The GOP Plot to Screw the Economy and the Middle Class
July 29, 2010 posted by Michael Leon · 9 Comments
Sarah Palin
- What the GOP and Tea Party allies are doing is not just reckless, it’s sociopathic -
By Bob Cesca at Huffington Post
We’re only three months away from the midterm election when a shockingly large number of American voters will inexplicably vote for Republican candidates. I have no idea if this will mean a Republican takeover of the House or Senate or both, but there will definitely be enough voter support for Republicans to significantly reduce the Democratic majorities in the House and Senate.
Why? Because too many voters tend to be low-information, knee-jerk Springfield-from-The-Simpsons types, and the Republicans have lashed their crazy trains to this new wave of inchoate roid-rage to help sweep them into more congressional seats.
Here are a few of the ongoing economic conditions facing a vast majority of Americans, many of whom are all revved up to vote Republican in November. According to Michael Snyder of the Business Insider:
• 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
• 66 percent of the income growth between 2001 and 2007 went to the top 1 percent of all Americans.
• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
• The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
• In America today, the average time needed to find a job has risen to a record 35.2 weeks.
• More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
• Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
Oh, and the Center on Budget and Policy Priorities reported that wages for the highest 20 percent of earners rose by nearly 300 percent since 1979, while wages for the bottom and middle 20 percent increased only by 41 percent — combined. Plotted on a graph, middle and working class wages have flatlined for 30 years. Roll all of these tragic figures into a slow growth recovery and here we are. Most of us in the middle class are screwed.
And thanks to an alliance between the Republicans (which includes the tea party), the increasingly dominant far-right media, a traditional “old media” that panders to the far-right, and right-of-center “conservadems” who pander to the Republicans, too many voters have decided that the Republican Party might be better suited to turn all of this around.
The big lie here is that if Congress stops spending, cuts the deficit and makes permanent the Bush tax cuts, especially the tax cuts for the wealthiest Americans, our problems will be solved — even though these concepts are in direct conflict with each other. Not surprising given the ever-lengthening Republican syllabus of contradictions.
Here’s how this new batch of contradictions plays out.
According to Republicans and their conservadem enablers, we have to cut the deficit and pay for every program Congress passes or else we’re all doomed. We’re stealing from our children, they say. This has manifested itself in Republican filibusters of both unemployment benefits ($34 billion) and a new jobs bill ($33 billion over ten years). A Republican filibuster killed the jobs bill, and, after many failed cloture votes, the filibuster of the unemployment benefits was finally defeated and the Senate Democrats passed the extensions. Throughout the past year and a half, it’s been the same story. Any effort made by the Democrats to stimulate the economy has been filibustered by the Republicans. They say it’s because of the deficit and debt.
And yet they want to make the Bush tax cuts permanent, which would add $678 billion dollars to the deficit — and that’s just the cost of the tax cuts going to the top two percent of earners. In other words, the Republicans want to spend $678 billion in further giveaways for the wealthiest two percent, and they don’t care whether it increases the deficit.
By the way, the Republicans also recently voted against and defeated an amendment to strip Big Oil of its $35 billion in subsidies. Just thought I’d pass that along. Put another way, $678 billion in tax cuts for the wealthy? No problem. Deficit-shmeficit! But $34 billion in unemployment benefits for an out-of-work middle class at a time when companies aren’t hiring (say nothing of the aforementioned bullet-points)? Evil! Instead, the Republicans want to give $35 billion to Big Oil in the form of corporate welfare during the worst oil spill in American history while telling unemployed middle class families to piss off.
Do we have a clear picture in terms of who and what the Republicans care about?
It surely isn’t fiscal discipline or the deficit. And it surely isn’t the middle class. The Bush tax cuts, if extended, would add $2 trillion to debt, so it’s not that either. Throw in another policy started by the Republicans — the war spending (more of which was passed yesterday without any worries about CBO scoring or making sure it’s deficit neutral) — and there’s the vast majority of your deficit and debt for the next ten years. Not the stimulus or the bailouts. The long term budget impact of the wars and the Bush tax cuts literally dwarf the stimulus. Here’s the CBPP evidence in colorful graph form:
That big blue chunk represents the Bush tax cut portion of the deficit. The yellow represents the wars. The light blue is the tax revenue lost to the recession. And those really narrow tan and red strata are TARP and the stimulus. Clearly we need to elect more Republicans so they can make permanent the big thick deficit hogs and kill that thin section for the stimulus.
