Posts Tagged ‘economic collapse’

Another Day Older and Deeper in Debt

June 17, 2011

Got debt?  Do you have credit cards, car loans or a mortgage.  If so, what do you suppose would happen if you wrote those who loaned you the money and said you weren’t going to pay back what you’ve already borrowed?

The consequences would be pretty grim.  Interest rates on your debt would quickly rise as would the amount creditors expected you to pay each month.  Your credit score would drop, limiting your future capability to borrow.  And if you defaulted on secured debt like auto and home loans the assets would be seized.  Millions of our fellow Americans face this grim reality now.

Well, raising the US public debt ceiling is much the same as a creditor setting allowable total credit for an individual or business with two differences.  First, government can do what individuals and businesses can’t – set its own debt limit.  And second, raising the debt limit is our collective agreement that we will pay back what we’ve ALREADY borrowed. Raising the limit protects the full faith and credit of the United States and avoids catastrophic economic consequences we’ve never faced because we’ve NEVER failed to acknowledge our collective debt, NEVER in the entire history of our nation.  This is why the US dollar is the world’s reserve currency.

According to CNN Money, since 1962 we have raised the debt ceiling 74 times including 10 times since 2001.  All financial bills originate in the House of Representatives and this House, under the control of the tea party Republicans is refusing to raise the ceiling.  Word they pass among themselves is that not raising it either wouldn’t be that serious a problem or, if it is, they’ll just blame it on President Obama and the Democrats.  That’s the crazy game they’re playing with our country these days.

In recent newsletters, Representative Francisco Canseco, a former bank director who should know better, repeated the Republican line of opposing raising the debt ceiling.  Here’s one of his talking points:  “…it is time we cut up the national credit card and force government to live within its means, just like American families and small businesses do every day.”

Since when have American families and small businesses be able to get along without credit debt?!!  Only the rich can buy houses and cars and major appliances without using credit.  And thanks to “trickle-drown” economic policies of the last 30 years, the income of average Americans has been flat.  We’ve been forced to use credit for unexpected medical bills, auto repairs, replacing broken appliances, and other unplanned expenses.  Small businesses rely on credit to buy equipment and inventory just to stay in business.

Responsible individuals and small businesses are struggling now to keep from defaulting on their debt.  We expect our government to do the same.  We do NOT expect our government to operate debt-free.  While individuals and businesses are worried about their ABILITY to repay their debt, the US government has the ability — but the radical right is UNWILLING to do it.

Another talking point:  They say it’s about “…getting Washington’s spending addiction under control so that private-sector job creation can once again thrive in America.”  This is the same argument they made to force continuation of the Bush tax cuts.  Republicans, where are the jobs from those tax cuts?  All they have accomplished is RAISING the debt.  If the Bush tax cuts had never been enacted, today our debt as a percentage of GDP would be a manageable amount under 50% instead of the 70% it is.  That’s the “revenue problem” Republicans deny we have.

Furthermore, Republicans are the ones with the spending addiction.  Our debt has accumulated from the Afghanistan and Iraq wars which were hidden off the books during GW Bush’s administration, and an unfunded drug program that prohibits Medicare from negotiating for lower prices.  Furthermore, the recession, which we now know was caused by deregulation of Wall Street, the banksters and the housing market, caused the debt to grow.  Tax revenue dropped while essential recovery spending increased.

Now, congressional Republicans want raising the debt ceiling to hinge on huge spending cuts.  Hello, people! We’re in a major recession and you don’t turn that around by cutting government spending.  You don’t create jobs by cutting jobs.  Our economy runs on demand for good and services, not tax cuts for the rich and corporate.  And a recovering economy will pay down a lot of the debt.

Furthermore, they refuse to consider spending cuts in areas that contributed to the debt, like military spending.  “No, no,” they say, “must keep those military contracts pumping money overseas and out of our economy.”  They recently refused to end subsidies to oil companies — one of which, Exxon, recently posted the highest profit of any corporation in the history of history!

Instead, they want to cut spending that actually helps ordinary middle class Americans – Medicare benefits, education, infrastructure spending. They want to cut the spending that is the REAL job creator in our economy.  For what they think will be their political gain in 2012, they want the economy to fail.

Strangely, they refuse to do what responsible individuals and businesses do when faced with debt, and that is to raise revenue.  They maintain corporate tax rates are too high, but the United States has the lowest real corporate tax burden (1.8% of GDP) among the 32 countries in the Organization for Economic Cooperation and Development.  In 2009, General Electric paid NO taxes on $10.3 billion income and took a tax benefit of $1.1 billion.  Overall tax revenues (what is really paid) as a percent of GDP are at their lowest level in more than 50 years.

Republicans tout recent surveys in which those polled opposed raising the debt ceiling.  Of course!  If you misinform people as to the consequences they’re likely to think raising the limit is a bad idea.  However, failing to raise the debt limit is a default that will hurt every individual and business in the country.  Standard and Poors has already warned that our bond rating will go down.  All our interest rates will rise and the value of our assets (property, pensions, savings, etc) will decline.  The single weakest part of our economy, housing, will be devastated.  We’ll see an economic collapse far worse than that of 2008.  And we will STILL have both our personal and public debt now ever larger.

