If your doctor gave you a prescription to improve your health, and it made you deathly ill, would you follow said doctor’s orders to take ever-increasing dosages?
Of course you wouldn’t. You’d label the doctor either an incompetent quack or an unscrupulous shill for the pharmaceutical company; you’d stop taking medicine that was killing you, and you’d seek alternative treatment.
It’s all so obvious: you believe that something will be beneficial, so you give it a try, but once your experience proves that your faith was misplaced — you dummy up. You learn from your mistake and move forward a wiser person.
So, why is it that what seems so obvious in a healthcare scenario, and would also apply without exception if dealing with a mechanic, a lawyer, a contractor, or pretty much anyone else, somehow winds up being lost entirely in the world of politics?
More to the point: how is it possible, after experiencing the catastrophic results of conservative economic policy, that there’s a single American (who’s not either a Republican politician or some other member of the Top 1%) still willing to give the GOP Rx for the economy another nanosecond of consideration?
When King Solomon said that “there is nothing new under the sun,” he couldn’t possibly have done a better job at describing GOP economic policy. From the plans being offered by the illustrious ranks of Republican presidential candidates to those recently articulated by House Majority Leader, Eric Cantor, their prescription is nothing but more of the same poison that crashed the American economy, blew unemployment up to historic levels, and fueled concentration of wealth not seen since the Great Depression.
The GOP Rx for the economy is ever-static and never works. Whether you’re talking decades ago or focused on today, it always consists of the same triple threat to the American people: cut taxes for the wealthy, deregulate, and privatize government along with the commons. They wrap their rhetoric up in a flag, label their plan as “job creating,” and somehow manage to sell the same warmed-over economic Vioxx time and again.
The truth of the matter is that we’ve already tried every element of the Republican plan, all to the detriment of the vast majority of Americans.
According to the GOP, we must lower taxes on the wealthy (a.k.a. the “job creators”) in order to address unemployment. Of course, tax rates today are at record lows with the total income tax burden at its lowest point since 1950 — a fact that begs the question, “Why don’t we already have the jobs?”
Well, the answer is that lowering taxes on the wealthy doesn’t create jobs. It never has and never will, yet whenever the opportunity arises, the GOP snake oil dealers come out of the woodwork offering the same poisonous tonic. Bush did it in 2001, promising 800,000 jobs from his Economic Growth and Tax Relief Reconciliation Act, but the $1.6 trillion tax cut, that gave fully half of the savings to the Top 1%, didn’t actually create any jobs. In fact, following the cuts, we lost 2.7 million jobs by May of 2003.
In contrast, Bill Clinton had the unmitigated gall to raise taxes on the rich, which if GOP prognosticators were right should have been a death knell for job creation. But instead of the Republican predictions of an apocalypse, of a market collapse and dire straits for the economy, we entered into the most prosperous peacetime economy in American history. BLS records show that 22.7 million jobs were created under President Clinton and a paltry 1.08 million under George W. Bush. It seems pretty obvious which president had the better prescription for the American economy.
Once all of the hype is pushed aside, it’s plain to see that tax cuts for the rich have little to do with job creation and instead achieve only the one thing that the average person might expect — they make the rich even richer. They lead to the banana republic style distribution of wealth that now has the U.S. ranking 98th amongst 136 nations measured by the Gini index of income inequality — worse than Iran — worse than freaking China! But what can you expect when our top 1% now holds more financial wealth than the bottom 95% of the population?
So, maybe the GOP is wrong about tax cuts but right about deregulation. Maybe present calls to repeal Dodd-Frank to “free up Wall St.” are just the prescription for prosperity we need. Maybe there is validity in Michelle Bachmann’s claim that financial reform is “killing the banking industry.” And maybe Sarah Palin will actually run for president, there really is an Easter Bunny, and the GOP truly does give a fat flying flip about working Americans.
The deregulation story is actually scarier than the tax cut myth. It was deregulation that gave birth to the derivative market, allowed unfettered access to credit default swaps, tore down the barrier between investment and commercial banking, and created the Wall St. casino that bled the middle class for 30% of their combined wealth and sent unemployment to levels not seen since the last tax cutting, deregulating, military spending GOP buffoon, Ronald Reagan, sent the rate over 10%.
