Category Archives: Economy

Teapublican Lie #4.

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“The national debt was created by President Obama.”

I’ve addressed this figment of the Teapublican imagination before. They know it’s a lie, but they’re fond of saying it anyway. Indeed, they’re fond of blaming President Obama for everything bad and taking credit for everything good.

Who created the Great Recession? According to Teapublicans, it wasn’t Bush. It was Obama.

Who’s responsible for the high unemployment rate? Why Obama, of course, even though 8 million jobs were lost on Bush’s watch while the Obama administration has overseen a net increase in jobs.

Who was responsible for tracking down Osama bin Laden? According to Teapublicans it was certainly not Obama. Bin Laden’s death was the direct result of Bush/Cheney policies. You’ve heard all these lies and more.

Now, back to the national debt:

No less an authority than Bruce Bartlett, Ronald Reagan’s former policy adviser, has said that of the more than $14 trillion national debt, more than $7 trillion is a direct result of George W. Bush’s policies – most especially his tax cuts and the wars in Afghanistan and Iraq. Only $1.4 trillion is the result of President Obama’s attempts to get our economy moving in the right direction! The remainder can be credited to all of the presidents prior to Bush.

I’ll finish by quoting David Stockman, Reagan’s Director of the Office of Management and Budget who began a NY Times op-ed by stating, “How my GOP destroyed the US economy.”

Apparently, at least some Republicans are willing to speak the truth.

Teapublican Lie #3.

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“Cutting deficits and the national debt will create jobs.”

This is the most fashionable load of bull excrement being sold by Teapublicans. But nothing could be further from the truth.

Certainly, the debt has a chilling effect on the long-term prospects of our economy. But the debt does not constitute a crisis. In fact, the total debt equals roughly one year of the US GDP. To relate that to a family’s finances (as Teapublicans are so fond of doing), it’s akin to a family earning $100,000 per year holding a $100,000 mortgage.

Now let’s look at what severe cuts to our deficit and debt will do to our economy in the short term.

When the government cuts spending it cuts the budgets of government agencies. That forces those agencies to lay off many of their employees. So, inevitably, there’s a net loss of jobs. Further, the decrease in employees results in less oversight of banks, food and drugs, Medicare payments, etc. – all of which make our economy and taxpayers less safe. 

Moreover, government cuts can have a negative effect on private companies that act as vendors to those agencies. For example, large cuts to the Department of Defense will cause the DOD to suspend weapons acquisition and development. That means defense contractors will have to make dramatic cuts to their payroll.

Part of the reason for our jobless recovery from Bush’s Great Recession is that state and local governments are experiencing a loss of revenue from taxpayers. As a result, those governments have been laying off workers even faster than private companies can hire them.

So, in the short term, what do you expect a $1 trillion cut to our deficit will do to our economy? Obviously, it will cost tens of thousands of people their jobs. Maybe yours!

Teapublican Lie #2.

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“US corporate taxes are the highest in the world.”

You’ve heard it over and over during the past 2-1/2 years. Not only from Teapublicans. But from supposedly authoritative sources such as the US Chamber of Commerce. So let’s examine this myth more closely.

While it is true that the corporate income tax rate for the US is 34.2% (which includes a state tax rate of 6%), that is not significantly higher than the corporate tax rate for many other developed nations, and it’s less than Japan’s. Brazil has a rate of 32.5%; France and Germany have tax rates of more than 31%; Australia 30.8%; Canada 28% and the UK has a rate of 25.4%.

More to the point, this is not the rate that most large US corporations actually pay. In fact, the effective tax rate for large US corporations (after deductions and subsidies) is less than 18%!

For example, 12 major corporations made $171 billion in profits from 2008 to 2010, yet had a negative income tax rate of 1.5 percent! And the most egregious example is GE. Last year the global conglomerate generated $10.3 billion in pretax income, but ended up owing nothing in US federal income taxes. In fact, it recorded a tax benefit of $1.1 billion!

Moreover, employer payroll taxes in the US are just 7.7% – less than Korea, India, Mexico, Poland and most of the developed world. And since the 1940s, the corporate share of all federal income taxes has dropped dramatically. In 1940, corporations paid 43 percent of all the federal income taxes collected in the US. But, in 2010, that percentage was only 8.9 percent! Indeed, the US raises less corporate tax revenue than most developed countries.

So though the US has the world’s 2nd highest corporate income tax rate, the rate actually paid by US corporations is much lower. In fact, our effective tax rate is less than that of even Mexico, India, Vietnam, Korea, China and Russia. And that’s the truth!

Teapublican Lie #1.

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Today begins a series intended to de-bunk the many Teapublican lies that will be repeated over the coming election season. Primary amongst them is this pants-on-fire whopper:  “Cutting taxes creates jobs.”

