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Economical Thoughts

December 12, 2010

What I’ve pieced together recently:

(I will try to be concise and brief –‘economical’– in making my several points)

* “In the wake of Republican gains int he mid-term elections Obama must move to the center.” We heard that phrase  move to the center  over and over again like it was some magic mantra.   But what people are calling the center is actually the narrow gap between the more-or-less sane right-wing and the totally looney crackpot right-wing. And is “move to the center” what the Republicans did when they suffered overwhelming rejection by voters in 2006 and 2008? No, not at all. They dug their heels in and became more radically right-wing, rigidly partisan,  and stubbornly obstructionist.  Why shoudl the Democrats behave any differently? What’s in it for them if they do bow to their sworn enemies?

*Most of the self-identified  “independent voters” are really Republicans who don’t want to admit it. They are not truly independent. I suspect many Tea Partiers who claim to have  “never voted before”  or  “had no political beliefs before” or “never paid attention to politics before,” are blowing smoke–i.e., lying. They are right-wingers in sheep’s clothing, trying to pass as Just Plain Folks from Main Street USA.  After all, who checks up on such claims? It’s so easy for them to lie and for today’s press to swallow what they say at face value without question.

*Obama said all the economists he’s talked to or read agreed the Obama-McConnell tax cut package was  A Good Thing.  To prove this, the Obama White House posted the expert economists’ names on a website.  These so-called “economists” are not economic analysts at all. Two are money managers and investment advisors  exclusively for extremely wealthy  clients. Two  of the other “economists”  are actually officials of Bank of America and Wells Fargo,  who of course are delighted with the plan since they will personally reap windfalls of millions of dollars (and their favored clients billions of dollars)  if it is enacted into law. No wonder they endorse the plan!  Another “economist” and “expert”  cited is Greg Mankiw,  former Chairman of George W. Bush’s Council of Economic Advisors . These are the people cited by the White House as evidence that all Serious, Knowledgeable Economists endorse the plan. Mankiw has openly defended fraud and outright looting by the wealthy as inevitable and justifiable.   He is one of the architects of the de-regulation and lack of supervision that made the Great Recession of today both possible and inevitable. Is the Obama Administration deaf, dumb, and blind?  They cite the support of their worst enemies (and the American people’s worst enemies)  as evidence they are on the right track?!  For more details see William K. Black, “The Effort to Claim That Economists Support Obama’s Capitulation on Tax Cuts for the Wealthy” 12/10/10 on the Huffington Post, Black, a professor of economics and law concludes, “Generations of political scientists will marvel at this administration’s self-destructive reflexes.”

*Will more tax cuts motivate big and small businesses to create more jobs?  First,  let’s remember that the federal  government defines small businesses as any business with less than 500 employees. So you can be a pretty damn big business with 499 employees and a payroll of $15 million and still be categorized as a  “small business”. Overall Big Business and Small Business are raking in all-time record profits and sitting on record sums and percentages of huge  cash reserves. So lack of cash on hand cannot be the problem. More cash in their pockets won’t solve the unemployment problem.  the problem isn’t taxes or lack of after-tax cash, but over-capacity and lack of effective demand.  In other word,s they already have more capacity to produce goods and services than they can sell, so there’s no incentive to expand. why expand your capacity when it will just sit idle?  And while  many people may have a human need  for those goods and services, they don’t have the money to buy them so there is no “effective demand,” which means a need or desire backed up by the ability and willingness to pay for those goods and services. The wealthy and the big corporations literally have more money than they know what to do with. With the growing impoverishment of the poor, the working class, and the rapidly- shrinking ‘middle class’ (most of whom are actually working class), they no longer have enough money to spend to stimulate the economy and keep it growing. Wealthy individuals and corporations can and do hoard a large portion of their income and assets, waiting for the investment climate to change. Or they invest overseas where factory workers’ wages of $1.20 a day guarantee huge returns on their investment.  Ordinary people have no choice but to immediately spend all or almost all of what they have–but it has shrunken so much it’s not enough to keep the economy going.  It is lack of effective demand that is keeping the economy stalled in a depressed state.  Ordinary  people have no money to spend, which, if they did, would be stimulating economic  growth , which would in turn  be generating new jobs.

*The “temporary” decrease in payroll tax to fund Social Security and Medicare is giving a dangerous foot in the door to the many conservatives who have sworn to gut and cripple, if not completely eliminate  the two most popular  and most  successful federal government programs in American history.  It’s letting the money-hungry right-wing foxes into the  public henhouse. The reduction in payroll tax is supposed to be  “temporary” just like all the Bush tax cuts were always intended to be temporary–but look what happened! the Republicans “forgot” they were planned,  agreed to, and only passed by Congress because they were  temporary measures. Suddenly they shifted ground and demanded they be extended, and will demand in another two years, they be  extended again and again  until they become permanent. Two years from now, the Right Wing will be demanding the payroll tax cut in funding for Social Security and Medicare  be extended and made permanent,  deliberately creating a crisis for Social Security and Medicare funding, which up to now have been securely funded through 2037 under present arrangements and population projections.  Or, they will hold Social Security & Medicare hostage  while demanding massive slashing of other government programs that might acutally benefit those of us who work for a living. And these are the people being called “populists”. That a good example of the Big Lie. It would be hard to imagine any group of people in history more obviously & transparently cynical than the current spokesmen of the Republican Party.

*For sixty percent (60%) of American senior citizens, Social Security payments are  most of their income. These are the people whose earned benefits over a lifetime the Republicans want to slash, and to impose new sacrifices upon, so the ultra-rich won’t have to do without that third yacht or second Lear jet. “Populust’ Sarah Palin supports this, enthusiastically.  Ah, shucks! Just plain folks!

*I think Obama’s timing is self-defeating for himself,  his administration and for the Democrats. By agreeing to two-year extensions, this gridlock issue/crisis/conflict will re-appear just in time for the 2012 presidential election when this new package deal expires.  it will be “deja vu all over again,” to quote Yogi Berra.  Employment will not have improved much and $900 billion will have been added to the deficit by the tax cuts, which the GOP will hang around Obama’s neck as the “Obama Deficit” even though it was their demands,  priorities, and policies that created most of it.  Frustrated and angry people, confused and without a coherent alternative narrative,  will buy into it. Mark my words– please!

 I will be delighted to eat them if I am wrong.








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