11.09.09
Imperfect Information Undermines “Free-market” Economies
It’s no secret that a variety of interested parties exert influence over both economic policies and the general understanding (and reporting) of the effects of changes, just as they do in energy, health care, education, the financial sector, and/or anything else that the Congress or various federal agencies have a role in shaping. Misinformation can lead a seemingly honest, open debate far afield from reality, inhibiting the efficiency of the process while at the same time warping the outcome.
If you don’t understand fiduciary relationships, and you still think most corporate actions reflect the same sort of priorities that pertain when a truly small business is owned by a single person, or a couple, you’re missing a key factor. Shareholders, for instance, seldom have any significant influence on the pay (or bonuses) of officers engaged in potentially risky decisions at major corporations – auto manufacturers, for instance, or the financial institutions that crumbled on Wall Street as the financial crisis became obvious to virtually everybody at home and abroad near the end of the Bush administration, when we ended up dumping billions of dollars into banks without any obvious benefit (it certainly didn’t stimulate consumer lending, as both Bush and early Obama administration initiatives were intended to do.)
In fact, if you look closely, the problem of banks that are “too big to fail” is getting worse, not better, due to consolidation. But that’s not what they tell Congress or the media; the bankers speak instead of “economies of scale” to justify even further growth. Banks are tied to the model that’s ruled economic policy for decades: debt-fueled consumer spending.
Those who talk about concerns over finite resources, such as clean water, are scoffed at, and the countering rhetoric lumps them in with “climate alarmists” and “tree huggers” in such a way that genuine free market forces are not even close to determining the value of any natural resource that cannot be mined – with the curious exception that there are some cities who have privatized their formerly municipally controlled water systems, which does begin to result in a certain market value being placed on that particular resource. Of course, once a profit motive starts driving the price up, citizens in the U.S. and abroad often agitate to re-socialize their water supplies, in an era when “socializing” is used by some to imply everything that went wrong with every non-U.S. form of government.
Similarly there’s an obvious bias in the talk about income tax cuts – it generally originates from those who are well to do, and stirs the emotions of those who have much less, but more importantly if one looks closely at the data, there’s been a strong correlation in the past between those with wealth and those whose tax rates truly go down under most of the recent approaches. Would tax cuts stimulate the economy? Assuredly so – but in what way? 
A tax cut on income doesn’t have the same effect as, say, a tax cut (or tax credit/investment credit) for spending consistent with our national priorities, such as alternative energy sources, or research and education, etc. Such selective, targeted changes spur spending in specific areas — a very straightforward function of supply and demand, and the result is tangible — money flows to those areas, stimulating job growth and additional investment without any necessary growth of the government (growth which makes most of us justifiably cautious in the wake of the Bush administration’s under-reported increases.)
The reason that governments trying socialism, such as the USSR, to manage resources and markets for the good of the people have consistently floundered and failed is that they don’t — and can’t — have good enough centralized information to succeed making the rapid decisions necessary to control what is arguably the most intricate challenge of any “man-made” system, the decentralized activity of a vibrant, balanced economy. Markets are efficient at managing that information; but we’ve seen a dramatic example of why they cannot be expected to function for the good of the consumers when government fails to regulate those with the profit motives.
Consumers, too, need access to better information than they typically get under the current system, no matter if you’re considering tax-cuts, politics, the price of peanut butter, new home-buyer credits, or anything else. When misinformation is tolerated (or encouraged) it undermines the effectiveness of capitalism. Free markets rely on timely, accurate information – we need to consider new incentives for the reporting of “news” and information systems we base our choices on, or capitalism is absolutely doomed to implode.
10.27.09
Recent tax cuts increased the 2009 deficit
Bruce Bartlett was a domestic policy adviser to President Ronald Reagan, and conservative supply sider. He did a little simple math and uncovered that the cause of the deficit increase is revenue-related.
The increase cannot be blamed on spending – the Obama administration’s spending has been more conservative than was forecast – $28 billion less than was predicted. This math strongly suggests that more tax cuts, as some in the GOP are advocating, would actually further increase the deficit; tax cuts were unambiguously a major factor in the problematic revenue decline that underlies the deficit growth.
