Nel's New Day

November 30, 2020

Dems Back; GOP Reverses to Cry Austerity

Filed under: Budget — trp2011 @ 1:07 AM
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During President Obama’s two terms, Republicans bitterly complained about the national debt, giving that as a reason to vote Republican. While bragging about his wonderful economy, Dictator Donald Trump brags about his “best ever” economy but pushes the U.S. into greater debt, especially with a massive tax cut for his wealthy friend and huge corporations before he completely mismanaged a pandemic and forcing expensive stimulus bills.

Today’s “letter” from Heather Cox Richardson explains the history of Republicans’ faulty policy of tax cuts driving the U.S. into a fiscal hole while in power and then moving to austerity the instant Democrats have any power:


“One story jumped out at me today. The Hill reported that as soon as a Democrat is back in the White House, Republicans intend to retrench and be careful about how the country spends money, although during Trump’s term, even before the pandemic, they spent huge sums without worrying about it.

This is a pattern. Since President Ronald Reagan’s presidency in the 1980s, Republicans have insisted that tax cuts will pay for themselves by stimulating economic growth, thus increasing tax revenues as everyone gets richer. At the same time, they have dramatically increased military spending without ever suggesting a way to pay for it. Then they complain about the debt and insist that the only way to get our finances back into whack is to cut domestic spending.

There are two important metrics involved in figuring out our national expenses. One is the deficit, which is the difference between the money the government spends every year and the money it takes in. The other is the debt, which is the total amount the government owes.

Until the late twentieth century, the government took on large debt during the Civil War, WWI, WWII and during the Great Depression, when Democrat Franklin Delano Roosevelt initiated a new kind of government that regulated business, provided a basic social safety net, and promoted infrastructure. But leaders of both parties believed that deficits should reflect emergencies and that debt should be held at a low percentage of the nation’s Gross Domestic Product, used to estimate the growth of the economy. It was to pay down the national debt that the Republican Party created national taxation, including the income tax, during the Civil War, and that Republican Dwight Eisenhower kept the top income tax bracket at 91% during his administration. Eisenhower was the last Republican president to balance a budget.

After the Great Depression, taxes and the social welfare programs they funded created what economists call the “great compression” when economic inequality in America shrank.

But the stagflation of the 1970s drove white families into higher tax brackets without giving them more buying power at the same time that politicians eager to end business regulation and social welfare programs told them that their tax dollars were going to the civil rights protesters that featured so prominently on the evening news. In 1980, they voted for a president who promised to cut the taxes that he insisted were going to “welfare queens” and to put money back in their pockets.

Ronald Reagan promised that cutting taxes would actually produce more revenue. As business leaders—the supply side—had more money, they would invest in businesses which would hire more workers, at better wages. Rather than focusing on the demand side of the equation—the workers—as governments had done since FDR fought the Depression with the New Deal, Reagan said he could jump-start the economy by putting money into the supply side. The man who would become his own vice president, George H.W. Bush, called this idea “voodoo economics,” but who would complain about a plan that enabled Americans to have the government programs they had come to depend on, without having to pay for them?

Unfortunately, it actually was voodoo economics. In 1981, Congress cut $35 billion from the next year’s budget and cut the top income tax rates from 70% to 50%, as well as cutting capital gains and estate taxes. At Reagan’s urging, it also added $17 billion in new defense spending. In the next five years, it would increase defense spending by 40%. As that money (and more, from the deregulation of savings and loan banks, and from lower interest rates) boosted the economy, it seemed that supply-side economics worked.

An up-and-coming Republican spokesman named Grover Norquist insisted that voters did not want to be taxed to pay down deficits, and it was clear they didn’t have to be. When Democrats called for higher taxes and defense cuts to balance the deficit, Republicans accused them of being anti-business and soft on communism.

But the booming economy was paid for by extensive borrowing. During Reagan’s years in office, the federal debt tripled from $994 billion to $2.8 trillion, and America went from being a creditor nation to a debtor nation. Republican leaders insisted that the Democrats were responsible for the rising debt because they would not make sufficient cuts in domestic spending, but in fact increased defense spending meant the administration itself never submitted a balanced budget.

When he took office, George H.W. Bush tried to take on the national debt, which was costing Americans $200 billion a year in interest payments. In 1990, facing a $171 billion deficit for the next year, Bush agreed to raise taxes if Democrats agreed to steep spending cuts. Republicans led by Georgia Representative Newt Gingrich signed onto the deal in private, but in public began to force those willing to raise taxes, people they called RINOs—Republicans in Name Only—out of their party. The belief that economic growth depended on cutting taxes had become the test of Republican purity.

In 1993, to deal with budget deficits, President Bill Clinton convinced Congress to raise tax rates on incomes over $250,000—affecting about 1% of Americans—to 39.6%, increase the highest corporate tax rate by 1%, and increase the gas tax. Not a single Republican voted for the measure, but under it, the economy boomed and the annual deficits began to shrink. In 1997, Clinton expanded domestic programs and cut the capital gains tax rate, but even still, in 1998, the government was producing a budget surplus.

