Home ALEC The Economy, Politics and Jobs

The Economy, Politics and Jobs


One of the key problems with the country today is the lack of jobs. If we had jobs, we would have more economic activity at the bottom end of the economic scale and that would help to balance the weight between the top 1% or 2% and the bottom 50% or 80%. The middle of the economic range in this country has household income in the $45,000 range.

Jobs can be tied directly to gross national product. But GDP has no bearing on Wall Street and though Wall Street does have some bearing on the economy, it is no indicator of a healthy, vibrant free enterprise system. Wall Street no longer has a direct connection to industry. Wall Street has now become an industry of its own, albeit an unstable and socially unproductive one.

If you take periods of our history where there were large numbers of jobs, there was also a strong growth rate in the GDP. Under Truman and Kennedy, GDP was in the 5% range. When Clinton came in, there was a recession. Over 7% of the country was unemployed and had been for a while.

Clinton’s policies did two important things. He increased the domestic growth in the economy. And he lowered the unemployment until by 2000, it was hanging around 4%, both slightly above and also slightly below. Everyone who wanted or needed a job was getting one. In Houston unemployment dropped below 2%.

Isn’t it interesting that when Truman, Kennedy, Johnson, and Clinton, growth was strong and jobs were plentiful. Under Reagan, Bush I, and Bush II, jobs were scarce an growth was slow. In Bush II’s case, growth was only 1.65% for his entire term. He created 1 million jobs, whereas Clinton created 22 million in the same period of time. But things did not stay that way under George W. Bush’s policies.

Here’s what we had for a growth rate after 8 years of George Bush. In Year 8 of his term, that is the year 2008, his economic policies culminated in quarters of 1.9% GDP growth, 1.1%, 0.9%, and minus 0.3%. In the month immediately following his leaving office, January 2009, the growth rate was minus 2.8%, and for the rest of 2009, it was minus 3.5%, minus 4.1% and minus 3.3%. About 20 million people were out of work after the Bush Stock Market Crash.

In other words we had good economic trends. The problem was that they were going in reverse. In other words, the economy was collapsing into a big heap. We were literally falling into a huge Depression, even after having been saved momentarily by Congress. What Congress did was to at least assure that we would not fall so low that so many banks would fail that we could not recover. The Congress, while its hand was forced by literal panic in the financial community, and by some lies on the part of the Bush Administration, gave hundreds of billions ot Wall Street to keep the economy, even in dilapidated shape, functioning until money could begin to flow and the bad apples could be tossed out of the barrel.

When did things begin to turn around? It was after President Obama was able to get through a large stimulus bill, even though that bill was hijacked in part by the Congress. Here’s what happened. In 2010, by quarter, here was GDP growth (mostly). In the first quarter, decline continued, minus 0.2%. Second quarter, positive 1.6%, third, 2.7%, and fourth 3%. Not bad considering that the first quarter of 2008, under Bush only produced 1.9% growth. And Bush’s average growth over 8 years, including huge expenditures on two wars, was only 1.65%!

So the stimulus did have an effect. By the end of 2010, GDP was just barely touching 3%. Not bad. But the stimulus of what was supposed to be $800 billion, was actually closer to $500 billion because of the Republican demand that about $300 billion be in more tax cuts. Even the $800 billion was about $400 billion too low, but with the inclusion of the useless Republican tax cuts of about $275 billion, the stimulus was less than half what was needed and with Republicans filibustering every piece of investment legislation or every jobs bill, there were no new jobs created after the stimulus bill began to slow. So what happened in 2011?

In 2011, things began to slow down. There had been no action taken by government at all except that which could be done by the President’s own executive action. Hundreds of attempts to create jobs had been filibustered by the Republicans in the Senate. As a result, GDP fell under 2% to 1.9% and 1.5% before rebounding to 2% in the beginning of 2012.

The President did what he could. He had stabilized the auto industry and they began to build cars in earnest that could compete with Japan and Germany. The Fed continued to loosen the reins on the money supply but the banks simply seemed to send the money back and forth among financial institutions. Good for the market, but nothing happened on jobs. It seemed as though no money was being invested in new businesses. Most of the money went to banks who loaned it to Wall Street. The market, therefore, continued to expand and climb.

