It didn’t have to be like this. Suffice it to say, that thus far, Obama has been a disappointment as President. Not a failure, but there are many things he should have done, and hasn’t, that have caused disappointment. Mainly his capitulation to corporations and the wealthy at the expense of the rest of us. Looking back Obama was a of a blank slate, politically speaking, and that allowed people to project on him their own expectations that had little, if any, basis in fact.
An example is when he said this, “If I were designing a system from scratch, I would probably go ahead with a single-payer system”. It sounds good, but he knew he wouldn’t be designing a system from scratch. It was enough, however, to allow people to believe, falsely, that he would fight for a single payer health care system.
I had “hoped” he would govern more like FDR than like Bill Clinton, but wasn’t banking on it. But I certainly didn’t expect him to govern to the right of Richard Nixon. But his biggest failing is what Drew Westen highlighted in an Op-Ed in the New York Times yesterday, What happened to Obama?, his inability to tell the story of what happened to the American economy.
When Barack Obama rose to the lectern on Inauguration Day, the nation was in tatters. Americans were scared and angry. The economy was spinning in reverse. Three-quarters of a million people lost their jobs that month. Many had lost their homes, and with them the only nest eggs they had. Even the usually impervious upper middle class had seen a decade of stagnant or declining investment, with the stock market dropping in value with no end in sight. Hope was as scarce as credit.
In that context, Americans needed their president to tell them a story that made sense of what they had just been through, what caused it, and how it was going to end. They needed to hear that he understood what they were feeling, that he would track down those responsible for their pain and suffering, and that he would restore order and safety. What they were waiting for, in broad strokes, was a story something like this:
“I know you’re scared and angry. Many of you have lost your jobs, your homes, your hope. This was a disaster, but it was not a natural disaster. It was made by Wall Street gamblers who speculated with your lives and futures. It was made by conservative extremists who told us that if we just eliminated regulations and rewarded greed and recklessness, it would all work out. But it didn’t work out. And it didn’t work out 80 years ago, when the same people sold our grandparents the same bill of goods, with the same results. But we learned something from our grandparents about how to fix it, and we will draw on their wisdom. We will restore business confidence the old-fashioned way: by putting money back in the pockets of working Americans by putting them back to work, and by restoring integrity to our financial markets and demanding it of those who want to run them. I can’t promise that we won’t make mistakes along the way. But I can promise you that they will be honest mistakes, and that your government has your back again.” A story isn’t a policy. But that simple narrative — and the policies that would naturally have flowed from it — would have inoculated against much of what was to come in the intervening two and a half years of failed government, idled factories and idled hands. That story would have made clear that the president understood that the American people had given Democrats the presidency and majorities in both houses of Congress to fix the mess the Republicans and Wall Street had made of the country, and that this would not be a power-sharing arrangement. It would have made clear that the problem wasn’t tax-and-spend liberalism or the deficit — a deficit that didn’t exist until George W. Bush gave nearly $2 trillion in tax breaks largely to the wealthiest Americans and squandered $1 trillion in two wars.
And perhaps most important, it would have offered a clear, compelling alternative to the dominant narrative of the right, that our problem is not due to spending on things like the pensions of firefighters, but to the fact that those who can afford to buy influence are rewriting the rules so they can cut themselves progressively larger slices of the American pie while paying less of their fair share for it.
But there was no story — and there has been none since.
This is similar to what Rick Perlstein called his Rules of Liberal Political Success. Which shows that Obama can’t be hero without having a villain to defend the people from. Westen then goes on to show how Obama’s middle milquetoast pollitics is playing out.
So where does that leave us?