Now, if you’re a Republican, you might be clinging to the idea that extending the Bush tax cuts would have a stimulative effect on the economy (somehow) even though this hasn’t been the case for the last ten years other than for the wealthiest Americans who have once again disproved the trickle-down theories at the heart of Reaganomics by pocketing their share of the trickle instead of reinvesting in jobs and wages for the middle class.
The Bush tax cuts will not stimulate the economy.
According to Moody’s Analytics (hardly a left-wing apparatchik), for every dollar of government money spent on extending the Bush tax cuts, there’s only a 32-cent return on investment in terms of economic stimulus. Not a solid investment. How about cutting the corporate tax rate? Also a 32-cent return in economic stimulus. Capital gains tax cuts? 37-cents. And, lumped together, there’s your Republican plan for growing the economy. Dumb investments. Goldman Sachs would short these policies. I’m not sure they haven’t, actually.
But what about the Democratic spending? For every dollar spent on unemployment benefits, there’s a $1.61 return in economic stimulus. Good investment! How about infrastructure spending? $1.57 return. Aid to the states? $1.41. Temporary increase in food stamps? $1.74. Even the Obama tax credits for the middle class, $288 billion of the Recovery Act, account for up to $1.30.
Meanwhile, the Obama administration is working with a deficit commission which will focus on trimming the deficit after (we hope) the economy and jobs are back on track. The Republicans, of course, voted against forming a deficit commission.
Given the choice between deficit spending that significantly stimulates economic growth or deficit spending that barely makes a dent, which choice are the Republicans trying to sell? The really stupid deficit spending for the wealthy that barely makes a dent in the recovery. That’s the Republican plan.
Also, contrary to popular far-right myths, it’s worth noting that the Democrats and the White House have no intention of allowing the tax cuts for families earning less than $250,000 to expire. Those tax cuts will be renewed this year. As for the top tax brackets, you find me a multi-millionaire who pays the actual marginal rate every April and I’ll show you a very rich moron. Most of these guys, after deductions and loopholes, pay an effective tax rate that’s much lower than the middle class tax brackets. So don’t tell me that millionaire Glenn Beck and millionaire Paris Hilton will be financially burdened by a 2.6 percent bump in their margin tax rate next year. Sorry, no. They won’t be. And why do middle class Republican voters give a rip about Paris Hilton’s tax rate? Because they believe they’ll be as wealthy as Paris some day. But read those bullet-points again. It’s not happening.
Unless there’s some sort of mass epiphany, or unless the Democrats actually speak up and take the discourse by the horns and fight, middle class American voters in November will augment the number of Republicans (and conservadems) in Congress mostly because they’ve been suckered into endorsing these insane Republican economic policies. Subsequently, the Republicans will balloon the deficit and undermine the economic recovery in order to give more handouts to the super rich. And the middle class will continue to be an accomplice in its own slow-roasted homicide.
WE THE SOVEREIGN STATES OF THE
U.S.A. DECLARE OUR FREEDOM/INDEPENDENCE
FROM WASHINGTON D.C. & NEW YORK CITY & ISRAEL
ALL ILLEGAL ALIENS WILL BE DEPORTED & FLOWN TO TEL AVIV
For every dollar spent on unemployment benefits, there’s a $1.61 return in economic stimulus. Good investment! How about infrastructure spending? $1.57 return. Aid to the states? $1.41. Temporary increase in food stamps? $1.74. Even the Obama tax credits for the middle class, $288 billion of the Recovery Act, account for up to $1.30.
How do you support those numbers?
Tax cuts to the already wealthy don’t convert to spending on goods and services. They are saved, which either attracts interest or merely pushes up asset prices.
Spending on people that are struggling gets spent on goods and services which increase economic activuty and velocity.
