While it is true that we have added a little under $5 trillion to the debt since Obama took office, it is important (and fair) to remember that most of the massive spending policies implemented by the previous administration did NOT cease to exist the day Obama was inaugurated. The wars, the ridiculous tax cuts for the wealthiest Americans, Medicare Part D (boondoggle for Big Pharma) all continue to contribute to the debt to this day, while adding to the amount of interest that has to be paid on the debt.
The fact is, as a percentage of GDP, new spending by the Obama administration is actually lower than it has been since World War II — lower than the rate of inflation for the past two years. Obama’s actual “new” spending has amounted to about $900 billion over the last 3 years. This, despite the fact that government spending routinely goes up during economic downturns regardless of who is in the White House because more people have to depend on unemployment benefits, welfare, food stamps and Medicaid in order to survive.
According to CNN.Money, it has now been determined that more jobs have been created since the economy tanked than were lost. Obama has managed to achieve this net gain in jobs since 2009, despite having to deal with the lowest rated, least productive and most obstructive Congress since the Civil War, not to mention the fact that this country lost more than 50,000 factories between 2000 and 2009.
Mitt Romey’s and Paul Ryan’s plan would cut taxes 20% and allegedly keep those cuts “revenue neutral” by eliminating loopholes and certain deductions which they have both refused to identify. Most economists agree that their tax cuts would cost about $5 trillion over the next 10 years, and they also agree that eliminating every single loophole and write-off would NOT pay for them. In other words, they are making stuff up as they go along, refusing to provide any details because those details would expose the problems with their ideas.
Romney and Ryan also say that they want to “widen the tax base”. There is only one way to interpret this: they want families to start paying federal income tax who have, until now, made too little money to pay any federal income tax. So, according to Romney and Ryan, low income families would be subject to paying taxes they’ve never had to pay before, while the wealthy would get an average of a $250,000/year tax cut.
Obama 2012 –– Because the alternative is UNTHINKABLE!
Four years ago, this country was on the precipice of a second Great Depression. That’s an economic state where more than a quarter of the population is unemployed, half of all businesses close their doors, banks stop lending, and the government has to go into massive debt to keep the population from starving. It is a time when the majority of the country has to do without basic necessities. The only thing that got us out of the Great Depression was government spending on World War II.
Fortunately, the second Great Depression didn’t happen. In fact, less than three years after the recession bottomed out in 2009, the country has had a net gain in jobs relative to the jobs that had been lost. We have had 32 straight months of job growth in the private sector. The DOW has more than doubled, which has been good news to anyone with a 401K. We did NOT have to turn our auto industry over to foreign manufacturers two years ago, which saved more than a million jobs. Our exports are near record levels and we are less dependent on foreign oil than in the last 20 years. Home prices are finally headed up again. In Los Angeles, home values posted their highest gains in more than 6 years. Taxes have actually gone down since Obama took office, and more than 30 million people now have medical insurance who couldn’t get it before.
By any measure, the economy is trending upward.
Has it been fast enough? Of course not. You don’t recover from the loss of more than 50,000 factories (between 2000 and 2009) in just 3 years. New industries have to be generated. More people need new training for those jobs. It requires a national investment. The problem is, we now have the lowest rated, least productive, most obstructive Congress since the Civil War, whose primary objective has been to ensure that nothing President Obama proposes or supports passes or is adequately funded. It is politics of self-destruction.
Obama’s and Biden’s economic plan has been simple enough to grasp for anybody who has bothered to pay attention. The American Jobs Act was a great bill that would have been paid for while creating 3 million jobs. Guess who blocked it.
Undecided voters have no excuse. And no option.
Obama 2012 –– Because the alternative is UNTHINKABLE.