Like most Americans, at this point, I have no idea what Barack Obama — and by extension the party he leads — believes on virtually any issue. The president tells us he prefers a “balanced” approach to deficit reduction, one that weds “revenue enhancements” (a weak way of describing popular taxes on the rich and big corporations that are evading them) with “entitlement cuts” (an equally poor choice of words that implies that people who’ve worked their whole lives are looking for handouts). But the law he just signed includes only the cuts. This pattern of presenting inconsistent positions with no apparent recognition of their incoherence is another hallmark of this president’s storytelling. He announces in a speech on energy and climate change that we need to expand offshore oil drilling and coal production — two methods of obtaining fuels that contribute to the extreme weather Americans are now seeing. He supports a health care law that will use Medicaid to insure about 15 million more Americans and then endorses a budget plan that, through cuts to state budgets, will most likely decimate Medicaid and other essential programs for children, senior citizens and people who are vulnerable by virtue of disabilities or an economy that is getting weaker by the day. He gives a major speech on immigration reform after deporting a million immigrants in two years, breaking up families at a pace George W. Bush could never rival in all his years as president.
THE real conundrum is why the president seems so compelled to take both sides of every issue, encouraging voters to project whatever they want on him, and hoping they won’t realize which hand is holding the rabbit. That a large section of the country views him as a socialist while many in his own party are concluding that he does not share their values speaks volumes — but not the volumes his advisers are selling: that if you make both the right and left mad, you must be doing something right.[Emphasis added]
Obama i’s trying to be all things to all people, and in the process winds up looking inept and unprincipled. Westen ends with this.
A final explanation is that he ran for president on two contradictory platforms: as a reformer who would clean up the system, and as a unity candidate who would transcend the lines of red and blue. He has pursued the one with which he is most comfortable given the constraints of his character, consistently choosing the message of bipartisanship over the message of confrontation.[Emphasis added]
But the arc of history does not bend toward justice through capitulation cast as compromise. It does not bend when 400 people control more of the wealth than 150 million of their fellow Americans. It does not bend when the average middle-class family has seen its income stagnate over the last 30 years while the richest 1 percent has seen its income rise astronomically. It does not bend when we cut the fixed incomes of our parents and grandparents so hedge fund managers can keep their 15 percent tax rates. It does not bend when only one side in negotiations between workers and their bosses is allowed representation. And it does not bend when, as political scientists have shown, it is not public opinion but the opinions of the wealthy that predict the votes of the Senate. The arc of history can bend only so far before it breaks.
It became clear early on with his appointments - Rahm Emanuel, Tim Giethner, Tom Daschele, etc.. - that he was going down the corporatist/centrist Democratic path. It’s clear now that he sees his path to reelection as keeping as much of the corporate cash on his side, by trying to turn Wall Street against the Republican/tea party. Which means the American people and their economic plight will not get the attention it deserves unless the economy gets much worse.
But it didn’t have to be like this. He could have told the story of the last 30 plus years, and shown whose fault this mess was. The economic destruction of the middle class that was started under Ronald Reagan, which culminated under George W. Bush. But he decided to work within that system instead of trying to change it and bring the American people to his side by putting them back to work, and changing their lives for the better.
More corporate profits do not equal jobs. There are a few simple facts about our economy. The problem is demand. Too many people without jobs, and therefore money, and they can’t buy products. Until that changes, little positive will happen to our economy. From Al Gore on Countdown w/Keith Olbermann on Tuesday (BTW if you don’t get Current TV, this site posts links to Countdown video the next day):
Where the economy is concerned we should be talking about unemployment and getting people back to work. And where the agenda of the country is concerned we can’t just turn it over to corporations and the wealthy, the very idea that if you give more money to the people at the top they’re going to be job creators. Well the reason they’re not creating jobs is because they can’t sell the products that they make. And the reason they can’t sell the products is because the people of this country don’t have any money to but the products. We need to get the economy working in a pattern that helps middle-income families and low-middle income families and takes care of those who need government to be on their side and not giving in to the demands of the wealthiest and most powerful.
Great video from The Rachel Maddow Show last night. Where Jared Bernstein ended by saying this, “The economy is telling us a very clear message, it needs some kind of fiscal help. The politics are completely upside down telling us the opposite”.
And here’s Paul Krugman from last night’s Countdown on what’s likely to happen in the future for the US economy.