And Republicans will still be pushing “voodoo economics.”  Oh, but don’t fret about this, Americans.  When the economic collapse comes they’ll just blame it on President Obama and the Democrats.  Won’t that make you feel much better?

It’s the Economic Collapse, and We’re Not Stupid

November 18, 2010

There are opinions aplenty on the meaning of the midterm election results  Here’s my two bits:  Don’t read the “tea leaves” wrong. No matter how loudly some may proclaim, the election was not a wholesale swing of support from the Democratic to the Republican agenda by the American people.  Similarly, the results were not “it’s the economy, stupid,” – anger that recovery has not been accomplished in 18 months. Consider that the real story was “it’s the economic collapse, and we’re not stupid.”

Midterm elections always see a drop in turnout, but this one was amplified by major social upheaval.  This worst economic collapse in 80 years was bound to cause severe social disruption. Millions are out of work, have lost their homes and schools, moved and become disconnected from the political process. Millions are in personal crisis and, when in personal crisis, people deal with it personally.  They become depressed and disheartened. And this collapse has fallen most heavily on the lives and spirits of whom? The middle class, young folk, low-income families, and minority group members.

Data is still accumulating, but indications are that those above didn’t vote in numbers they did in 2008. For example, the youth vote was down from 18% to 11% of the electorate. As a Democratic precinct chair, I called voters in my precinct to encourage voting. Again and again, for young voters I heard “not a working number.” They likely moved and became separated from their voting “home” where they’re registered to vote. University students who had been misled to register back in their home counties tried to vote where they were on election day and could not.  What a shame!  Seeing this, I thought of the many others who could be thus disconnected from the electoral process and I realized that it was not just young folk.  Not this time.

So, the message of the election was not in the “will of the voters” but in the pain of the nonvoters. Millions were disenfranchised by economic and social disruption, and progressives and Democrats didn’t do a good enough job of communicating with them to maintain their political involvement.  Still, most of them would have voted as they did in 2008. And, on issue after issue, Americans support progressive public policies that help ordinary Americans and provide security and wellbeing for all – policies championed and implemented by President Obama and the Democrats. Many are aware that it was capitalistic economic and regulatory policy that directly caused the recession and the greatest income inequality in the history of our nation.  They see the Republicans now calling for more of the same and they don’t want it.

Also not surprising for a time of economic upheaval, we’ve seen the corrupting influence of piles of dough from anonymous capitalist sources. It is more than ironic that, after unfettered capitalism caused the economic collapse, now, after the Citizens United Supreme Court decision, it wrecked further havoc on the democratic process. It anonymously funded lies and spin, hate, fear and division to further its purposes. It co-opted the tea partiers and turned normally rational (and probably even surprised) Republicans to its will. Unfortunately, fear, hatred of others and lies can motivate some to vote, even to vote against their own best interests.

In particular, small business owners may have voted against their own best interest. If you are one, do the math on your business plan if middle-class incomes drop, jobs go away and there is less demand for goods and services you provide.  Which would you rather have, a small tax cut or a much larger income from higher demand? Which of those will lead you to add jobs and build the economy?

Keep in mind that our federal taxes actually are very low – comparable to the 1950s overall. And Democrats in Congress – some of whom ironically just got voted out of power – brought businesses all kinds of tax deductions and credits to spur growth and gave over 95% of working Americans a tax cut. They did so against stiff Republican opposition. The Bush tax cuts that Republicans now want to continue for the highest incomes have been in effect since 2001.  They haven’t created any jobs and represent $700 billion of the deficit.

Since much of federal spending goes to states and local governments, when federal spending drops, state and local costs go up.  Texas has around a $20 billion dollar deficit right now, even after receiving massive assistance from the federal government our Governor demonizes.  If that shortfall is resolved by service cuts, YOUR prosperity will drop because it’s dependent on the prosperity of everyone else. Do you really want low taxes and low services from your government?  Do you really want cuts in government spending even though it makes no business sense for you?

The Republican Party of today has become the servant of the very, very wealthy – banksters, Wall Streetwalkers, multi-national corporations and their CEOs.  Aside from tax cuts on high incomes, they seek deregulation for big polluters and financial firms.  They want to shrink the parts of government that help ordinary Americans and the parts that would hold big money accountable.  Small businesses and individuals at all income levels have always fared better under Democratic government.  It’s a fact.  Everyone prospers when every one prospers.

So the “message in the bottle” is that, while economic collapse and social disarray disenfranchised many, they are still out here and will return to the political arena. It is the high-turnout, not the low-turnout, election that is the better indicator of the will of the voters. So, though the tea party/Republican agenda may have scored a temporary and limited victory, its days are numbered.  It looks backward to a past that never was, is out of touch with reality (to put it nicely), is socially divisive, has no concrete plans to improve our lives and prioritizes capitalism over people and the Earth.  I don’t think most Americans want that.