Then again, how is asking people who earn over a half million dollars a year to pay a couple of thousand dollars more in taxes destroying them? A person making $500,000/year gets a bimonthly paycheck that grosses roughly $21,000, or +$40,000/month. If they’ve invested wisely and take advantage of the kinds of tax shelters that are available, he or she can adjust that taxable income considerably. So, the notion that a $2,000 or even a $5,000 annual surcharge on that amount of income would dramatically impact that person’s lifestyle is preposterous. We’re talking about approximately $200/paycheck on a +$20,000 check to provide every American with quality health care. The result would be that no child of the wealthy would be taken out of private school. No mansion or Bentley would have to be sold. No second or third vacation home would be put on the market. No vacations to the Riviera would be cancelled. And no pools would go unheated. Those who say they would have to cut back on charitable giving are just looking for an excuse to do so.
Some would say that asking the wealthy to shoulder some of the costs of health care reform is unAmerican, or even socialistic. That might be true if there wasn’t any return on investment for the wealthy. The fact is, that providing health care for every American would resolve one of the biggest obstacles that our economy faces. Small businesses, which suffer the most with exhorbitant health care costs, would find immediately relief and be able to hold on to experienced workers longer. Wouldn’t a healthier economy with a healthier labor force enhance the investment opportunities for the wealthy, while creating a more stable financial foundation for the country as a whole? Years ago, there was a comic strip that had a blowhard millionaire corporate tycoon named General Bullmoose. The motto of this character was “What’s good for General Bullmoose is good for the USA.” Today, the reverse of that phrase is the reality of the situation. What’s good for the USA is the best way for General Bullmoose to hold onto his wealth. Otherwise, the whole system is put at risk.
While it’s true that the top 5% of the nation pays more than 50% of the taxes, it is also true that this same 5% also holds more than 90% of the nation’s wealth. The top 1% hold half the nation’s wealth. With the various loopholes and shelters provided by our obsolete tax code, most of these people pay less taxes than those in the middle class. Warren Buffet has publicly stated that he thinks it is obscene that he pays approximately 18% in taxes, while his secretary is paying a full 30%. The screams we hear from the wealthy about President Obama’s health care reform are fueled by inexplicable greed, ideological obstinance, and a total lack of compassion for those who are less fortunate.
It’s true. You can’t help the poor or the middle class by “destroying” the rich. But nobody is suggesting that destroying any level of our economy would help any other level. The point is that wealthy people in the United States have been existing in a protective bubble since the Reagan administration that was designed to preserve their wealth at the expense of the middle class. Those of us in the midsection of the economy have fewer hospitals, deteriorating public schools, bridges and highways, and almost zero access to government. To preserve the standard of living and health of the population as a whole, and keep this country from sliding into Third World status, it is high time that the wealthy in this country paid their fair share, which they have not. The claim that doing so would destroy their way of life is a fatuous argument.
Here’s what one of the biggest tax cuts in U.S. history is going to do: A single person making less than $75,000 a year will take home an additional $400 per year under the federal plan passed by Congress, and a couple making less than $150,000 would get $800. This means that the average American will take home an extra $25 in each paycheck. Anybody who thinks this is the sort of “stimulation” that will pull our economy out of its vertical nose-dive is either nuts or being held hostage by their own ideology. Basically, when Obama agreed to add in more tax cuts in order to gain Republican support for the bill (which he never got), he was taking much needed tax revenue from the Treasury and decreasing the amount he was spending on the infrastructure. That is the portion of the bill that will go to repairing our Third World-like infrastructure, including bridges, highways and schools and, in the process, create millions of jobs in the private sector. Government workers will not be doing that work. These will be citizens who would be out of work, not paying taxes, and on government assistance without the program.
Some may recall that last year the government sent out fat rebate checks to tax payers. Families got nearly twice what the tax cuts will net them. Those rebates did NOT go back into the economy, as the wishful thinkers in the Bush administration predicted. For all intents and purposes, the money may as well have been flushed down the toilet because it had no detectable impact on the economy. None.
