Category Archives: Economy

The cost of tax cuts.

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Everybody complains about paying taxes.  But Republicans and Teabaggers have turned their complaints into an art form.  Indeed, just last week, they were whining that the Obama administration allowed a number of Bush-era tax cuts to lapse.  Yet these people are the first to complain when our government entities don’t work as they expect.  Somehow, they seem incapable of seeing the connection. 

For the past 40-plus years, Republicans have been cutting taxes on the wealthiest U.S. citizens and U.S. corporations.  They’ve even cut estate taxes (the so-called death tax). 

All of this tax-cutting has had a profound effect on our infrastructure. 

Except in our largest cities, our highways haven’t been substantially improved since the 50s and 60s.  As evidenced by the bridge collapse in Minneapolis, many of our nation’s bridges are in woeful repair.  Contrary to popular belief, it wasn’t Hurricane Katrina that caused the disaster in New Orleans.  It was the U.S. Army Corps of Engineer’s archaic levee system.   And in California, another levee system responsible for much of Los Angeles’ water is eroding making it highly vulnerable to a catastrophic event. 

Our electric grid needs to be replaced.   Many of our largest cities’ sewer systems are collapsing.  Security at our airports is incapable of stopping all terrorists, and the security for our ports is much worse.  Our schools are falling behind those in many other nations.  And, unlike most wealthy nations, we can’t provide basic health care to all of our citizens (although that is, hopefully, about to change).

What’s the reaction of Republicans when faced with these facts?  Not surprisingly, they merely call for more tax cuts.

U.S. may soon be governed by a 3-party system.

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Democrats, Republicans and lunatics.

A new poll by NBC and The Wall Street Journal shows that the Tea Party is now more popular than both Republicans and Democrats.  The question is why.  What have the Tea Partiers done besides gather in relatively small noisy groups and wave obnoxious, racist signs?  Have the Tea Party leaders offered any suggestions to improve American lives?  Have they any recommendations to help those without health care?  Have they offered any real solutions for putting Americans back to work?  Have they put forward any regulations to reign in the greed on Wall Street?

You already know the answer.  The Tea Party leaders have nothing to offer but anger, accusations and snide remarks.  But they are dangerous.  Can you, for a hideous moment, imagine an administration led by President Palin and Vice-President Glenn Beck?  Can you even entertain the thought of Michelle Bachmann as Speaker of the House? 

Some people believe that, because the Mayan calendar ends on December 21, 2012, there will be an apocalyptic disaster that will mark the end of civilization.  I have never subscribed to that theory.  But if the Tea Party grows in popularity and American voters stupidly elect Sarah Palin as President in 2012, the theory may well prove to be true.

Why the recession is our own damn fault.

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Sure, it was the greed of mortgage-lenders and Wall Street that led to our recession.  But it’s consumers that are perpetuating it.  Most economists will tell you that recessions are mostly in the consumers’ minds.  If consumers are worried and reduce spending, our economy drops.  When consumers start spending, our economy rises.

Now, I understand that there are several overriding issues that led to this particular recession, not the least of which is the redistribution of wealth upward (10 percent of Americans now control nearly 71 percent of all U.S. assets).  Nevertheless, we have the power to fix it.

For one, we can vote for political candidates who are more concerned about ordinary citizens than the wealthy and the corporations that finance their political campaigns.

When possible, we can purchase American-made products.  Not just products with American brands, but products that actually say “made in America” on the product or the packaging.  I understand that it’s increasingly difficult to find American-made products, and that they sometimes cost more than those made elsewhere, but there is no better way to create or ensure American jobs.  For example, a Chevrolet or Ford is not only assembled in the U.S. by American workers, many of the parts are made in the U.S. and the profits go to American-based companies that pay taxes in the U.S.   This isn’t protectionism.  It’s simply common sense.

Finally, we can individually and collectively boycott corporations that don’t operate in our best interests.  Given their recent behavior, why would anyone continue to patronize the too-big-to-fail banks when there are so many other alternatives?  So even if you feel that voting for political candidates doesn’t change anything.  Voting with your purchases most definitely can.