Mr. Bartlett, in a column dated October 24th, was responding to the theory that tax cuts were the best way to solve the deficit, as was advanced by Mort Zuckerman recently in a New York Daily News opinion piece.
Here’s an excerpt:
According to the Congressional Budget Office’s January 2009 estimate for fiscal year 2009, outlays were projected to be $3,543 billion and revenues were projected to be $2,357 billion, leaving a deficit of $1,186 billion. Keep in mind that these estimates were made before Obama took office, based on existing law and policy, and did not take into account any actions that Obama might implement.
Therefore, unless one thinks that McCain would have somehow or other raised taxes and cut spending (with a Democratic Congress), rather than enacting a stimulus of his own, then a deficit of $1.2 trillion was baked in the cake the day Obama took office. Any suggestion that McCain would have brought in a lower deficit is simply fanciful.
Now let’s fast forward to the end of fiscal year 2009, which ended on September 30. According to CBO, it ended with spending at $3,515 billion and revenues of $2,106 billion for a deficit of $1,409 billion.
To recap, the deficit came in $223 billion higher than projected, but spending was $28 billion [less] and revenues were $251 billion less than expected. Thus we can conclude that more than 100 percent of the increase in the deficit since January is accounted for by lower revenues. Not one penny is due to higher spending.
It turns out you have to go back to 1950 to find a year when federal revenues were lower as a share of GDP. So Bartlett, who is happy to say there is some basis for criticism of the Obama administration’s anti-recession tactics, points out that excessive spending isn’t the problem.
In fact, with much of the revenue that was not collected due to the tax cuts sitting more-or-less idle in savings accounts, and certainly not trickling down to stimulate job growth, or bank lending, etc., Bruce Bartlett concludes that:
The idea that Reagan-style tax cuts would have done anything is just nuts.
Bartlett’s article is a must-read for anybody involved in the U.S. economy – which should include every voter and pundit, not just those elected to Congress.
10.22.09
Income Redistribution and the IRS
The non-partisan Center on Budget and Priority Policy, a research group forcused on federal and state fiscal policies, looked at IRS data and stated in September that:
“Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928, according to an analysis of newly released IRS data by economists Thomas Piketty and Emmanuel Saez.”
In fact, with the exception of a slight reversal that correlates with the Bill Clinton presidency, the chart of this IRS data, reproduced below, reveals an obvious trend in favor of the wealthy.
Class Warfare?
In point of fact, Piketty and Saez relied on several different income concepts and each naturally results in slightly different estimates of the share of income going to each group, so the Center on Budget and Priority Policy conclusion that the share of the nation’s income flowing to the top earning households increased from 16.9% in 2002 to 23.5% in 2007 could have “quibble room.” Yet the fact remains that change represents a larger share than at any point since 1928.
I strongly urge you to read the entire article, and abandon any sense that the wealthy in America are either paying a disproportionate share of their income(s) or losing some mythical class warfare when people talk about income redistribution or raising taxes.
Taxation without representation
It’s lately become fashionable in certain circles to cite the American Revolution as an anti-tax movement. Nothing could be more misleading, and I suspect many of those who rely on the tea bag as a new rallying symbol neither drink tea nor are conversant with either the series of
tax changes, such as the molasses tax (6p/gallon,) which contributed to the uprising against taxation without representation or with the impact of the choice to drink tea over coffee.
Surely many of those who opine that they, “don’t want our government to do anything at all,” and argue in favor of states’ rights, etc., do, in fact, prefer having national immigration laws (and agents to enforce them,) a standing army to provide for the common defense, and even publicly built and maintained highways over the free-market alternative as practiced in present-day Somalia. Yet there’s more to their position than simply a media-distorted, sound-bite-fed outcry being exploited for ratings and ad revenues.
The collective American psyche places great stock in the notion of fair play. Some take it so far that they want the U.S. to be the world arbiter of justice, and accordingly encourage the notion that it’s somehow an American responsibility to prevent piracy on the high seas (the ultimate free-market exercise) or to remove regimes from power in other countries if they don’t believe that leader assumed power fairly.