There are many people who believe with all their heart that giving big tax breaks to corporations and the wealthy will result in expansion of businesses and more jobs. It’s a good theory, but it isn’t borne out by the facts. If anything, we’ve seen in the last 8 years that major corporations taking advantage of de-regulation and tax breaks have chosen to do exactly the opposite by laying off workers, restructuring, moving off-shore, and paying exorbitant bonuses to executives. In the meantime, over the last 15 years wages in the private sector have not gone up. It has been as if we were all background characters in Oliver Stone’s film, “Wall Street”. But, at least Gordon Gecko was good at what he did. The people running our big corporations, especially in the auto industry, do not appear to be cut from the same cloth as Lee Iococca. The Peter Principle is in full swing in corporate America.
The bottom line is that the ideology of the Republican Party, which is that government cannot be a solution to our biggest problems, ignores the severity of our predicament while showing zero compassion for those who are suffering most in this downturn. I don’t think they actually believe tax cuts will do anything more than give them a campaign slogan in the next election. It’s what they’re against that counts here. They honestly believe that the private sector can police itself and make the right decisions for America. They think that making the rich richer will ultimately raise up the bottom 95% of the country because rich people are the heart and soul of our economy (forget that wages haven’t gone up in this country for the last 15 years). They harp on the concept that only the private sector can create real wealth, when the country’s economy has just struck an iceberg. To clarify the situation for them, the stimulus bill was never intended to create wealth. It is intended to keep our nation afloat. A very small percentage of the population is worried about creating wealth right now. The rest of us are going to remember the way the Republican Party has handled this process.
It was a pleasant dream, but still just a dream. That members of the House and Senate would work together, setting aside their ideologies and petty projects so they could do what was right for the country instead of voting along party lines or pandering to local constituencies and friendly lobbyists. When Judd Gregg withdrew his name from the nomination for Commerce Secretary, it signaled the GOP’s absolute unwillingness to work with anybody who has an opposing point of view. He didn’t withdraw because he suddenly realized that he and President Obama have different economic philosophies. Obama has talked openly about the need for a big stimulus package since long before January 20th. After having pursued the job by querying Obama staffers about a position in the Cabinet, he pulled out because he was being leaned on by the RNC, which smells blood in the water. Its own blood. Gregg turned down a big pay-raise and a prestigious seat in the Presidential Cabinet because he was being treated like a traitor and threatened by his fellow Republicans. The man is a coelenterate. The Party has no conscience.
The Republican Party is in the process of forming a circular firing squad. Unfortunately, the middle class is sitting right in the middle of that cross-fire. Nobel Prize-winning economists were lining up to support the stimulus package, with some even saying it was too small, yet the GOP financial wizards who were responsible for getting us into this debacle were predicting the doom of capitalism and rise of socialism if the bill was signed into law. These are many of the same people who supported Phil Graham’s legislation back in 1999 which all but eliminated any regulation of the banking industry. These were the same “free marketers” who insisted that corporations would always do the right thing. Then ENRON collapsed. These are the intellectual giants who presided over a national debt that went from a billion dollar surplus to trillions of dollars in the red in a matter of six short years. Did a few democrats enable some of that behavior? Of course, but the fiscal policies of the Bush Administration and the anti-regulation ideology of the Republican Party built the foundation of sand upon which our economy was expanding.
Hopefully, Obama has learned a sad, yet important lesson in the last month. He must realize by now that the Republican party is driven exclusively by ideology, rather than by pragmatic reasoning. When he hears United States senators apologizing to a radio talkshow host for criticizing his “I hope Obama fails” remark, Obama must know that he is dealing with people who are bent on obstructing anything that he tries to do, regardless of how much damage it might to do the country. He’s dealing with ideologues who think that tax cuts alone will save the economy from catastrophe, even though a study of the last tax cut showed that it had no measurable impact on the economy. He’s dealing with people who led the charge for last year’s government hand-out, which failed to do anything for the people who received those checks in the mail. He’s dealing with people who are looking for their next campaign slogan, rather than useful solutions to the terrible problems we face.
Obama will always be a civil negotiator. That’s his nature. He appears to be a guy who rarely if ever loses his cool. But he needs to take the gloves off and make it clear to the American people what he is dealing with on Capitol Hill. Between now and 2012, the GOP’s circular firing squad will lock and load, and the Republican Party will, for all intents and purposes, cease to exist as a viable national party. We can only hope that it won’t succeed in taking the middle class with it.
