Sep 142010
 
American Recovery and Reinvestment Act constru...
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Everybody you talk to has an opinion about the American Recovery and Reinvestment Act (ARRA) of 2009, better known as the Stimulus. Enacted in February of 2009, the program was intended to shore up short term consumer spending, provide aid to states and invest in projects to create jobs. With a total price tag originally estimated to be $787 billion, the Stimulus was originally supported by 51% of Americans, but a year and a half later, only 29% believed that it had actually helped the economy.

A Rasmussen Reports poll taken in July showed that not only did so few Americans believe the Stimulus had helped, but that 43% believed that it hurt the economy. That same poll revealed that 69% of those surveyed believed tax cuts were a better way to create jobs than more government spending. Without doubt, these attitudes are reason for concern, but they fall far short of telling the whole story.

Things actually get much more confusing when the results of a Gallup poll taken in June are also considered. The survey asked people if they would be in favor of Congress passing legislation to “Approve additional government spending to create jobs and stimulate the economy,” and 60% of those polled answered in the affirmative with only 38% in opposition.

So, 60% of Americans support more stimulus spending, but 43% believe that what was spent through July had actually hurt the economy, and 69% believe tax cuts would create more jobs. What can explain this incongruence?

The answer is likely found in the American proclivity to swallow political talking points without any verification of facts. A revealing example of this dynamic concerns the Obama tax cuts offered through the Stimulus. A CBS News/New York Times poll conducted in February of this year showed that 24% of respondents believed that Obama had increased taxes, while only 13% believed they had been reduced. Amongst Tea Partiers, only 2% believed taxes had decreased under Obama, and a whopping 44% believed they had increased. The opinions evinced in these polls have nothing to do with the reality that the Stimulus included 25 different tax cuts that benefitted 95% of all Americans.

Sadly, voter opinion seems to track much more closely to political rhetoric than anything substantive or factual. Republicans have consistently spread the message that Obama will raise people’s taxes, therefore people believe that he has. They’ve also espoused the position that tax cuts best stimulate the economy, and although the vast majority of economists believe tax cuts to be the worst form of economic stimulus, a majority of Americans adhere to the conservative falsehood.

This dynamic seems also to be at the root of public opinion regarding the Stimulus. Arguably the Obama administration’s most successful program to date, it has been credited by the Congressional Budget Office (CBO) with adding as much as 4.5% to the GDP and increasing the number of people employed by between 1.4 and 3.3 million. According to Mark Zandi, former economic advisor to John McCain, unemployment would be 11.5% instead of 9.5% without the Stimulus. But still 43% of Americans believe the Stimulus has hurt the economy.

The stimulus has paid out 77% of the $288 billion in tax relief, but only 64% of the $224 billion in entitlement funds, with direct investment funds trailing still further. Thus far, barely 54% of the $275 billion slated for contracts and grants has been paid, mostly because of the long lead times resulting from a shortage of “shovel-ready” projects. But as the projects ramp up, the real promise for future jobs, new industries, lower healthcare costs, more efficient government and improved energy independence will all begin to materialize.

More than $23 billion in contracts, grants and loans has come to California, funding over 18,000 awards. One major project right here in Contra Costa County is the fourth bore on the Caldecott Tunnel. Nearly $200 million was allocated to Caltrans for the project that would not have proceeded without the ARRA. In addition, direct local funding within Contra Costa County has funded 46 contracts and 252 grants totaling nearly $300 million. Investments include $43 million for transportation, $22 million for public safety, $14 million for energy, $126 million for education and more funding to assist with health and human services, housing, labor, technology and water/environment. Together, these projects have created nearly 500 new jobs, saved many times that amount and promise to create more as projects move forward.

Unfortunately, the Stimulus success stories are not what most people are fed through the media. Unless an individual happens to be working on a Stimulus funded project, their opinion is likely shaped by the spurious claims levied by its political opponents. People like House Minority Leader, John Boehner and half-term Alaska Governor, Sarah Palin have made it a practice to disparage the Stimulus without any facts to back their claims.  Republican Senators John McCain (R-AZ) and Tom Coburn (R-OK) even went so far as to create a list of “wasteful” Stimulus projects that was more a waste of time to create or read than anything else.

