Since the Fall of 2008, the U.S. economy a dynamic enterprise of about $15 trillion dollars, as measured in employment, has fallen by about 8 million people. There were already about 7 million people unemployed, or 7% by the end of 2007, a roller coaster ride up and down after the Clinton Administration when unemployment was only at about 4%.
The Bush policies of hands-off government, privatizing services, sending jobs to companies like Blackwater and Halliburton to help fight unnecessary and totally wasteful wars had created a society in which Neoconservatives, basically the military-industrial complex feeding on two wars, were creating nothing here in the U.S. but armaments.
And that part of the economy has remained the same. In 2010, the U.S. spent over $246 billion on military contracts and already in 2011 through July has spent over $170 billion.
But in 2007, with no manufacturing being done in the U.S. and very little else that could be done with investment funds (only 12% of GDP was manufacturing, the same percentage as government) down from 32% in the 1960s and 1970s. So the financial community, moving money around and collection commissions on it, became a larger and larger part of our economy.
The old reliable home equity for average homeowners suddenly began to look like one of the really solid parts of the economy. In the early days of the Reagan Administration, when he was trying to stop inflation, home values had dropped by 20%. But now they had long since returned.
Savings and loan organizations were collapsing all over the country in the Reagan years because of deregulation. They had been established long before with one function…to insure that people had access to safe, reliable mortgages. But the Reagan deregulation of Savings and Loans created all kinds of scandalous adventures with the money of homeowners.
By the mid-1990s, with the better economy under Clinton, home values began to climb and employment began to climb. Incomes went up. More people could now be brought into home ownership. Rules were relaxed slightly and people began to get into homes where they could build equity, which, over time, had become the basis for much of the personal wealth of the middle class.
But by 2001, when Bush came into office, the speculators had begun to think about tapping into that personal wealth. Reagan had already provided incentives for people to borrow against their homes. Now, with the banks completely deregulated, as the economy began to recover from the shocks of an economy depressed by the effects of 9/11, and a down business cycle, banks began to ease up dramatically on requirements for mortgage lending.
This created huge numbers of new mortgages which, in turn, created more housing purchases and skyrocketing home values. All this speculation, all this investment in false values of houses, came crashing down in 2008, when the bankers, who had been selling these mortgages as securities investments, were, in a sense, caught red-handed selling worthless paper. People suddenly started unloading these securities which were simply quite clearly of very little if any value.
The con game was over. Many people had made millions and billions but now the banks were holding documents that had decreased so far in value that they had no money. They had so little security from the worthless paper they were holding that they had to go to the government in the Fall of 2008 and borrow $700 billion dollars, basically for operating money until they could replenish their capital.
In the meantime, however, the crash of securities, and the total lack of confidence in business and finance represented by the Stock Market, collapsed, falling from 11,000 down to 6,900. Top stocks like General Electric, which had been in the $20s falling to just $6. Why? Because business collapsed. People stopped buying things. Various funds which were held for pensions or health insurance kept in securities to earn a return were suddenly tremendously reduced in value.
It was all speculation, built on a relaxed view of how the economy works, leveraged by financial insiders and others who knew that activities that once would have brought a sharp rebuke or a lawsuit from the SEC, even jail time, were now being countenanced by a government that wanted its friends in business to do extremely well in order to gain political support. So basically it was look the other way against borderline criminality…and in some cases real criminality…by the bankers…in return for a political alliance.
When all the catastrophe had been absorbed, the GDP had fallen by trillions and the unemployment numbers had skyrocketed. But something else had happened. With the economic crisis, political positions hardened. There were only two choices. Increase taxes on the wealthy and on corporations, stop speculation, close loopholes, restore manufacturing here in the U.S,, shut down the wars overseas or—do nothing. Doing nothing would mean that millions of Americans would suffer.
It would mean cutting back on national and state governments to offer fewer services to citizens. It would mean beginning to cut back on social services to the poor. It would mean restricting government investment in new jobs and stimulating private enterprise. Only by cutting government could the one party concerned with those who had caused the problem originally be able to stop the higher taxes and other remedies.
So the GOP, the Neoconservatives, the Republican Party began a campaign to insure that the one person elected by all the people, the President, could not get any social programs through. No new jobs bills. No investment programs in private enterprise. And a constant threat to close down government and put the people, so to speak, out on the street.