This whopper has been repeated so often by so many that voters have come to believe it’s true. Yet when you examine the evidence, you find that it defies belief.  For example, if cutting taxes created jobs, then why was there negative job creation during the Bush administration despite the vaunted Bush tax cuts? (And that was even before the economy was driven off a cliff during the last few months of 2008.)

If cutting taxes created jobs, why did the economy flourish under the Clinton administration despite higher taxes?

And if cutting taxes creates jobs, why is our unemployment now so high despite the fact that US citizens are paying the lowest share of their income for taxes – all taxes – since 1958?

Truth is, the only thing cutting taxes on corporations and the rich does for our economy is to increase wealth for those who need it least.

What If FDR, Truman Or Eisenhower Faced This Congress?

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Despite the fact that our economy was in freefall when President Obama entered office, people are fond of blaming him for our current misery.  Instead of supporting Obama’s attempts to right our sinking ship, Teapublicans have chosen to fight him every step of the way. 

No matter that the record number of Senate filibusters paralyzed our government.  No matter that the cries of “Socialist” have further divided our nation.  Teapublicans seem only to care about ensuring that Obama is a one-term president.

And just when it appeared that the economy was growing again, Teapublicans chose to turn the debt ceiling into a “crisis” resulting in a downgrade of US Treasury Securities and further despair.

All this got me wondering: What if today’s Teapublicans had been around following the Great Depression? Would they have been willing to fund Social Security? Would they have opened the US Treasury to build our infrastructure? Would our nation’s most iconic structures have ever been funded? Would there be a Hoover Dam? Would the Tennessee Valley Authority exist?

What if Teapublicans had been around following WWII? Would they have approved the post WWII-era top tax rate of 91 perecent? Would they have approved of the billions spent to expand our Universities? Would they have supported the GI Bill? Would they have approved of Eisenhower’s interstate highway system?

Looking at more recent history, would they have approved of raising the debt ceiling as Reagan was tripling the national debt? Would they have approved of his tax increases?

I think you know the answers. 

Now ask yourself this: What would have become of the US if today’s Teapublicans had been around during the founding of our nation? Would they even have been willing to spend their money to fund the Revolution?

It Is Now Clear That S&P’s Downgrade Was Political.

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Now that the Fitch rating service has confirmed the AAA rating for US Treasury bonds, it raises questions about the real motives for the downgrade by S&P. Of the three rating agencies, both Moody’s and Fitch have maintained the AAA rating. Fitch even called the outlook for US Treasury bonds positive.

Why the different outlooks?

It is possible that it merely represents a difference of opinion. It’s also possible that S&P wanted to flex its political muscle. When you read the full analysis by S&P, two statements stand out:

1 – “The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently.”

2 – “Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.”

Certainly, each party has rushed to blame the other for S&P’s downgrade. However, since only one party (The Democratic Party) was publicly willing to compromise, and since the other party (The Republican Party) chose to create a crisis in order to get its way, it’s abundantly clear which party is truly to blame for the US Treasury bonds being downgraded for the first time in history. It’s also clear that the Republican position of maintaining the Bush tax cuts is fiscally irresponsible.

A Question of Compromise.

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When Democrats and Teapublicans named their members of the so-called Super Congress, the media immediately asked, “Will Senators Patty Murray, John Kerry and Max Baucus be willing to compromise with their Teapublican counterparts? What about Representatives James Clyburn, Xavier Becerra and Chris Van Hollen?”

Say what?

During the last three and a half years, Democrats have amply demonstrated a willingness to compromise.  During the negotiations for health reform, they caved on the most important component – the public option. Last Fall, they gave in to Teapublicans by extending the Bush-era tax cuts despite the growing deficit. And in the recent negotiations to raise the debt ceiling, Democrats gave up on increased revenue from closing tax loopholes and raising taxes on the wealthy. 

What compomises have Teapublicans been willing to make?

One can’t help but wonder why the media failed to ask if the Teapublican representatives on the Super Congress committee will be willing to compromise. After all, Mitch McConnell said he would not appoint anyone to the committee who would vote for increased tax revenue. Could it be that the so-called “mainstream, liberal-biased” media are now biased toward Teapublicans?

The Democrats can’t afford to negotiate away their principles again. If they do, Democratic support for the administration and Congress will likely collapse. Of course, that’s what Teapublicans are counting on.

Downgraded Expectations

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I’m not just referring to the lowered credit rating for US Treasury notes. If Teapublicans are allowed to continue the same political obstructionism they’ve displayed in the first 2-1/2 years of the Obama administration, we should all become accustomed to expecting less. Less jobs. Less retirement benefits. Less access to health care. Less government services. Less civility in public discourse. And less honesty.

Just consider: Despite being elected by an overwhelming majority of the voting public, President Obama has, thus far, been stonewalled by Teapublicans who, the day after the election, stated that their main goal is to make Obama a one-term president. Many on the right immediately called for Obama to fail despite the obvious implication that that would mean the US would also fail.

