(Part V of The Failure of Conservative Economics will be posted following this post, in a few days. But we thought that what is happening immediately would form a good example of what Conservative Economics and Politics have led us to thus far. )
After the Bush Stock Market Crash of 2008 and the resultant Bush-Cheney Depression of 2009-2012 several theories on recovery were put forth.
The Democratic proposal, put forth by the President, was a traditional stimulus. In other words there would be a government infusion of capital and other asset development directly into the economy to replace what was thought to be a bare cupboard of private investment capital, and hiding in that cupboard also the shriveled egos of formerly strident American bankers and “investment” brokers, basically…we discovered to our remorse and anger…con men.
So these “brilliant” men who knew the price of everything and the value of nothing turned out to be worth…nothing. They were and still are no help to anyone but their own bank accounts. They were too weak and frail from having lost a few bucks to be able to regenerate business activity.
The Republican Party was on their side. When the President did pass a stimulus bill through Congress in March of 2009, most Republicans said that it would never work, that we would be doomed. By threatening and complaining and refusing to vote to help Americans, they picked up about one-third of the bill in cash, tax cuts, for their rich pals and corporations. More political contributions. But the remaining 500 billion dollars that did go into projects over about 2 years, resulted in 3 million jobs and that meant another 3 million jobs saved in the private sector. It took unemployment from almost 11% down to 8%.
But that didn’t solve the problem. And of course the Republicans knew that it wouldn’t. (Just as it is still not clear why a perfectly sound 7-story building near…but not next to the World Trade Center on 9/11…would suddenly collapse while having only two small fires on a couple of floors and not having been hit by enough debris to even mar its exterior.)
By the way, lest you think us mad….just to finish this point, building 7’s collapse has still not been satisfactorily explained. But we do know that all records in that building of the SEC, the CIA the Department of Defense, the INS and the IRS who occupied space were destroyed. As were those of the Secret Service, which until that time had it’s largest field office anywhere, in that building. All we know is….all the records are gone…destroyed in the collapse.
Oh, by the way, no other building of even much larger size has ever collapsed from fire, let alone the two relatively small fires supposedly in the building that day. But, there are many, many witnesses who say that they heard several explosions on floors other than the ones where there were said to have been fires.
Back to sequester–similarly, it is still not clear why, in the early days of the worst bubble and speculative raid on Wall Street since 1929, Bush and Cheney would not only send to run the Securities and Exchange Commission a man with no experience, Christopher Cox, but one whose antipathy for regulations and regulatory activity was the most visible and often publicly stated of almost anyone on earth. And he proved to be exactly so. He caused a Stock Market Crash. He thwarted investigations, fired the toughest and most experienced and most dedicated attorneys and literally tossed important files into the wastebasket.
So, against the context of suspicion, duplicity and potentially criminal fraud, we discuss why we arrived at a sequester and who is doing what to whom and why.
This all started about a year and a half ago with the debt ceiling increase. The Tea Baggers decided that they would hold up the debt ceiling increase, which, yes, is stupid but they could do it, unless President Obama agreed to their deficit reduction demands. Which were: some immediate cuts in programs and also a “trigger” mechanism attached to a longer-term discussion on cuts. The Tea Baggers, working as we now know for the Koch Family, naturally wanted cuts to your Social Security and to Medicare and Medicaid. None of it happened except the “trigger” on long-term cuts.
The “trigger” became what we now call the sequester. it is not new. It had happened before in our history. But it was demanded by the Tea Baggers and so the President said, at the time…fine, but if you demand it and do not come up with cuts in the meantime, plus some substantial revenue additions, we will let it go through. And that is what has happened. The top end of the Bush Tax Cuts were allowed to retire, raising those taxes again. But the Republicans would not agree to any of the cuts discussed in tax loopholes, which almost every commission on solving the national debt has seen as necessary to solving the problem.
But the Koch Family Tea Baggers are still demanding cuts to Social Security and Medicare and Medicaid. It still will not happen. The reason is that we all have paid into those programs and they are not suddenly running wild with benefits. They have all been curtailed already. Social Security did not have any cost of living increase for two or three years which was essentially a cut. Medicare premiums went up, not down, and that came out of Social Security…which we… not the Koch Family paid for.
The simple solution to the problem is to give all government departments a target…across the board…and let them decide where and how to make the cuts. But then…and this is extremely important…we need to cut all major loopholes for corporations, put a minimum tax on a corporation of ten percent of sales in order to do business here in the U.S. and finally invest in the creation of at least 2.5 million direct government jobs to kick-start the economy. This would require a separate borrowing of about $400 billion from the Treasury, but that could be isolated as an account and paid back over 5 years in taxes across that spectrum of the populace who benefit from the jobs.
While we would generate 2.5 million jobs, the multiplier of at least one (economics would say at least 2) would create another 2.5 million jobs. That would employ 5 million people (over 2 years) both in public jobs that would eventually become private or public-private ventures and take us out of Depression. Tax revenues on this specific group plus taxes on that general income group in the entire population, many of whom pay no taxes now, would repay the loan and give everyone more security.
