My biggest frustration in recent years is, for whatever reason and there are many, that our history has been forgotten. We are not trying everything – especially things that worked in the past – to fix the economic situation we are in. What I mean is that we had a Great Depression 80 years ago, and it took us over a decade to get out of it. What finally go us out of it was massive deficit spending by the government, aka World War II.
The reason we aren’t’ discussing that is because the parameters of our economic conversation has moved so far to the right that what worked last time is not even allowed into the conversation. To highlight how bad ti’s gotten, calling the policies of Barack Obama socialism, means that Ronald Reagan was a communist. Via conservative blogger Andrew Sullivan,Obama’s Spending Record: More Conservative Than Reagan’s.
This is the kind of reality that makes Sean Hannity’s head explodes. So far, the GOP candidates have been running against a fictional president with a fictional record. Obama didn’t campaign to increase government spending, but inheriting what was in the final quarter of 2008 an annualized contraction of 9 percent of GDP, he opted for a stimulus. That accounts for much of the spending.
I know we are supposed – along with Fox News – to have total amnesia about the spending record of George W. Bush, who had nothing like the recession Obama inherited to counter. But there it is. Along with the fact that of the last seven presidents, the top three spenders are all Republicans.
From that it’s easy to see that with Obama governing more “conservatve” than so-called “conservatives”, it’s not really a surprise that the economy is where it is. With the known remedy still waiting in the wings. This excerpt from a radio conversation between economist Richard Wolffe and Sam Seder shows exactly how the conversation has changed over the last 80 years, Prof. Richard Wolff: We have a “failed economic system”—To fix it, we must tax the wealthy.
I’d like to expand Wolff’s answer to the seventh question, about deficits. It’s fascinating and contains two stories about Roosevelt I wasn’t aware of.
Here’s Wolff, paraphrased, at 24:20 in the clip:
[To your borrowing question], I’d say no. I’d take that page from FDR as well. He didn’t borrow. Roosevelt went to the business community and to the rich and [basically] said:
Look you have to help me. You have to give me the money to take care of the mass of the people. If you don’t, the CIO and the communists will come down the road and offer you a much worse deal than I’m offering you.
If you give me the money. I’ll go to the unions and give them a massive bailout, and in return they’ll agree not to interfere with your business. You’ll remain the shareholders and boards of directors and all the rest.
So basically he split the business community. Half of them became the sworn enemy of the New Deal. The other half agreed with him, the equivalent of people like Buffett today.
Between the support from the mass of the Dems below, and half of the wealthy at the top, you got the kind of support for FDR to enable the New Deal. He became a virtual saint to the American people.
In that same answer, Wolff tells this telling story about how Roosevelt financed the New Deal (26:18 in the clip; again, paraphrased):
Deficits and debts are real problems. The way to deal with them, at least to move part of the way back [to lower levels], is to raise taxes on the wealthy and on corporations.
Illustration: In 1942-43, FDR sent Congress a proposal for a 100% top income tax. This would create a maximum salary or wage or income. Like a minimum wage for the poor, it’s a maximum wage for the rich.
Congress went ballistic, led by republicans, of course. In the end, they compromised — on a 94% top tax bracket. [And that's how Roosevelt financed his programs.] In the 50s and 60s, the top marginal rate was 91%, endorsed by both parties. If we’re going through the 5th year of a crisis, the same logic ought to move us in the same direction.
The point is how can we get back to say a 50% or 60% top rate when we can’t even repeal the Bush Tax Cuts for the wealthy, (top tax rate of 39.6%)? But, instead the discussion is about a “Randian” dream budget that would decimate everyone who is not already wealthy, Ryan Budget Slashes Safety Net on ‘Path to Prosperity’.
While Medicare and Medicaid get a trim, it’s not mainly about Medicare this time. This time it’s about cutting programs for the poor.
The Washington Post‘s Ezra Klein broke down the proposed spending cuts in a WonkBook blog post.
Over the next decade, Ryan plans to spend about 16 percent less than the White House on “income security” programs for the poor — that’s everything from food stamps to housing assistance to the earned-income tax credit. (Ryan’s budget would authorize $4.8 trillion between 2013 and 2022; the White House’s would spend $5.7 trillion.) Compared with Obama, Ryan would spend 25 percent less on transportation and 13 percent less on veterans. He’d spend 6 percent less on “General science, space, and basic technology.” And, compared with the White House’s proposal, he’d shell out 33 percent less for “Education, training, employment, and social services.”