Disastrous decisions have been made with regards to our economy for nearly on 40 years. And those decisions have hurt poor, working, and middle class Americans while the wealthy and corporations have made out like bandits. Depression era New Deal style policies have been mostly pushed aside, and the current economic state is owned by the centrists, corporatists, and wing nuts. And the way our politics are currently configured we’re unlikely to get the kind of policies our country needs until the current policies fail. Then once we go to a point where the wealthy and corporations, and the politicians they own realize there is no other choice, because they’re facing a revolt, will things change.
Watch this, it’s clear some things up.
“The Left” in America is gone and until it comes back little will change. Where we go now is an open question, What do we do now?
For a rundown of exactly how bad the “debt deal” to solve the phony deficit crisis will be Jon Perr has a great rundown, The Real Losers in the Debt Deal.
The ink isn’t yet dry (or even written) on the 11th hour debt deal, but the media are already doing their usual body count of the victors and vanquished. In the Washington Post, conventional wisdom regurgitation machine Chris Cillizza produced the predictable winners and losers list. While the Wall Street Journal and right-wing columnists proclaim “a Tea Party Triumph,” Paul Krugman,Jonathan Cohn and Greg Sargent lamented the dire political and economic consequences ofPresident Obama’s latest surrender to his Republican captors.
But largely overlooked in these post-mortems are the real losers in the one-way debt ceiling compromise: the American people. The new spending cuts didn’t merely ensure that a sluggish economy and stubbornly high-unemployment will not only be made worse; Washington tied its own hands when it comes to doing anything about it. And without raising new revenue at a time of historically low taxes, the next round of reductions promises to make the already leaky American social safety net even more porous.
And that isn’t even the worst of it. There’s is much pain coming to states and local governments because of this.
But what’s been largely ignored is how the very solution to the debt-ceiling crisis could also squeeze state and local governments that are already strapped for cash. Among the biggest items on the chopping block in Congress are education and Medicaid spending — federal dollars that make up the largest parts of most states’ budgets. Nearly every state government has already set its budget for the next year — some for the next two years — under the assumption that federal spending would remain more or less consistent. If such money is abruptly pulled, states won’t suddenly be able to change their spending obligations or raise taxes. [Emphasis added]
(Does that bold part above remind anyone of Texas? It should!) Of course much of the problem we face is because of the fact that for the last 40 years or so there’s been a war on workers and the middle class by the rich and corporations - and only one side has been fighting for much of it.
“Our study underscores the role of unions as an equalizing force in the labor market,” said study author Bruce Western, a professor of sociology at Harvard University. “Most researchers studying wage inequality have focused on the effects of educational stratification—pay differences based on level of education—and have generally under-emphasized the impact of unions.” [Emphasis added]
From 1973 to 2007, wage inequality in the private sector increased by more than 40 percent among men, and by about 50 percent among women. In their study, Western and co-author Jake Rosenfeld, a professor of sociology at the University of Washington, examine the effects of union decline on both between-group inequality and within-group inequality. Between-group compares people from different demographics and industries, while within-group looks at people from the same demographics and industries.
[…]
In terms of policy implications, Western and Rosenfeld think their study could help reignite the dialogue on labor unions, which they believe has disappeared from economic debates in recent years.
“In the early 1970s, unions were important for delivering middle class incomes to working class families, and they enlivened politics by speaking out against inequality,” said Western. “These days, there just aren’t big institutional actors who are making the case for greater economic equality in America.”
1) The threat of unionization caused non-unionized employers to raise wages; that threat disappered along with unions.
2) Unions occupied a bully pulpit; knocking them off left the moral case for equality vulnerable to attack. (What do you mean Viacom’s CEO isn’t worth $85 million?) 3) Workers lost their Washington lobbyists, and with them, any hope of winning political battles for better wages and benefits.
Anyone who isn’t a corporate bought politician, meaning most Americans, knows that the best way to fix our economic problems is to put people back to work. The best way to do that is by having the rich and corporations to stop being so greedy. As David Cay Johnston points out there’s a simple fix for our economic problems, Fact-free fiscal farce.
Had America stuck by the tax-and-restrained-spending policies of President Clinton, and his budget projections proved reliable, the government today would have no debt. Instead it would have a surplus of $2.1 trillion, or nearly $7,000 per American.
