE. We should stop worrying about Wall Street. Worry about American workers. Use money to build up Main Street, and the future capacities of our workforce.

ENERGY INDEPENDENCE and a non-carbon economy should be the equivalent of a war mobilization. Hire Americans to weatherize and insulate homes across the land. Don’t encourage General Motors or any other auto company to shrink. USE THE AUTO MAKERS’ SPARE capacity to make buses, new wind turbines, and electric cars (why let the Chinese best us on this?). Enlarge public transit systems.

Meanwhile, extend our educational infrastructure. So many young people are out of work that they should be using this time to improve their skills and capacities. Expand community colleges. Enlarge Pell Grants. Extend job-training opportunities to the unemployed, so they can learn new skills while they’re collecting unemployment benefits.

Finally, ACCELERATE universal health care.” (Emphasis mine).

see:http://www.truthout.org/040409C

Love, war, and economic disaster

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may indeed  make surprising bedfellows, an example of which was the Sierra Club sponsored event at the Great Lakes Science Center in Cleveland  March 31st on the Blue Green Alliance: a coming together of Blue (Labor Unions), and Green (‘tree hugging’ Sierra Club types ) – a concurrence neither the  environmentalists nor the ‘hard hats’ of the late sixties could ever have imagined.

The panelists were:

o Jesus Leon Santos – a Mexican progressive agriculturist, and winner of the 2008 Goldman Environmental prize.

o Jim Clark – VP of IUE-CWA.

o Margrete Strand – Sierra Club National office.

The theme was the impact of “Free” Trade on Labor and the ecology, and the promise of a new, Green, sustainable, economy.

Senior Santos presentation was an inspiring story of a grass roots organization which is working on recovering savaged land through reforestation, and encouraging others to buy local food products.

Mr. Clark gave a specific example of how the CFL bulb had been developed in Ohio, and then made oversees to avoid both living wages and environmental concerns.

Ms. Strand summarized the Blue Green concept, and pointed the way to action.

Mr. John Ryan of Sherrod’s office(former CWA) also spoke.

Questions and answers followed.

Those present were rewarded.

N.B.: Senior Santos provided an answer to the ‘ WWJD’ question: He’d plant trees!

There is a chance that the worst is over…

Today, stocks are up roughly 20 percent in the past two weeks, the biggest such short-term rally since 1938

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“In October, all three asset classes — stocks, bonds and commodities such as oil and farm products — were in freefall. Today, stocks are up roughly 20 percent in the past two weeks, the biggest such short-term rally since 1938.” 

Biggest short term rally since 1938?

From McClatchy: “WASHINGTON — With the Dow Jones Industrial Average rising around 20 percent over the past few weeks, a down Friday notwithstanding, the question on many lips is whether the stock market has hit bottom and, if so, when might the broader economy follow?

Stock prices often reflect expectations of how the economy will be faring six months or so into the future. If the recent rise in stock prices reflects that the market has bottomed out and is starting a bull run — as some prominent analysts tentatively suggest — that would point to a turnaround for the economy by late summer or early fall.

Few analysts are willing to declare that we’ve hit bottom without hedging, especially since there’s been plenty of premature speculation before about a market bottom during the past 16 months of recession. As if to mock the budding optimism, the Dow closed down Friday by 148.38 points to 7,776.18.

Most analysts now agree, however, that there are some encouraging shafts of light after months of pitch-black news.

“The best news now is that despite the worst . . . daily litany of horrible news, the strongest renewed bank fears, despite all of that, we’ve got stocks today essentially where they were in October,” said James Paulsen, chief investment strategist for Wells Capital Management, owned by the giant bank Wells Fargo.”

see: http://www.mcclatchydc.com/227/story/64992.html

Who’s on first?

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Once again, our President has been misquoted in the mainstream.  From HuffPost, on The View:

“Elisabeth then asked if Senator McCain felt vindicated at having called the fundamentals of the economy strong during his campaign, only for President Obama to use similar language recently. “Yeah, I think so,” Meghan responded. “It’s ironic it’s the exact language and the exact terms he used earlier. I am sure he does feel vindicated.”

However, Obama did not use exactly the same language as his former rival. “If we are keeping focused on all the fundamentally sound aspects of our economy, all the outstanding companies, workers, all the innovation and dynamism in this economy, then we’re going to get through this,”Obama said last week. McCain simply stated that the “fundamentals of our economy are strong.”

Once again, what the President, who choses words with care, actually said, and, what was paraphrased, are far apart.

see; http://www.huffingtonpost.com/2009/03/16/meghan-mccain-on-the-view_n_175319.html