State budgets are under assault
The American Dream is under assault. There is no free lunch. Taxation to accomplish the legitimate goals of federal and state government initiatives must be fairly distributed. Defining the necessary changes to tax codes is a daunting prospect even if it’s separated pragmatically from debating the role of government to expedite resolving budget crises. But considering higher taxes on the wealthy hardly constitutes class warfare, let alone an unfair burden.
10.02.09
Can the market create prosperity?
Some of our elected representatives in Washington say our big government can’t do anything well. Ironically, while it’s true the federal government obviously did a slip-shod job of regulating the mortgage and banking industry, those elected officials are in charge of everything from what the government spends to how it runs, and many of them have been there for well over a decade, doing whatever it is they do to make it “better.”
We’ve tried less regulation; we’ve tried lowering taxes; we’ve outsourced to save money including using private contractors instead of the military to fight a war that obviously hasn’t stimulated the economy; we’ve tried everything the politicians could think of except privatizing our social security accounts – and most of us are glad that didn’t fly.
Where have they led us?
The economy will need years to recover from the steep plunge in 2008, unemployment is still rising, mortgage foreclosure rates are problematic while home prices tumble, banks are being closed at a record pace, and institutions “too big to fail” are on the verge of filing bankruptcy despite the former administrations attempts to rescue them by propping up their finances with billions of tax dollars.
On the other hand, gas is back down under $3 a gallon – who would have imagined that was a good price 5 years ago? Still, that’s what the middle class is cheering about today (it sure isn’t the price of education or health insurance.)
When was the last time you say “Made in America” on the label of something you bought? Plants sit idle while manufacturing jobs continue to dwindle. Where have we been investing? In derivatives – financial products so complex that the people who buy and sell them can’t really tell you how they work. Once upon a time we heard about the huge growth of jobs in the service sector, but if you call for service you’re as likely to get a machine answering the call as a person, and when it’s a person they’re often overseas – who knew we could outsource service sector jobs?
The President’s got a real rat’s nest on his hands with the economy. Depending who you listen to he’s either put the foxes in charge of the chicken coop or hired the people who made the mess in the financial markets to clean it up. The former would be a disaster, obviously, but even the latter is rather daunting (and yes, I know, banks hire former bank robbers, computer security firms hire former hackers, but that doesn’t make me comfortable.) Granted, Obama’s shown a desire to invest in America, to get people back to work, but he’s still a relative newcomer and the entrenched powers that be in both major parties were there – in charge – as all these problems brewed up this ugly mess in the first place. There’s enough blame to go ’round on Capitol Hill when it comes to the economy. One man by himself cannot create – or recapture – our American Dream.
It’s not enough to “stimulate” the private sector and create green jobs; our leaders have to insure that the sorts of abuses which led to this crisis won’t recur. The abuses of the public trust are not confined to Wall Street, they’re also there on K Street, First Street, and South Capitol Street… and consumers are justified in being dubious that the people who left this series of overlapping errors unattended are the proper ones to lead us out of the resulting crisis. The denizens of the Capitol have shown a propensity for bickering and posturing, but little in the way of solutions has emerged – to the point that the executive branch is now authoring legislative proposals since the two parties can’t agree on how to move forward together.
It’s time to invest in us and our future – in infrastructure and education, and in making sure that anybody who works for a living can afford to stay healthy and enjoy the retirement they’ve earned. I’m not advocating isolationism, mind you, but multi-national corporations aren’t helping anybody but themselves. Small businesses that put local people to work and keep the profits within our communities are the engine that can power economic recovery. Tax breaks for mega-corporations end up being bonuses for already-rich CEOs – what trickles down is being funneled through lobbyists right back to Congress, apparently.
We pay our taxes so the government can do what is necessary for the common good. Seems to me all the government’s done for most of the past 10 or more years is grow larger. What have our Senators and Representatives done but watch as the entire system melted down? OK, granted, they did just boost their own budget, and sure, CEOs and lobbyists are still pulling down a good paycheck, with full benefits – but what about the rest of us?
09.29.09
How the U.S. government spends your money
Billions of tax dollars are going for a US-Mexico border fence, but is it doing any good? Well, if you read the Christian Science Monitor article by Daniel Wood you’ll have more questions than answers.