No previous president has been subjected to such organized obstruction and nonsense. Teapublicans have questioned his legitimacy by saying he was born in Kenya. They have called him a socialist, a communist, a facist and a Nazi. And they have blamed him for the economic disaster created by his predecessor.

In Congress, Teapublicans have filibustered a record number of legislative initiatives. They have blocked a record number of cabinet and judicial nominations. They have blocked nearly every attempt to stimulate the economy and create jobs. And they created a debt ceiling “crisis” when their own tax cuts led to massive increases in the national debt.

It’s all part of their “starve the beast” philosophy of less government. So what has it gotten us? An economy that is still struggling more than three years after their less-government-no-regulation policies led to the worst economic crash since the Great Depression. And now that US Treasury bonds have been downgraded as a result of their brinksmanship, the economy is once again teetering on the edge of disaster.

Given that S&P clearly stated its reason for downgrading our bond rating is our dysfunctional Congress, one might assume that Teapublicans will come to their collective senses and begin to compromise in order to create jobs, generate more revenue and cut our deficit.

That is the lesson sane people might take away from S&P’s message. But, that’s not who we’re dealing with.  Instead, we have to rely on John Boehner, Mitch McConnell, Michelle Bachmann and Eric Cantor correctly reading their tea leaves.

World’s Greatest Nation? Really?

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Although many Americans are fond of calling the US the greatest nation on Earth, that hasn’t been true for many years. Certainly we have the world’s most powerful military, but that’s no criteria for greatness. Neither is the fact that we are still the world’s richest nation, despite the downgrade in our credit rating by Standard & Poors.

But greatest?

Does a great nation tolerate an ever-widening gap between billionaires and the working poor? Does a great nation leave tens of millions of its citizens without access to health care? Does a great nation allow millions of its children to be homeless? Does a great nation allow its education system to become third-rate? Does a great nation allow its infrastructure to decay and collapse merely to give another tax cut to large corporations and the wealthy?

Does a great nation use its financial and military power to prop up brutal dictatorships around the world? Does a great nation bankrupt the small farmers of neighboring countries by subsidizing corporate farms then demonize those farmers when they cross the border looking for jobs? Does a great nation demean those who labor to build things with their hands, to put out fires, or to teach its youth? Does a great nation begrudge a comfortable retirement to its elderly? Does a great nation allow large corporations and the wealthy to elect its politicians?

How can a nation be called great when it rewards greed and corruption? When its judicial system rules that corporations have rights superior to those of its citizens? When its financial institutions are allowed to grow so large they are immune to failure from their own mistakes? When its corporate lawyers are tasked with seeking out financial and legal loopholes that allow their clients to game the system? When its politicians are more concerned with scoring political points than the welfare of its voters? When its citizens are more interested in the antics of its celebrities than those of its government? When it allows its previous leader to run up a huge debt, and then blames the leader who inherited it?

We didn’t need Standard & Poors to tell us that our nation is on the verge of bankruptcy. When it comes to fairness, ideas and ethics, the US has been on the verge of bankruptcy for many years.

If Teapublicans Have Such Great Ideas, Why Do They Lie So Much?

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Why do they generate and circulate a seemingly endless number of blatantly false and misleading chain emails that demean our President?
Why do they try to shout down everyone with whom they disagree?
Why do they parrot talking points instead of rationally debating issues?
Why do they protect the obscenely wealthy and attack the poor?
Why do they complain about immigration then hire illegal immigrants to do their landscaping or repair their roofs?
Why do they preach small government then pass laws giving government power to prevent gay marriages and lawful abortions?
Why do they fight to ban abortions while, at the same time, fighting against sex education and the contraceptive practices that would help avoid them?
Why do they revere police and firefighters for responding to 9/11 then try to take away their right to collective bargaining and health care?
Why do they praise those in the military and ignore veterans in need of help?
Why do they revere President Bush for adding $7 trillion to our national debt and crashing our economy then attack President Obama for adding $1.4 trillion in trying to fix it?
Why do they complain about the excesses of Wall Street bankers while trying to block laws that will regulate them?
Why do they slash budgets for education while complaining that the US is falling behind other nations?
Why do they complain about unemployment as they cut federal budgets to force even more layoffs?
Why do they complain about government health care while telling the government to keep its hands off their Medicare?
Why do they complain about passing health care reform after a 10-month debate then pass a bill to kill entitlements with virtually no debate.
Why do they talk about helping small businesses then undercut them with policies that only benefit large corporations?
Why do they refuse to eliminate tax loopholes for corporations that claim an offshore P.O. Box as their corporate headquarters?
Why do they subsidize big oil companies and refuse to subsidize renewable alternatives?
Why do they call themselves conservatives when they’re against conservation of our environment?
Why do they demand compromise then refuse to consider alternate ideas?