It was George W. Bush’s dismantling of the regulatory structure that gave us the housing bubble and subsequent economic collapse, allowed the Massey Mine disaster to kill 29 people, and laid the ground work of incompetence that led to the BP oil spill.
Republican style deregulation strips government of its power to carry out it moral mission to protect the people and replaces it with a charade of profit-focused companies pretending to police themselves. It assigns henhouse security to the fox by binding and gagging the farmer. It leads to companies monitoring safety requirements, as it did at Big Branch and in the Gulf, and leaves drug testing to the pharmaceutical companies, as was the case with Merck and their Vioxx pain reliever that caused tens of thousands of heart attacks and strokes, and killed nearly 3,500 Americans.
There are no doubt regulations that do place an unnecessary burden on businesses, and they should be addressed, but they are in the minority. Most regulations serve a vital purpose to protect the citizenry from those who would exploit people and planet in order to add to their bottom line.
Government regulation is as necessary as our system of criminal and civil law. It ensures the safety of our food, infrastructure, medicine, energy, transportation system, consumer products, water supply, and workplace — without regulation we cannot have a functional society. Regulatory reform may indeed be essential, but it must be accomplished intelligently and without compromise that sacrifices the moral mission in exchange for the profit motive. Such reform cannot be achieved through GOP “starve the beast” tactics, where funding for the FDA, SEC, FAA or FEMA and OSHA are indiscriminately cut, nor will it happen through attacks on unions, the NRLB or the EPA as proposed by Eric “Corporate Shill” Cantor and his ignorant mob of Tea Party ideologues.
The Republican plan for America is simple: starve government of necessary funding, cripple government by axing regulations, and turn whatever’s left of government over to private enterprise to milk for profits. They ignore the reality that our economy is stalled because of lack of demand stemming from concentration of wealth not seen since the Great Depression. They ignore science, clutching onto the desperate notion that 98% of climate scientists are wrong about global warming in order to justify their loyal support of fossil fuels. And they ignore the selfish drain on the economy presented by the Wall St. casino and fat-cat government contractors who provide services at rates averaging 183% of the costs to simply hire federal workers.
Sadly, none of this matters to the GOP. When facts get in their way, they just invent another marketing phrase, regurgitate more of their distorted talking points, and spin their poison in populist labels like “liberty” and “freedom.” But in spite of their flag waving and lip service for working Americans, the truth of the GOP is that their core mantra remains “government is the problem,” and they will stop at nothing to deliver on their self-fulfilling prophesy.
Make no mistake about it, the GOP Rx is effective. The problem is that the America it’s intended to serve is comprised of only the top 1 to 2% of Americans. The strength of our nation depends upon both a strong democracy and a healthy capitalist economy. Sadly, the Republican Party is willing to trample the rights of the People and decimate that democracy in order to feed the greed of the economic elite.
Americans need to wake up before it’s too late. They need to smell the burning apple pie, and realize that the parasitic capitalist machine is killing its host. Republicans may still talk about jobs and small business, but it should be obvious to the most casual observer that high unemployment and the lower wages it brings are nirvana for GOP strategists, and real small business is anathema for their vision of an American corporatocracy.
The GOP Rx for our economy deserves a grade of “D” for “Death” of the American Dream. And any working American who subscribes to their prescription and believes that the policies that are destroying the middle class will somehow magically start producing a different result deserves a great big “F” for “Fucking Insane!”
An investment firm named KPCB (Kleiner Perkins Caufield & Byers) has posted a lengthy presentation on YouTube that addresses the current issue of U.S. government debt and provides an ostensibly impartial analysis of the situation and how it may be addressed. This article is offered as a review and commentary of the presentation’s content:
This is one very skewed take on the federal debt issue presented by a very large global investment company with a seriously vested interest, including a major presence in China. While the slideshow pretends to be non-partisan, in reality, it’s a propaganda tool that emphasizes all GOP talking points and glosses over any mention of opposing views.