Corporate loan sharking.

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Having read that credit card companies are increasing interest rates, I began to wonder: What separates our financial institutions from the Sicilian Mafia, the Chinese Tongs or anyone else imprisoned for loan-sharking? They all charge outrageous interest rates on loans. They all have aggressive collection tactics. And many of them have politicians in their pockets.

The main difference, of course, is that the banks have incorporated as financial institutions. This allows the banks and credit card companies to borrow money from the Federal Reserve at a discount rate that’s currently .05 percent. Then they lend it at interest rates ranging from 20 to more than 45 percent! Not even casinos enjoy that kind of return. But, then, casinos are regulated.

For those of you under age of 50, you might be interested to learn that all financial institutions used to be governed by usury laws designed to prevent the lending of money at unreasonably high interest rates. State banks still are. Unfortunately, usury laws no longer apply to banks that label themselves “national”. The result is that large banks such as Bank of America, Wells Fargo and Chase can charge pretty much any interest rate they want.

And they want a lot.

Of course, they justify their rates by claiming that consumer default is on the rise.

There are several problems with that claim. One, the managers of these companies pay themselves 6- or 7-figure bonuses. Two, it was their greed that led to an economy that has forced consumer defaults. And three, it was the government, financed by you and I, that kept these companies from going bankrupt.

If our Congress ever decides to put the interests of taxpayers above corporations, the corporate officers that run national banks might have even more in common with the Mafia and the Tongs – a prison cell.

How tea-baggers can eliminate the national debt.

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Since President Obama’s inauguration, the so-called tea-baggers have demonstrated, yelled at and threatened the administration. They claim the President is not a citizen. They believe he is trying to implement a socialist, or even communist, agenda. And they seem most angry over increases in the national debt. Never mind that the increases are the result of the previous administration’s policies. Never mind that much of the money allocated through TARP funds has been repaid. Never mind that GM seems on the road to recovery. And ignore the fact that, according to the CBO, the stimulus has saved or created 1.6 million jobs.

However, I think we can channel all that anger and energy to help pay off the national debt. Since the tea-baggers have driven up sales of guns and ammo following Obama’s election, they’re certainly well-enough armed to defend our shores. That would permit us to eliminate most of our national defense budget.

Just think, without a large military force, the tea-baggers would no longer have to fear that our government will take away their freedoms. Of course, we could keep a small professional military to operate, maintain and defend our enormous arsenal of nuclear tipped missiles. That would ensure that no foreign government would attack us. We’d bring home our troops from Afghanistan, Iraq, Germany, Japan and South Korea. Without an enormous military and all of its ships, planes, tanks and troop carriers, we would have less need for oil, so we would no longer need to project American power around the globe. And since most of our large, multi-national corporations have already exported most of our jobs, we should feel no obligation to protect corporate interests on foreign soil. Besides, those companies can afford to hire their own protection such as the likes of Blackwater, aka Xe.

What’s not to like? No more war. No more nation-building (other than on our own soil). No more national debt. All made possible by putting the tea-baggers’ guns and anger to better use.

The no-it-all party.

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As Republicans continue to attack President Obama over the lousy economy they, themselves, created, it becomes painfully obvious that they have no compassion, no ideas, no shame and no clue.  They keep serving up the same failed theories and rhetoric that got us into this mess. 

In their minds, the economy would recover if only the Democrats would provide more tax cuts for the wealthy.  At the same time, Republicans are attempting to stonewall any attempts at regulating Wall Street or reforming the runaway health insurance industry.  In their view, the “free” market and deregulation are cure-alls for anything that ails our economy.

But before anyone wants to sign onto their Reagan-inspired trickle-down economic theories, let’s look at what this kind of thinking has brought us over the last 30 years of Republican leadership:

1 – More than 14 million Americans are currently unemployed, and Federal Reserve Chairmen Ben Bernanke blames the continuing high level of unemployment on the too-big-to-fail banks for failing to make loans to small businesses, the engine that drives our economy. 