This is what Keynes had in mind. Spending money into banks, wars and already profitable corporations wasn’t.
The essence is in the nature of deficit spending. The aim should be full employment. Federal debt equals private savings remember. Those at the top have the savings and THAT is what should be taxed back into the real economy first.
Seems like made up numbers
Tax cuts for the super-rich and wars have fiscal ramifications.
Thanks for your thoughts. The super-rich, those 10,000 individuals who own 35% of America, won’t be paying higher taxes on income–they’ve already made off with all they need. Putting aside the labels the media and our elites have cleverly devised to prey upon differences in personal temperament, which are meant to divide us, the prevailing fiscal and monetary policies in this country are straight-up Keynesianism. In the preface to the German edition of his General Theory of Employment, Interest, and Money, Keynes explicitly states his theories are most applicable to a totalitarian state. Make no mistake about it, our elites are fully aware that their policies will impoverish the wage earner by taxation and destroy middle class wealth through inflation. As Lenin succinctly put it, “The way to crush the bourgeoisie [that's most of us] is to grind them between the millstones of taxation and inflation.”
By the way, how is it that “for every dollar of government money spent on extending the Bush tax cuts, there’s only a 32-cent return on investment in terms of economic stimulus”? I don’t understand the thought, that the government has money to spend in the first place that it hasn’t already taken through coercion. More importantly, the assertion that a dollar of tax cut has a negative multiplier, or negative velocity, is absurd on the face of it. Is it being suggested that the economy contracts by a factor of three for each dollar of tax cut? The only sense I can make out of this is that Americans cannot mortgage their children and grandchildren fast enough to the Chinese, buying all the plastic and electronic junk at Walmart, so maybe that’s the point, that the money doesn’t stay here. In any case, the idea that spending can improve the economy has the cart before the horse. Only through investment, which is roughly equivalent to savings, can a society put off spending today to benefit tomorrow.
What your readers need to know is that while we’re experiencing catastrophic asset deflation in houses, inflation is rearing its ugly head already in such things as food prices. When a bank takes a deposit it can lend the money out, and so it does in normal times. But the check given to the borrower ends up in his bank, which in turn lends it out, and so on. This is called fractional-reserve banking, and a quick overview of the practice is easy to find. The best book for understanding the way our elites have robbed us blind through inflataion is Griffin’s “The Creature From Jekyll Island,” an easy and quick study of our banking system and the crimes of the Federal Reserve System. I apologize for repeating myself on this site, but this book will knock your socks off. It’s easy to read and it’s more like a book on espionage than on our central bank and its fractional-reserve banking spawn. The photos of the crooks involved is worth the price of the book, which is usually stocked in any large bookstore.
The Fed more than doubled the base money supply over the last 21 months or so, and if the banks start lending again, prices could go right through the roof as a result of this monetary explosion. Double the money supply in circulation, double prices. But, it’s not that simple. When this increase of base money first gets into the banking system–that is, into the hands of Goldman Sachs ad nauseam–the robber barons get to play with it for free. You and I get nothing but higher prices down the road. This is theft, an organized criminal conspiracy against the American working man and woman, and inflation is aptly called the stealth tax.
Let’s not quibble about our temperamental allegiances on domestic issues while the house burns down around us. The elites will naturally have their paper assets neatly tucked away for spending on the Riviera or some tropical island. Throwing out all the bums serving in Congress, which is all but a mere handful, is pointless since the media ensures that only a similar group of servile lackeys to the powers that be can ever come before the voters.
Even though the GOP has overrun the Tea Party, the people in it are not fooled or coopted. I have spoken to a lot of them. They are disillusioned with both parties. I know that a lot of people are planning to vote for anybody but the mainstream parties because they are both thoroughly corrupt.
MK
If you look at the chart on p. 128 of Kevin Phillips’ Wealth and Democracy, it’s entirely clear that the middle class has been getting screwed for 40+ years. The notion that it’s a Republican or Democratic thing is nonsense. Both serve the plutocrats and neither will reverse course.
Globalization, not Dem or Repub, is wiping out the middle.