The US Needs a New Deal

When President Clinton left office, the U.S. had a budget surplus. When President Bush the younger left office 8 years later, the U.S. was on the brink of an economic collapse with high unemployment, a Wall Street brought to its knees by its own greed which had a ripple effect on the economy. Corrupt lending practices were exposed as many homeowners defaulted on their mortgages. Banks failed, the auto industry needed a bailing out and to top it all off, we were at war in two countries, wars that were not paid for – projected to have cost 1.26 trillion by the end of 2011 and an unpaid for prescription drug plan which cost 272 billion. And finally, the Bush tax cuts enacted in 2001 and 2003 and then extended through 2012 cost the U.S. something in the order of 2.8 trillion in lost revenues.

The U.S. has a spending problem, no doubt, starting with Bush the younger and exacerbated by President Obama’s policies to carry on with the wars in Iraq and Afghanistan, adding Libya to the mix, and his deal with Congress to extend the Bush tax cuts. But the U.S. also has a significant revenue problem. And I agree with the President and most Democrats that we have to tackle the debt problem with a balanced approach of both spending cuts and revenue enhancements. However, the government does need to increase spending, or I should say invest, in job creating programs that will help put the unemployed back to work. It is clear that tax cuts do very little to create jobs or spur the economy. In fact, favorable tax policies to corporations have succeeded only in making them more profitable as they move operations and jobs overseas. Some corporations paid very little in taxes over the years while receiving generous subsidies both at the state and federal level. Boston Scientific recently announced the layoff of 1,200 workers and a plan to create 1,000 jobs in China, this despite receiving a substantial tax break from the state of Massachusetts. So the Republicans are right. Corporate tax cuts do create jobs, just not in this country.

How do we get out of this economic mess? If I were a member of this super committee charged with deficit reduction, I would advocate the following:

• All the things President Obama originally proposed on the campaign trail: raise taxes on the top 2% of wage earners, close corporate tax loopholes, and raise the capital gains and inheritance tax.
• Complete troop withdrawal from Afghanistan, Iraq and Libya.
• Implement a broad amnesty program for the 15 million undocumented in this country. This would bring economic and social justice to an underclass of exploited workers and help to keep the Social Security fund solvent. It’s the right thing to do; an economic and moral imperative.
• Create a tax free zone near Waco, Texas, Tucson, Arizona and the South Dakota Badlands where Americans who want to live free of government intervention can live free of government services. They would be charged a fee to travel outside these zones, and have to pay tolls on all public roads. In addition, they would be assessed a clean air breathing tax while traveling outside Waco, Tuscon or the Badlands. To travel abroad, tax free residents will pay 100,000 for a passport or passport renewal. To access any public space or service, they would pay a hefty user fee.
• For Americans who wish to pay more than their fair share of taxes, they can.
• Last, America should invest in its ailing infrastructure and it’s national parks system.  We should invest heavily in education, clean energy and the arts. The Obama administration should create a civilian jobs program modeled after the CCC, the Peace Corp, and Americorp expanding into adult education programs focused on literacy for all. Let’s bring back Keynsian economics.

USA USA USA

Govt Needs To Put Folks To Work

I’m hearing mixed reports about the economy.  It’s on the rebound according to some.  Consumer spending is up from this time last year by billions of dollars.  Folks are spending money.  One report suggests this is a sign of consumer confidence.  The Republicans would say this has to do with the certainty factor attributed to tax breaks for all.  Wait, isn’t it a little too early for that?  Curiously, another report argued that while folks of all economic means spent money during the holiday season, they did not feel confident about the economy, this despite the “certainty” of tax breaks.