All of the policy “changes” that have occurred since the “great recession” started have been to protect those with much at the expense of those with less. And there’s isn’t anyone in power advocating for those with less. Because the way our political system is currently operating doesn’t allow for them to have access to power. But more importantly because access and, as SCOTUS ruled in Citizens United, speech in our political system requires money, and lots of it. Until we all stand up and fight for an equalizing force, the inequality will continue.
Krugman on Texas jobs and Rick Perry, Texas Tales.
Wages in Texas are low, and have probably fallen relative to those in slower-growth states. On the other hand, the cost of living is low, largely thanks to cheap housing. What we don’t see is either the productivity surge or the wage surge we would have expected if the Goodhair model was at all right. As Ryan Avent points out, Texas real GDP per capita has actually grown very slowly.
One more thing: how should we think about Texan performance in the recession and weak recovery? Well, I’d say that we should measure that performance around the trend – a trend that reflects the forces described by models I and II. Of course Texas has faster job growth than the rest of the country; it always does. The question is whether relative to that trend the state has done remarkably well. And it hasn’t: the unemployment rate in Texas is slightly above the rate in New York.
While Texas is creating more jobs than the rest of the country, most are not good paying jobs. And the unemployment rate will likely continue rising as the budget cuts start to set in after the fiscal year starts in September. Via Kuff, Does Perry get any credit?, check out this AAS article, Should Perry get credit for Texas economy?
Economists disagree on how much credit Perry deserves for the state’s recovery, but they agree his economic policies are a continuation of a long-standing Texas tradition.
“As for our reputation as a low-tax, low-service state, that’s always been true, ever since the Republic,” said James Galbraith, a professor at the Lyndon B. Johnson School of Public Affairs. “Gov. Perry did not inherit a high-tax, high-service state and transform it.”
Galbraith said other economic factors, not Perry, are driving the Texas economy: “He has no influence that I’m aware of over geology, the oil price, immigration or capital inflow.”
On the other hand, Roger Meiners, economics professor at the University of Texas at Arlington, credits Perry for pressuring the Legislature to keep taxes and spending low while continuing a business-friendly environment.
“Overall, Gov. Perry has done a solid job,” Meiners said. “How that relates to possible presidential ability is less clear.”
Meiners said Perry did not inherit the “terrible” problems other states’ governors faced during the recession: “He had a stronger base to build on and has not had to promote ‘radical’ changes in policies as some other governors have done.”
There’s another reason why Texas didn’t far so bad. It’s Texas’ dirty little secret that the GOP doesn’t like to talk about. It called government regulation, in the way of consumer protection, The Lone Star Secret.
As Kuff says about the AAS article, Perry’s going to have to take the blame when the time comes.
Which, as the story notes, is how it was before Perry took office, and how it will undoubtedly continue to be after he leaves. You want to give Perry credit for that, fine, but then he also deserves the “credit” for all of the austerity-induced job losses and all future educational setbacks resulting from cuts to public schools. That story is yet to be written, but the parts of it that begin to show up in the next few months while Perry may or may not be mounting a Presidential campaign deserve a full airing.
And there again we’re back to where Krugman left off. If Perry’s done such a good job of creating jobs why is Texas’ unemployment rate still so high? It’s because of this, that was pointed out in the AAS article.
Yet almost half of the state’s job growth the past two years was led by education, health care and government, the sectors of the economy that will now take a hit as federal stimulus money runs out and the Legislature’s 8 percent cut in state spending translates into thousands of layoffs among state workers and teachers in the coming weeks.
That certainly makes it seem like the unemployment rate in Texas will be going up after the Summer is over.
The debt ceiling was first enacted in 1917. Why? The date tells all: we were about to enter the Great War. To fund that effort, the Wilson government needed to issue Liberty Bonds. This was controversial, and the debt ceiling was cover, passed to reassure the rubes that Congress would be “responsible” even while the country went to war. It was, from the beginning, an exercise in bad faith and has remained so every single second to the present day.
