Jobs and the Economy
"Jobs are created when the economy grows; the economy grows when Americans have more money to spend and invest; and the best, fairest way to make sure Americans have the money is not to tax it away in the first place." - G W Bush, State of the Union 01/28/03 -
That sound bite sounds right, but it's really right wing...and wrong. Jobs are lost when the economy shrinks; the economy shrinks when most Americans have less money to spend and invest. That's exactly what Bush's policies do: they actually take money away from consumers and businesses.
The best way to make the economy grow is also the fairest way to run the economy. Make sure all Americans have money to spend and invest through fair and sensible economic policies which promote growth and fair opportunity. That's the proven successful formula Bush rejects in favor of big budget busting tax cuts for the idle rich.
While it's true different economists see the same data in different ways and make drastically different predictions, economics is less confusing than many believe. There are a few basic economic laws which no one can repeal. It's basically about making choices.
The right choices make for a better future. Unfortunately, Bush's right wing choices lead to the mess we're in now. These policies make the various states each others' enemies, pitting American against American in favor of multinational corporations.
We need only consider the Clinton Era for proof of what works, and look at the miserable Bush I and Bush II performance for proof of what doesn't. While the right wingers typically blame this Bush economic mess on Bill Clinton, here's an overview of the Clinton-Gore Administration's economic successes including:
Elimination of record-high budget deficits
Largest pay-down of debt in history
Smallest government in over three decades
Increasing investments in people
Lowest tax burden for typical families since the 1970s
Seven consecutive years of double-digit investment growth for the first time on record
Lowest unemployment in a generation
Longest economic expansion in U.S. history.
Clinton and Gore replaced the $290 BILLION Bush deficit -- the biggest in history -- with a record surplus while providing tax cuts for working families. These policies helped increase home ownership, high employment and income for minorities, and college tuition assistance for millions of Americans.
If the Supreme Court hadn't stolen the election from Al Gore and the American people, we could have had more of the same prosperity thanks to continued Clinton / Gore policies which offered:
A balanced and fiscally responsible budget plan
Paying off the debt by 2013, resulting in lower interest rates and a stronger economy
Strengthening and modernizing Medicare by securing it until at least 2030, reforming it to make it more efficient and competitive, and improving its benefits, including new prescription drug coverage
Extending the life of Social Security to at least 2054
Investing in key priorities like education, health care, environment, public safety, and national security
Providing targeted tax relief for families to help them save for retirement, pay for child care, and go to college."
See PRESIDENT CLINTON: URGING CONGRESS TO PASS A BUDGET THAT INVESTS IN AMERICA'S PRIORITIES, April 13, 2000: http://clinton3.nara.gov/WH/Work/041400.html.
Contrast this Clinton / Gore record of prosperity against the miserable Bush record:
The nation has lost 1.7 million jobs over the past two years after adding 5 million jobs in 1999 and 2000. According to the U.S. Department of Labor, there are 2.5 job seekers for every job opening.
Unemployment is at an eight-year high and expected to grow. Ten million unemployed workers want jobs but cannot find them. More than 4 million work only part time because they cannot get full-time positions.
More than 2 million unemployed workers have run out of their regular state-provided unemployment benefits and the emergency unemployment benefits they received under the temporary federal program. Many of these workers now have no jobs -- and no means of support.
The stock market declined for the third consecutive year, marking the first three-year losing streak in 60 years. Losses in the major indices in 2002 were roughly double those of 2001, and the Dow’s losses almost tripled those of 2000.
Bankruptcy filings continue at a record setting pace. Filings for the fiscal year ending Sept. 30, 2002 -- more than 1.5 million cases -- were almost 8 percent greater than the 2001 fiscal year. And the total number of cases filed in the three-month period ending last September set the national record for any three-month period in U.S. history.
States are experiencing their worst financial crisis since World War II, with cumulative three-year budget shortfalls that exceed $180 billion. States are laying off workers and making deep cuts in health care, education and public safety funding. For the first time in eight years, they are raising taxes -- ironically, a step they are forced to take in part because of tax cuts and other cutbacks at the federal level.
See New Report: Bush Economic Performance Failing, Jan. 27, 2003: http://www.aflcio.org/yourjobeconomy/todayseconomy/ns01272003.cfm.
Cold, hard facts prove the strong Clinton record puts the lousy Bush record to shame, and refute Bush's excuses and attempts to blame President Clinton for the Bush recession.
Some Bush apologists cleverly blame 9/11 for Bush's economic failures. This excuse falls flat for three reasons.
First, Bush's failed leadership left us wide open to attack on 9/11. Blaming Bush's failed economic policies on his failed national security policies can't get him off the hook.
Second, we've endured other, even larger disasters -- earthquakes, wars, hurricanes -- which also hammered the economy, without wrecking it.