Still, the spending cuts don’t go far enough for some. Tea Party Republicans said that they weren’t sure they would vote for it and the conservative Club for Growth rejected the budget yesterday, saying it takes too long to balance the budget (by 2040) and violates the Budget Control Act by ending automatic spending cuts. Republican presidential candidate Rick Santorum told Glenn Beck that although he thought it was a “great blueprint,” he would prefer a plan that cut spending more quickly. Mitt Romney called it “a bold and exciting effort.”
While this proposal is getting panned by many, the idea that it’s even being seriously discussed in such bad economic times is the real tragedy. (Kuff has these links to cricism of the Ryan plan here – This is basically the Paul Ryan Budget Plan for Texas – in his post about something similar that what was proposed in Texas on Tuesday).
There has been a counter-proposal from the left which came from the Congressional Progressive Caucus. It’s called the Budget For All.
Here’s the list of what’s being proposed:
Our Budget Puts Americans Back to Work
Our budget attacks America’s persistently high unemployment levels with more than $2.4 trillion in job-creating investments. This plan utilizes every tool at the government’s disposal to get our economy moving again, including:
• Direct hire programs that create a School Improvement Corps, a Park Improvement Corps, and a Student Jobs Corps, among others.
• Targeted tax incentives that spur clean energy, manufacturing, and cutting-edge technological investments in the private sector.
• Widespread domestic investments including an infrastructure bank, a $556 billion surface transportation bill, and approximately $1.7 trillion in widespread domestic investment.
Our Budget Exhibits Fiscal Discipline
• Unlike the Republican budget, the Budget for All substantially reduces the deficit, and does so in a way that does not devastate what Americans want preserved.
• We achieve these notable benchmarks by focusing on the true drivers of our deficit – unsustainable tax policies, the wars overseas, and policies that helped cause the recent recession – rather than putting the middle class’s social safety net on the chopping block.
Our Budget Creates a Fairer America
• Ends tax cuts for the top 2% of Americans on schedule at year’s end
• Extends tax relief for middle class households and the vast majority of Americans
• Creates new tax brackets for millionaires and billionaires, in line with the Buffett Rule principle
• Eliminates the tax code’s preferential treatment of capital gains and dividends
• Abolishes corporate welfare for oil, gas, and coal companies
• Eliminates loopholes that allow businesses to dodge their true tax liability
• Creates a publicly funded federal election system that gets corporate money out of politics for good
Our Budget Brings Our Troops Home
• Responsibly and expeditiously ends our military presence in Iraq and Afghanistan, leaving America more secure at home and abroad
• Adapts our military to address 21st century threats; through modernization, the Department of Defense will spend less and stop contributing to our deficit problems
Protects American Families
• Provides a Making Work Pay tax credit for families struggling with high gas and food cost 2013-2015
• Extends Earned Income Tax Credit, the Child and Dependent Care Credit
• Invests in programs to stave off further foreclosures to keep families in their homes
• Invests in our children’s education by increasing Education, Training, and Social Services
It’s a good plan and will help many. It’s no new “New Deal” that’s for sure. It might be what one would call Reaganesque.
Comparing the Budget for All to the Budget for the 1%.
Paul Krugman on Paul Ryan,Flim-Flam Fever.
So actually two questions: are people finally willing to concede that Ryan is not now and has never been remotely serious? And — I know this is probably far too much to ask — are they going to do a bit of soul-searching over how they got snookered by this obvious charlatan?
Digby on the Budget for all.
Not that anyone in Washington will pay any attention because it doesn’t insist that average Americans feel pain and deprivation so the “producers” in society are free to pillage create jobs, but here is the one page outline of the new budget from the Progressive Caucus. Like last year, it actually reduces the deficit much more than Paul Ryan’s plan (if anyone actually cares about that.)And it also protects the safety net and stimulates the economy.
It does ask that the obscenely wealthy people kick in a fair piece of their ill-gotten gains and requires the government to stop fighting useless wars. But I have no problem with that. I would be surprised if most people do.
It’s really not that hard. If we lived in a sane country it would be passed by acclamation.
But we don’t …