In 2006 DHS awarded a “virtual fence” contract to Boeing for a stretch of the border in Arizona as part of President Bush’s “Secure Border Initiative.” The budget grew to nearly $1 billion just two years later. So far, no virtual fence; just a very real budget. DHS recently decided to extend its contract with Boeing for another year.
Several sites now report that the Government Accountability Office (GAO) recently predicted that $6.5 billion will be needed to maintain the rest of the actual, though still incomplete, multi-billion dollar non-virtual fence over the next 20 years, addding:
“So far, it has been breached 3,363 times, requiring $1,300 for the average repair.”
Just so you don’t have to reach for your calculator, the math works out like this:
3,363 breaches x $1300 = $ 4,371,9000
But the kicker is there’s no way to prove if it’s actually making any real difference – well, beyond fattening the wallets of the folks awarded the contracts and costing tax-payers money, of course. So, we’ve spent about $2.5 billion so far on construction, we’re seeing several new breaches each day (on average), and CSM interviewed one woman, Dawn Garner, who says that 40 illegal immigrants a day cross her small ranch.
Sound bad? Don’t answer yet.
Ronald Reagan famously urged Gorbachev to tear down the Berlin Wall. There was a lesson there we’ve somehow forgotten about what the effects and effectiveness of walls really are.
Yasha Levine, writing at The Exiled, reports he’s interviewed a Border Patrol agent who asserts that it’s not just breaches – in some cases ramps are deployed on both sides and smuggler’s caravans drive right over! Levine has more bad news:
There is one thing we can be sure of:
the massive steel pylons have been a boon for Mexican scrap metal entrepreneurs, who are able to supplement their incomes by dragging off whole sections of the fence right under the nose of our beefed up Border Patrol.
And those we capture trying to make the crossing? We spend a bit of money to detain them, a bit to process them, a bit to send them back home again, and – you guessed it – start the cycle over. Because if there’s one other thing we can be sure of:
No matter which country they’re a citizen of, the folks who prefer the USA to Mexico aren’t likely to change their minds.
But DHS, born under former GOP President George Bush, sees no reason to change course, or deny money to Boeing or the other contractors. They’ve got a mandate for, “more effective use of personnel and technology” and “physical infrastructure enhancements to 
prevent unlawful border entry,” and so spend they will. But are we stopping the drugs and other smuggling? Honestly, nobody knows.
It’s past time to think about our priorities, particularly our spending/funding priorities and the role of the federal government. It grew larger than ever over the early part of the 21st Century, but failed to address the needs of our nation.
Instead politicians awarded lucrative contracts as political favors. It’s no wonder the trust for Congress has plummeted – the scrutiny has them scurrying for cover, and some of them are talking out of both sides of their mouths.
04.19.09
Connecting the dots: From Tea Parties to taxes
Let’s skip the loaded debate over who benefited from Bush-era tax cuts, and move right on to the guts of the current question: 
are taxes unfair, and is a tea-bag an apt modern rallying symbol?
People having trouble making ends meet have reason to wish bank and credit-card fees were less onerous, and they naturally resent the inevitable burden of any tax they think is unfair. Yet nobody in the U.S.A. wants our local, state, or federal agencies to outright shut down the way they have in Somalia. We value the services the government provides even though we hope Obama can cut costs and reverse the run-away growth of the U.S. federal government that has characterized the beginning of this century.
Fair, easily understood taxes are a reasonable means to pay for public education, defense, bridges & roads, and so on – so long as they aren’t roads and bridges to nowhere that benefit some special interest that donates to a congressional campaign to win favors. Nobody doubts we need on-going investments to keep this country a great place to live, work, and raise families – yet amid the on-going economic meltdown there’s a natural anger when we hear about bailout money going to folks who earn more in a single bonus than most Americans earn in a lifetime.
So when we argue about tax cuts, let’s make sure we’re clear on just whose taxes are being cut. We’ve been giving tax breaks to oil companies, and now Exxon’s atop the Fortune 500 – it doesn’t take an accounting degree to know that’s not fair to people trying to pay for health care, college tuition, and the home they live in. Congress has been looking out for the already-rich at the expense of the rest of us by creating byzantine, opaque loopholes in exchange for campaign donations and junkets, and that has simply got to stop. People aren’t upset about taxes, they’re upset about not being sure if everybody’s paying their fair share.