Even before he took office, President George W. Bush prepared a $1.6 trillion tax cut to wipe that surplus out. Norquist explained to a reporter that so long as there was money to spend, it would go to social welfare legislation, and the Republicans were determined to starve the government, not feed it. Bush did not get the full cut he wanted, but in June 2001 Congress passed a bill cutting $1.3 trillion over ten years.

Immediately after 9-11, Congress appropriated $358 billion for security before Bush dramatically increased military spending—by $48 billion—while slashing domestic spending. When the administration launched more tax cuts the following year, Bush’s Treasury Secretary, Paul O’Neill, worried about a fiscal crisis. Vice President Dick Cheney disagreed: “Reagan proved that deficits don’t matter.” Bush took the country into war in Afghanistan and Iraq but, for the first time in U.S. history, did not raise taxes to pay for the military actions. Instead, Congress cut taxes again. By 2009, the Congressional Research Service estimated the cost of those wars at $1 trillion.  President Barack Obama took office in early 2009 with the Great Recession in full swing. Deficit spending to restart the economy put the deficit at more than $1.4 trillion that year. As the economy recovered, deficits dropped to $585 billion.

Under Trump, though, they rose dramatically again despite the fact he inherited a growing economy. In 2017, he pushed through a tax cut which increased the 2019 deficit to $984 billion. It was projected to be $1.02 trillion in 2020—a 74% increase in four years of a strong economy—when the coronavirus hit. This meant that interest payments on the federal debt—before coronavirus—were estimated to cost $382 billion, 8.2% of total government spending. [Comparison of deficits for Obama’s last three years with DDT’s first three years. DDT’s tax cuts aren’t paying for themselves.] 

The pandemic, of course, required a huge relief package. The CARES bill appropriated $2.2 trillion, making this year’s deficit projected to be at least $3.7 trillion.

Measured against GDP, our accumulated debt is now higher than at any time except in 1946, during World War II. In June 2020, it was $20.3 trillion.

Economists are of two minds (at least!) about the economic effects of deficits and the federal debt, but there is one very clear political meaning to them. This pattern of government spending and taxation since 1981 has moved wealth upward dramatically. In 1979, the top 1% of Americans held 20.5% of the nation’s wealth. In 1989 the top 1% held 35.7%.

By 2017, the top 1% owned 40% of the country’s wealth, more than the bottom 90% combined. The top 20% in 2017 owned 90% of the wealth, leaving just 10% for the remaining 80%. The bottom 20% of Americans have no wealth; they are in debt.

When Republicans today say they are going to turn their attention back to the deficits and the debt, what they are saying is that they intend to continue to cut taxes. Then they will blame the Democrats for being fiscally irresponsible when they call for the infrastructure and social welfare spending that used to keep the American economic playing field somewhat level.

[Note: As you can see, the U.S. is moving forward on the same circular pattern. Republicans make a horrible mess, and Democrats get elected. Democrats clean up the mess. The minute the country gets in better shape, the Republicans make another mess. And so on.

July 6, 2015

GOP Wants U.S. to Have Problems of Greece

Filed under: Budget,Uncategorized — trp2011 @ 9:06 PM
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Greece’s vote of 61 to 39 percent against austerity measures this past week leaves the country in limbo as its creditors are wondering what to do about the country. Greek banks are still closed, the economy is in chaos, and a new bailout agreement may cost them more. But evidence shows that the Greeks are right about austerity, and more of it will hurt their economy.


Five years ago, the International Monetary Fund (IMF) told Greece that the austerity measures would restore the market’s confidence in its debt, help the country’s economy rebound in the medium term, and have a negative, but survivable, impact on output and unemployment. It didn’t. Higher recession and exceptionally high unemployment in Greece have been accompanied by a lack of market confidence and the loss of 30 percent in banking deposits. The economy shrank by 17 percent instead of 5.5 percent, and the unemployment rose to 25 percent instead of 15 percent. In the past seven years, the economy shrank 25 percent, and a report stated that “productivity gains proved elusive.” At the same time, “public debt remained too high and eventually had to be restructured.”

The failed estimates to solve Greek’s problems came from a flawed paper by economists Carmen Reinhart and Kenneth Rogoff who tried to prove that economic growth slows down when countries’ public debt reaches 90 percent of their GDP. The authors had excluded times where countries had both high debt and average growth, used debatable methods to weight countries, and made a coding error that excluded even more countries with high debt and steady growth. Fixing the errors showed that Reinhart and Rogoff were wrong, and a reanalysis revealed that the opposite result is true—that slow growth leads to high debt. When austerity measures hurt the economy, they damage, more than help, debt levels.