Third, the economy was already shrinking before 9/11, thanks to Bush's poor choices. People familiar with "Supply Side" disasters such as Reagan's recessions and the Great Depression predicted similar failures from Bush's similarly flawed policies. Bush can't blame 9/11 for the economic problems his policies caused months before. See several articles at this site: http://www.mikehersh.com/cat_index_9.shtml
No, Bush cannot blame his failures on President Clinton or the terrorist attacks. Instead of continued prosperity -- paying down the debt with sound policies investing in the future with fair, affordable tax cuts for all Americans -- Bush took us on a different course.
Now, we're once more facing increasing job losses, recessions, and triple digit deficits as far as the eye can see. Bush's failure speaks for itself. Bush made the bad decisions, then he claimed his policies would bring prosperity. Bush must take the blame.
This because Bush sides with the truly greedy rather than the vast majority of Americans. We can see what happens when leaders make poor choices. The economy tanks. Bush abandoned policies we know work well, choosing to borrow and waste money on Star Wars, an unnecessary $billion a day war, and gifts for the idle rich.
The economy can't grow off welfare for the wealthy and corporate crime Bush coddles and promotes. Then Bush will pass along the bill to future Presidents and the next generation. Just as Reagan and Bush I did.
When Republicans tell you they want to cut your taxes, don't believe them. Not if you're an average American. Read the fine print. Look at their proposals and budgets. They may cut your federal income tax a few hundred or if you're doing well, even a few thousand. Don't spend that money yet, though.
What Bush gives with one hand, he takes away with the other. His policies cut aid to the states, forcing them to raise your taxes and cut services your family needs. Our total net taxes will increase, even as our roads, bridges, schools, libraries, and other economic infrastructure crumble.
This is the bottom line: Unless you earn more than a quarter of a million dollars a year, Bush's proposals will end up making you to pay higher taxes for less in services. Not only that, these policies distort and hurt the economy. They could cost you your job. All this so the privileged elite can pay lower taxes. "All they are saying is give greed a chance."
Why do right wing Republicans embrace failed policies and reject basic economic laws? Out of greed and because ideology overwhelms their better judgment. Wealthy special interests hire mercenary and fanatic academics to pontificate from self-serving "think tanks."
Keep this in mind the next time you hear right wingers -- calling themselves supply-siders or "libertarians" or whatever -- tell you they know what's good for you and the economy. They never let economics, facts or history stand in the way of a bad, unfair policy.
Bush's policies are taking money from most Americans, and concentrating cash in the hands of the elite few. That means almost all of us will have less money to spend and invest, and the few who have more money will have less incentive to do either. This is a recipe for recession -- if not depression.
Former Nixon advisor Kevin Phillips wrote at least three books explaining this in detail with irrefutable data. JK Galbraith and many others traced the Great Depression to wrong-headed right wing policies such as those Bush is pushing. These policies lose millions of jobs and mortgage the future by rolling up debt and slashing investments in education and infrastructure.
While right wingers embrace some basic economic facts, their ideology clouds the overall picture. Right wing rhetoric -- based on nonsense like "Say's Law," ignoring the need for demand to move products -- flies in the face of common sense. It also contradicts history, recent and long-standing economic laws, even the most basic: "There's no such thing as a free lunch."
Supply Siders claim that cutting taxes increases revenues, so tax cuts pay for themselves. They often claim Reagan and JFK accomplished this, but that's wishful thinking -- if not outright lying. Tax revenues did not increase because Reagan cut taxes. Revenues fell dramatically. The record -- produced by Reagan's own Office of Management and Budget proves that revenues increased only after Reagan hiked taxes.
By fixating supply, right wingers ignore the need for consumers to have money and want to spend money ("demand") before they can spend money. The Keynesian view holds that without demand, supply remains stagnant -- not "demanded" and therefore not purchased. When almost no one has anything, and only a few have almost everything, the economy chokes to a halt and starts contracting.
Imagine playing the game Monopoly. After a while, one person has all the money and you can't play further. It simply won't work that way. History proves the same laws apply to the national economy. When too few have too much, and too many have too little, the economy sputters and fails.
Before the New Deal, "boom and bust" cycles wracked the US economy. Wealth and power flowed into the hands of the elite, and impoverished the rest. The bust cycles became deeper and longer, until we reached the culmination of Supply Side economics: the Great Depression.
After a century or more of unmitigated failure, you'd think no one would propose "Supply Side" -- at least not with a straight face. If it weren't for the unbridled enthusiasm of "free market" fanatics and the bottomless greed of special interests, Supply Side would join other discredited oddball ideas like the "flat earth" theory or the idea frogs come from mud. Periodically, however, this right wing ideology arises against common sense, history, and established economic thought.