In the late 1700s, in an era when nobody dared drink unboiled water, merchants and bureaucrats conspired to tax the tea sent to America – the tea that made getting enough fluid more palatable – at exorbitant rates. In a gesture not unlike cutting off their noses to spite their own faces a boycott was enforced – and a message sent – by vandalizing private property, thus insuring that the captains had no merchandise to sell and no collected taxes (or profits) to take back to England. Naturally coffee filled in the gap in the colonies for some time. (The U.S. didn’t immediately become a coffee nation, though. That change is usually tied to the tea embargo during the War of 1812.)
In modern terms, tea is considerably more central to the daily living of people in Europe and Asia. The fact that every student of U.S. history learns about the “Boston Tea Party” apparently made it seem a catchy sound-bite as behind the scenes operatives sought to foment a movement timed to use as a media event on April 15th,
but the effect of the media coverage seems to have given us more sense of Alice’s Mad Hatter than colonial rebels battling distant rich despots. The President’s shining success at the Summit of the Americas further diminished the amount of attention the story got in various media.
Curiously, in hindsight the naive echoing of the slang-term “tea-bagging” by conservative pundits probably drove more web traffic to Google and the UrbanDictionary than the actual events. It certainly detracted from impact of the hype leading up to the not-so-grassroots parties.
I’m betting the folks with Google Ad Sense terms tied to those searches, and “astro-turfing“ are enjoying a brief bonanza of exposure.
03.24.09
Information in the open changes the way business was done in DC.
President Obama told the National Conference of State Legislatures last week that, “Decisions about how Recovery Act dollars are spent will be based on the merit…” and stressed that maximizing job creation, making health care affordable, rebuilding crumbling infrastructure, and other projects that manifest “enduring benefits” to taxpayers must take priority.
Under the recently issued guidance from the Obama administration (which some were hoping wouldn’t appear) lobbyists seeking an administration member’s time to discuss a “Recovery Act” project must submit their requests in writing so that correspondence can be posted online, just as with the topics of meetings between administration officials and lobbyists on stimulus efforts. This is not business as usual for DC lobbyists; this is a refreshing degree of openness at a time when voters are very curious about how their money is parceled out, and echoes his warnings to mayors last month that the President would “will call them out” on wasteful uses of stimulus dollars.
As history shows us, when we let Wall Street and lobbyists handle their own affairs in smoke-filled back rooms and over martinis at the country club, jobs and sustainable wealth fall by the wayside while cash flows to the wealthiest investors. Curiously enough, income disparities shrink while job creation and government revenues increase if, and when, the wealthy are taxed – it causes them to invest rather than hoard their capital.
Economic viability will come only through repudiating the unfounded faith many Republicans have exhibited in trickle-down voodoo and unregulated capitalism, paired with self-serving definitions of sound-bite terms such as educational choice. We need a return to an ethic of service, work, and strong family values such as the first family demonstrates.
We need to restore confidence – both here and abroad – that the United States is a leading force on economic and moral issues, not a duplicitous, arrogant bully guilty of not practicing what we preach. Obama’s walking the walk.
03.04.09
We need to invest in our country
As an entrepreneur who has run several small businesses, I think it’s time to return to fundamentals on the economy, starting with investing in America again. It’s small businesses that will put people back to work; that’s how we’re going to get this country back on its feet. It’s entrepreneurs and small business owners who respond with enthusiasm instead of being bound in their decision-making by CFOs and slow-moving Boards of Directors focused on short-term bottom line numbers, (the kind of decision-making that led to the foreclosure and credit crisis, and ultimately the big business bailout using taxpayer dollars.)
To be sure, we need public education, technical schools, and affordable college tuition so young Americans are ready for these new jobs. It’s a global economy, but most of us work in the same city we live in. When we see bulldozers
and excavators moving dirt, and trucks hauling instead of sitting idle at auction sites, then we’ll know things are turning around.
The President is intent on stimulating the private sector, but big businesses with names we all know have abused deregulation and the public trust. Credit card companies raise their rates willy-nilly, and hide extra fees in the small print. How much of his economic stimulus can be paid for simply by ending wasteful government spending, and eliminating tax cuts for the super-rich?