If you agree with the KPCB take, then the main problem with the U.S. economy is entitlement spending. The slideshow emphasizes this point over and over, throughout the presentation. It also distorts the truth about tax revenue, demonizes government employees, minimizes the impact of defense spending, and makes a series of unfounded comparisons backed by equally illegitimate half-truths.
The following are some specific criticisms:
They assault the growth in government spending by charting the growth starting with the Great Depression: it’s up to 24% of GDP following a 3% trend line prior to 1930 — no shit it grew — there was no prior safety net and no future for anyone but the robber barons and banksters. That’s why we had the Great Depression! The New Deal paved the way and the ensuing period of time following WW2 was the greatest sustained economic expansion in our history — all under a system of shared prosperity brought about through government programs and regulation.
They use the GOP favorite, a family example, as comparison to show what the government should do. Of course it fails to illuminate any of the distinctions between the two very different groups. You know, like one can actually address trade rules, modify tax structures, and print freaking money — or that one is focused on its own wellbeing and the other is supposed to be focused on the wellbeing of ALL the people.
They claim that entitlement costs are rising “exponentially,” which is, of course, true, but still a means of somewhat overstating the issue. Even in today’s sad state of economic affairs, our GDP is presently growing “exponentially” — at a rate of 1.6%, which is pathetic. But the fact that few Americans understand exponential growth provides an open opportunity to exploit their ignorance and make the situation sound as bad as possible. FYI, even the Heritage Foundation estimates claim that entitlement spending will “double” by 2050. I guess “double” just doesn’t sound scary enough.
They label the growth in entitlement spending as a “runaway freight train,” comparing it to the increase in tax revenues, claiming that the former has grown at 2 times the rate of the latter over the past 10 years. Of course, they conveniently leave out anything about the Bush Tax Cuts and the fact that tax rates are at their lowest mark in more than 50 years. Are low taxes really evidence of “runaway” entitlement spending?
They emphasize how large our entitlement spending is by comparing it to the GDP of India, the “world’s 9th largest economy, but they never state that India’s GDP is only $1.38 trillion, or less than 1/10th the size of our own.
They attack the entitlements, but they completely glaze over defense spending. They list it as only 20% of the total and $656 billion. Of course, the truth is that when looking at all defense spending, not just the department of defense, the number is over $1 trillion, and is pushing 30% of overall spending.
They chart a picture where defense spending is actually below the statistical average since 1948 as a portion of GDP. Based on said chart, they assert that we’re actually not spending that much on defense. Of course, they chose a period of time that does include the spike for the Korean war and also the Viet Nam war years, but conveniently omits WW2, when spending peaked at 42% of GDP, and they made sure they stopped the chart in 2003 — eliminating the final $300 billion in Bush increases, not to mention Obama’s own.
They also never make any distinction in what might be considered appropriate defense spending between peacetime/wartime, nor do they address differences between wars of necessity versus wars of choice. They also fail to mention that defense spending has actually tripled since 1997, and they leave out entirely the true financial costs of war — those which echo through many facets of the economy and include a huge portion of federal interest payments and are in total estimated to be more than three times the direct costs.
They do mention defense cuts but only the most low hanging of fruit, like the extra engine for the F-35, and certainly nothing like actually ending the wars.
They show the future unfunded costs of Medicare, Medicaid and Social Security, $35, $23, and $8 trillion respectively, but fail to mention (except in the fine print) that this is over the next 75 years. They also give nothing for comparison, like the fact that at the present rate, defense costs of over $1 trillion each year, which are taken from general revenue, would amount to more than $75 trillion over the same period.
They talk about healthcare costs and results but give only lip service to any real reform that might be made. They make no mention of soaring insurer and pharmaceutical profits, or of the fact that Medicare is prohibited from negotiating drug prices, nor do they mention the 3-6% administrative costs for Medicare as compared to the 12-30% for private insurers. They even understate total healthcare costs at 8.2% of GDP when it’s actually running over 17%.
They present a terrible view of the increase in Medicaid recipients, showing that in 1965 only 1-in-50 people relied on the program compared to 1-in-6 in 2007. Of course they present this as if it were solely an issue associated with program rules and say nothing about the impact of increased cost of living and falling median income and loss of benefits.