Greece’s high debt levels have historical precedent as does the concept that Greeks don’t have to immediately repay debts. Authority Thomas Piketty said, “Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted.” When countries such as Great Britain used austerity to deal with debts, England took over 100 years to do so, costing the country 2 to 3 percent of its economy. Germany, the country leading the call for austerity in Greece, “has never repaid its external debt,” according to Piketty. Although German debt was over 200 percent of its GDP after World War II, it shrank to 20 percent ten years later because 60 percent of its foreign debts were cancelled in 1953 along with an internal debt restructuring.

Piketty recommends a combination of debt relief, inflation, and a tax on private wealth. He said, “Europe was founded on debt forgiveness and investment in the future. Not on the idea of endless penance.”

Austerity means less spending. Less spending means less demand. Less demand means less money to hire workers, pay contractors, or to pay for pensions. Increased taxes for the poor and middle class has the same problem: higher taxes for consumers means less money to spend. Greece massively cut spending and raised taxes, but the country still has a budget deficit because unemployed people don’t pay taxes and businesses losing money don’t pay taxes. Germans and others in northern Europe complain about giving money to “lazy” Greeks and other southern Europeans, but the economic policies of the northern Europeans run deficits in southern Europe. If Germany and other wealthier countries boosted poor countries through a greater expansion of fiscal policy, the latter wouldn’t need handouts.

People in the United States need to note the Greek situation because the GOP is trying to do the same thing to the U.S. that the European Union did to Greece. After George W. Bush caused the trajectory toward a large deficit with his tax cuts for the wealthy, two wars, and ignorance regarding the housing bubble, the GOP decided that austerity was the only cure for the problem. A conservative, Gene Steuerle, set out to show how wrong the government has been to create programs such as Social Security, Medicare, and Medicaid and proved the opposite. It’s the same situation as in Greece: the more money people have to spend, the greater the economy. Giving wealthy people tax cuts does no good because they shelter or spend it overseas, giving no support to the U.S. economy. For example, Walmart has 78 shell companies in 15 tax havens with $76 billion in just Luxembourg and the Netherlands.

What helps the economy is investing in the future through government spending that benefits large parts of the population. All the countries that reduced their deficit the most since 2010 have the worst employment performance.

Another GOP-caused problem is the cost for health care. The United States pays over twice as much per person in this area as the other wealthy countries but gets nothing extra in terms of outcomes. The U.S. doesn’t get better health care than Germany, Canada, or France; it just pays much more. The U.S. pays twice as much for doctors, drugs, medical equipment, etc. while throwing money at insurance companies.

A serious GOP problem is its obsession with the “free market,” the belief that all innovation and growth come from the private sector. Nations relying on private industry have become stagnant because private companies rehash old ideas and stash their money in foreign tax havens. The iPhone was revolutionary, but its touch screen, GPS, and processor were funded by some country’s government. The iPhone 5 just uses different materials than the iPhone 4 does. Most of this country’s R&D funding goes to refining existing technologies. Private companies care only for short-term immediate profits, but governments aren’t forced into this box. If the U.S. had invested in R&D instead of Sollyndra or other similar companies, technologies in improved solar could have been innovative. That’s the real competition from China that the U.S. fears.

Two years ago, a report showed that over 2 million people were unemployed in the country almost four years after the end of the 2008 recession because of austerity measures. During that time, federal, state, and local governments cut about 500,000 jobs compared to the average of 1.7 million people hired in every other recession since 1970. The GOP’s tight fiscal policy kept the economy from growing.

Paul Krugman wrote that “austerity policies serve the interests of wealthy creditors.” Since World War II, only three presidents before President Obama left office with a larger debt ratio than when they came in—Ronald Reagan and the two George Bushes, the three with hard-line conservative governments. Those are the ones “deprive the government of the revenue it needs to pay for popular programs.”

If the U.S. emulates Greece, the country can expect these outcomes. Austerity kills and injures:

  • Stillbirths rose by 21 percent between 2008 and 2011 because of scaled down prenatal health services for pregnant women while infant mortality surged by 43 percent between 2008 and 2010.
  • Deaths by suicide increased by 45 percent between 2007 and 2011 with the general deterioration of life due to austerity from unemployment, poverty, reduction of the minimum wage, and lack of disposable income.
  • New HIV infections among injecting drug users rose from 15 in 2009 to 484 in 2012 while tuberculosis more than doubled between 2012 and 2013 after lack or prevention and treatment care.
  • Malaria re-emerged for the first time in 40 years after significant cuts in municipal budgets reduced mosquito-spraying programs.
  • The use of mental health services increased by 120 percent although public funding for mental health dropped by 20 percent between 2010 and 2011 and by an extra 55 percent between 2011 and 2012.

Austerity leads to neo-facism. The greater the income inequality, the larger the response from right-wing, neo-facist parties. Just as Europeans failed to develop a shared political union, the 50 states in this country are splitting farther apart. The culture of austerity exacerbates social stresses and leads to populist challenges. If Social Security and Medicare were to disappear, as many far-right legislators in the United States hope, rivalries would grow and white supremacists would gain greater and greater power in the ensuing increase of poverty.