The Stimulus could have been more effective. There’s little doubt that money could have been better directed to achieve maximum job creation, but to say that the entire program “has gotten us nowhere,” as John Boehner stated recently, is nothing short of a bald-faced lie. The Republican obstructionists have succeeded in using deception and distortion to convince American citizens that stimulus spending is ineffective and that tax cuts are a preferred option. Both economic theory and American history say otherwise.

The Stimulus has raised the number of full-time-equivalent (FTE) jobs by as many as 4.8 million. It is also creating new export industries, moving our nation forward with alternative energy and laying the foundation for lower healthcare costs and more efficient government. The most significant issue with the Stimulus is that it was too small, and the national conversation should now be focused on a second wave. But instead we toil with Republican subterfuge and self-serving delay.

Wake up America! Those who criticize the Stimulus, raise concerns about the deficit and at the same time fight for tax cuts for the super-rich, don’t give a care about your wellbeing. Open your eyes and see them for what they are — Republicans.


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Aug 092010
 
Example of state employee furloughs in 2009 be...
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Like all good Republicans, in order for Meg Whitman to execute her tax-reduction-for-the-rich strategy, she must reduce spending. According to Whitman’s campaign, this has to be done regardless. Citing recent spending increases, they claim that in the decade preceding the recession, “State spending had increased by nearly 80 percent.” This is true, but it’s also disingenuous. What Whitman fails to mention is that while spending did increase, so did the GDP. The whole truth is that spending rose a much more modest 30 percent when viewed as a portion of the GDP.

Of course, citing the gross increase in spending isn’t, in and of itself, a big issue. But, when it’s used to substantiate their indictment of what they term, a “spending binge,” and then they turn around and offer a GDP-based cap as the solution — well . . . the smell of burnt rubber flowing from the spin is stifling.

But, spin aside, nobody can deny that the State budget needs serious work. Pushing forward the deficit has become standard procedure, and Whitman has a plan to address it. She will “defend the two-thirds budget requirement,” her logic being that to require only a simple majority would be “nothing more than a license for Sacramento to raise our taxes.” The potential for tax increases being Whitman’s number one concern, she’ll fight to keep it from happening, even if it means perpetuating the State Legislature’s inability to develop a budget in a timely fashion.

Judging from her plan, Meg Whitman seems to be oblivious to the detrimental effects of running a state without a budget. Most people would like to avoid the State paying its bills with IOUs or cutting 200,000 worker’s salaries to minimum wage. Does Ms. Whitman understand the situation? Does she care? Maybe it’s just the fact that she had no interest in state politics prior to deciding to run for governor that leaves her so naïve. Perhaps she just didn’t notice that the state had missed its constitutional deadline for a budget 19 times in the past 25 years. It is possible, since she’s rarely even bothered to register to vote for that entire period of time, and more.

Whitman’s prior disregard to fulfill her duty as a voter might also help explain her naïveté concerning California’s budget woes. The state really had no trouble developing budgets prior to 1978 and the passage of Prop-13, which has reduced local tax revenues by an estimated $200 billion over time. These cuts hit education hard and eventually brought about Prop-98, which requires a complex calculation that typically commits 40% of the budget to education. But even though California has the 13th lowest property tax rate in the country, Whitman, and conservatives in general, adamantly oppose any increase in taxes, even one that often results in one neighbor paying 20 times more for identical property.

No, Whitman insists that the only path to a balanced budget is through the unholy pair of both spending and tax cuts. If this seems a bit contrary, especially amidst a recession, it’s because it is. Nobel Prize-winning economist, Joseph Stiglitz, provided his analysis on the matter in 2008. According to Stiglitz, when the economy is weak, “Economic theory and evidence gives a clear and unambiguous answer: It is economically preferable to raise taxes on those with high incomes than to cut state expenditures.”

Stiglitz is very clear about state spending: “Every dollar of state and local government spending enters the local economy right away, generating a greater economic impact. The impact is especially large when the money goes for salaries of teachers, policemen and firemen, doctors and nurses and others that provide vital services to our communities.” Yet Whitman’s plan is 180 degrees off from the sage advice of this renowned economist, and most others.

Whitman will lower taxes on the rich instead of raising them, and will trump that action with deep spending cuts. Little detail is available regarding the cuts she will target, but when employee compensation and retirement forms the largest single piece of the budget pie, there’s no doubt where her axe will have to cut. One such cut that may not break the hearts of many Californians is her planned initiative for a constitutional amendment to make the State Legislature part-time. Such a move is obviously more political than practical, as the savings would be minimal.