They present the only choices to “fixing” Social Security as increasing the retirement age to 73, increasing payroll taxes to 14.3% or reducing benefits by 12%. This paints a pretty bleak picture. But it may not be so bleak when you consider that the tax increase could come largely from lifting the salary cap, or the benefit reduction could apply only to those who are wealthy — or a combination of the two. They also never mention that the program is 100% solvent through 2037, or that it will still be able to pay 78% of benefits beyond that period without any program changes —but then that wouldn’t serve their purpose.
They also make the argument that life expectancy has increased in the U.S. by 26% since the inception of Social Security while retirement age has only gone up by 3%. Now that doesn’t seem very balanced, but of course when you consider that those who actually perform physical work are barely living any longer at all, and that the real increase in expectancy applies mostly to the high income earners who need Social Security the least . . . well, I guess it depends for whom you’re advocating.
They make assertions in pursuit of the GOP agenda item to divert attention from the impact corporate profits and reduced taxation of the economic elite have had on the economy, and they attempt to place the blame on government workers and unions. They actually choose to paint a picture that blames GM’s economic problems chiefly on retiree benefits, and then claim that the company’s recovery was achieved by removing employee healthcare benefits and focusing on quality. Oddly, they never mention the government bailout.
They assert that if a corporation fails to balance its books, they are forced to go out of business, but they neglect to say a word about Too Big To Fail — the socialization of Wall St. debt , the $16 trillion in loans made by the Federal Reserve to the nations biggest banks and corporations at near-zero rates, the auto industry bailout, or any of the billions of dollars in corporate subsidies, which were estimated by the conservative Cato Institute at $92 billion in 2006 alone.
They depict the debt picture in the U.S. by comparing it to other nations and using our gross public debt number, which unlike other nations has the added factor of including inter-government and state-issued debt, neither of which is typical of most other countries. The combination of these two categories is about 30% of the total, which puts the 86% number in a considerably different light. And BTW, even though they chose to use government spending trends from 1930, they fail to mention that the debt to GDP ratio was 122% after WW2 — a number that we paid down with economic expansion and higher taxes on corporations and the wealthy.
They totally distort the tax picture by placing blame on the 51% of Americans who didn’t pay taxes and never mention that the number increased because Wall St. had literally stolen trillions in middle class wealth and crashed the economy in the process, sending 8 million people to the unemployment lines and creating a situation where it was necessary for the Obama administration to extend $288 billion in further tax cuts as part of the much maligned stimulus program.
They assert that the number of people paying 50% of taxes had dropped by 60% between 1965 and 2005. All true, but what they don’t say is that the slice of people making enough money on which to live has also been dropping — that the share of income gouged by the top 1% had grown from 8% in the mid-1970s to 23.% in 2007, and that the median wage fell for the first time in decades under G.W. Bush. They also fail to mention that the corporate share of taxes also dropped from 20% of the total in the 1960s to under 9% in 2010 — from 4% of GDP in 1965 to 1.3% in 2009, which is the lowest of all OECD nations except Iceland.
They present an absurd picture of addressing the debt with tax increases by isolating such measures as a single-solution response. In so doing, the picture they paint is that income tax rates would have to double. Of course, they conveniently ignore any combined solution of spending cuts and tax increases; they completely skim over the potential for eliminating tax loopholes and tax havens, instead offering only the possibility of either taxing healthcare benefits or eliminating the home mortgage deduction — both obviously targeted at raising alarm in working Americans. They also leave out any possibility of limiting the increased tax rates to millionaires and billionaires — you know, like the hedge fund managers, many of whom rake in over $1 billion in a single year and are able to treat their income as capital gains, paying only 15%, while a single person making $35K has to pay 25%.
They speak about government action where “nearly all” Americans will share in the sacrifice, but they don’t want you to consider that what they really mean — when the bottom 98% of us pay the entire price, that is “nearly all” Americans.
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First there was the New Deal, and then there came the Ordeal; now we need the Re-Deal.
For more than four decades after the Great Depression struck, programs based on progressive principles worked to ensure that all Americans shared in the prosperity of our great nation. The rich did get richer, but so did everyone else; fairness and empathy for our fellow man formed the moral foundation of our culture, and together we forged arguably the greatest nation in the history of the planet.