Finally, the boost of 5 million jobs would mean that the GDP would grow. Certainly it would grow at least again as much as it is during this Bush-Cheney Depression, or another 2%. That economic growth is equivalent to about $340 billion a year, or additional government revenues of about $68 billion.
So let’s go back now to the Boehner and the Republican Tea Bagger proposals. They have no plans to create any revenue. So–think about it–no more money coming into the government. No growth. No new jobs. No infrastructure development. Nothing forward.
But their plan calls for cuts exclusively. And only cuts in things like Social Security and Medicare. So the people who now have some income and who have paid into Social Security will have more of it stolen and given to pay tax loopholes for multi-billion dollar corporations…whose owners comprise about 500-1000 of the richest people in the world. And remember, we paid into Social Security last year and every year about $850 billion…everyone contributed. The costs are now about equal to what is being paid in.
But…and this is extremely important….from 1987 to 2013, we have consistently paid in much, much more–trillions–than was needed. We are far and away in surplus, not in debt in our Social Security account. In fact, if we do nothing, Social Security will go on just as it is until something like 2027 and then payments would drop down to about 78% of what they are now, adjusted for inflation. So we are basically talking about theft of something that belongs to us. It is like someone looting our insurance company, or embezzling funds and saying that this is the way insurance works. It doesn’t work that way. That way is illegal, even criminal.
What about cuts to the military and to other departments of government? Well, we could still make cuts and give each department the ability to make the same cuts but give them two years to do it and the right to do it in their own way. But we should never do it without revenue enhancements to the plan so that they are not simply cutting and then later on asked to do it again. We need to balance government not simply continue deficit government forever.
Despite what people like John Boehner says, government is already smaller per capita that it was in the Bush era. We continue to grow as a country. Boehner knows this. We have about 85 million more people than in Reagan’s day and about 55 million more than in Clinton’s presidency. So…the largest government expenditures? Sure. Also the largest population.
But here is what we don’t have that has cut costs. We don’t have two wars. One is done and one is winding down. We don’t have high drug costs that were passed on to the people in the prescription drug plan “donut hole.” We don’t have as many people excluded from health insurance or as high a percentage of health insurance premiums going to CEO salaries. And we simply don’t have government costs as high as they were, per capita, under President George W. Bush.
The problem is, however, that there are other things we don’t have. We don’t have the money that was shrink-wrapped during the Iraq War and sent on pallets to Iraq where friends of Dick Cheney’s “lost” about $20 billion. We don’t have the estimated $60 billion in private contracts with Halliburton and others for jobs never completed or construction done so shabbily that some buildings are unusable or must be literally torn down. We don’t have the estimated $7 trillion the Bush Administration spent more than they took in during their 8-year term of office. We don’t have the $4 trillion that we spent after the Bush Administration crashed the economy and put 15 million people out of work. Naturally, the Tea Baggers refuse any options that might put them back to work…but keep them as welfare slaves…yet complain about the cost…and complain about their being “lazy.”
Someone said, half seriously, half joking….that “life is hard, and then you die.” But we do not need to make life as hard as it is becoming for some. Nor do we need to make it as luxurious and as elitist and as aristocratic and as self-serving as we have made it for the rich. Almost all income now goes to the top 1%, as astonishing as that seems. Since George W Bush walked through the door of the Whilte House, average American incomes have declined by a whopping 25%. Four hundred people own as much as approximately 155 million people. And five banks control approximately half of all assets. Fifty million people have dropped into the poverty rolls since 2008.
And now we have $85 billion of government cuts coming up this year. It will cost everyone something. The poor will suffer. The military will suffer. Airlines, ports, schools, hospitals, universities and the border patrols. The cuts were severe. They were meant to be. Both sides meant them to be…so that people would come to their senses. But we don’t have sensible people any longer.
Doesn’t it make sense that when a corporation makes $40 billion and when it has 5 major stockholders who own 30% of the company…in other words…each one or each family will get a little over $1.4 billion, each year and has been getting that for years…that it is time to stop. You do not need $1.4 billion,year after year, when 15 million Americans are out of work and that $1.4 billion could be cut in half and used to create jobs that would create more economic activity…that would eventually come back to help billionaires make more money!
We have lost rationality and the people who have lost it are not the billionaires. It is the Tea Baggers who have bought into the idea that, somehow, if they help the billionaires everything will improve, despite the fact that things have been getting worse for ten or twelve years or perhaps even 30 years. We need to let people know that this sequester is not about some kind of redistribution of tax income. It is about restoring American values so that we can put people to work so that they can buy food, clothing, homes, cars and some amount of recreation without depending on the government. The rich are happy. They take their 80% of what they make and put it in the bank and spend it. The rest of us struggle.
Sooner or later, whether the sequester works or not, people will become dissatisfied. They will revolt. This is what happens at some point as it has throughout history when people feel that…for their time and place…they are oppressed and can no longer live as they have been forced to. We do not need a heavy demand to cut services to most people at a time when they have less and less. We need reform. At this time, in this place, reform means tax reform, corporate reform and realignment of our national priorities.
And it had better come soon.