Category Archives: Current Events

For our economy, let’s give credit where credit is due.

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The so-called teabaggers and wing nuts claim their attacks on President Obama aren’t the result of racism or ideology.  They say their demonstrations are about the national debt which they believe has increased to staggering new levels under the Obama administration. 

There are three flaws with their argument.  One is that the debt only really matters if we plan on selling our nation sometime soon.  Otherwise, it’s merely a number.  Second, while it’s true that the debt has reached an all time high in actual dollar amount, as a percent of GDP (gross domestic product) it has been higher before.  And third, very little of the current debt can be attributed to actions by President Obama.

Following the Great Depression and WWII, the national debt as a percent of GDP stood at 120 percent.  It steadily decreased each year until the election of Ronald Reagan in 1980.  Under Reagan the administration so overspent on military weapons that the national debt nearly tripled.  The debt continued to increase during the George H.W. Bush administration.  When Bill Clinton was elected President in 1992, he prioritized the economy and succeeded in significantly reducing the debt.  Then, under George W. Bush, the debt nearly doubled again until, by the time he left office, it had risen back to 80 percent of GDP.  (One has to wonder where the tea parties and town halls were then.)

In reality, the recent increase in our national debt is the result of two wars begun by the Bush administration (one based on false information) that have cost more than $2 trillion – a figure that doesn’t even include the cost of health care, disability compensation and death benefits for those who have served in these wars.  Contributing to the increase was the creation of the massive Homeland Security department by the Bush administration.   And, of course, the primary cause was Republican-led deregulation of banks and commodities resulting in runaway greed and wild speculation.  When the banks’ risky investments failed, the Federal Government was faced with a decision of bailing out those responsible for this mess.  Or letting the nation slide into a 2nd Great Depression. 

By the time of his inauguration, President Obama was facing the worst economy since Herbert Hoover.  And, like FDR, he has little choice but to try to create jobs through stimulus funds and loans.  Yet, despite having created this mess, Republicans have fought Obama at every opportunity.  Not a single Republican in the House voted for the stimulus package and all but three Republicans in the Senate voted against it. 

It appears they would rather make some sort of political statement than uphold their commitment to serve our nation. 

Republicans have also tried to block health care reform and the proposed cap on carbon dioxide emissions intended to head off more severe climate change.  (They wouldn’t want to interfere with the profits of our large corporations, would they?)

Perhaps the most absurd attack on President Obama is his trip to promote Chicago as host of the Olympics.  They claim that he should be spending more time in the Oval Office.  Hmmm, I wonder what they thought of Bush’s vacations while in office.  The final statistics show that “W” spent 977 days (33 percent) of his two terms on vacation, including the days immediately following Hurricane Katrina.

In my opinion, everyone needs to be more patient with this president.  Republican presidents had nearly 30 years to get us into this mess.  Let’s give President Obama more than 9 months to get us out of it.

Where will our jobs come from?

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As economists talk about the prospects for an economic recovery, they often mention that it may well be a “jobless recovery.”  Is anyone really surprised by that?  After all, in the interest of “globalization” we’ve exported most of our jobs to other nations.

When large corporations began selling the notion of globalization in the 1980s, they promised American workers access to new markets for American-made products in places like China and India.  The reality is much different.  Once so-called Fair Trade rules were established, American corporations began relocating manufacturing to nations with cheaper labor.  One American manufacturing industry after another was closed…steel, textiles, shoes, electronics, furniture, tools…the list is extensive.

Soon after, much of our agricultural production was exported to Mexico, Central and South America. 

We were told that none of this would harm the U.S.  In fact, the corporations and politicians said that this would benefit Americans with more diverse and lower-priced products.  Moreover, we could easily replace “dirty” low-paying manufacturing jobs with “cleaner” technology, service and information jobs. 

The next step was to move corporate call centers to Mexico, India and the Philippines.  (After all, that kind of work is much too mundane and boring for American workers.)   

Next, the corporations began hiring illegal immigrants for restaurant, landscaping, meat processing and construction jobs.  We were told that these were jobs Americans citizens were unwilling to do.  (The corporations neglected to mention that the real reason American citizens didn’t want these jobs were reduced salaries and benefits.)

More recently, corporations have exported the creation of software to India.  At the same time, they’ve requested special green cards for Indian engineers.  The corporations claim that too few Americans are as well-educated and trained. 

Even our military has gotten into the act by hiring mercenaries from other nations to provide security for American diplomats in Iraq and Afghanistan.

Is it any wonder that our health care system now represents 1/6th of our economy?  And we’re already hiring nurses and doctors from other nations to meet “shortages”.

So what will unemployed American citizens do?  The most promising opportunity is for the invention and manufacture of so-called green products such as wind turbines, photovoltaic solar panels and higher mileage vehicles…if politicians and corporations don’t export these jobs first.

Show us the money.

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When the housing market crashed bringing down the financial industry along with it (or was it the other way around?), trillions of dollars vanished.   The question is where did the money go?

The Federal Reserve along with the Bush administration started propping up the financial industry and the economy beginning in 2007.  Mostly this was done quietly with little to no media attention.  By the time President Obama was sworn in, taxpayers had already shelled out more than $3.46 trillion and the world economy was on the verge of collapse. 

Since Obama’s inauguration, the federal government has committed another $3.77 trillion in loans, bailout funds and stimulus spending to stave off what most economists concluded would be a 2nd Great Depression.   

And people are outraged!  Not at the ones who created this mess and originally hid it from the public.  But at the administration who inherited it.  That kind of logic could only be demonstrated by the likes of Glenn Beck, Rush Limbaugh and Dick Armey.   Where are their “Teabagger” demonstrations against CitiGroup, Bank of America, and Wells Fargo?  Where’s the right-wing fury for AIG?  Where are the posters calling Bush and Cheney Socialists and Communists for having allowed (or encouraged) this to happen?   

More important, where’s the money?

Of the $7.244 trillion total, $168 billion was mailed to taxpayers in the form of stimulus checks.  $787 billion is dedicated to stimulus spending on infrastructure and new jobs.  $275 billion is targeted at foreclosure relief.  And $15 billion is aimed at supporting small businesses. 

The rest of the money ($6.167 trillion) went to prop up the very institutions that created the mess.  For example, $234 billion went to CitiGroup, $137.5 billion to AIG, $118 billion to Bank of America and $29 billion went to Bear Stearns.   Another $700 billion was dedicated to the Troubled Asset Relief Program.  $1 trillion was set aside for the Term-Asset-Backed Securities Loan Facility to make it less risky for banks to lend money to businesses and consumers.  $720 billion was set aside to help banks remove toxic assets from their balance sheets.   Indeed, almost all the rest of the money has been allocated to help our banks recover from their own risky behavior.

And it has worked really well…for the banks.  Thanks to government aid, the CEOs, fund managers, and other financial executives are still able to afford new vacation homes, yachts and other “necessities” with their bonuses.  They’ve been able to raise fees on checking accounts and interest rates on credit cards.  And they’ve been able to return to the risky behavior that led to this mess in the first place.

Best of all, thanks to their lobbying efforts, paid for in large part by taxpayers’ money, they’ve so far been able to fend off serious regulation.