Today this bad-faith law is pressed to its absurd extreme, to force massive cuts in public programs as the price of not-reneging on the public debts of the United States. Never mind that to force default on the public obligations of the United States is plainly unconstitutional. Section 4 of the 14th amendment says in simple language that public debts, once duly authorized by law and including pensions, by the way, “shall not be questioned.” The purpose of this language was to foreclose, to put beyond politics, any possibility that the Union would renege on debts and pensions and bounties incurred to win the Civil War. But the application is very general and the courts have ruled that the principle extends to the present day.
What is going on in Congress at this moment already violates that mandate. It is an effort to subvert the authority of the government to meet and therefore to incur obligations of every possible stripe. It is an attack on the concept of government itself – as the “Tea Party” by its very name would no doubt agree. It therefore paints those deficit hawks who are using the debt ceiling to take budget hostages as enemies of the United States Constitution.
Why isn’t unemployment reduction front and center on the policy agenda? More specifically, why has the debate over deficit reduction shoved it aside?
Here are three possible reasons.
First, unemployment is concentrated among the less educated, blacks and Hispanics who lack political or economic clout.
Second, high unemployment is not hurting overall business profits, which have soared to historic heights. In the 1930s, joblessness reduced the demand for consumer goods, idling many businesses as well as workers, creating economic incentives to support public job-creation efforts.
Today, our largest corporations and richest investors are well positioned to take advantage of growing demand in emerging markets far from our shores, whether in the form of increased exports or new investment opportunities.
As a small-business owner explained in a recent Wall Street Journal article, he only sells domestically and does not have the opportunity to “exploit foreign markets that are growing faster.”
Third, the jobless individuals, public employees and small-business owners who could, in theory, form a strong political coalition to support more active job creation are constantly subjected to a barrage of arguments that we should do nothing but cut government spending and hope for the best.
So let’s summarize: The economy isn’t fixing itself. Nor are there real obstacles to government action: both the bond vigilantes and structural unemployment exist only in the imaginations of pundits. And if stimulus seems to have failed, it’s because it was never actually tried.
Listening to what supposedly serious people say about the economy, you’d think the problem was “no, we can’t.” But the reality is “no, we won’t.” And every pundit who reinforces that destructive passivity is part of the problem.
Ugh. That was a seriously ugly jobs report (pdf). Almost no job creation, with slow private-sector growth offset by falling public-sector employment; a falling employment-population ratio; and (I don’t know how many people have picked this up), an actual decline in wages, albeit a small one.
Let me emphasize that last point. My bottom line on the inflation-deflation issue has always been to look at wages; you can’t have a wage-price spiral if wages ain’t spiraling. And they aren’t, to say the least.
It’s important to realize, by the way, that stagnant wages are NOT good for recovery; all they do is ensure that the burden of debt relative to income remains high, keeping demand and employment down.
The situation cries out for aggressively expansionary monetary and fiscal policy. Instead, however, all the political push is in the opposite direction.
To understand why jobs and the issues that most Americans care about are not being addressed it’s key to understand two phrases that Krugman uses. The confidence ferry and The Invisible bond vigilantes. What the “confidence ferry” does is allow federal politicians and beltway media to declare that we have to attack the debt first, and keep taxes on corporations and the rich low, to give markets and business confidence so they will “feel” confident enough again to hire workers in significant numbers. The “bond vigilantes” is the irrational and unfounded fear that our debt will cause interest rates and inflation to spike. Obviously neither one of those has occurred so far.
(Interesting aside. Check out this graphic on the difference between what questions asked by Twitter users, and White House journalists, that mention selected topics.)
The question we need to answer is, why can’t we get a policy that will work? Well let’s turn to another Nobel Laureate, Joe Stiglitz to help us answer that. The Ideological Crisis of Western Capitalism.
Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Even in its hey-day, from the early 1980’s until 2007, American-style deregulated capitalism brought greater material well-being only to the very richest in the richest country of the world. Indeed, over the course of this ideology’s 30-year ascendance, most Americans saw their incomes decline or stagnate year after year.