2 – 49 million Americans, including 17 million children, currently lack adequate, consistent access to food. 

3 – The VA estimates that 131,000 veterans are homeless on any given night and 18 veterans commit suicide every single day. 

4 – Nearly 47 million Americans lack health insurance.  Of those, nearly 45,000, including 2,266 veterans, die each year for lack of access to health care. 

5 – In what used to be a sight seen only in third world nations, thousands of American citizens have stood in line for free health care because they lack insurance.  More than 8,000 stood in line to receive health care in Los Angeles alone.  Many were turned away.  1,000 recently stood in line for free health care in New Orleans and there are similar free clinics scheduled in Little Rock, Kansas City and other U.S. cities.

These are not the kind of problems that will be solved by more tax cuts for the wealthy or further deregulation of our greedy, ship-the-jobs-off-shore industries.  They require substantial commitments of tax dollars, along with fresh ideas and political will, neither of which are currently available from the Republican Party.

Who’s really at fault for our nation’s predicament?

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Who is more at fault for the problems that face our nation?  Republican candidates?  Or the voters who are deceived into voting for them?  During campaigns, Republican candidates take a populist tone.  They talk about the issues that are important to ordinary Americans such as opportunity and personal freedom.  But when they are elected, they tend to focus almost exclusively on issues designed to benefit the elite. 

Despite promises of fiscal responsibility, Reagan and George W. Bush dramatically increase the deficit and national debt.  Despite promises of small government, Bush created the huge bureaucracy that is Homeland Defense.  And the Republican mantra of lower taxes has really proven to be nonsense.  They may occasionally offer a token tax cut for the middle and lower class, but the real cuts are reserved for the wealthy.   Republicans talk about creating jobs then make it easier for corporations to eliminate collective bargaining and ship jobs oversees.  They talk about getting government regulations out of the way then watch corporations create new scams to abscond with more of their consumers’ money. 

Why, then, do voters fall for these false promises over and over?  Often it’s because they aren’t curious enough to really examine the party’s platform and hold the candidates accountable.  And all too often it’s because they focus on a variety of wedge issues such as abortion, terrorism and same-sex marriage.  They fall victim to a sort of 3 card monte.  They’re mesmorized by the Republican distractions of fear, anger and religion.

How many lower and middle class voters actually benefited from Reaganomics?  How many benefited from George W. Bush’s “compassionate conservatism?”  I submit that instead of jobs, increased salaries and tax cuts, they were rewarded for their votes with war, massive deficits and decreased prosperity.  But the real Republican constituency consisting of CEOs, bankers, investors, oil executives and defense contractors is doing just fine, thank you.

The Bush Legacy: America in Decline

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A few weeks ago, economists Martin Wolf and Robert Shiller appeared on Fareed Zakaria’s GPS on CNN.  They said, “It is now clear that the Obama team has helped avert a complete meltdown of our financial markets.  But they warned that one of the greatest dangers facing our nation is the growing economic disparity between the rich and the poor.”  They went on to say, “This could create a country in which not even those with a great deal of money will want to live.”

There are other troubling effects of Bush’s tax cuts for the wealthy, deregulation and the Republican Party’s stubborn adherence to trickle-down economics. 

Although he draws no conclusions relative to party politics, Rick Newman talks about warning signs of American decline in a story published by U.S. News & World Report.  In the story he states, “…real household income in America has flat-lined, which means many middle-class families are barely keeping up with inflation. The exploding federal deficit hamstrings the government’s ability to help. Healthcare is too expensive, America’s manufacturing base is eroding, and two open-ended foreign wars are draining the national treasury.”

Newman goes on to point out that the annual “prosperity index“ published by Legatum Institute, a London-based research firm, now ranks the U.S. as the ninth most prosperous country in the world.  The same study ranks the United States 27th for the health of its citizens, a statistic that is all the more disturbing given the fact that we spend far more on healthcare per person than any other nation.

According to Newman’s article, the U.S. poverty rate of 17 percent ranks third worst among advanced nations above only Turkey and Mexico.  And since our future depends on the education of our youth, there is more disturbing news.  American 15-year-olds score below average among advanced nations on math and science.