But all good things must come to an end, and that’s what started happening in the U.S. during the 1970s. The oil crisis of 1973, followed by a stock market crash and runaway inflation brought economic growth to a standstill. Productivity actually went backwards in 1974, shrinking by 1.5%, stagflation set in, the prime rate soared, and Americans were left desperate for change.
That change came in 1980. Ronald Reagan was elected in reaction to a stalled economy, the 444-day long Iran Hostage Crisis, and a general sense that America was losing its way. Reagan did bring change, by the boat load, and the short term results were impressive. In direct opposition to the austerity called for by Jimmy Carter, Reagan set in motion the wheels of a fiscally-expansive economic policy that would drop the 13.5% inflation rate of 1980 to just 3% by 1983.
Of course, most of the credit for the drop in inflation belongs to the monetary policies of then Federal Reserve chief, Paul Volcker, but it was Reagan’s combination of increased defense spending, coupled with massive tax cuts that would create a model for the future. Reagan would nearly double military spending during his time in office, while simultaneously ripping away the federal tax base. The result was a tripling of the federal debt, to $2.8 trillion, a dramatic shift that moved the U.S. from being the world’s largest international creditor to the world’s largest debtor nation.
Sadly, not only did Reagan plunge our nation into debt, but he did so as the reverse-Robin Hood in Chief. Establishing tax cuts very favorable to the rich, while cutting social programs and gutting the internal regulatory structure of the government, Reagan was the political godfather of movement conservatism. His policies, coupled with his suppression of union rights laid the foundation for the lopsided balance of prosperity we have today.
But as detrimental as Reagan’s policies were for working Americans, their harmful effects pale when compared to a single tenet that emanated from his bully pulpit — “Government is not the solution to our problem; government is the problem.”
No more destructive words have ever been uttered by a U.S. president. With a single statement, the actor turned president both rationalized his dismantling of social programs and gutting of tax revenues and also disassociated a large portion of the American public from their only means to combat their own demise. As Nobel Prize winning economist, Paul Krugman, once said in reference to movement conservatism, “Reagan taught the movement how to clothe elitist economic ideas in populist rhetoric.”
Once the American public bought into the notion of government-is-the-problem, the die was cast. The progressive ethics upon which modern America was built would soon be trampled time and again. Before long, the only Americans to reap any bounty would be the economic elite, who began to prosper as never before, doing so at the expense of everyone else.
The shift in public attitude was so strong that, in order to gain election, Democrats who once supported progressive principles embraced instead the Third Way. Combining conservative economic policy with a liberal position on social issues, Third Way Democrats are more Republican-light than truly Democratic. Bill Clinton presided in this manner, and as a result is responsible for such anti-worker legislation as NAFTA, as well as a heap of corporate wealthfare in the form of telecom “reform,” commodities treatment that opened the doors to the wild derivatives nightmare that nearly sunk the economy, and the repeal of Glass-Steagall, which removed all remaining barriers preventing commercial banks from playing in the Wall St. casino.
To his credit, Clinton did at least balance the budget and turn over a surplus to his successor. But once George Bush took office, all stops were removed. Without a progressive bone in his body, the younger Bush wasn’t held back by any sense of fair play. He drastically cut taxes, especially for the rich, dismantled the regulatory structure, replacing all key posts with industry insiders, and spent federal money like a drunken sailor. Bush was asleep at the wheel when the Islamic terrorists attacked on 9/11, and again when the economic terrorists on Wall St. attacked in 2008. He opened a new prison for the former and rewarded the latter with a $700 billion bail-out.
President Barack Obama was then elected by campaigning on a platform of “Change we Need.” Obama rode the wave of anger directed at Republicans and Wall St. all the way into the Whitehouse and then quickly proceeded to surround himself with the very people who had orchestrated the collapse.
