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economy

Economy that funnels ever more rewards
to ever fewer people is unsustainable

The U.S. economy is an equation, with big-money interests like corporations, the financial industry and millionaire investors on one side of the equal sign and millions of paycheck workers, small-business operators, farmers, retirees and students on the other side.

Think of one side of the equation as the supply side and folks able to use money to make money, and the other side as people who must work to make money.

When the economy is healthy and functioning well, the equation is roughly in balance. But balance has become impossible in recent years thanks to three decades of wrong policies, ideology run amok and Americans letting themselves be misled into voting against their own best interest.

One picture of the consequences looks like this.

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The graph is from a good post at The Atlantic by Daniel Indiviglio. Do read his brief post in full, but for now consider his bottom-line conclusion about what the chart means:

. . . over the past five years Americans, on average, have seen no disposable income growth if you adjust for population and inflation. This also explains why they’re spending like it’s 2006 — because they don’t have more money to spend. No wonder the recovery continues to feel like a recession: that’s an awfully long time to go without a raise.”

Something else bears mentioning here. Since records have been kept, productivity gains have meant more profits for business, generally, and income gains for workers. Now, compare the income chart from the summer of 2006 forward to the productivity chart.

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BLS productivity graph

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When things are this out of whack there is no longer an equation. “Exploitation” is the only word that fits. Like the federal deficit, this situation cannot go on indefinitely without triggering a calamity — one that could mean plenty of pain to go around, for those profiting now as well as those getting the short end of the stick.

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Perry offers plan for economic Armageddon
in bid to win support of Bush dead enders

Rick PerryWith polls showing that upwards of 60 percent of Americans favor raising taxes on the country’s wealthiest citizens while preserving Social Security, Medicare and Medicaid, Texas Gov. Rick Perry sought to boost his lagging presidential primary campaign Tuesday by unveiling a flat-tax plan to do the opposite.

The Republican governor’s proposal would give Americans the option of paying a 20% tax or keeping their current rate, which now rises to 35% for the most wealthy. Perry also would eliminate a variety of taxes that mainly affect the rich, as well as the income tax on Social Security payments, which would benefit millions of retirees.

Perry told reporters he didn’t “have a problem in the world” if his plan would deliver millions of dollars to the richest taxpayers, and that he assumed they would use the windfall to create jobs. He also dismissed criticisms that the plan would widen the federal deficit.

By advancing an unworkable, fiscally irresponsible plan that invites public scorn, Perry makes clear he cares only about winning support from conservative Republican extremists — the 23 percent of Americans who made up George W. Bush’s political base, later morphing into today’s tea-party radicals.

Note that, despite spectacular failures when it was tried in the 1980’s and during George W. Bush’s eight-year reign of error, Perry assumes trickle-down economic nonsense will suddenly start benefiting anyone but the rich. Keep in mind that one definition of madness is doing the same thing over and over, expecting a different result.

Perry’s economic plan includes reducing discretionary spending by $100 billion a year, starting with a 50 percent cut in federal spending for elementary and secondary education. He would also “overhaul” Social Security, Medicare and Medicaid.

Peter Morici, a conservative economist at the University of Maryland, said the plan “falls short in two important respects: It won’t encourage many better investment decisions and foster growth, and it will spin the federal deficit permanently into the stratosphere.”

He estimated that Perry’s plan would cost the federal government $900 billion a year in lost revenue.

That’s perfect for shrinking government until it’s small enough to drown in a bathtub, winning economic Darwinist and radical-conservative enforcer Grover Norquist’s seal of approval.

Taking no chances someone with average or better intelligence might respond with unwelcome questions or comments, Perry chose to announce his rendition of voodoo economics to 150 invited guests at a plastics plant outside Greenville, S.C. We say “his” rendition advisedly. Perry’s flat tax is based on the one touted by multimillionaire, former presidential candidate and current Perry advisor Steve Forbes when Forbes ran for president in 1996 and 2000.

Perry can pander to the Republican Party’s burgeoning base of perverse 16th-century throwbacks, selfish know-nothings and bullies with this nonsense safe in the knowledge that, even if he were to get elected president and send it to Congress, it would never pass.

Well, it would never pass unless voters are foolish enough to double down on their mistakes of November 2010 by electing many more Republican throwbacks, selfish know-nothings and bullies to Congress in 2012.