Is it a coincidence that the size of the bailout Bush proposed roughly equals the cost of the war in Iraq?
That war has been a burden on our military, and paying the debt is a drag on our economy that will linger for years. The new President is winding that down, but we’ll be paying for it for years and spending is only half of the equation. The money to do these things has to come from somewhere. Government is here to stay: In some way we need to fund the things that make government work for the people. Our elected leaders, in turn, must stop letting our hard-earned tax dollars simply line the pockets of special interests.
The American Dream isn’t about letting lobbyists control who pays taxes and who gets rich, it’s that any child in this country should have a chance at becoming a productive adult who can support and raise a family comfortably. Working full-time and pulling your weight should mean you don’t have to worry about grocery bills, the price of commuting, or paying to see a good doctor when you or your family needs medical care.
Tax credits for continuing education make it tempting to better yourself. The tax cuts for the middle and lower class earners proposed by the Obama administration make a start at offsetting the skyrocketing costs of groceries, health care, and college, but we need to go further. One great idea is to give tax incentives to companies that cover increases in health care costs while the President tries to reform that out-of-control system.
Public pressure and increased scrutiny are starting to make companies think twice about huge salaries and bigger bonuses for wealthy executives while pleading for bailout funds and cutting paychecks and benefits and pensions of the people who do the real work. Let’s take it a step further and tax those who make money by exploiting cheap labor overseas. Our government needs money to operate, 
no matter if it’s to build roads, insure products made overseas are safe, or to keep our military strong, and if a company doesn’t want to pay American workers they still have an obligation to contribute and support the system that has made their success possible. We need to reverse the trend of layoffs and plant closures; we need to rebuild the foundation of our economy – and the American Dream – by putting Americans back to work.
02.22.09
Economic Recovery: Facts for D.C. to factor in
When Congress and the President are working on the budget, they have a perfect case study for the “no new taxes” approach right here in Minnesota: we elected a rising star of the Republican party to be our Governor in 2002 on that pledge, Timothy J. “Tim” Pawlenty. 
Now in his second term, Governor Pawlenty won the office promising to balance the state budget at a time when Minnesotans were tired of the way politics had played out in the state capitol while Jesse”The Body” Ventura as Governor, and according to Wikipedia, Pawlenty attacked a deficit of roughly “$4.3 billion without raising taxes, primarily by reducing the rate of funding increases for state services, including funding for transportation, social services, and welfare.“
“New fees aren’t taxes”
If not for the fact that the tourism industry in the state took a big hit in 2005 due to a government shutdown and closure of highway rest areas, state parks and so on, we might have been ok with the winking at that pledge and calling some things new “fees” instead of taxes (heck, it was only $300 million or so,)
and major increases in tuition at the state colleges and universities, or cuts in areas such as school spending — until we realized there was no longer a band playing at the high school events. And in places where they value music, such as Fergus Falls, the communities and booster clubs can find local funding to keep band directors such as Scott Kummrow employed, right?
We needed the revenue, clearly, and the Governor didn’t raise taxes – although local jurisdictions had to fill the gaps as the money from the state dried up, but that’s another story. By the way, adding toll lanes to busy commuter routes isn’t a new tax, either. I have some question about how to label the bond bill the governor signed last year, but he vetoed some line items so maybe we can say he somewhat limited tax increases in the future?
But lets not quibble about fees and bonding, let’s talk about the Minnesota economy and budget – that’s the point. Sure, we might have put thousands of Minnesotans to work if the bond bill had included funding for light rail connections between Minneapolis and St. Paul, and that probably would have stimulated business and tourism in those areas, but it would have made the bonding bill even larger and somebody would have had to pay and the delay only adds maybe $40 million to the cost – later, when he’s no longer the Governor. And now our budget deficit in probably only $7-$8 billion.
No New Taxes
In Minnesota trying to generalize that taxes were problematic by definition glossed over that the government runs on money: funding for nursing homes, teachers, and education was slashed, for example, and the costs passed on to local communities to “balance the budget.” The state budget deficit is now conservatively projected at double what it was when Pawlenty took office, while sales tax revenues fall and companies slash payrolls driving people onto unemployment rolls (placing their health care coverage at risk and further reducing consumer spending.) At least 
Pawlenty isn’t posturing for the pundits as Louisiana Governor Piyush “Bobby” Jindal and a few others are by suggesting we won’t take “stimulus” money from the federal government – He’s saying Minnesota government needs cash.