The latest incarnation of this carnival game developed during the late 1970s. Based on oversimplifications and even stark internal contradictions, a few non-economists launched a junk-science approach known as "Supply Side" Economics. In this they borrowed from a long discredited theorem known as "Say's Law."
"Say's Law" holds that no matter how little money consumers have, or how little they want an item, they will buy it provided producers supply enough of that item. This because as the supply increases in the face of stable demand, the price per item will fall until people buy all the items. Don't believe people really think this "proves" Supply-Side? Take a look at this quote from a typical ideologue:
"...Hoover, Roosevelt, and Keynes had it all backwards. The proper economic principle is called 'Say's Law,' for Jean Baptiste Say (1767-1832), that 'supply creates demand.' This means that 'overproduction' in a free economy is actually impossible. This happens to have been the topic of the doctoral dissertation of the great economist Thomas Sowell, now available as Say's Law, An Historical Analysis [Princeton University Press, 1972]."
This breathless endorsement of repudiated illogic concludes with this gem: "Why Say's Law is correct is evident from one simple consideration: if inventory doesn't sell, then prices will be cut until it does." See Say's Law and Supply Side Economics: http://www.friesian.com/sayslaw.htm.
If an item is unwanted, Lack of consumers can't be the problem. The real problem is the lack of supply! There's just not enough things people don't want! Say says the solution is to make more of it until the price goes down far enough. As absurd as this notion is, it provides the economic underpinning for "Supply Side" economics. Crack your local Yellow Pages and count all the buggy whip vendors for confirmation of "Say's Law."
The right wing view tries to repudiate an idea any kid running a lemonade stand knows: Without customers, there are no sales. No matter how low the price of an unwanted item falls, not enough consumers will buy it. Moreover, unless enough consumers have enough money, they cannot buy the things they want -- much less the things they don't want.
Supply Siders just don't get it, perhaps because most of them inherited enough money to buy everything they ever wanted. They don't understand real life and the choices real families face. They refuse to admit that no matter how cheap a car or home is, if you're broke you can't buy it. I guess Supply Siders have never been broke?
To make bad matters worse, these right wing policies increase actual costs of purchasing items -- higher interest rates, higher sales / property taxes -- thereby decreasing the demand needed to break the vicious cycle! I'll get to that later.
Bush's approach failed before and will fail again, leading to fewer jobs, higher real costs for consumers and businesses, and higher total taxes for most Americans. Supply-Side policies caused, deepened and lengthened the Great Depression, and did the same during the Reagan Recessions of the 1980s.
Right wingers try to blame every bad economic event on "big government." This is facile and dishonest. Public and private institutions manipulate the economy in various ways for various reasons.
Government action promotes economic growth on a triumphant scale. Public spending actually built our nation. Public money and resources financed our great national transportation and communications systems from the Erie Canal to the national railroads to the interstate highways to the Internet.
Government spending empowered and vitalized America. Massive public projects like the Hoover Dam and Tennessee Valley Authority brought water and power to huge regions of the United States.
Our tax dollars help us become more productive. Our unfairly maligned public education -- K through 12 and our unmatched universities -- foster invaluable personal development and learning, and promote commerce and research.
No private firm or consortium fills these needs. None act in the public interest defending workers, consumers or the environment. None ever will. It's simply not profit motivated.
Right wingers like to invoke their Supply Side patron saint Adam Smith. They pretend Smith advocated economy of anarchy, social Darwinism, and free-for-all helter-skelter commercial predation. However, Adam Smith never envisioned -- much less endorsed -- an economic system devoid of governmental controls.
Smith predicated his theory on an understanding that government would provide for public needs, and protect public interests "the market" undervalues because private firms would not and do not do so. Therefore, Smith's system required the "invisible hand" of the market working with the visible hand of government.
Writing in the 18th Century from a background of crown-controlled mercantilist restraint of trade, Smith knew unconstrained capitalism would devolve into over-concentration of economic power, monopoly and oligopoly restraint of trade, market abuses and other failures.
Right wingers who demand we operate with one hand tied behind our back advocate private restraint of trade every bit as onerous and anti-capitalistic as the system Smith decried, along with gargantuan public and private debt distorting any semblance of "the market."
Contrary to Smith's theory -- as well as all evidence and reason -- right wing ideologues rely on something that doesn't exist: the mythical "free market." One might as well depend on increased production from unicorns and centaurs for economic growth! Trusting the dubious wisdom of an imaginary entity over flesh and blood people makes for bad policy.
For example, wanton and wasteful "tax cuts" -- which redistribute money from hard working people to the idle rich -- poison the economy. These tried and false policies caused the Great Depression. They failed to prevent and in fact deepened the Reagan Recession of the Early 1980s. They're distorting and derailing economic recovery now.