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Republican economics explained in three slices

Speaking to a group of self-appointed guardians of the nation’s moral and spiritual well-being Friday — the so-called Value Voters Summit — Republican House Majority Leader Eric Cantor, R-Va., told his listeners what he’s “increasingly concerned” about.

 

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This brings to mind what Cantor, his fellow Republicans and gay-bashing Values Voters should be concerned about, and could help do something about. But they aren’t and they won’t.

Share of wealth graph

Occupy Wall Street protesters and their counterparts in cities across the U.S. are rightfully upset about their situation and about all the lies and greed that brought them low. Let’s take a moment to consider the lies, because they’re important to understand and to finally throw back at those who continue to tell them.

Look carefully at the pie chart. Notice how small that yellow slice 80 percent of us share is compared to the two slices shared by some of the wealthiest, most powerful people on Earth. For 30 years, conservative Republican shills for Wall Street banks, big investors and corporate America have been telling the rest of us their reward-the-rich policies would make the pie bigger and bigger. By growing the pie their way, they said, everyone’s slice would get bigger.

Republicans lied. The pie has grown somewhat. But what Republican policies have done is make those red and blue slices bigger out of all proportion to the the yellow slice. The main achievement of Republicans’ trickle-down scam has been to make those red and blue slices bigger by making the yellow slice smaller.

That, in a simple pie chart, is the truth about Reaganomics, about supply-side economics, about trickle-down economics — about the only thing Republicans have for an economic policy. It’s the only thing they have had for an economic policy for 30 years of taking from the poor and from the working and middle classes to make those blue and red slices of the pie so wonderfully big for Republicans’ favored few.

Why must so many give up so much to benefit so few? Simply because Cantor’s perverse attitude, like that of his party and every Republican presidential candidate, is rooted in self-interest and party interest. It’s a matter of not biting, but rewarding, the hands that feed his campaign coffers and those of his fellow Republicans.

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Millionaire Rep. Ryan cries class warfare

“It adds further instability to our system, more uncertainty and it punishes job creation and those people who create jobs. Class warfare may make for good politics but it makes for rotten economics.”

—Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, commenting on President Obama’s reported plan
to increase taxes on wealthy Americans,
during an appearance on Fox News,
Sept. 18, 2011

Look who’s talking: It’s hardly surprising that Ryan, a radical-conservative Republican and economic Darwinist, would jump at the chance to charge class warfare. With a net worth said to be around $2.4 million, Ryan has a glaring conflict of interest. Not that he will admit to having a conflict of interest or abstain from voting on tax increases for the rich because of it.

Ryan provides the latest example of a standard GOP tactic: project on to others what you and your party say and do.

Republicans have been waging class warfare for more than three decades on everyone in the country who’s not wealthy and well connected. The results are in and poor, working-class and middle-class Americans are losing on all fronts.

[stextbox id=”custom” caption=”Class warfare facts:” float=”true” align=”center” width=”460″ mleft=”6″ mright=”0″ mtop=”12″ mbottom=”12″]”The nation’s official poverty rate in 2010 was 15.1 percent, up from 14.3 percent in 2009 — the third consecutive annual increase in the poverty rate. There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009 — the fourth consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published.
—U.S. Census Bureau poverty report[/stextbox]

Economic stimulus necessary, effective,
provided the correct amount is applied

“This post is in response to a comment from our conservative friend, rightsaidfred, about our previous post, “Obama jobs plan deserves support, enactment.”

Let’s begin with rightsaidfred’s comment, which he started off quoting a line from our post:

‘. . . spend some $447 billion to raise gross domestic product by as much as 2 percent and reduce unemployment perhaps 1 percent by late 2012.’

If we don’t hit this metric, do we get our money back? Such programs have a history of not meeting expectations.

Why the glee to have the government fix the economy? Government often does more harm than good in this regard. Temporally and historically, governments have been an expensive enterprise, best expanded by wealthy countries. We need to get our wealth elsewhere, not from government. The best thing for a stronger economy is for each reader of this blog to go out and personally do more. The individuals that make up a country are the ones that drive the economy.

I see a lot of preemptive blaming of Republicans for the failure of Obama’s plan. Maybe Obama’s plan will fail because it is a bad plan.

What follows is our response.

RSF, if you get a strep throat, your doctor will prescribe penicillin to treat it for 10 days and tell you to take all the pills, for the whole 10 days. That’s because if you do anything less you risk killing only the weaker germs. The strongest can then multiply, possibly causing permanent heart damage. The prescribed regimen was established through research and testing.

