Category Archives: Economy

Self-Inflicted Pain.

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Beginning with the Reagan administration, the U.S. has, in effect, taken out its very large supply of guns, taken careful aim and shot itself in the foot.  Of course, I’m speaking metaphorically, but the damage to our nation is very real.

The Reagan administration’s notion that you could dramatically increase defense spending, increase corporate welfare, demonize unions and cut taxes has had a devastating and lasting impact on our country.  It’s because of Reaganomics that our deficits and national debt began to spiral out of control.  Even Reagan’s own budget director has since labeled Reagan’s economic policies a failure.

Of course, the Repugnants, aka right-wing Republicans, are fond of blaming our deficits on Democrats.  But that’s revisionist history.  Under Reagan and Bush The Elder, the deficits reached new heights.  Clinton and, in fairness, a Republican-led Congress, turned those deficits into surpluses.  Then Bush The Junior turned the entire economy upside down by pursuing two unfunded wars, lowering taxes and deregulating Wall Street.  In order to save us from a world-wide economic collapse, President Obama had to increase spending by providing loans to banks and automakers.  He also, for the first time, included the cost of the wars in Afghanistan and Iraq in his budget.

Republicans have seized on those actions to unfairly blame Obama for the deficits.  Now they want to use the deficits to undo all of the nation’s safety nets for children, the poor, the ill and the elderly.  At the same time, they continue to call for further tax cuts for the wealthy.  (Never mind that our taxes are now the lowest in 60 years.)

There is, of course, an alternative to what Bush The Elder once referred to as “voodoo economics.”  As the economy continues to improve, we could raise taxes back to pre-George W. Bush levels and close the enormous tax loopholes that have been exploited by large corporations.  At the same time, we could reduce the out-of-control defense budget and use a portion of the savings to create jobs by rebuilding our factories and infrastructure.

But if that makes sense to you, don’t hold your breath.  As long as those large corporations and defense contractors are allowed to fund the campaigns of Congressional Representatives and Senators, it’s not likely to happen.

Arizona’s SB1070 7 Months Later.

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In April of this year, Jan Brewer signed Arizona’s controversial anti-immigrant bill into law.  It was hailed by conservatives far and wide as a great first step in closing our border to keep Mexicans from taking our jobs and using our services.  And at least 12 more states are considering similar legislation.

So how is 1070 actually working out?

In the 7 months since its signing, many of the most controversial parts of the law have not yet gone into effect, and the state has spent more than $10 million to defend the law in courts.  An estimated 100,000 undocumented workers have fled the state to find jobs elsewhere, taking with them the money they paid for rent, clothing, groceries, gasoline and more.  A very conservative estimate of the financial loss to the state would be somewhere in the vicinity of $4 million.  And their contributions as a workforce to the state could be estimated at more than 10 times that.  In addition, the law has led to boycotts from other states and cities which has already cost our tourism industry more than $141 million.  Add to that the jobs lost in the tourist industry and the cost rises to more than $250,000.  Based on the latest estimates, the new law has cost Arizona nearly $500 million!

“But certainly the state has seen some benefits from the law, too,” you say.

Not really.  It has served to create distrust between Arizona’s white population and Latino population.  The law has turned many other states and cities against us.  And the drug war still rages along the border, fueled by American guns and our insatiable appetite for illegal drugs.

The only ones who seem to have benefited from the law are Jan Brewer, John McCain, Russell Pearce, and other right-wing Arizona politicians who used scare tactics related to the law to get themselves re-elected.  Which is no doubt the over-riding reason for passing the law in the first place.

Okay, Republicans, now what?

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You lied, cheated and spent your way into control of the House of Representatives.  You took control of more governors’ offices.  And you took control of 19 more state legislatures.

Much of your success was the result of massive corporate donations and your filibustering of legislation that could have helped turn this economy around – the economy that collapsed on your watch due to your lack of oversight and regulation.  Remember?

You blamed your mess on President Obama, Nancy Pelosi and Harry Reid.  Then you talked about “taking your country back,” resorting to 2nd Amendment remedies, if necessary.

You won on promises of less government and lower taxes.  So what next?

Plan to cut the size of government?  Maybe you haven’t noticed, but the downsizing of state, county and local governments is one of the primary reasons our economy is so slow to recover.  We’re losing government jobs faster than private industry can add jobs.  Moreover, the lack of government oversight of Wall Street is one of the main reasons we’re in this predicament.