Did not the Repubs argue that tax breaks for the wealthy would create jobs? Have those jobs been created?  Will they be?  I don’t think so.  Yahoo just laid off a ton of workers.  Notwithstanding unemployment numbers, many corporations have enjoyed another year of profits despite the sluggish economy.  They’ve retooled, outsourced, sub-contracted, laid off expendable workers and the like.  They’ve found corporate loopholes to avoid paying their fair share of taxes.  In some cases business paid no taxes at all and will be getting fat refund checks from the government.  What happened to corporate welfare reform?  CEOs and high salaried executives are getting corporate bonuses and a nice income tax break from the IRS.  Now, I don’t begrudge someone for making a lot of money – I just think they should pay a higher tax rate – and I mean actually pay that rate, not find ways to shield profits or legally game the system.  Our tax system should remain truly progressive and not oppressively regressive.

The economy is a complicated construct.  For those employed, unemployment numbers don’t mean much, but gas prices or tuition bills might.  Not to speak for anybody, but a millionaire or billionaire for that matter might view the economy as a set of policies that should protect and facilitate the expansion of personal family wealth and make it possible to pass it on to family untouched by the government.  I’m reminded of the Pink Floyd song “Money”.

Republicans argue that the wealthy are the key to reducing the unemployment rate.   But do the wealthy really care about unemployment?  Philanthropists might, but they reserve the right to contribute to whatever cause is close to their heart, not necessarily job creation.   Altruism aside, we must remember that the bottom line of capitalism is profit.  There is no such thing as a free market with a social conscience.  It’s all about the bottom line.  The government should be in the business of job creation and should not outsource the responsibility to corporate America whose priority is profit, not people.  Mr. President, put folks to work.   People first!

The State of the Divided Union

President Obama’s first standing ovation during the SOU address came when he said, referring to the resiliency of our nation during hard times,  “It’s because of this spirit…that I’ve never been more hopeful about America’s future than I am tonight.  Despite our hardships, our union is strong.”  But is it strong?  What union was he referring too?  He mentioned the Battle of Bull Run during the American Civil war.  There was certainly a strong resolve on the part of President Lincoln to preserve the union.  Or was he talking about labor unions?  It’s hard to argue that unions are strong when they represent only 12.3% of the workforce or approximately 15 million workers.  In fact, union membership is on the decline.  In 1983, there were over 17 million union workers – over 20% of the workforce.   So what union was he talking about in his speech? Not the union of the people either.  I can’t remember a time when the people of this country were more divided.  I think his point was that the people don’t want to be divided.  That voters are fed up with partisan politics.  He tried to elevate himself above the gridlock that is Washington, but his administration is part of the problem.

Obama supporters expected him to deliver on some of his 2008 campaign promises on domestic issues in his first year, promises on  health care and immigration reform and job creation.   Ambitious as the promises were, the fact that health care reform did not come, that he came close but could not close the deal speaks to a failed approach, one in which he tried to placate the blue dogs and republicans by giving up on the public option.  As to jobs, the stimulus package hasn’t created as many as expected, partly because the stimulus wasn’t big enough.  And without Ted Kennedy, immigration reform may be nothing more than a hollow promise.

So what is Obama to do to right the ship? First, he wants bipartisan governance, but the republicans don’t want the democrats to get credit for anything.  They seem determined to say no to everything, even their own ideas.   So he should continue to expose this hypocrisy as he did at the meeting with republicans a day after the SOU.  I hope more candid meetings like this continue, but I have a feeling that the republican leadership will put a stop to it.   Second, he needs to stop sounding like a republican or he is going to lose his base of support.  How many times did Obama reference tax cuts in the SOU?  Tax cuts for businesses, for the middle class, for students, for homebuyers, for parents, and even more corporate welfare to encourage investment.  Tax breaks for everyone except the wealthiest, who don’t need them and could, if they chose, game the system by hiding assets or hiring  effective lawyers and accountants to find loopholes.  And then a spending freeze.  Republicans might like the sound of that, but of course will criticize him for not doing it soon enough.  Reducing the deficit should be a national priority, but it should be noted time and time again that Obama inherited the huge deficit.

The State of the Union is this:  We are a divided nation.   We don’t have to always agree on the issues, but there is such a thing as compromise.  Without it, we will continue to be a dysfunctional nation.  Let’s bring back the United in United States of America.