Conservatives in the United States use austerity for their own means. When they wanted war, they followed Vice-President Dick Cheney’s statement, “Reagan proved deficits don’t matter.” Their purpose is to gain power and white entitlement by advancing big business through destroying worker control and exerting control over minorities through ridding themselves of the “welfare state.” Reducing spending on the government causes a greater percentage of blacks to lose their jobs than whites. Increasing unemployment puts a larger percentage of blacks without work than whites.

While the United States struggled with slow economy because of the GOP austerity measures, the austere policies in some GOP-controlled states, for example Kansas and Wisconsin, have destroyed the people. Louisiana State University is considering bankruptcy. Kansas’s austerity program drove the state so far into the ground that it shut down the website for the state economic development agency. That’s where the GOP wants the United States to go.

January 6, 2014

Congress Debates Unemployment Benefits

On December 28, 2014, the U.S. economy started losing a billion dollars each week. That was the date when 1.3 million no longer received unemployment benefits because they had been unemployed for over six months, and Congress refused to renew these benefits, an average of $256 per week per person. Within six months, another 1.9 million people may lose these benefits if no action is taken. People receiving these benefits will most likely spend the benefits immediately on services and goods.

This emergency unemployment compensation was first passed in 2008 when the unemployment rate was 5.6 percent and the average duration of unemployment was 17.1 weeks. Five years after George W. Bush signed the bill the rate is 7 percent, and the duration is 36 weeks. With the expiration of the law, unemployed people can collect benefits for only a maximum 26 weeks.

A bill to renew the emergency benefits was introduced by Sens. Jack Reed (D-RI) and Dean Heller (R-NV)—two states with the highest unemployment rate—and the Senate has determined it a priority, beginning today. Because of the severe weather, Senate Majority Leader postponed the vote until tomorrow when he hopes to have the necessary 60 votes.

The following map shows the likelihood of people losing benefits in each state until benefits are renewed. The darker the shading, the greater percentage of the population losing the benefits.

Unemployment map

Every state but one—North Dakota—has added more people than jobs since the recession began, totalling 9.2 million jobs for the country. In 33 states, the difference between jobs and population is 5 percent or more. New Jersey takes the biggest hit with 1 percent of the state population losing benefits.

Eligibility and benefits are determined at the state level, meaning that unemployment benefits vary across the nation. This map shows the differences among different states:

Unemployment benefits by stateThe GOP members have several off-the-wall opinions of why they want to eliminate benefits. Some of them want to “get back to normal,” even though the fire of the recession has not been put out yet. They think that the country can be “normal” if they pretend it is. Sen. Rand Paul (R-KY) pretends that he is trying to get the unemployed back to work because employers discriminate against those who have been out of work for the longest times.

Paul's job advice

Paul has also been insulting to the unemployed by stating that they are unwilling to take lower-paid jobs below their skill level. The senator fails to understand that employers don’t want to hire well-educated people for jobs that don’t require this level of education because they think that the workers will leave as soon as they get a better job. Those who are unemployed for a longer period are also discriminated against because employers think that they don’t want a job or have lost their skills.

GOP theories of keeping the unemployed from having benefits are all debunked by legislative actions in North Carolina. Because this state cut off unemployment benefits earlier than any other state, North Carolina has shown that the result is a shrinking labor force. The unemployed have stopped looking for jobs because they don’t exist. Congress wants to do the same thing.

Congress hides unemployed

Paul used economist Rand Ghayad to prove his point, and Ghayad responded. “Paul cites my work on long-term unemployment as a justification – which surprised me, because it implies the opposite of what he says it does.” The economist further explained that good policy “requires more than a cursory or selective reading of the research.”

Ghayad writes in The Atlantic, “But just because companies discriminate against the long-term unemployed doesn’t mean long-term benefits are to blame. Paul might know that if he read beyond the first line of my paper’s abstract.” Again the economist’s explanation is the same as any reasonable thought, that only if people stopped looking for jobs would cutting benefits drop the unemployment rate. It might hide problems with the labor market, but it won’t cure them. The article concludes:

“A careful reading reveals we can be both hard-headed and warm-hearted in this holiday season.”

The tragedy of unemployment is the large number of people looking for jobs. Each single job averages three job seekers, and the number is much higher in cities. When two new Wal-Marts opened in Washington, D.C. last month, other 23,000 people applied for fewer than 600 jobs—about 40 job seekers per job. The elite GOP in Congress exhort the unemployed to look for lower-paying jobs: that’s what they’re doing at Wal-Mart.

The very people blaming people for unemployment are the ones who caused the problem. Eight months ago, the New York Times reported on how the Congressional austerity measures—those promoted by GOP lawmakers—have kept the unemployment rate from dropping another point. Without the austerity measures, the economic growth would also have most likely grown two additional points in the previous year. This information comes from both private sector and government economists. “Immediate deficit reduction is a drag on full economic recovery.”

