Thursday, December 2, 2010
A Nation that's lost Its Mind, Moorings and Sense
Why are these three Republican miscreants looking like 3 cats that swallowed 3 canaries? Probably because they know a "compromise" is forthcoming from the weak-wussy Dems that will award tax cuts for the rich totalling at least $140 billion over two years, while unemployed "99ers" and kids have to suck salt this Xmas.
Bob Herbert's recent NY Times op-ed column, 'America is Hiding from Reality', really told it as it is. As he put it:
"We're in denial about the extent of rot in the system and the effort that would be required to turn it around. It will likely take many years, perhaps a decade or more, to get employment back to a level at which one could fairly say the economy is thriving"
And yet despite this fact (also explained in detail in my two blogs on 'The Great American Decline') the Repukes in congress have refused extending unemployment benefits to nearly 800,000 for whom the deadline expired two nights ago. And by Xmas, two million more unemployed will be dumped from the rolls - also sending 2.5 million of their kids into food insecurity, want and possible malnutrition - because a few assholes on the Right side of the aisle would prefer to extend tax cuts for the rich. Those would add $700 BILLION to the deficit over ten years, and $70 billion for a one year extension alone, while extending unemployment benefits for another year would cost about $65 billion - and immediately fuel a much needed economic stimulus as those people buy groceries, gas, pay utilities and even maybe a couple toys for their kids at Xmas.
We have a nation: government and people, trapped in the shadows and insanity of their own delusionary thinking when the times call for cold, clear logic and an enormous dollop of common sense. But where is it? Not from a certain segment of the people- many of whom keep insisting they want their tax cuts though they have to know their Social Security and Medicare will then have to suffer cuts later. Not from the government, which continues its idiotic turkey dance on whether to extend the Bush tax cuts or not while at the same time declaring the bona fides of a "deficit commission" that needs "to make hard choices". REALLY?? Then, why the hell not make the first and easiest "hard" choice which eliminates automatically $3.7 trillion of potential deficit over the next ten years and let ALL BUSH TAX CUTS EXPIRE!
The Dems keep playing soft, pander-to me- math games by asserting they want to let only the Middle class tax cuts (defined as $250k and up) to go forward, while the reeps want all to go forward, with the wealthiest 2% benefiting disproportionately. This is a fool's errand, as ALL the cuts ought to expire. The Dems' game is based on phony numbers and dishonesty since they refuse to level with their constituents that we're talking about marginal rates and given their existing threshold ($250 k) the wealthiest 1% will still get a tax cut that amounts to nearly $6,300 a year on average (compared to about $350 for a $40k/yr earner) , while if the higher end cuts went forward (as the Reptiles desire) this would amount to about $70,000/yr. (Or equivalent to 225 weeks of added average unemployment benefits.)
In other words, if the Dems could mount an honest argument for once, and trust the intellects of their constituents, they could inform them that the wealthy are still getting tax cuts even if just the Middle class cuts pass! But rather than do that they engage in verbal and political gamesmanship with the Reeps, who are no better and no more honest - arguing the rich tax cuts will "lead to more employment" when all the accumulated evidence of the past decade discloses the exact opposite.
A Financial Times analysis from two months ago, by Richard Bernstein, noted:
“Our own examination of U.S. non-residential investment indicate the reduction in capital gains tax rates failed to spur U.S. business investment and failed to improve U.S. economic competitiveness”
In other words, the FT’s findings were exactly opposite to what had been touted by the 2001-2003 cuts’ cheerleaders (many of the same people who claim that extending the Bush cuts to the wealthiest now is critical for job formation).
The FT’s analysis continued:
“The 2000s- that is the period immediately following the Bush tax cuts – were the weakest decade in U.S. postwar history for real, non-residential capital investment. Not only were the 2000s by far the weakest period but the tax cuts did not even curtail the secular slowdown in the growth of business structures. Rather the slowdown accelerated to a full decline”
Contrast this with the hike in taxes (which the current expiry of Bush cuts would revert to, about 39.5%) immediately after Bill Clinton took office, leading to the accumulation of more than $600 billion in surpluses by the time he left office, and the creation of 20 million jobs.
Meanwhile, the FT analysis observes that “during each decade from the 1950s to the 1990s, growth in real gross non-residential investment averaged between 3.5 percent and 7.4 percent a decade. During the 2000s it averaged a mere 1%”.
For reference, the top marginal tax rate during the Bush years (for income tax) was reduced to 36% from the 39.5% during the 1990s Clinton Years. Over the 1950s and into the 1960s (until about 1964) the top marginal rate was at 91%, going down to 65% by the mid -60s. The low level of 39.5% wasn’t hit until Reagan arrived in 1980, and passed his tax cuts. (And we note here that the debt as a percentage of GDP rose to nearly 30% during the Reagan years, caused by his tax cuts in conjunction with military spending that amounted to nearly $2.2 trillion over his tenure).
Simple, elementary common sense discloses that the way to pump up the economy is not to hand more free money to the rich who will merely sit on it, speculate in hedge funds, or buy diamond jewelry, yachts and Ferraris. It's to extend unemployment benefits. Those people will spend it immediately and will deliver an estimates $1.50 per dollar invested, contrasted with 25 cents for middle class tax cuts, and 10 cents for higher end cuts.