We borrow to buy homes, cars, and even smaller items that fit on our credit cards. We continually pay interest to some of the same companies that needed bailing out on Wall Street, while one group of people benefits: the rich. They don’t worry about the price of cheese, cars, or college.
History doesn’t support trickle-down theory.
For the common good it’s time we admit that when you cut taxes for the rich they mostly they stash more money into their nest egg(s) so they can retire early, live comfortably, eat cake, and travel the world. Meanwhile the rest of us watch our food budget, some see the investment in their homes plummet, and if we have put money aside we watch what remains of it shrinking in our privatized retirement accounts.
Digg this story!
02.08.09
600,000 additional jobs lost in January.
The U.S. economy continues to reverberate from the policies (or perhaps lack of policies) that the Bush-Cheney administration championed since taking office 8 years ago, and by most accounts we’ve now lost over 3.5 million jobs during the recession that they bestowed upon the tax-payers and future tax-payers. The layoffs are building momentum, the unemployment rate is soaring, yet certain members of the U.S. Senate and House of Representatives continue to support the trickle-down theories that brought us to this economic precipice. But it’s not their fault.
I don’t mean the state of the economy – that’s the fault of everybody who ever championed, or simply ignored, deregulation of the banking and financial industries. No, it’s not their fault that they’re engaged in partisan theatrics at a time when the country has demonstrated a broad mandate for new approaches, because Nancy Pelosi tricked them. The Speaker of the House got the minority to close ranks, to vote as a bloc to block the first version of the new Stimulus bill even though they had been altogether supportive of Bush’s unfettered spending as the previous administration was winding down, and now the Republican Senators are largely following suit.
Some strategists might suggest that at such a juncture the wise thing would be to give the newly elected President what he asks for, hoping that by the time the mid-term election rolls around they’d have something to point their fingers at if it fails while saying, “we did what he asked.” But these savvy politicos couldn’t pass up the opportunity to close ranks when Pelosi ran a bill through quickly for a vote, and now they’re posturing desperately while the tax payers and voters watch more closely than the D.C. insiders are accustomed to – they’re being downright obstructionist, and that leaves the Democrats in a stronger position.
All the voters are seeing offered as alternatives by the Republicans is “cut taxes.” Cutting taxes sounds pretty good to the people at the top end of the earning scales, but when you’re worried about losing your job and keeping food on the table your concern is not for the Capital Gains tax which is already considerably lower than the Income Tax, your concern is over staunching the flow of jobs before unemployment spirals to the levels of the Great Depression. President Obama’s right to insist on timely action, the same sort of need the prior administration finally woke up to in the waning lame-duck days of their power.
Theatrics are alive and well in the Senate.
What are the Republicans opposed to? Not so much, it turns out: something under 1% of the spending, yet rather than come with proposals for the voters to contemplate their doing what worked in the past, made-for-Fox drama and histrionics, name calling. While the President is visibly reaching out to find common ground, some of the most influential Republicans in the capitol are hoping for sound-bites of their outrage and opposition “you have to start from scratch” – they failed to realize that Nancy Pelosi invited them back into their old, discredited “we-they” postures for the national audience, and failed to understand the urgency and pain of their constituents as the layoffs and foreclosures continue.
I might counsel the Speaker to be less successful, but I know there’s no taking the politics out of the process. I just hope the damage she’s done to the opposition doesn’t delay the repair the President’s crafting for the people.
The reality is the situation is urgent; we can’t allow the economy of the nation to falter and stall, we can’t afford it. The decisions have to be made and plans launched by people who can’t remotely follow the calculus that economists such as Paul Krugman or Mark Anson employ. Americans want to get back to work – and we want our elected leaders to do their work swiftly so we can stop laying off teachers and assembly line workers and losing their productive participation in our economy.
Maybe if we enforced layoffs in Congress in proportion to the rest of the country, or the budget, they’d get off their rhetoric and get the bill passed.