In terms of dollars spent, perhaps 1% of the proposed stimulus package fell into the category of ‘pet projects’ that some House democrats wanted to piggy-back onto the bill. Nancy Pelosi has to accept responsibility for allowing that foolishness–she seems a little drunk with power now days and Obama needs to take her to the woodshed and explain that her arrogance is sabotaging a lot of the good will his election generated for the Democratic Party.* But most of the things that GOP wanted cut from the House and Senate bills were smart, multi-purpose solutions that would have created jobs and, at the same time, kept several states from going bankrupt. The cuts in education are particularly difficult to understand, given that they would have generated jobs and, at the same time, improved the quality of our children’s education. That and many other useful items were cut from the Senate bill because the GOP chose to play a dangerous game of chicken with the Obama administration, holding the bill hostage while demanding a ransom of tax cuts and less spending.
Here is the sad fact about tax cuts: they’re a joke for 95% of us.
Tax cuts routinely add up to a net increase of just a few dollars per paycheck, in the process of depleting an already anemic Treasury. The stimulating effect of tax cuts on the national economy is virtually undetectable. But, what Republicans are looking for here isn’t an actual solution to the economic free-fall we’re in anyway. They just want a campaign slogan for the next election. Their ideology, rather than any expertise in economics, tells them that the marketplace has to go through these “cycles” now and then, and that the government should do nothing. The reason for this is because the “government” is evil and, therefore, anything it does will only make things worse. Again, this is an ideological, rather than economic point of view. The vast majority of people with advanced degrees in economics couldn’t disagree with it more.
A lot of people are very angry about the way the GOP has held the stimulus package hostage, forcing the administration to cut much needed items that would have created jobs and repaired our crumbling infrastructure. States are cutting essential services, and California isn’t even sending out tax refunds for the first time in the state’s history. The argument that tax cuts are going to pull us out of this vertical nose-dive is sheer idiocy. And, leading that debate is a solemn-faced John McCain, having graduated 895th in his Naval Academy class of 899 midshipmen with zero understanding of economics. This intellectual giant has recently announced that President Obama’s stimulus package is just a big spending bill which he cannot support. The man is marching like a lemming toward the edge of a cliff, along with the rest of his party.
In the next election, the GOP is going to be eliminated as viable national political party. We can only hope that their short-sighted, self-serving ideology doesn’t drag the country into a Depression before that happens.
*NOTE: I have recently been accused by some language nazis that my “woodshed” remark here is sexist and that it represents an implied endorsement of violence against women. ‘Taking someone to the woodshed’ is a common metaphor that is gender neutral. Now, if I had said that Obama should take Nancy Pelosi to the Lincoln Bedroom, they might have had a point.
Paul Krugman, the recent winner of the Nobel Prize for Economics, made an interesting comment today while in Stockholm to receive his honor. He pointed out that U.S. Treasury Secretary Paulson had rejected a “sort of temporary part-nationalization” involving governments giving financial institutions more money in return for stock, while the British government “went straight to the heart of the problem … with stunning speed.” Krugman said the leading European economies have “in effect declared themselves ready to follow Britain’s lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts…. And whaddya know… Mr. Paulson – after arguably wasting several precious weeks – has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities.” Secretary Paulson, a George Bush appointee, is an economic ideologue as opposed to being an intelligent pragmatist. He conforms his economic theories to fit his politics, which forbids anything close to nationalization because it violates the conservative dictums of smaller government and the so-called “free market.” Rather than do what would have worked, and doing it right away, his ideology paralyzed his thinking and the economy sunk further into the abyss. If you’re ignorant and have no ideas of your own, your turn to your ideology and your talking points. This is what we’ve seen the McCain/Palin ticket do time and again throughout this campaign. Krugman, who is not without credentials, has labeled the Republican Party as “the party of stupid.”