And in the Republican business community, there was no problem. The Republican Party was not worried because their mandate comes from the top 200 to 300 businesses, not from the people who vote for them. The rest of the businesses, the roughly 220,000 who went out of business between late 2008 and 2010, according to the Census Department, still believed that they were being represented by Republicans right up to the day that they closed their doors.

The Republican propaganda campaign is more than just a constant mantra about repealing health care reform efforts. It includes a daily campaign from the likes of the Wall Street Journal editorial pages to the Fox News Channel to the editorial pages of many metropolitan newspapers, who although part of a chain and therefore beholden to giant global corporations, continue to pretend to their local advertisers that the Republican Party is still the Party of small business.

Of course the obvious answer to this is the following. If the Republican Party were the Party of small business, why would they not engage an organization like NFIB? The answer is that they already have a strong business affiliation…the American Legislative Exchange Council, or ALEC. This group, supported by huge global corporations, like Kraft, Coke and Boeing as well as lobbyists like the National Rifle Association, the National Bail Bondsmen’s organization, America’s Health Insurance Plans and groups like the American Petroleum Institute…have their own agenda, and pay at least one state legislator in every state a handsome amount to get legislation….that they write…into state legislatures for a vote.

So who does support small business? Is it the NFIB? They supposedly had as many as half a million members and despite apparently losing something like 100,000 members recently, still have have about 350, 000 members nationwide. But if NFIB likes small business why don’t they like health care reform?

The Affordable Care Act specifically includes major benefits for really small businesses. On the plus and minus scales of business decisions, small business certainly comes out on the plus side from ACA reforms.

First of all, most businesses are exempt from many of the employer mandates. Second, the incentives are so small-business tailored, it seems foolish to work against them. Over 95% of small businesses would pay no penalties but would have tax incentives to keep employees on health care. Most small businesses have fewer than 50 employees. So, mandates don’t even apply to them. So why would NFIB support repeal of this law or, as it did, lobby for the removal of the public option from the bill. There are virtually no logical reasons for this except two. One, you are working to keep all benefits and privileges away from workers to reduce any leverage they have. Or, two, you are being given financial support by those promoting the repeal of health care reform.

The NFIB, inexplicably, if you assume they are on the side of small business owners, who now have a very workable program, calls for the repeal because the law applied unconstitutional mandates. It also says that there are too many new regulations. Job creation will be affected. But that simply is not true. Job creation, though it may just be a coincidence, has accelerated since the new law went into full effect, even with its dismal opening.

The worst part of the NFIB’s critical comments is the idea that mandates are unconstitutional. Those comments are bad because they are inaccurate, untrue, and worse, they mirror the arguments of huge corporations in the health care industry who stand to lose hundreds of billions of dollars which will stay in the pockets of individual consumers. Here is the final argument that proves NFIB is either on someone’s payroll or consider themselves advocates for big business.

Because the new law excludes almost all really small businesses from any kinds of mandates, there should be no concern on that score. But the law also allows individual workers to go out onto the exchanges and get minimal health care insurance, but better coverage than used to be available, with no preconditions and no refusals at a lower cost….and then get a subsidy! Furthermore, ACA provides substantial tax credits to businesses with fewer than 25 employees if the average income of those employees is less than $50,000 per year.

The NFIB says it is not enough. So, the problem then becomes this. Where was the NFIB when the legislation was being written? The people they support were not advocating for health care reform. They were doing everything possible to prevent health care reform, with no suggestions on reform at all.

And finally, if NFIB is impartial but working for the small businessman or businesswoman, then why did they take $3.7 million dollars from Karl Rove’s Crossroads GPS organization. This is an organization dedicated to arch-conservative principles and would only give money to NFIB because they agreed to mount a lawsuit against the Obama Administration and the Affordable Care Act.

And, given the fact that most people who inherit large amounts of money are not small businessmen, then it is equally surprising that NFIB fought to have estate taxes removed. All these actions simply prove that they are a Right-Wing organization, dedicated to lobbying for the rich and for giant global corporations.

If NFIB is correct, and most of its employers have fewer than 10 employees, then one thing is abundantly clear. NFIB does not work for its 350,000 members. NFIB members should find another organization that truly has the best interests of small business at heart.