They threatened to hold up unemployment, and they could have, if the President would not sign even more tax cuts for the rich. They threatened to close down the government and put the old and the poor into starvation or death threatening conditions from lack of health care, if the President did not agree to a commission to cut back government, which will include large segments of social services.
A tax increase of 4% on a person making a million dollars a year and paying a nominal tax of 35% but who actually pay about 23% of income in taxes would add $40,000 to their $230,000 tax bill. But they would still have $730,000, about $70,000 a month to get by on.
Consider someone on an income of $15,000 a year, which is about what half of people on Social Security live on totally, while paying for Medicare and rent. The fact is that the extra 4%, which should actually be more, will not affect the lives of these wealthy people as much as a cut in that $15,000 Social Security income.
Now consider someone 50 years old, not eligible for Social Security or Medicare. Let’s say that this man had worked for the same company for ten years, had built up a small equity in a savings plan, had health care and was laid off. Let’s say that his home has equity, maybe even $100,000. But let’s say that he cannot find a job for a year. That is the situation of millions of people right now.
Extended unemployment may end as of the end of 2011, and the private investment market is doing nothing. So what can you do? You can work as hard as possible to vote out these specific people. All these Senators voted against the President’s jobs bill on October 11, 2011.
They all did. They did it knowing that millions of Americans are desperate to find jobs. They did it although they knew that this was a way to help millions of Americans who have no where else to turn.
And this is what was in the bill that they voted down:
It would cut payroll taxes and some other expenses for small businesses in ways that would give them incentives to hire workers by cutting their costs of adding new workers. It would also give other tax benefits for hiring more workers and it would make certain financial regulations easier to handle to ease the task of getting financing.
It would provide incentives to hire veterans coming home from Iraq and Afghanistan. They are a big part of the unemployment figure and need particular attention to get into the workforce.
It would put about 280,000 teachers back to work or keep ones that are scheduled to be laid off. Some firefighter jobs and police jobs would also have been sustained.
Schools and public buildings and roads and even housing stock debilitated but workable would have been renovated, rebuilt and improved.
A work-sharing initiative that companies could use to reduce work hours for some employees while keeping others on staff, reducing layoffs and adding back employees.
A $4,000 tax credit to small firms who hire unemployed workers and other incentives to make those hires more attractive. A fund to hire and train young, unskilled, low-income workers.
In general, this would have been a plan that would jump start the jobs market. It would have been a stepping stone towards a bigger plan, perhaps, learning from this one to involve more public-private cooperation to restore jobs and the economy.
But the Republicans were having none of it. Not one Republican voted for the President’s plan. And now, today, two days later, they are patting themselves on the back, blaming the President’s plan…which they never even bothered to amend or modify….for not being good enough. They, of course, are lying, simply talking on the floor of the Senate to build up sound bites, video clips to play for their now jobless constituencies about why they could not consider the needs of the citizens in their states.
Why should we have such a plan or why should we have a plan for growth that is even bigger? Because if we do not, we will go further into debt as a country and things will get much, much worse.
Unemployment payments help the individual but they do nothing for the country. They draw down resources that could be used to make many of these jobs permanent by eventually integrating them into the private sector. An investment plan in jobs continues to move the nation ahead in education, transportation, housing and, if the Republicans could ever be made to see the light, rural development, including Internet-connected communities all over the country.
The problem with the initial stimulus was that on one realized…very few did…that a loss of 760,000 jobs in one month was as dramatic an event as one could imagine in unemployment. That happened, as part of a cycle, in the first month President Obama was in office. In normal times, that would have been a shocking alert that the economy was in free-fall. But when Republicans look to their campaign contributors as their constituents, the problem looks less urgent.
President Obama recognized that we were in deep trouble. So did even the economists for the Republicans. But the Republicans…now not traditional statesmen but Neocons, the new term for Fasicsts…simply turned their backs on the American people and turned towards the oil barons, the health care industry and Wall Street. They made a conscious decision to walk away from the people in favor of the monopolists and the billionaires.
And that is where we are now. We are facing a Depression very soon if the Fascists and their monopolist, plutocratic supporters cannot be persuaded to think less about their greed and more about the needs of this country.