And yet today's reports from the Associated Press include this amazing piece of codswallop:
"Congressional opponents of extending the the unemployment benefits beyond this month say fiscal responsibility should come first. Republicans in House and Senate say they're open to extending benefits but not if it means adding to the $13.8 trillion deficit"
But this is unadulterated horse manure! Because in the same breath, these "congressional opponents" are quite prepared to add $70 billion to the deficit next year, and another $70 billion the next via upper end tax cuts -with NO hint of paying for them, in order to grant the wealthiest a vastly higher amount of tax cut largesse than they'd receive if just the $250k and under 'middle class' cuts went through. Contrast this with $65 billion needed to extend unemployment benefits for one freaking year, to give a helping hand to over 6 million that will eventually need it, and their more than 9 million innocent victim kids. (Who will now be fortunate to receive an oatmeal cookie each this Christmas, while rich kids can look forward to jet skis, Kawasakis, land rovers the next! Is this "class warfare? Damned fuckin' A straight it is, and about damned time more 'Muricans also became class warriors, or suffer the consquences!)
So, the whole argument is bogus as a three-point-five dollar bill. It doesn't wash, yet few seem able to break through and see it. At the same time, people are hostage to this insane "deficit commission's" claims that draconian measures must be enacted to pare $3.7 trillion from the deficit over 9 years, when merely eliminating all the Bush cuts saves $3.7 million over ten, with no cuts in basic entitlements! Has the whole nation and government lost its collective reasoning power, or is it so ensnared in its own semantic mind games it finds honest argument and decisions impossible?
The same goes with the war-defense funding which continues to bleed away an estimated $715 billion per year, not including unpaid for "supplementals" to the Afhgan excursion - which easily total on average $160 billion a year. As Bob Herbert put it so well in his column (ibid.):
"The wreckage from the recession and the nation's mindlessly destructive policies in the years leading up to the recession is all around us. We still don't have the money to pay for the wars that we insist on fighting year after year. We have neither the will nor the common sense to either raise taxes to pay for the wars or stop fighting them".
So true! Neither the will or common sense to pay for these engagements-occupations, or stop fighting them. The delusions of empire, or more exactly a declining empire. And the major error committed was when we made the dreadful and fateful step to cross over from a democratic Republic to an Empire - preoccupied with extending military might to every corner of the planet, but minus the means or will to pay for this extravagance. Never heeding once John F. Kennedy's warning in his 1963 American University speech that peace can never be enforced by a Pax Americana - at the end of American weapons of war! Now we have American weapons of war everywhere, confronting every conceivable threat from the North Koreans, to Iran, to the Taliban, Al Qaeda and every snot-nosed gang of rag tag punks that fancies themselves terrorists, from the Phillippines to Indonesia to Yemen. Yet no money to pay for any of it unless we go to Chinese Bankers or beg bond traders to let us keep our triple A bond rating so we can get into more war debt, and soon....tax cut debt!
Meanwhile, the tax cut phobia, stoked by a political party that has only its own interests and not the nation's at heart, has done untold damage - sowing in millions of American minds that taxes are ooooh....sooo very bad and nasty! Soooooo "Un-American!" Which is more horse shit. As Matt Miller showed in his book, The Tyranny of Dead Ideas, tax cuts "aiding a nation are amongst the most dead of all". In terms of economic growth over time, it is in fact the European "welfare" states which beat the pants off the tax-phobic U.S. of A. The reason is simple: the people in those nations haven't had their brains subverted against higher taxes, and understand they are part of a commonweal whose shared interests those taxes support. They also get it that the spending generated by that "welfare" side of the economy is what props up the demand side of the macro-economic equation, and preserves growth while the "supply-side" economies (like the U.S.) suffer. Why do people think Germany has done so much better than the U.S. in weathering this recession?
When unemployment benefits for two million run out by Xmas - causing massive psychological harm as homes are foreclosed, and families forced into the cold streets or homeless shelters, wiser Europeans will look on and wonder how their American counterparts could be so blind and misled. How could a toxin introduced more than two hundred years ago, endorsing an unrealizable hyper-individuality, gain so much traction that it now threatens to permanently disable a once -great nation? One can only speculate, but observing the goings on in Washington today, makes it clear that this is a county that - for whatever reason- has surrendered its collective mind, moorings and sense.
As Bob Herbert put it:
"All we are good at is bulldozing money to the very wealthy, no wonder the country is in such a deeep slide....America will never get its act together until we recognize how much trouble we're in and how much effort and shared sacrifice are needed to stop the decline. "
The problem is, pending the outcome of the Bush tax cuts vote (or not), the decline may well be beyond any remote repair. If they are allowed to go through, for anyone, because of misplaced political pandering- it's mostly over but the dirges. Within 2-3 years a new "deficit" commission will arrive saying even steeper cuts are needed because of how the increased deficits from the tax cuts enlarged the existing deficits.
And so it goes.