The focus of GOP members of Congress was deficit reduction, and they succeeded. The deficit is shrinking faster than at any other time in the past 60 years. At the same time, however, the economy has not grown enough to provide sufficient employment. Spending cuts have reduced demand and taken capital out of the economy while people who could increase demand lost money through payroll tax increases when the breaks were eliminated.  Solutions for unemployment: stop the sequestration cuts, invest in infrastructure, and extend federal aid to prevent the growing public-sector layoff.

When the GOP blocked the president’s American Jobs Act, they also blocked over one million jobs. Sequestration wiped out another 700,000 potential jobs. If the GOP had passed the jobs act and not the sequestration, 15 percent of the unemployed might now have jobs, lowering the unemployment rate below 6 percent.

Almost two months ago, Rep. Eric Cantor (R-VA) distributed the House GOP agenda for 2014—a blank sheet of paper. We can be pretty sure that they will continue with their historic approach of avoidance and obstructionism.

May 4, 2013

GOP Austerity Plan a Hoax

Since the GOP Tea Party took over Congress over two years ago, they’ve been screaming—sometimes literally—about the importance of spending cuts and tax cuts: in one word, austerity. I’m convinced that they know less about economics than I do—and I know almost nothing. But they have held up the golden words of Carmen Reinhart and Kenneth Rogoff, two Harvard economists who wrote “Growth in the Time of Debt.” The message of this paper is that economic growth slows dramatically the very instant that a country’s gross debt to GDP ratio crosses 90 percent. How can we doubt people with their credentials! Journalists and policy-makers jumped on the bandwagon driven by deficit hawks.

Economists, on the other hand, thought that the research was shoddy and the conclusions absurd. Thomas Ferguson and Robert Johnson wrote in “A World Upside Down? Deficit Fantasies in the Great Recession” that too little data had skewed R&R’s conclusions after they eliminated over a century of British data when British debt loads exploded but economic growth raced forward. Marshall Auerback criticized the relevance of the cases that they had used. But major media such as the Washington Post didn’t listen, and conservative consensus was that the United States could move its economy forward by cutting jobs, stripping away vital public services, and letting the infrastructure crumble.

R&R’s entire cover has been blown by a 28-year-old graduate student at the University of Massachusetts, Amherst, Thomas Herndon, a 28-year-old graduate student, when he tried to replicate the Reinhart-Rogoff results as part of a class exercise. It didn’t work so he asked R&R for their data spreadsheet. In it, Herndon found disastrous problems, which he passed by his professors, Michael Ash and Robert Pollin, mistakes such as selective exclusion of years of high debt and average growth, a problematic method of weighing countries, and, worst of all, a coding error in the Excel spreadsheet that excludes high-debt and average-growth countries. Mother Jones dubbed it “the Excel Error Heard Round the World.”

With the two professors, Herndon wrote:

“A coding error in the RR working spreadsheet entirely excludes five countries, Australia, Austria, Belgium, Canada, and Denmark, from the analysis. [Reinhart-Rogoff] averaged cells in lines 30 to 44 instead of lines 30 to 49…This spreadsheet error…is responsible for a -0.3 percentage-point error in RR’s published average real GDP growth in the highest public debt/GDP category.”

Fixing these mistakes results in an anti-austerity rationale: countries can cross artificial debt-to-GDP “threshold” and grow. The new paper from the two professors and the graduate student, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,” shows:

“When properly calculated, the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0:1 percent as published in Reinhart and Rogoff. That is, contrary to RR, average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when debt/GDP ratios are lower.”

The entire foundation for the disastrous global push for austerity and debt reductions in the 21st century was based on bad data and a spreadsheet mistake. R&R’s premise was the basis of Rep. Paul Ryan’s (R-WI) draconian Path to Prosperity budget, for GOP rejection of further stimulus, and the Fix the Debt crowd’s frenzied calls for urgent action. Even President Obama joined up with his “chained CPI” for federal programs.  In Europe, R&R’s work justified austerity policies that pushed the unemployment rate over 10 percent for the euro zone as a whole and above 20 percent in Greece and Spain. This mistake had “enormous consequences” for real people, wrote economist Dean Baker in “How Much Unemployment Did Reinhart and Rogoff’s Arithmetic Mistake Cause?”

R&R also have close ties to Wall Street billionaire Pete Peterson, who has worked on cuts in Social Security and Medicare for decades. Almost every think tank and non-profit that works on deficit- and debt-related issues have been bankrolled by Peterson, including the Peterson Institute for International Economics where Reinhart is a Senior Fellow. Her husband, Vincent Reinhart, does similar work for the American Enterprise Institute, also bankrolled by Peterson. Rogoff is listed on the Advisory Board of the Peterson Institute.

