“The Republican party is going to fall on its sword to defend a bunch of millionaires, half of whom voted Democratic and half of whom live in Hollywood?” – Bill Kristol, editor of the conservative Weekly Standard
Is the “fiscal cliff” that everyone is raising a scream about really the doomsday issue they say it is? We’re told that unless the Executive and Legislative branches of the federal government do not work together to hammer out a sane approach to the deficit, there will be hell to pay if the Budget Control Act of 2011 is allowed to go into effect at the end of this year. There’s something to hate in this legislation for both sides.
Among the laws set to change at midnight on December 31, 2012, are the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, the end of the tax cuts from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. According to Barron’s, over 1,000 government programs – including the defense budget and Medicare are in line for “deep, automatic cuts.” SOURCE
Depending on who you listen to however, the failure to work out a sensible approach that hurts the fewest people may or may not throw the economy back into a recession. So who are the “sides” disputing what will and won’t happen? As usual the devil’s in the details and fear-mongering abounds. When such chaos is expressed I always rely on those economists who not only favor the middle-income working families but tend to have a good track record in their estimations.
The other side is often defensive for the wealthiest amongst us; assuring us as they have for decades now that trickle down economics will be our salvation. Trickle-down is the economic brain-child of the Reagan administration; one that has failed miserably in lieu of low taxes and fewer regulations over the last 30 years. Never mind that the so-called job creators at the top of the income pyramid have shown little willingness to create jobs with their great wealth. Their incomes have sky-rocketed while production - with fewer workers – has kept pace with their increased wealth. The notion that lower taxes allows entrepreneurs and high income earners to stick it back into the economy and thus create jobs just hasn’t held up under the light of scrutiny.
One observer has astutely noted that “the rich create bubbles, not jobs.”
This graph shows the true magnitude of the failure of the “jobs creators”: bubble job formation, no growth in the labor force, and a 20.352 million gap in September 2012 between the employed and those who would work if work was available. Add in the poor quality of the jobs being created and the increased number of involuntary part-time workers, and we have fail upon fail upon fail. It is Orwellian that after a decade of trillion-dollar tax cuts and bailouts of the rich, and a steadily worsening jobs and employment picture for American workers, we are told to be kind to the rich and give them even more money because they are the “jobs creators”. With job creators like these, we are better off without them. SOURCE
These are the same people who resided in that bubble that cost them the election last week. They believe this fantasy as they did the one that said their presidential candidate, Mitt Romney, was a shoe-in and that the GOP would regain the Senate, even with the likes of rape-friendly Todd Akin in Missouri and Richard Mourdock in Indiana.
So based just on this limited information I’m thinking I’m going to go with those experts who seem to see things more clearly. Let’s start with a nobel laureate for Economics.
In a recent column of his, Paul Krugman reminds us that the deficit hawks “have been wrong about everything so far.”
Recent events have also demonstrated clearly what was already apparent to careful observers: the deficit-scold movement was never really about the deficit. Instead, it was about using deficit fears to shred the social safety net. And letting that happen wouldn’t just be bad policy; it would be a betrayal of the Americans who just re-elected a health-reformer president and voted in some of the most progressive senators ever. SOURCE
Last week there was this from Dean Baker at the Center for Economic and Policy Research.
The political leadership, including the Washington press corps and punditry, were already intently ignoring the economic downturn that is still wreaking havoc on the lives of tens of millions of people across the country. Now, in the wake of the destruction from Hurricane Sandy, they will intensify their efforts to ignore global warming. After all, they want the country to focus on the debt – an issue that no one other than the elites views as a problem.
The reality, of course, is straightforward. The large deficits of recent years are due to the economic downturn caused by the collapse of the housing bubble. If the economy were back near its pre-recession level of unemployment, then the deficits would be close to 1% of GDP, a level that could be sustained indefinitely.
But the deficit scare-mongers are not interested in numbers and economics; they want to gut key government programs – most importantly, social security and Medicare. That is why they are pushing the fear stories about the debt and deficit. This is the rationale for the Campaign to “Fix” the Debt, a collection of 80 CEOs ostensibly focused on getting the budget in order.
And finally there is this from Michael Hoexter, a policy analyst and marketing consultant on green issues, climate change, clean and renewable energy, and energy efficiency.
Whatever one’s personal tastes and predilections are in government programs and the role of government overall, the net effect in dollar terms of reducing the spending of government, in the context of the current Lesser Depression is to stall and eventually shrink the economy. Because of a mountain of private sector debt and overvalued assets like real estate in which people are now under water, the only source of renewed spending on goods and services, the engine of economic growth, is government spending. (emphasis mine)
The current ubiquity of austerity advocates and the accompanying rise in fashionable gold-bugism are part of a nostalgia for a past that never was, a fantasy of the solidity and fixity of monetary value. The increased attraction to the primitive idea that economic value is located in the currency itself, rather than generated and maintained by a dynamic real economy with a flexible currency managed by government, [like the U.S.], is a sign of a retreat from confidence in the private economy’s growth potential and in much-maligned government’s leadership role in managing and supporting that economy. SOURCE
What appears to be going on here is that the head-in-the-sand crowd, who refuse to recognize that their ideas are no longer the Holy Grail they’ve touted for years, are equally unable to read the writing on the wall – TAKE YOUR VOODOO ECONOMICS AND STICK IT WHERE THE SUN DON’T SHINE.
If they’re going to commit economic suicide we need to make sure they are not taking us all down with them. They may get their clutches on even greater wealth in the short run but in so doing they risk depriving the vast majority of people to live with integrity, absent the fear from basic needs, which can only create high levels of social chaos.
I think the voters made their views quite clear to both Parties. Obama was elected because he was the more sane of the two but there was no mandate here to continue business as usual promoted by both centrist neo-liberals and conservatives. The policies that saw the greatest rise in the middle-class following WWII are slowing disappearing through the diligent machination efforts of the plutocracy who have taken over our democratic institutions.
It is important that each and every one of us who said NO to people like the Koch brothers and Sheldon Adelson, said NO to the undemocratic thrust behind Citizens United, said NO to repressive voter ID laws, said NO to dehumanizing women on abortion rights, said NO to holding the economy hostage for a few of the privileged wealthy, … that we continue to stand up for policies that recreate the level playing field that once made this nation the most powerful economic force on the planet.