Plan to cut taxes by renewing the ill-conceived Bush tax cuts for the wealthy?  Then plan on adding $80 billion to our deficit over the next two years.  Want to repeal “Obamacare?”  Then plan on adding yet another $138 billion to our deficit over the next 10 years.  (Not to mention the fact that you’ll be denying health care access to more than 30 million Americans.)

Plan on cutting the deficit?  You could cut half of our bloated $663.7 billion defense budget (not including the Iraq and Afghan wars).  But what will you do about the defense contractor jobs you eliminate?

The most radical Republicans talk about eliminating or privatizing all “entitlements” such as Social Security, Medicare and Medicaid.  They want to get rid of the Department of Education, the Environmental Protection Agency, and the National Science Foundation, as well.  All of that combined would save $1.48 trillion a year, completely offsetting the deficit and leaving us with a surplus of more than $200 billion each year (not including tax cuts for the wealthy, rising health care costs, increased military spending and increased border security).

But we’d have a nation of uneducated, unheathy children and heavily-armed, destitute senior citizens.  Try running on that platform in future elections.  Or will you do as some Tea Party candidates suggest, and limit voting to landowners or those already in office?

How Much Is Your Vote Worth?

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$100? $1,000? $10,000? More? This year, corporate and foreign-funded shadow groups seem willing to spend whatever it takes to convince you to vote Republican.

Unfortunately, you won’t get to pocket the money.  But, thanks to the Supreme Court decision in the Citizerns United case, corporations (both domestic and foreign) are now able to pour hundreds of millions of dollars into advertising campaigns that attack Democrats. Even the Chamber of Commerce is getting into the act. The group has solicited large donations from businesses in China, Saudi Arabia, Dubai, Bahrain and other nations to spend on attack ads against Democratic candidates. Best of all, unlike the $20 donations you give to candidates, the corporations can give anonymously. The shadow groups don’t have to disclose the source of their millions.

Now you may be asking, “Why are corporations so willing to open their vaults for politics?”

The answer is obvious. They expect something in return. And, as always, Republicans stand ready to give it to them. Republican candidates promise to continue their fight against labor unions. They will continue to promote lower taxes for corporations and the wealthy. They are committed to eliminating pesky regulations that protect the environment and consumers. And they continue to attack so-called entitlements such as Social Security and Medicare.

This year, Republicans even offer a few new bonuses for their corporate masters. Many of the so-called Tea Party candidates on the Republican ticket have questioned the Constitutionality of the minimum wage and unemployment insurance. After all, who wants to waste money on a bunch of lazy deadbeats who can’t hold a job?)  Further, Newt Gingrich is even recommending that GOP candidates attack food stamps! 

If all this corporate money is able to buy enough votes, just imagine what that could mean for working people. American workers can look forward to lower wages, fewer benefits, unaffordable health care and no safety nets. Who wouldn’t want that?

Tax Cuts As An Economic Stimulus.

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It’s one of the most important issues that will be debated in the coming months. Democrats, including President Obama, want to let the Bush tax cuts for the wealthiest two percent of our population expire. They claim that we can no longer afford these tax cuts and letting them expire would reduce the deficit and create more fairness for the middle class.

Republicans, on the other hand, claim that the majority of those making $250,000 or more per year are small business owners and that raising their taxes would cost us thousands of jobs. Indeed, they would not only make the Bush tax cuts permanent. They would cut taxes even further as a stimulus for creating jobs.

There are a couple of things I find troubling with the Republican logic. Most small business owners make far less than $250,000 per year. And those who make more than $250,000 likely won’t spend the extra money on their businesses. As a small business owner, I know that’s just not how things work. While some will put the extra money back into their business, most will invest the money in securities, save it or spend it on themselves.

But don’t just take my word for it. Let’s look at how most economists view tax cuts as a form of stimulus: They estimate that tax cuts have a return of 32 cents of economic growth for every dollar spent. On the other hand, programs like food stamps (which many Republicans oppose) have much higher rates of return. It’s estimated that such programs generate $1.71 of economic growth for every dollar spent. And, according to Mark Zandi, John McCain’s economic adviser during the 2008 presidential campaign, those unemployment benefits that Republican teabaggers so oppose are estimated to generate $1.61 in economic growth for each dollar spent.

As the nonpartisan Tax Policy Center put it: ” The tax cuts of 2001 and 2003 provided much less stimulus to the economy than other policies of equal cost would have. The underlying reason is that although the tax cuts were well-timed to provide a short-run economic stimulus, they were poorly designed for this task.”