Right wing economics pose this false choice: you decide how to spend your money or else "big government" will decide for you. The implication is these policies "return your money to you." In fact, unless your annual income is well above $250,000.00 the right wing policies will take more from you than you will receive. Look at the balance sheet:
Bush's budget makes the federal government borrow money. Public borrowing diminishes the pool of money available for private lending. Federal debt offers high guaranteed returns, making riskier private investments less attractive. This drives up interest costs for businesses and consumers.
Higher interest costs make it more difficult for people to buy and businesses to expand. Faced with declining demand for goods and services, businesses fire people. People out of work cannot afford to buy as many goods and services. Making spending more expensive while driving businesses into bankruptcy and consumers out of work further depresses demand for goods and services.
Bush's budget cuts assistance to states and localities which must raise taxes and cut services. This further increases costs of doing business, costs of buying homes and products, and drives even more firms out of business and more people out of work.
As businesses shrink and fail, they fire more people. People lose their jobs and businesses leave the economy. They no longer produce things, and can no longer afford to buy goods and services. As this continues, more businesses go under, more people lose their jobs, and so on.
The economy shrinks and keeps shrinking no matter how much the Federal Reserve tries to stimulate the economy and no matter how many tax cuts Republicans give to Enron and Bill Gates. Welcome to the vicious cycle which inexorably leads to deep recessions and depressions.
After a few years of this, the voters get sick of Republicans blaming someone else for the mess they caused, and vote for someone honest enough to face the problems and sensible enough to do something about it. Even then, the problems continue.
The federal government will eventually have to increase taxes to pay down this massive debt. Presidents Reagan, Bush and Clinton all had to raise taxes to keep the United States from collapsing completely. Right wingers happily blame Bill Clinton for raising taxes, but they typically deny this had anything to do with the unprecedented economic success we enjoyed afterward.
Republicans generally accept Bush raised taxes, although they blame Democrats for making him do it rather than Reagan whose borrow and spend budgets made it necessary. That's better than their adamant denial that Reagan actually raised taxes more than any other President in history when he signed three huge hikes. In fact, more Americans paid more in net taxes after Reagan than before, while a lucky few among the economic elite enjoyed an unearned windfall.
One thing even Republican can't deny: when you borrow money you have to pay it back -- with interest. The federal government will eventually have to pay back every cent of the hundreds of $billions Reagan, Bush and Bush borrow in our name with a hefty interest charge. That means some time soon, your government will cut services you need and raise your taxes to pay for Bush's misguided budget.
Bush's tax cuts for the top few percent wealthiest rob Americans of the jobs and income the economy needs to growing. This while his budget cuts undercut the building blocks we need for sustained prosperity -- our transportation, education, and communications systems.
Right wingers cannot repeal the basic maxim: pay me now or pay me later -- with interest. By the time we're done paying down this latest round of Republican debt, we and the next generation will pay the wealthiest few -- with interest -- money they are obligated to pay in taxes by law, custom and moral duty to their country Thanks to these "tax cuts," almost all Americans will end up paying more in taxes!
Contradicting dollars and sense, right wingers claim it matters to the economy whether people and businesses pay money as higher taxes to government now or later. They also claim public bureaucrats acting in the public interest can do nothing right, while private bureaucrats acting in their own greedy interests can do no wrong. This is ridiculous. In either case, human judgment plays a role overruling the "free market forces" -- imaginary constructs right wing ideologues invoke to promote their prejudices.
Compare a higher tax bill of $1000 to higher interest payments totaling the same denomination. In both cases, the payer has $1000 less money and the bank or the government has $1000 more. Where is the difference to the payer? There is none, except.... Bankers act for themselves. The government acts on behalf of us all. Both are "interventions" in the "free market."
Which "intervention" is better for society? The answer is obvious. Yet, the ideologues contradict this logic and insist on the opposite of reason. They claim it's better to let the idle rich and corporate criminals spend your money on themselves, rather than you voting for people to spend your money on better schools, medical care, transportation and national defense for you.
Understand right wingers' vested interests and market mania when they demand you give your money to them and their wealthy patrons rather than keep it invested in your quality of life and the future.
Keep this in mind the next time right wingers, calling themselves supply-siders or "libertarians" or whatever -- champion a superstition espousing naive faith in a "free market" which never was (and could never be).
All they are saying is give greed a chance. All we are saying is we tried it the right wing, and it failed. We tried it the Roosevelt, Kennedy, Clinton way, and we built the wealthiest economy ever.
When presented with a clear cut choice between tried and true moderate policies versus extreme economic ideology which favors the few and impoverishes the rest, voters will reject Bush's Deja Voodoo Dubba-U-nomics.
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