Another Third Way Democrat, Obama has promoted more aid for those in need than what occurred under the eight years of W’s rule, but he’s also bowed to conservative economic policy time after time. The Obama healthcare “reform” improved access to healthcare insurance, but did so without effectively addressing the related costs. The financial “reform” bill, ostensibly enacted to prevent another banking crash, was passed without provision to deal with Too-Big-Too-Fail or the derivative casino. Most recently, Obama signed legislation providing tax relief to average Americans but not without also extending the Bush cuts for the most wealthy.
The net result of more than 30 years of a federal government divorced from progressive principles is an America more reminiscent of that which created the Great Depression than the one that was created to ensure that it would never happen again. Concentration of wealth today is the worst since the Depression — so bad that the top 1% have leaped from 9% of overall income prior to Reagan, to 23.5% today, and now have more financial wealth than the bottom 95% of all Americans.
The richest 400 Americans now have more wealth than the bottom 50%, while a record number of our people live in poverty, including one in every five children. The robbery of wealth extracted through the subprime mortgage scheme took 30% of all middle class wealth and transferred it to the Wall St. thieves and disreputable brokers across the country. Homeowners by the millions are still facing foreclosure, and many who are not are paying underwater mortgages. Yet the banks are still paying out billions in bonuses, even after being bailed out with taxpayer money, and now account for more than 40% of all American corporate profits.
Meanwhile, the corporate share of federal tax revenues collected dropped from more than 30% during the progressive era to a mere 6.6% today. But even that low rate would present a huge increase for firms like G.E. that just filed its second return in a row where the IRS had to pay them money, in spite of billions in profits. Of course, American corporations responsible for shipping as many as 8 million jobs overseas need their tax savings in order to pay for their CEO salaries that skyrocketed from 24-to-1 in the late 1960s to a high of 431-to-1, before dropping after the banking crash to a mere 319-to-1.
Average Americans would likely cheer the prosperity of the elite, if only a bit of it was shared. But while the rich have been lining their pockets, median household income has now experienced its first decline since 1967, and job growth under Bush was the slowest since 1945. The U6 unemployment rate, which tracks the underemployed along with the unemployed, is still hovering near 17%, and overall participation in the labor force is at its lowest point since 1984.
Politicians say that corporations would start hiring but might need incentives, because their record profits, the highest ever at $1.659 trillion in the third quarter of 2010, just aren’t sufficient. But not to worry, because while the Congress may be in stalemate, the wave of new Republican governors in statehouses across the country are doing everything they can to cut taxes, along with social programs, while waging a war against public employees. Who says we can’t concentrate wealth still further?
We now have a national debt that exceeds $14 trillion, and the clarion call amongst politicians on both sides of the aisle is for austerity, for cuts to Social Security and Medicare and a draconian slashing of social programs of all types. We are in dire fiscal trouble they say, and there must be shared sacrifice — but the only sharing going on is a split where all benefits go to the wealthiest 1% and all sacrifice to the other 99% of us.
There is no excuse for this corrupted mess. The American People have allowed our country to be hijacked by a self-serving elite who deliberately drive wedges into the populace so that we’ll fight amongst ourselves while they bleed us all dry. Hard working people across the nation are struggling to make ends meet while the money changers struggle to find more ways to exploit them. Hard work should be rewarded above clever manipulation. In the words of one of our greatest presidents, a Republican named Abraham Lincoln, “Labor is the superior of capital, and deserves much the higher consideration.”
Another famous Republican, President Teddy Roosevelt, once said “A great democracy must be progressive or it will soon cease to be a great democracy.” Truer words were never said. Progressive principles demand that all citizens work together for the common good. They support entrepreneurialism and prohibit monopoly. They’re rooted in fairness and insist that prosperity be shared. They require that we invest in our infrastructure, and in our people, for such investments form the true strength of a nation.
Progressive principles are about progress, about building a better America. Progress isn’t a dirty word — unless you prefer that things stay exactly as they are. The America captured in the artwork of Norman Rockwell, the America for which so many of us are nostalgic, that was an America built on progressive principles. The Great Depression was that same nation ravaged by scorched earth policies like those in effect today.
Isn’t it time that all Americans ask themselves which America they prefer?
We can work together to end the Ordeal and demand a Re-Deal where all Americans get a fair deal. One nation, one people — we must unite against the evil that’s destroying us; that evil has a name — its name is Greed.