They did, however, provide a nice windfall for the wealthiest Americans while adding billions to our deficit.

The Perpetual War Machine.

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As President Eisenhower was leaving office, he warned, “We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist … Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”

Consider the warning unheeded.

For 2010, the U.S. defense budget is $692,000,000,000 – more than the total of all 194 other nation’s combined. And that doesn’t even include the money being spent in Iraq and Afghanistan! By comparison, in 2009, the 2nd largest defense budget belonged to China at $98,800,000. And the defense budget for Russian Federation stood at a paltry $61,000,000.

Yet, as our nation struggles with high unemployment and decaying infrastructure, Republicans continue to push for more military spending along with the use of more military contractors such as Halliburton, KBR and XE (aka Blackwater). All the while, they rail against the growing deficit.

What about that makes any friggin’ sense?

Well, apparently it makes sense to former President George W. Bush. According to former Argentine Prime Minister Nestor Kirchner, Bush told him that “all the economic growth that the U.S. had had, had been based on the different wars it had waged.”  Wow!

So, according to Bush, our chief economic stimulus is war?! No wonder he ignored the warnings of 9/11. No wonder he invaded Afghanistan and Iraq. It was part of his plan for economic growth!

If our economy is based on war, then why, during the two longest wars in U.S. history, aren’t we thriving? Why are so many Americans unemployed? It would appear that Bush’s war theory makes as much sense as Reagan’s trickle down theory.

I have a better suggestion for improving our economy. Let’s cut our $692 billion defense budget in half. We’ll still have a budget more than three times the size of any other nation – enough to ensure our place as the biggest, baddest bully on the planet. And we’ll have money to rebuild our crumbling infrastructure and invest in new industries that create jobs for people without killing others.

The Growing Underclass In America.

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There are currently 14.6 million Americans who are out of work, and that number likely doesn’t include millions more, such as the self-employed, who have seen their businesses diminish to virtually nothing. But before you blame the current Administration, take a look at the monthly unemployment claims beginning in January 2008. By the time President Obama was inaugurated, the new claims had grown to more than 750,000/month. Yet despite having to fight Republicans every step of the way, President Obama and Congress began to turn things around. In fact, in May of this year, we added 433,000 jobs.

The real question is, without enormous structural changes to our nation, what kind of jobs will be available?

Even before the Great Recession, most of our jobs were in the so-called service sector. And most of these jobs pay less than $25,000/year. The list includes fast food workers, restaurant workers, hosts and hostesses, dishwashers, cashiers, amusement park attendants, movie theater ushers and ticket-takers, farm workers, gaming dealers, bartenders, personal and home care aides, parking lot attendants, lifeguards, ski patrol, garment pressers, laundry & dry-cleaning workers, child care workers, maids, and elderly caregivers, receptionists, secretaries and maintenance “engineers”.

The result is that approximately 35 percent of the U.S. workers make $25,000/year or less! (The national poverty level is $21,756 for a family of four.) And many careers that were once considered good jobs, such as construction, don’t pay much better. Construction workers make only $11/hour to $15/hour.

Our nation has been bleeding relatively high-paying manufacturing jobs since the 1980s (7.7 million between 1986 and 2001). However, under the Obama Administration, the U.S. economy has actually begun to reverse that trend. New data shows that we have added more than 180,000 manufacturing jobs in 2010. Still, the majority of good jobs are in medicine, law and government. Indeed, of the top 15 highest paying jobs in America, 14 are in medicine.

Lowering taxes for corporations and the wealthy as Republicans demand won’t help create new higher-paying jobs. That will only ensure that the wealthy will make even more money and pay fewer taxes. It will also relegate even more of our citizens to the growing underclass.

A better option is to follow the path of FDR, Truman and Eisenhower – raise taxes on the wealthy and the “too big to fail” by allowing the Bush tax cuts to expire then use the additional revenue to rebuild our infrastructure and to create energy alternatives to foreign oil. That would create opportunities for construction companies, manufacturers and suppliers of materials. It would also incentify our corporations to invest their hoards of cash, and it would encourage our banks to open their vaults and make loans to small businesses. More important, it would put people back to work.