Moreover, output growth in the United States was not economically sustainable. With so much of US national income going to so few, growth could continue only through consumption financed by a mounting pile of debt.
I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government. Alas, that has not been the case. On the contrary, a resurgence of right-wing economics, driven, as always, by ideology and special interests, once again threatens the global economy – or at least the economies of Europe and America, where these ideas continue to flourish.
In the US, this right-wing resurgence, whose adherents evidently seek to repeal the basic laws of math and economics, is threatening to force a default on the national debt. If Congress mandates expenditures that exceed revenues, there will be a deficit, and that deficit has to be financed. Rather than carefully balancing the benefits of each government expenditure program with the costs of raising taxes to finance those benefits, the right seeks to use a sledgehammer – not allowing the national debt to increaseforces expenditures to be limited to taxes.
This leaves open the question of which expenditures get priority – and if expenditures to pay interest on the national debt do not, a default is inevitable. Moreover, to cut back expenditures now, in the midst of an ongoing crisis brought on by free-market ideology, would inevitably simply prolong the downturn.
A decade ago, in the midst of an economic boom, the US faced a surplus so large that it threatened to eliminate the national debt. Unaffordable tax cuts and wars, a major recession, and soaring health-care costs – fueled in part by the commitment of George W. Bush’s administration to giving drug companies free rein in setting prices, even with government money at stake – quickly transformed a huge surplus into record peacetime deficits.
The remedies to the US deficit follow immediately from this diagnosis: put America back to work by stimulating the economy; end the mindless wars; rein in military and drug costs; and raise taxes, at least on the very rich. But the right will have none of this, and instead is pushing for even more tax cuts for corporations and the wealthy, together with expenditure cuts in investments and social protection that put the future of the US economy in peril and that shred what remains of the social contract. Meanwhile, the US financial sector has been lobbying hard to free itself of regulations, so that it can return to its previous, disastrously carefree, ways.
Another problem is that there isn’t anyone in power, or who has the President’s ear, that is advocating for jobs. And the classic liberal/Keynesian economics appears to no longer be a priority for Democrats and is left out of the discussion, Why is the Obama Team Embracing Hooverism?
The people in the senior economic policy shop are primarily Wall Street people, who view the world in a much different frame that those looking at demand-side, deflationary consumer pressures. Similarly they are people who think that a solid Wall Street will be the driver of the economy, an argument we’ve seen going back to at least PPIP.
Also the 1990s is when neoliberals really took over the macroeconomic arguments (see this Galbraith argument). Liberals abandoned demand-side arguments in order to try and win over a role for the government in the supply-side arguments – the liberal government can bring job training, relocation loans, tax credits, etc. to help with employment, leaving the demand side arguments to disappear.
Lately when in engaging in conversations about the economy my tone turns bleak. And I say something to the effect of, “enough people aren’t hurting enough for us to get the fundamental change we need”. The question is, how bad does it have to get before corporations and politicians will accept the fact that we need a modern day New Deal?
In our current political environment, where the media and politicians are more focused on the debt and protecting tax cuts for the rich and corporations that don’t need them (ferry’s and the invisible), there’s no urgency for creating jobs and demand that’s needed to fix the economy. Until that changes little will change.
Texas job growth slowed abruptly in May after steadily increasing in prior months. Texas housing market
indicators showed weakness, with declines in construction and sales in May. Oil prices moved down in May and
June, while natural gas prices edged up. Texas manufacturing continued to expand in June but at a slower pace,
with the Texas Manufacturing Outlook Survey’s production index falling…
Here’s a video with Robert Reich telling us why we need to Invest in America, again. From Rebuild The Dream.
As Paul Krugman points out it’s hard to understand The Obama-Keynes Mystery. But sooner or later everyone will figure it out.
The question then is why. As I’ve tried to show many times, the facts overwhelmingly refute the anti-Keynes talking points. Neither the invisible bond vigilantes nor the confidence fairy have made an appearance. So why is Obama talking up those talking points?