The new R&R book using the same flawed data that Herndon discovered, A Decade of Debt, is bankrolled by Peterson.

As usual when academics are caught in a mistake, R&R tried to dig themselves out of the hole but just went farther in:

“Nowhere did we assert that 90 percent was a magic threshold that transforms outcomes, as conservative politicians have suggested. […] Our view has always been that causality runs in both directions, and that there is no rule that applies across all times and places…. Our consistent advice has been to avoid withdrawing fiscal stimulus too quickly, a position identical to that of most mainstream economists.”

R&R aren’t alone in trying to lie their way out of an awkward, world-destroying mistake. Alberto F. Alesina and Silvia Ardagna tried to show that spending cuts are actually “expansionary” because all these draconian cuts are automatically followed by economic growth. Basically, the International Monetary Fund discovered that A&A were cooking the books by the way through extraneous effects in its statistical techniques. As Paul Krugman wrote, A&A didn’t crash and burn like R&R, but they did became gradually discredited.

Now some of the big players are opposing austerity: the manager of PIMCO, the largest bond-buying firm in the world; top figures at Blackrock, one of the most influential investment banks in the world; the President of the European Commission, Jose Manuel Barroso; and Martin Wolf, world-renowned finance commentator for the Financial Times. Those who want more information on why austerity doesn’t work might want to read Mark Blyth’s new book, Austerity: History of a Dangerous Idea, a collection of austerity disasters during the 20th century.

Why do conservatives want austerity? Paul Krugman, Nobel Prize winner, theorizes that it’s a moral tale of punishing excess. People who live beyond their means must pay the price. Unfortunately, “living beyond our means” means all the costs from George W. Bush’s preemptive wars and tax cuts for the wealthy.

Conservatives refuse to understand that the country’s current problems come from too little spending; they want the redemption of suffering. But their mandate for suffering all goes to the poor and middle class through cuts on health care and Social Security, which they call “entitlements,” despite the fact that the poor and middle class fund these programs.

Economic science, according to conservatives, evolves from what the top 1 percent wants. Right now the they think that the economic recession serves them well. The stock market has shot to the top during the push toward austerity, and the wealthy have acquired all the net worth during the past few years.

Between 2009 and 2011, the richest 8 million families, the top 7 percent, saw their average wealth rise from $1.7 million to $2.5 million each. The bottom 93%, 111 million families, each lost an average of $6,000. Therefore, the top 7 percent gained $5.6 trillion in net worth, an increase of 28 percent, while the rest of the people in the nation went down by 4 percent.

No wonder the wealthy don’t want anything to change, despite dire predictions for the country’s economy. They’re just fine right now. They fail to understand that their wealth depends on the spending of the rest of the people, spending that they cannot do if the economic inequality continues.

July 24, 2012

GOP Vision for America

Yesterday I had breakfast with a friend who used to be a Republican, and I realized how lucky Democrats are these days. Not everyone in the party is  enamored with everything that Obama does, and the Democrat lawmakers are sometimes irritating. But the old-guard Republicans are lost.

During our discussion she said, “I’ve lost my party! I don’t tell anybody that I’m a Republican any more. I say that I’m an independent.” So I thought about the Republican vision for the United States: miserly, selfish, controlling, and violent. Conservatives are changing the United States from the “can do” to the “won’t do” beliefs.

Violence, of course, comes from the conservatives’ attitude toward gun control. It’s not just that they want everybody to have one or two guns in the house to protect themselves and use for recreational hunting. Instead, they want everyone to have as much fire power as they can afford to buy without considering that a restriction in this–or even licensing guns–might result in fewer deaths. The recently deposed head of the Arizona state senate, Russell Pearce, accuses the people in the Aurora (CO) theater of being cowards for not taking down the young man with four weapons and unlimited rounds for them at his disposal.

As for the current war in Afghanistan, the one that costs us $88.5 a year and where the country wants us to leave, the House managed to debate our situation there—for one hour. That’s all the nation’s destiny is worth to these people.

The conservatives’ craving for control has been clearly shown through the conservatives’ drive to eradicate unions, primarily for teachers, and contraception availability. Both these destroy salaries for women because teaching has been one place in the past where women can come closer to achieving economic equality. Without a decent salary, without the fair pay act which would require that women are paid the same as men for the same work, and without the chance to avoid pregnancy, women are losing the ability to stay out of poverty, where the conservatives think that they don’t deserve help. They want to control women.

Another control from the Republicans is the rash of laws mandating restrictive photo IDs for voting. Initially conservatives said the purpose was to prevent voter fraud, but by now they are admitting, as all sane people knew, that there was no fraud. Pennsylvania Republican House Leader Mike Turzai said,  “[…] Voter ID, which is gonna allow Governor Romney to win the state of Pennsylvania, done.” Conservatives simply tried to remove as many progressive voters from participating in the election as possible.

