I have been unable to make entries into this blog so far this week simply because I have become numb from the crass stupidity and self-centered interests of some in Washington who on one side would shut the government down, have it default on its debt and worsen this sick economy even further while those on the other side simply can’t find the courage to stand up this moronic display of ignorance and short-sightedness.
But I guess I’m even further dismayed by the voting public that created this mess because they were easily persuaded that our problems lie not with those who put us where we are today with two wars, a policy of “spend and borrow” while reducing revenue through exorbitant tax cuts for those who have failed to reinvest those savings into the economy, a la trickle down economics. Americans are an irrational lot says Bryan Caplan in his 2007 book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies. No clearer evidence of this exists than the way voters went from a fervent belief in 2008 to change course from the neo-conservative policies of Bush/Cheney only to revert back to them in 2010 in their new disguise as the Tea Party.
Those bad policies under Bush/Cheney made themselves aware to the general public just as they were leaving office, leaving the damage for the incoming administration to address. They propped up corporate malfeasance by enforcing a mood of deregulating on everything they could or placing industry puppets in agencies that were supposed to insure consumers and working families would not be exploited and short-changed.
The result was a huge increase in unemployment and mortgage defaults brought on by a greedy financial industry where millions of Americans lost their savings and retirement incomes. This condition though was set up by unregulated mortgage lenders using predatory lending practices. I need not go into detail here to break down how this had a domino effect on the business sector and jobs. Many of you are living those dire consequences even still today.
Yet the public allowed their anger to be manipulated by a small segment within politics who call themselves Libertarians and the philosophy that GOP candidate Ron Paul was known for that tended to attribute all of our problems on a bloated government while overlooking the excesses of those within the free-market system. There is no doubt that the way government spends our tax dollars needs reform. But cutting spending in government at this critical time is hardly the point one wants to start at. The notion that government spending was THE problem and thus needed to be curtailed immediately took precedence over the more serious issue of job creation and exposing the partnership between corporations and the people who enact the laws of the land.
Instead of allowing the new government under Barack Obama to carry out its plans to turn our economy around through federal stimulus funds, much like Roosevelt achieved during the Great Depression, the corporate wealth in this country jumped into the fray with both feet and turned this from a corporate malfeasance issue to a government spending issue. Their efforts focused on tying the jobless rate to high taxes that help fund state and federal jobs.
An analysis by economists at the Center for American progress “shows that steep spending cuts are hampering economic recovery in some states while other states that resisted cuts or increased spending are now seeing lower unemployment rates, faster private-sector job creation, and stronger economic growth. The bottom line: States that swallowed the bitter pill of steep cuts are the worse off.”
Taxes were indeed higher in the past to pay for all of this yet somehow people are led to believe that it was high taxes that effected our economic downturn, even though when this condition existed under Clinton we had one of the most expansive job growth periods in our nation. The rich still kept getting richer along with the middle-income class back then.
Now it’s only the wealthiest among us whose income has continued to grow while everyone else has seen their wages stagnate or diminish. Big companies swallow up smaller ones and local businesses have to close up shop because they can’t compete with the mammoth superstores whose headquarters may be in some off shore tax shelter.
What anchored this belief that high taxes are a job killer is the Libertarian economic theory that when government takes more of corporate and wealthy individuals’ income then there is less for them to invest in businesses that would create jobs. This sounds good in the classroom but in reality it’s simply not supported by the data.
In a report by Timothy R. Homan for Bloomberg news back in September of last year he quotes Chris Cornell, an economist who mined government reports back to 1989 for West Chester, Pennsylvania-based Moody’s Analytics. “I would tend to wonder how much the tax cut actually influences spending behavior,” said Mr. Connell “Spending by the top 5 percent of households seems much more closely tied to business- cycle issues than it does to tax-cut issues.”
The Moody’s research covering couples earning more than $210,000 found that spending by the wealthy is more likely to be influenced by the ups and downs of the stock market than changes in income-tax rates.
Stock-market performance is the “primary factor that is driving the savings of the top 5 percent of households,” said Mustafa Akcay, economist and co-researcher of the savings data.
Some economists voice caution about the promised effects of a change in tax rates. The nonpartisan Congressional Budget Office in January analyzed policy options and possible short- term effects on growth.
“Policies that temporarily increased the after-tax income of people who are relatively well off would probably have little effect on their spending because they generally would be able finance their consumption out of their income or assets without such a change,” CBO director Douglas Elmendorf testified to Congress on Feb. 23.
On the other hand, tax relief for families with “lower income, few assets and poor credit would probably” spur spending, he said. Elmendorf said because of job losses and a drop in assets over the past two years more families “probably fit that description now.” Source
Yet it’s critical information like this that goes largely unnoticed by the voting public. It is hard to get them focused on the details of what does and doesn’t work in order to enable them to make sound decisions in the voting booth. The pro-corporate forces in this country take advantage of this and enter the game at the most opportune time while people are still reeling from their own budget problems, persuading enough of them to back candidates and legislation that surreptitiously undercuts the voter’s own self-interests.
So what we saw in Washington these last few weeks were the sloppy and emotional results of people placed in office from the last election who hold extremely strong and somewhat incorrect views about what needs to be done while we have those that probably do know better allowing those irrational forces to have their way. The final product of their debt ceiling arguments have brought us no closer to solving the major issue in this country – jobs – and instead may create an even worse scenario that will make recovery even more difficult. At the close of the markets a day after the debt ceiling “resolution” was reached, the indexes are at their lowest in nearly a year.
It is becoming clear to financial analysts and economist the world over that what transpired in Washington has not only not fixed our economic woes but could well make things gravely worse. If that doesn’t have a numbing affect on you then you are not human. But what would send it over the edge for sure is if voters are once again so oblivious of what’s going that when the 2012 elections roll around they continue this irrational behavior and give the Republican Tea Party more power to create even greater destruction than they already have.