Macroeconomics hasn’t been repealed and won’t be invalidated because conservatives don’t like some parts of it. We know what gets a stalled economy growing again. It’s government creating demand when neither consumers nor businesses are willing or able to do that. It worked in the 1930s and 1940s, and several times since.

When we have government act to reverse a downward economic spiral by spending and thus creating demand, we’re not calling on some alien force from outer space. Our federal government is the American people acting in concert on their own behalf to solve a big, serious problem — one they can’t solve satisfactorily as individuals and groups.

What we don’t know and can’t learn through experimentation ahead of time is exactly how much government spending is required and for how long. Common sense indicates that for a country of more than 300 million people with a multi-trillion-dollar economy, a lot of spending is required to break out of a severe recession or depression.

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Obama jobs plan deserves support, enactment

ObamaPresident Obama presented to a joint session of Congress today a reasonable set of measures that, if enacted, would spend some $447 billion to raise gross domestic product by as much as 2 percent and reduce unemployment perhaps 1 percent by late 2012.

Obama was emphatic that the cost will not simply be added to the deficit, but will be covered by reductions already on paper and in the works, and by tax increases on those most able to pay.

Perversely, such potentially helpful results amount to powerful political reasons why congressional Republicans would rather run naked through a poison ivy patch than pass the president’s American Jobs Act.

Aware of the inevitable Party of No reaction, Obama laid down a too-gentlemanly but still definite marker that should give Republicans pause about making Capitol Hill one big obstruction zone this time (emphasis ours):

Regardless of the arguments we’ve had in the past, regardless of the arguments we will have in the future, this plan is the right thing to do right now. You should pass it. And I intend to take that message to every corner of this country. And I ask — I ask every American who agrees to lift your voice: Tell the people who are gathered here tonight that you want action now. Tell Washington that doing nothing is not an option. Remind us that if we act as one nation and one people, we have it within our power to meet this challenge.

Taking it to the people, calling on citizens to tell cynical, seflish Republican pols and some Democrats in name only to stop playing political games and start serving the public ahead of campaign donors and other special interests, is exactly what Obama needs to do. He should now repeat that call from coast to coast and border to border.

Urging the public to build a fire under recalcitrant senators and representatives shouldn’t be Obama’s job alone. In the coming weeks, the president’s Cabinet secretaries, staffers and congressional Democrats should get in front of every camera and microphone they can find to help drive home the message.

At one point, Obama mentioned helping to pay for desperately needed stimulus by eliminating tax loopholes and advantages enjoyed by oil companies. As Democrats cheered, MSNBC’s camera zoomed in on Rep. Jeb Hensarling, R-Texas, who sat immobile, looking exactly like a teenager sulking after being told he’s grounded for a week — a good indicator of Republican enthusiam for anything that will actually create jobs and ease millions of Americans’ misery.

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A great nation is a terrible thing to waste

inverted flagProfound changes in the U.S. economy that began during the 1970’s should’ve triggered public-policy responses to mitigate their bad side effects, keeping the middle class strong and growing in part by increasing public-sector investment, maintaining the country’s manufacturing base and backstopping organized labor.

Instead, public policy accelerated, intensified and entrenched the bad side effects, with the predictable result that our manufacturing base is gutted, organized labor is a shadow of its former self, and our shrinking middle class is hurting in ways unknown since the Great Depression.

We can account for how the world’s largest, strongest, most dynamic economy was brought low, and how the democracy with the most productive, stable and affluent society ended up deep in debt, with high unemployment, no job security, a tattered social safety net and gridlocked government, in five words: ignorance, bigotry, ideology, inattention and selfishness.

Ignorance: Most Americans think they know more about our country — its geography, Constitution, history, government, society and economy — than they actually do. A few decades back, a reporter went out on the streets of midtown Manhattan and read the First Amendment to a random sampling of passers-by. He asked them if that should be the law in our country. A shockingly high percentage said no.

For an equally revealing exercise at home or at work, hand out sheets of paper and challenge your friends, family or co-workers to name the 50 states. Then, ask them to explain in a simple paragraph the main differences between U.S. senators and representatives. If those in your group are all or mostly college educated, see if even one can accurately define capitalism, democratic socialism, state socialism and communism. Finally, ask for a simple paragraph explaining how banks create money.