Back to the economy, how does our current growth compare with previous eras? Well, of course, our best times were after WWII, when we had 4% and 5% growth for two or three decades. In 1950, we were not only the last man standing, with all the advanced countries of Europe devastated by war, but in those days we also manufactured here in the states about 80% of what we consumed domestically. We made cars, appliances, toys, apparel, television sets, radios, furniture and just about everything else right here in the United States.

In 1960, only about 8% of the value of goods sold here in the U.S. came from abroad. In 1980, it was 14%, and by 2010, it was an astounding 60%. And it is not only a huge transformation but industry and regulators have deliberately made it very confusing as to what is actually made here.

You don’t need to know what the product label says. No one cares if the product says “Made on Mars” if it is made here with U.S. jobs that pay a living wage. Since when has it not been the right of Americans to have a job? You want more products made here and many owners and CEOs of manufacturers want them made abroad.
Walmart, on the other hand, doesn’t want you to know the full amount of imported products that they sell because they sell over $400 billion of imported products. Retailing has replaced manufacturing as the biggest employer in the U.S. Walmart pays its associates an average of $8.81 an hour, not enough in most places to raise a family.

Walmart has sales of approximately $400 billion a year. It is not only the largest retailer in the U.S. but the largest U.S. corporation. Walmart sells in one quarter what Home Depot sells in a year. Walmart’s sales are more than the combined sales of Target, Sears, Kmart, J.C. Penney, Safeway and Kroger combined.
We must all understand the problem. Imported products, like Toyotas and BMWs and Bosch hand tools are not the problem. We have tariffs on those products and those countries have tariffs on some of our products. We live in that delicate balance of competing international interests.

But the case where a product is designed here, by a U.S. corporation, uses foreign materials, foreign labor, foreign assembly and then is shipped back into this country for sale is not only bad for our economy, it is devastating to the American people. We have lost 7 million jobs to Asia. Most of those jobs could have stayed here, making those products here.

The only reason we do not is childishly easy to explain but hard to accept. The reason is that lobbying forces for U.S. global corporations who want to increase profits at the expense of American labor now own the Republican Party. When they can assemble a House, Senate and Presidency, as they did in the Bush II years, they can run wild.

The Bush administration developed import-export laws that gave incentives to move not only jobs abroad but corporate headquarters. Tens of thousands of corporations have their “headquarters” in a post office box in Bimini or Bermuda. Hundreds of billions of dollars that should have been returned to the United States, taxed, and distributed to shareholders sits abroad, untaxed and invested abroad. These people are the worst kinds of traitors. These are anti-American businessmen, only interested in their own personal greed, their own lifestyles at the sacrifice of their fellow Americans.

One of the great untold stories of income inequality is the fact that when a man goes from making $200,000 per year and being taxed 50% on everything over $150.000, to that same income but only paying about $30,000 total in taxes, then he accumulates more wealth. That part is obvious. But when that extra income is spent to lobby to send another man’s job, worth perhaps $40,000 per year to China, by electing Republicans who will support the wealthy over the country at large, the loss of that $40,000 automatically and immediately raises income inequality.

And what results from income inequality? A smaller consumer market, slower GDP growth, a poorer country….declining and failing inftrastructure…and a less attractive market for foreign products. When we take $8 to $10 dollars out of a worker’s pocket and send it straight up to wealthy investors in the company, often merely investment banks, we damage the economy. People no longer have income to purchase discretionary items. They buy food, pay mortgages, loans, credit cards, medial bills and there is nothing left…if, in fact, they can pay all those bills.

Higher taxes on the rich are actually better for the economy. Not merely from the additional revenues to the Treasury because many of the rich will avoid paying those taxes. Actually, the increase comes in a more complex way. In order to avoid taxes, individuals must invest money. When you invest money, you take risk. When you take risk, you expect a reward. The rewards come in a multiplication of the investment 4, 5 or 10 times what was invested.

The best way to get those kinds of investments is to find a company just starting out and invest in it to make it grow, with one stipulation. The company must locate here, build factories here and hire employees here in the United States. Let the rich avoid their taxes if they invest in a new Microsoft, McDonalds, Boeing or Google. That is how people get the greatest rewards.

Think of the number of people employed in this country by those firms. That is what will raise all boats. Tax the rich. Force them to invest in U.S. corporations and as they are growing even richer, all Americans will benefit from new jobs, new industry and an American society resurrected by simple free enterprise.

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