There is one glimmer of positive news:  Newman points out that, according to a GfK Roper survey of how nations are viewed by others, “America rocketed from No. 7 in 2008 to No. 1 in 2009, largely because the world cheered the election of Barack Obama as U.S. president.”

“Starve the Beast”, Part II

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I previously wrote about the Republican Party’s plan to “Starve the Beast” which they believe to be big government.  They hope to cut taxes and the federal budget in order to reduce the size of government and bankrupt the so-called “entitlements” of Social Security, Medicare and Medicaid. 

But this conservative nonsense goes farther.

They also want to significantly cut funding for education.  If you aren’t already familiar with the notion, here’s the Republican line of “thinking” (I use the word loosely):  By cutting funds for public schools, the schools will be forced to increase class sizes.  With larger class sizes, the performance numbers of public schools will be worse.  The lower performance numbers will make government-funded school vouchers for private schools, parochial schools and home-schooling more attractive.  We will then be raising generations as dumb or dumber than the current pack of Republicans. 

If that fails to frighten you, imagine a whole generation of children being home-schooled by the likes of Sarah Palin and Glenn Beck, or their followers. 

Of course, this “Starve the Beast” mentality extends to other areas as well, most especially social services.  The Republican “thinking” is based on the belief that those unfortunates who are poor or sick are in those predicaments as a result of their own actions.  They didn’t follow the Republican philosophies of independence and personal responsibility.  If they had only worked harder and prayed more, the “thinking” goes, they wouldn’t require help.  Don’t concern yourselves with them.  When these downtrodden finally discover religion and Republican values, God will take care of them.

Now, I ask you, what is the real beast?  Big government?  Or the Republican Party?

The cost of war.

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Our war in Afghanistan has now dragged on longer than the failed Soviet Union occupation.  And President Obama is faced with a decision to expand the war by adding up to 40 thousand new troops, engineering a withdrawal, or committing to something between those extremes. 

By all accounts, this was a war that could have ended several years ago if we hadn’t become preoccupied with Iraq.  But as the Iraq “liberation” dragged on, our real enemies in Afghanistan regrouped and gained in strength.  Now it seems that no option in Afghanistan is a “good” option – especially given our economic woes at home.

It was recently reported that the Afghan war has already cost nearly $230 billion.  It was also estimated that the war costs $500,000 (Pentagon estimate) to $1 million (Congressional estimate) to maintain one U.S. soldier in Afghanistan for one year.  That cost includes transportation, equipment, support facilities and all incidentals.  If those figures are correct, adding 40 thousand more troops to the conflict will cost the U.S. an additional $20-40 billion over the next year.   And given that we still have combat troops stationed in Germany and Japan more than 60 years after the end of WW II, the cost will likely continue for many years to come. 

Not included in that estimate is the cost of VA to treat lasting injuries and psychological damage.  There are also the sums paid to veterans for disabilities.   And, of course, it’s impossible to place a price on the lives lost in action.   

Add to these costs the price of the war in Iraq which some estimate to total more than $2 trillion.

All of this is background to the debate over health care reform and economic stimulus.  The economic stimulus package that was signed by President Obama included $787 billion to create or save jobs by rebuilding our nation’s infrastructure.  And the cost of health care reform bills being considered are estimated to  cost more than $800 billion over 10 years.  Of course, the conservatives are horrified by these numbers.

So they must be apoplectic over the cost of Bush’s wars?  Not exactly.   The conservatives can’t wait to send more troops to Afghanistan and spend more money (and more lives) on open-ended, no-bid contracts for the likes of Halliburton and Xe.  They even trotted out the dark one (former V.P., and former Halliburton CEO, Dick Cheney) to attack Obama for “dithering” over the decision to commit more troops. 

Conservative logic goes something like this:  It’s un-American and un-patriotic to spend our own money on our own citizens for jobs and health care.  But it’s absolutely necessary to spend trillions to kill a few knuckleheads on the other side of the globe. 

Does this make any sense?  I think you know the answer.