Michigan is now a prime battleground against Republican control of municipalities and school districts by dictators appointed by the governor. The process started over a year ago with Public Act 4, signed by Gov. Rick Snyder, that extended emergency manager laws. In Michigan, an emergency manager gives all orders in the town or school district and can break contracts and fire elected officials. The first city that Snyder took over, in the name of fiscal problems, was a tiny, largely black town because a wealthy developer wanted to build a golf course on a public park along the lake.

In protest to the Michigan law, a coalition called Stand Up for Democracy submitted 226,000 signatures for a referendum to overturn the law. They needed just under 162,000, and the Bureau of Elections found 203,238 valid signatures. Another organization challenged the petitions on the basis of wrong font size. The Republicans on the Board of Canvassers succeeded in declaring all petitions invalid. Last month the state Court of Appeals ruled that the signatures should be accepted, allowing a public vote in November. That decision has been appealed to the Michigan Supreme Court which will hear the case tomorrow. Part of the debate will be how the “point” and “type” should be measured, whether by size of the printer’s block or the actual printed character. This comes from the anti-regulation party.

In its supposed craving for austerity, conservative lawmakers have one response for any action that would help the country: we can’t afford it. And they use this excuse with no justification. Health care won’t bankrupt the country as demonstrated by all the other countries with universal health care, but we can be bankrupted with escalating costs and a sick workforce with lost work days and productivity. In fact, repealing the health care act will cost the country $109 billion that the taxpayers will save if we keep the law. The World Health Organization reports that the United States spends 16 percent of its GDP, the highest portion of any country, on health care but ranks 37th out of 191 countries in performance. By contrast the United Kingdom spends 6 percent of its GDP but rates 18th in performance, almost 20 places higher than the U.S.

Social Security isn’t bankrupting the country; it just needs some tweaking the way that President Reagan did 30 years ago. And green energy isn’t too expensive; it hasn’t bankrupted Denmark. Start-up costs for anything are more expensive as the country found out with technology such as television and computers. This area combines austerity with selfishness because those huge corporations that present everyone with high utility bills, charge high gas prices, and give everyone dirty air and water don’t want to lose their customers. Republicans keep talking about all the money that the government lost in solar companies going bankrupt. Facts show companies lost less than 4 percent of the total program funding for alternative energy. Because Chinese companies got massive government subsidies, they were able to flood the U.S. market with solar equipment. Yet this is the time to continue the program because the drop in prices because of Chinese solar panels greatly reduces installation costs.

In its austerity, conservatives balk at providing sufficient education for the nation’s young people. In 2003 the US ranked 15th of 29 in reading literacy, 21st of 30 in scientific literacy, 25th of 30 in mathematics, 24th of 29 in problem solving. Conservatives claim that the United States has bad teachers as conservative lawmakers continue to starve the schools and increase the number of students in classes. The United States conservatives also want to charge high interest rates on student loans for higher education while Europe and Russia have tuition-free colleges and universities free to reduce the shortage of workers in specific fields.

In their selfishness, conservatives frequently avoid addressing a need. The farm bill expires on September 30, but House Republican leaders don’t plan to do anything about it. The bill would save $35 billion during the next 10 years, but Republicans don’t want to touch it until after the November election—an attitude that they seem to have for any legislative activity. Nothing like this has happened for at least a half century. Doing this will put the farmers suffering from the worst drought since the middle of the last century with Medicare doctors whose pay will run out, fired workers who worry about jobless benefits, and possibly millions of families whose tax breaks may expire. The Senate has already approved its farm bill so that the House needs to stop whining about the Senate not taking any action.

If the conservatives want to save the country, they need to take a hard look at the defense budget. The United States not only spends more money than any other country but also spends more than the next 14 nations combined. This nation’s military budget accounts for 41% of the total military spending in the entire world. This is the conservatives’ “dream for America.” T

July 8, 2012

Bigoted Christianity Rampant in the U.S.

The “Nuns on the Bus” have finished their 15-day tour with Sens. Barbara Mikulski (D-MD), Mary Landrieu (D-LA), and Susan Collins (R-MA) introducing a resolution honoring nuns. The senators said that the resolution “recognizes the Catholic Sisters’ fulfillment of their vital missions to teach our children, care for the sick, feed the hungry, shelter the homeless, lead major institutions, demand corporate responsibility and fight for policies that promote human dignity.” These brave women are opposing Republican lawmakers, led by Rep. Paul Ryan (R-WI), who ignore the Christian belief in aiding the poor and avoid the nuns.

Republicans are not only busy keeping the poor in poverty but also industriously using religion to destroy the credibility of Democrats. Preening themselves on their fiscal responsibility, the conservatives accuse Democrats of having a way on faith. Fiscal responsibility seems to be a problem at the Vatican, however; they have a $19 million deficit. The Rev. Federico Lombardi said that they need to get savings from somewhere although probably not from the layoff of any of the 2,832 Holy See personnel.