OK, here’s an unprofessional speculation: maybe it’s personal. Maybe the president just doesn’t like the kind of people who tell him counterintuitive things, who say that the government is not like a family, that it’s not right for the government to tighten its belt when Americans are tightening theirs, that unemployment is not caused by lack of the right skills. Certainly just about all the people who might have tried to make that argument have left the administration or are leaving soon.
And what’s left, I’m afraid, are the Very Serious People. It looks as if those are the people the president feels comfortable with. And that, of course, is a tragedy.
The three things we need to fix our economy are to get rid of the Bush Tax Cuts, bring our military home, and put our people back to work. Why the President, too many, and the Republicans can’t figure that is the mystery. This should help explain it, The Three Wings of the Republican Party.
The first wing, the psychiatric wing,
The second wing is the corporate wing, and
The third wing of the Republican Party, the Democrats.
Giving people dignity through work can revive our state, country, and even the Democratic Party. And there is not a better way to do it then by reinvesting in and rebuilding America.
In the bloodiest budget fight in memory, Texas legislators are slashing funds for rock-bottom basic services: schools, prisons, mental health care and nursing homes. The state is broke, say the slashers. We can’t afford luxuries.
But Rep. John Davis, R-Houston, believes we can afford a tax break for yacht buyers.
His astounding House Bill 2187, “relating to the imposition of and a limitation on the sales tax imposed on certain vessels” — which is to say, boats costing more than $250,000 — would cap the sales tax on a yacht at $15,625. That doesn’t sound bad until you do the math: For a $20 million yacht, it’d be nearly a 98 percent reduction in the state sales tax.
[…]
Ridiculous as the pitch is, though, we worry that Texas legislators are falling for it. It’s scary enough that the House Committee on Ways and Means voted to let the bill out of committee and onto the floor. But even scarier is the let-them-eat-cake tone of the committee hearing, as reported by the Texas Observer.
A quarter-million-dollar boat is a trifle, argued Rep. Lanham Lyne, R-Wichita Falls: “It doesn’t take much to get over $250,000.”
“This is not just for rich people,” an industry representative happily agreed. “You can get used yachts as well.”
What a boatload!
Memo to responsible legislators: Sink this bill now.
This idiotic bill and it’s supporters are important because it’s just these kinds of policies, top down, proposed by wealthy elites that got us into our sorry economic state. Paul Krugman has more, The Unwisdom of Elites.
The fact is that what we’re experiencing right now is a top-down disaster. The policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of influential people — in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes.
[…]
These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000?
The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.
So who was responsible for these budget busters? It wasn’t the man in the street.
President George W. Bush cut taxes in the service of his party’s ideology, not in response to a groundswell of popular demand — and the bulk of the cuts went to a small, affluent minority.
Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America’s political and pundit elite.
Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that’s who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit.
Little will change, until we change the policies of the last 30 years that got us into the economic mess we are in. It’s long past time for the wealthy and corporations to start paying their fair share. We will not get out of this until we put people back to work. Corporations won’t hire, so the government must.
Since writing a post yesterday comparing President Barack Obama to failed GOP President Herbert Hoover, here are a few comments on yesterday’s speech. My initial take was, great speech. But that’s what Obama does, he gives great speeches. The problem is the follow through and his weak negotiating skills.
The part this speech needed and missed, was a focus on jobs and putting unemployed Americans back to work. The quickest, best way to get rid of the deficit is to get millions of under and unemployed Americans back to work and paying taxes.
That being said he hit some really good points in the speech. He did such a good job that the wing-nuts in the GOP were whining as soon as he finished. They called it a partisan speech. Good!! The GOP plan that will kill Medicare and Social Security, and give more tax cuts to the rich, is extremely partisan and by people who hate you!
Here’s an excerpt from the speech and what probably sent the GOP into a tizzy.
But as far back as the 1980s, America started amassing debt at more alarming levels, and our leaders began to realize that a larger challenge was on the horizon. They knew that eventually, the Baby Boom generation would retire, which meant a much bigger portion of our citizens would be relying on programs like Medicare, Social Security, and possibly Medicaid. Like parents with young children who know they have to start saving for the college years, America had to start borrowing less and saving more to prepare for the retirement of an entire generation.