Good luck. And remember, in our system, the people decide who to trust with the levers of governmental power. The people decide who will make public policy affecting our society, and our national and economic security. Thus, it’s reasonable to expect that the less voters know, the more likely they are to let themselves be flim-flammed into electing ignorant, incompetent, dishonest, ideologically warped and/or crackpot-crazy public officials.

Bigotry: If you’ve ever used a shoehorn to ease a foot into a stiff new shoe, you can appreciate how useful people steeped in prejudice are to low-road politicians. A congressional district or state with a high percentage of racially biased people can be used to slide an unscrupulous and/or incompetent politician into a House of Representatives or Senate seat, or other high office, in much the same way. This explains the long, lucrative political careers of people like South Carolina’s Strom Thurmond and North Carolina’s Jesse Helms.

That these two examples are Southerners figures, because unfortunately, from Virginia to East Texas and including all or large parts of border states of the old Confederacy, a relatively high percentage of white residents are more or less prejudiced against people of different races and backgrounds. We want to be clear, however, that not all white Southerners are racists, and that those who are vary greatly in how far they’ll go in acting on prejudice. We also want to be clear that, unfortunately, bigots can be found in every part of the country.

Our reason for explaining the above is to make an unassailable point. That is, white Southern voters are overwhelmingly Republicans for reasons other than just a regionwide desire to shrink and weaken the federal government and limit federal taxation. Social, economic and political traditions, all of them intertwined with racial prejudice, are key factors in the relationship. Simmering resentment and elements of spite are no less so.

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Don’t blame China for our economic woes;
Corporations and sold-out pols are to blame

“Xenophobes will say China’s ascendance threatens America’s global cultural hegemony and promises to create a dystopia forcing us all to endure the supposed horrors of speaking Mandarin and using chopsticks.

Such misguided and bigoted demagoguery, though, distracts from the real crisis staring at us in our own mirror — a crisis not of other, but of self. Indeed, for all the fears of external assault, the Chinese invasion tells us the true problem is that America is no longer willing or able to invest in its own future.

This problem is most obvious — and shocking — in our government. As opposed to multinational corporations, which care only about maximizing shareholder profit, our public-policy arena is supposed to be focused on building America. But in this golden age of big-money politics, with multinational corporations buying off our lawmakers, we get the opposite — even during an unemployment crisis.

—David Sirota, in a column,
The Lesson of the Chinese Invasion,
Salon, Sept. 2, 2011

Some want it all — but only for themselves: One (liberal) man’s investment in our country’s future is another (conservative) man’s wasteful and unnecessary spending. Had it been left up to early Americans with the same mindset as today’s conservative-extremist Republicans, the Mississippi River would be our western border; people would have to drive around San Francisco Bay and cross New York’s Hudson and East rivers by ferry only; drivers would have to make do with two-lane state highways instead of multi-lane freeways; and the moon would host a Russian flag.

In the bargain, millions of Americans would’ve been poorer and otherwise less well off for all these years.

Millionaires tell Republicans to end Bush tax cuts

OK signA group called The Patriotic Millionaires has endorsed a remarkable letter to congressional Republicans that calls for ending the Bush tax cuts for those with incomes of $1 million or more a year.

Jack Jodell over at The Saturday Afternoon Post reproduces this thoughtful, informative letter and adds his own thoughts in two excellent posts you should read.

They are: Hats Off to the Patriotic Millionaires (Part one) and Hats Off to the Patriotic Millionaires (Part two).

Leaders on both sides failing economic test

thumb downIt’s fair to say U.S. policy makers are not only too hamstrung by the perverse, selfish intransigence of Republicans and their cadre of tea party ignoramuses, but also too overhwhelmed by the magnitude of economic damage the U.S. has suffered, to cope effectively, much less solve our economic problems.

How bad is it? Pro Publica spells our situation out in a depressingly broad array of statistics, including:

At this time last year, Republicans and tea party candidates for Congress loudly condemned the Obama administration and congressional Democrats for squandering billions on a stimulus program they claimed wasn’t working. That program wasn’t working well enough in part because Republicans had fought tooth and nail to make it too small and then to subvert and counteract its effectiveness. Doing things like refusing funds for high-speed rail and other projects. (Although, many congressional Republicans were front and center to take credit in their states and districts for stimulus projects that brought in federal money and put people to work.)

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