Meanwhile Republicans make it very clear that their definition of faith is only Christian. Colorado state Sen. Kevin Grantham wants a law to ban building new mosques: “Mosques are not churches like we would think of churches. They think of mosques more as a foothold into a society, as a foothold into a community, more in the cultural and in the nationalistic sense. Our churches–we don’t feel that way, they’re places of worship, and mosques are simply not that, and we need to take that into account when approving construction of those.”

Even the government suffers from serious religious prejudice. The military found it appropriate to use the depiction of a Muslim woman for target training for the Navy SEALs until they received complaints. Hanging on the wall behind the woman were verses of the Quran, a holy book to the second largest religion in the world with almost as many members as Christianity.

Some Christian leaders clearly show bigotry toward those of their same faith. The Rev. Mel Lewis, organizer and keynote speaker of last week’s Christian Identity Ministries’ three-day conference in Alabama, invited “all white Christians.” Asked about the discrimination, he said, “We don’t have the facilities to accommodate” those who are not “part of the chosen race.” The event, surrounded by Ku Klux Klan flags and supremacy slogans, culminated Friday night by what they call a “Christian cross lighting” as they hold a cross-burning. Some of those who attended also wore KKK garb.

Christians are sinking lower and lower on the scale of belief in the Constitution’s statement “for the general welfare.” Only 40% of Republicans agree that “It is the responsibility of the government to take care of people who can’t take care of themselves.” This number has gone down 18 points in the past five years; in 2007 58% of the Republicans thought that people who cannot take care of themselves deserve help. In three surveys during the George W. Bush administration, no fewer than half of Republicans said the government had a responsibility to care for those unable to care for themselves. In 1987, during the Ronald Reagan’s second term, 62% expressed this view.

One example of right-wing selfishness comes from many Republican governors’ refusal to accept billions of dollars in Medicaid funds to insure millions of people. According to those whose incomes are below 133 percent of the poverty level may receive federal Medicaid but cannot receive the subsidies that are provided for others of lower income.  If governors accept the federal money, everyone can be insured. Without this acceptance, between 3.5 million and 9.2 million people will have no health safety net. Ten Republican governors have stated that they will refuse the funds, and another 19 are considering it. Even three Democrat governors are questioning whether they will take the federal funding in Missouri, North Carolina, and Virginia.

Republican austerity is only for the poor and middle-class, however. Corporate taxes are at a 40-year low, with an effective tax rate paid of 12.1 percent. They’ve fallen from about 6 percent of GDP to less than 2 percent.

Radio host Jan Mickelson shows the conservatives’ lack of respect for others in his comment about the nuns on tour to Rep. Tom Latham (R-IA). “Do you guys, do you have any power to pull the nuns on the bus over and pistol whip them? They say [Paul Ryan] is evil, they say he is fake Catholic. They’re the ones that threw the first punch.”

Several years ago leadership of the Mormon church used its political clout to defeat California Proposition 8’s ban on marriage equality; now it is providing its resources, against church rules, to elect Mitt Romney. One action is giving away LDS Tools that provide full directories of church members including that of stake and district presidencies. The app also offers event calendar listings and a “birthday list,” and the Mormons are reaching out through Facebook and Twitter.

Cheers for the nuns! According to sister Simone Campbell, bus tour organizer and executive director of the Catholic social justice group NETWORK, “Congressman Ryan [is making] an outrageous claim … that the Catholic faith, that is all about serving the poor, validates his budget—which does nothing but decimate services to the poor and provide further tax cuts for the wealthy. By lifting up the work of Catholic sisters, we will demonstrate the very programs and services that will be decimated by the House budget.”

The country needs to look back at another Ryan—John Ryan, a prominent theologian who published A Living Wage in 1906. He claimed that economics must be shaped by and rooted in morality as he advocated fair and equal pay that started the living wage movement. His “Program for Social Reconstruction” (1919) was considered a blueprint not only for President Franklin Roosevelt’s New Deal including Social Security but also for collective bargaining rights, the right to organize, and the prevention of child labor—all aspects of the Labor Relations Act in 1935; comprehensive insurance—realized in the Social Security Act of 1935; and a minimum wage—that fueled the movement toward the Fair Labor Standards act of 1938

A century after the first publication of A Living Wage, we have similar economic conditions with rampant economic inequality and wealth in the hands of a few. The top one percent took over 40 percent of the national wealth last year. I prefer the philosophy of John Ryan over Paul Ryan when he declared the three guides to equality: Laws should promoting the general welfare; every individual has inherent dignity; and individuals are stronger through community.

On the eve of the nun’s bus tour, Sister Simone Campbell avowed, “This is a fight for the soul of our nation. Catholic social teaching says that the positive role of government is to counter the excesses of each culture. Our excess at this point is individualism, so the work of government is to counter that by emphasizing our responsibilities to each other.”

Paul Ryan needs to learn that.


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