To meet this challenge, our leaders came together three times during the 1990s to reduce our nation’s deficit — three times. They forged historic agreements that required tough decisions made by the first President Bush, then made by President Clinton, by Democratic Congresses and by a Republican Congress. All three agreements asked for shared responsibility and shared sacrifice. But they largely protected the middle class; they largely protected our commitment to seniors; they protected our key investments in our future.
As a result of these bipartisan efforts, America’s finances were in great shape by the year 2000. We went from deficit to surplus. America was actually on track to becoming completely debt free, and we were prepared for the retirement of the Baby Boomers.
But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed. We increased spending dramatically for two wars and an expensive prescription drug program -– but we didn’t pay for any of this new spending. Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts -– tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade. [Emphasis added]
To give you an idea of how much damage this caused to our nation’s checkbook, consider this: In the last decade, if we had simply found a way to pay for the tax cuts and the prescription drug benefit, our deficit would currently be at low historical levels in the coming years.
But that’s not what happened. And so, by the time I took office, we once again found ourselves deeply in debt and unprepared for a Baby Boom retirement that is now starting to take place. When I took office, our projected deficit, annually, was more than $1 trillion. On top of that, we faced a terrible financial crisis and a recession that, like most recessions, led us to temporarily borrow even more.
[…]
It’s a vision that says America can’t afford to keep the promise we’ve made to care for our seniors. It says that 10 years from now, if you’re a 65-year-old who’s eligible for Medicare, you should have to pay nearly $6,400 more than you would today. It says instead of guaranteed health care, you will get a voucher. And if that voucher isn’t worth enough to buy the insurance that’s available in the open marketplace, well, tough luck -– you’re on your own. Put simply, it ends Medicare as we know it.
It’s a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit. Who are these 50 million Americans? Many are somebody’s grandparents — may be one of yours — who wouldn’t be able to afford nursing home care without Medicaid. Many are poor children. Some are middle-class families who have children with autism or Down’s syndrome. Some of these kids with disabilities are — the disabilities are so severe that they require 24-hour care. These are the Americans we’d be telling to fend for themselves.
And worst of all, this is a vision that says even though Americans can’t afford to invest in education at current levels, or clean energy, even though we can’t afford to maintain our commitment on Medicare and Medicaid, we can somehow afford more than $1 trillion in new tax breaks for the wealthy. Think about that.
In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. That’s who needs to pay less taxes?
They want to give people like me a $200,000 tax cut that’s paid for by asking 33 seniors each to pay $6,000 more in health costs. That’s not right. And it’s not going to happen as long as I’m President. (Applause.)
This vision is less about reducing the deficit than it is about changing the basic social compact in America. Ronald Reagan’s own budget director said, there’s nothing “serious” or “courageous” about this plan. There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. And I don’t think there’s anything courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. That’s not a vision of the America I know.[Emphasis added]
That’s right our current economic situation is George W. Bush and the GOP’s fault. And it’s hurting working and middle class Americans and benefits the wealthy. And the GOP wants to make our economy worse for working and middle class Americans and even more beneficial to the wealthy.
No liberal regime has ever succeeded in American History without successfully stigmatizing the conservatism that preceded it as a failure that ruined ordinary people’s lives.
A transformational Democratic president must be a credible defender of the economic interests of ordinary Americans to a preponderance of those ordinary Americans sufficient to push through their distrust of cosmopolitan liberals as such. (Anti Big Business Populism).
No liberal regime has ever succeeded in American History without successfully stigmatizing it’s opposition as extreme, as alien, as strange, as frightening to ordinary Americans who want order in their lives.
Rachel Maddow did a great job breaking down what was good about it.
She also spoke to Dean Baker a little later, who brought up a little of Krugman’s concern (see first update), that this is as fare left as this debate will get.
In the end, it was a great speech by a politician, that’s it. Nothing, has been done yet, and doing nothing might actually might be the best plan for our budget. The point is Obama has made great speeches before, and promises before, and not followed through. Forgive me but I’ll save the praise for when this gets done.