Who Are We Afraid Of? (Part II)

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It was recently announced that the U.S. military budget ($692 billion for FY 2010) now exceeds military spending by all other nations combined. That’s right. We now spend more on defense than all 194 of the other countries in the world! And that doesn’t even include the money we spend on Homeland Security, or most of the money we spend on intelligence gathering. (A recent expose’ by the Washington Post reported an estimated 854,000 people work in the secretive information gathering business in the U.S. No one knows how much money is being spent on the endeavor.)

There can be only two conclusions from that data: We are the most powerful nation in the world. And we are the most paranoid; maybe with good reason.

According to Wikipedia, “as of March 31, 2008, U.S. armed forces were stationed at more than 820 installations in at least 135 countries.” Of course, we have large numbers in the war zones of Afghanistan and Iraq. But we still have 52,440 in Germany, 9,660 in Italy and 35,688 in Japan more than 60 years after WWII. We have 28,500 in the Republic of Korea more than 50 years after the Korean Conflict. We have 9,015 in the United Kingdom (are we expecting a repeat of our Revolutionary War?), 47,236 in East Asia, 3,362 in North Africa … the list goes on.

Given the state of our economy, what could possibly justify the expenditures? If they’re not needed, we’re wasting an incredible amount of money. And if they are, we need to change our foreign policy, because we must be the most hated people on Earth.

$3.4 Trillion Reasons To Not Vote Republican In November.

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According to the non-partisan Congressional Budget Office (CBO), that’s the amount tax cuts being proposed by Republicans will add to the national deficit over 10 years.

The proposed tax cuts include permanently extending the 2001 and 2003 Bush tax cuts which represent $2.3 trillion. Of course that’s just an estimate. But the CBO found that the unfunded Bush tax cuts, which primarily benefit the wealthy, added $539 billion to the deficit in 2005 alone.

On top of that deficit-ballooning idea, Republicans want to eliminate the Alternative Minimum Tax along with Estate Taxes and Gift Taxes which, according to projections, will add another $1.1 trillion to the deficit over 10 years. Again, these tax cuts are aimed at benefitting the wealthiest part of our society.

Just to be clear, the $3.4 trillion would be added to the annual deficit over the next ten years and the effect on the total national debt would be cumulative. In other words, they would likely add another $3.4 trillion to the national debt each and every decade after their passage!

In case you’ve been living in a vacuum, the people promoting these tax cuts are the very people who claim to be so concerned about adding to the deficit that they’re willing to filibuster the extension of unemployment benefits for people who are out of work.

What’s particularly fascinating about this debate is that the Republican leaders don’t think cutting revenue will have an impact on the deficit.

Senate Minority Dimwit, Mitch McConnell is on record for saying, “There’s no evidence that the Bush tax cuts actually diminished revenue. They increased revenue.”

Hmmm…if you believe that, maybe you should try this experiment at home: If your household expenses exceed your income, then look for a job with a lower salary. According to McConnell, fellow Senate Dimwit, Jon Kyl, and other Republicans, that will reduce your debt!

That’s the kind of thinking that took us from an economy that generated 22 million jobs and a budget surplus in the Clinton administration to an economy that almost entirely collapsed under the Bush administration and gave us a huge deficit.

Yeah, who wouldn’t want to put those people in charge again?

What’s The Real Reason There Are More Women In The Workplace?

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For the past several years, there has been much publicity over the increase of women in the workplace. The hiring of women has greatly outpaced the hiring of men in certain jobs. Advertising, marketing, healthcare, and many other industries are becoming dominated by women. The statistics would lead you to believe that the U.S. has finally become gender equal.

But before you begin applauding American corporations for their enlightment, you may want to consider another, not quite so flattering, reason for the change. In their never-ending quest to increase profits and pump up stock prices, corporations may simply be hiring more women because they can pay them less.

That’s right. American corporations have cut employee-related costs by increasing productivity, automating production lines, and shipping high-paying jobs overseas where workers are paid less and receive virtually no benefits. Many have hired illegal immigrants to replace workers at the lowest end of the pay scale. They’ve utilized independent contractors to replace full-time office workers in order to avoid paying Social Security, health care benefits, disability insurance and unemployment insurance. They’ve even come up with ways to use the Internet to pare the cost of marketing, advertising and design. So what’s left?

Women have always been able to do most jobs as well as men (and many better). But their salaries have long been suppressed. (A recent study found that female attorneys in elite law firms were paid an average of $66,000/year less than their male counterparts.) So why not take advantage of them once again?

Hiring more women is a sign of progress toward gender equality. But the reason for it is not necessarily one that corporations should be proud of.