But never fear, Queen Meg will get that budget balanced no matter what sacrifice has to be made by average Californians. She has yet to tell anyone which programs will suffer, but the Red Queen has at least given us some notice — she will be ordering “off with their heads” for more than 40,000 state employees.

So, Whitman will create jobs and balance the budget by lowering taxes on the rich and cutting workers from the state payroll. Then, with lower revenues and fewer people, she will move on to her third priority — to “fix education.” More about that in the next part of the Whitman story.


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Aug 062010
 
Jobless not hopeless, Ask for my resume - Chri...
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The Labor Department released its latest employment numbers this morning, and the only good news is that the situation hasn’t gotten any worse. Official unemployment (BLS-U3) still sits at 9.5%, and real unemployment (BLS-U6) — which includes both the underemployed and those who have stopped looking — is stuck at 16.5%. Here at home in Contra Costa County, it’s even worse with the “official” rate up slightly for June at 11.1%, but still better than California overall, which remains over 12%.

Sadly, as job growth remains stagnant, more and more people forget how we came to the disaster that we now face. Memory of the policies that gutted federal tax revenues, sent millions of American jobs overseas, and culminated in an economic crash that extracted a third of the wealth of the middle class and gave it to Wall Street fat cats, has become obscured. The awareness that drove the American populace to reject conservative politics just 20 months ago has somehow been crowded out by impatience and clouded out by Republican propaganda.

We are living today in an America designed and produced by Republican policy. Concentration of wealth is at its highest level since the Great Depression. The GDP continues to grow but unemployment is steady and wages are dropping. We’re told that we have a “jobless recovery,” which for all but the most wealthy means NO RECOVERY AT ALL. The very term is oxymoronic and should cause fits of cognitive dissonance. When the metrics used to gauge the economy show improvement but the quality of life for most Americans continues to decline, it should be clear to everyone that we’re focused on the wrong target.

But even in the pits of massive unemployment, distraction and subterfuge prevail. The Republicans continue their fight for the upper 2%, even to the extreme of deliberately sabotaging progress for the middle and working classes — and still people remain oblivious. They’ve bought the lie and embrace those who seek to exploit them while rejecting the very vehicle established to ensure their prosperity.

It’s Operation MindCrime, and it started 30 years ago, when Reagan sold the notion that government is the problem. Belief in that myth still lingers today, providing the fertile ground for the misinformation machine known as the Republican Party. They know that the true power does still reside with The People, but they also understand that the power is only realized in unity, and that The People can be divided through the unethical use of lies and distortions intended to play on fears and prejudices.

It doesn’t take an economist to understand what’s happened over the past 30 years, what conservative politics has wrought. It doesn’t even take an intelligent person; it simply requires a pause to look at the actual evidence.

The record is clear: the deficit originated with Reaganomics under the pretense of “trickle-down” which was later even refuted by the elder Bush and termed “voodoo economics.” But still, in spite of its detrimental effect on the well being of most Americans, the Republican Party has maintained loyalty to the self-serving fallacy. This allegiance has done nothing to help anyone but the upper 2%. It has resulted in concentrating more wealth in the upper 1% than the bottom 90%, the slowest rate of average job growth of any cycle since 1945, the first decline in median household income of any cycle since 1967, and the 2008 crash and present “jobless recovery.”

This is class warfare, plain and simple. It’s between the top 2% and everyone else. Sadly, far too many conservative middle class Americans have mistakenly taken the wrong side. They’ve bought the lies and fight toward their own demise. The solution is not in raging against these people but in understanding their concerns and sharing the facts with them. The line has been drawn in the sand, and although this truth is too often swept up in the maelstrom of conservative misinformation, it needs to be communicated.

The Democrats certainly have their share of issues, but they alone promote policies that will benefit 98% of Americans. Voters will have another chance in November to put an end to corporate exploitation of our nation. They already know what Republican policy will produce — we’re living in it! They need to open their eyes and give the Democrats a real chance to turn things around.

When speaking earlier this week at the AFL-CIO, President Obama summarized the decision to be made. He first reminded people that it took a decade to drive us into the ditch, and that it will likely take that long to dig us out. He then offered an analogy, “When you’re in a car and you want to go forward, you put it in D. You want to go back in the ditch, you put it on R.” Which direction do you want to go?


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