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Beware the Ides of March and Neocon Budget Scare Tactics

March 13th, 2010 · No Comments · Economics, Politics

We are going through one of those periods right now where the Neocon anti-middle class propaganda machine is cranking out trash day and night. The result of course is that the weirdos crawl out into the daylight where you can see them and read their illiterate scrawling in every electronic blip on the Internet.

Of course, the “supply-side” wannabe wonks are hollering at peak decibel about the debt. They are prompted by the multi-millionaires and billionaires on Wall Street–who want no regulation, thank you, and no taxation on the derivative-derived multi-millions they stole from the economy. These robotic bloggers would like to have you believe that stimuli do not work. What works, they will tell you, is tax cuts. They have new arguments for going back to Reagan-Bush-Bush economics, i.e., failure, again.

Now here is how simplistic that argument becomes for cutting taxes in a recession where a huge number of people are out of work and the balance are already spending everything they have–and are scared enough to try to save more. Let’s say that someone has $10 in his pocket. Next payday, he has $15 because, with the tax cut, the money you have taken out of his pay is less. So he will spend more. That’s a wonderful, simple argument that you can supplement with data from economic analysis that you can read on a plane or a bus or the subway or on the john. The fact is, however, that if you do not have a paycheck giving you $10 per week, you will not get the increased $15 per week unless someone shows up and not only hands you $10 but also gives you another $5.

Now, there are two kinds of people in a downturn. And what is a downturn? It is when fewer people are employed. The first kind of person is the one who has a job. And the second kind is the one who has no job. In a slight recession, those with jobs will bank the stimuli, or in the case of tax cuts, not even know that they have taken place. The ones without jobs will not care about tax cuts because they have no paychecks to look at to determine if they received a tax cut.

Corporations pay so little in taxes these days (7% of all tax revenues) that tax cuts are nearly irrelevant. So tax cuts in a slight recession mean nothing, have no appreciable effect at all. The deeper and more expansive the recession, where more people are unemployed, the less valuable the tax cuts will be. Those who receive a tax cut are still living in a deep recession. They have the same motivation as everyone else, only to a lesser degree. They are scared, and while they may spend some money, the extra money becomes savings to a higher degree than when an economy is flourishing. And the more marginally employed and secure, the less one will spend. After all who needs a tax cut when they have no paycheck? First, they need a paycheck. That’s called a stimulus.

This applies to Europe this way: Europeans have long had much greater and more all-encompassing benefits merely from citizenship than Americans. This has a negative effect on recovery statistics. In other words, Europeans, with more than a year of unemployment benefits, ranging around 40% of their employed income, with free health care and children’s education paid for take longer to get back to work, and that shows up in statistics as a stagnant recovery. But is it? To economists and statisticians it may be. Not as much to the worker. Not as much to the politicians. And industry has time to recover and make adjustments without the fear of unemployment funds running out and a nation hanging around like a wolf at the door until it can resume retraining and hiring.

We have a different approach. We apparently treasure our independence from government. That leads to very sharp drops when recessions occur…small businesses failing, people losing their homes, going bankrupt. That happens far less in Europe where they have made government a real support system. But of course they are not as wised as we. On the other hand, they are not as bankrupt or as without healthcare, or savings, or 5-week vacations or military budgets that are…next to ours like a mouse next to an elephant. None of their sons and daughters are dying or maimed for life. But we are…um…. the smart ones.

The people who say that Europe’s social network has had a negative effect on unemployment and the incentive for workers to return to work not only has not read all the studies on this which prove the opposite, or actually prove there is no relationship at all, but also shows that the person does not recognize the cultural differences between Europe and the United States. Europeans have a different attitude about work. Work is much more often craft. Things take longer, life is less frenetic, more placid. Yet, Europe survives. My goodness.

Of course the good members of the “Do Nothing” opposition Neoconservative Party have no real ideology. They work for the “Man,” the corporations, and they put up a show of having an opposing ideology but it is merely a sham, window dressing. Their job is to get legislation passed for industry…financial, manufacturing, health, food…whatever and whoever will pay them more.

The idea that small business cannot hire because of “cosmic uncertainty” is idiotic. A man with some capital and some experience in a field goes out and finds an opportunity. He finds a good location or he finds the availability of a group of customers that he or she can attach to a business to generate sufficient cash flow to get a business up and running. There is nothing cosmic about it. On the contrary, it is microcosmic. That is why they call it SMALL BUSINESS!

Oh, you don’t understand, they say. It is the financial uncertainty, the blah, blah, cosmic blah, blah. Well, here’s the reality. You go to a bank. They say no. You go to an investor who has money in a bank, lots of it. You both go to the bank. The banks says yes. Or some variant on that. Not once during any of this did anyone look outward towards the cosmos. They were too busy focusing on pieces of paper with numbers on them! They are called business plans and marketing plans and strategic plans. They quickly fill up that very small cosmos called the local marketplace. Local businessmen and women work 24-7 to develop their businesses. That is their cosmos.

The idea that the Obama stimulus has any relationship to the weak tea stimulus that George W. Bush put into effect—most people felt absolutely nothing, no effect whatsoever—and the huge infrastructure work that is going on now is, of course, silly. This was a real job creating stimulus, and it did not only save a million jobs (the governors kindly said 2 million jobs) but it created another 600,000 to a million while jobs were actually still falling at hundreds of thousands a month. What did George do? The only thing needed during that time was to stop creating legislation that encouraged corporations to both send jobs abroad, and—almost unbelievable now, looking back on it and given the current state of the economy—locate headquarters abroad.

The current line among the ardent Neocons is that Nixon was like Carter and Hoover was like Roosevelt and Reagan was some kind of savior. Hoover was working within traditional economic boundaries, much like those resurrected by the Neocons. They failed miserably. Roosevelt stepped it up, got the pace of intervention in the public, the consumer economy…the private economy had totally disappeared…to the point that people were put to work, some cash was flowing and the private sector had a platform from which to launch again. War provided the impetus, but it was basically the size of the government stimulus that made the difference In 1940 and beyond the kind of stimulus that should have been done in 1933 was launched. The use of the funds…in that case for war…was irrelevant. It was the size of the stimulus that made the difference.

Nixon was a fairly liberal guy by today’s standards, and would now be called a moderate Republican and would be drummed out of the Fundamentalist Christian-Right-Wing-political-theology-tax-cut-and-spend-Neoconservative Republican Party. Nixon would have laughed Sarah Palin back into the wild. He would have jumped all over Rush Limbaugh and Glenn Beck and Sean Hannity to get them to push his propaganda. Had he not been impeached, forced to resign, and had he been able to marshal the kinds of conservative radio propaganda we have today, he might have become Dictator.

Just recall during the Bush Administration how much war contracting and security contracting…private armies and locating major corporations in the heart of Muslim terrorist country…how much truly anti-American middle class stuff they were able to accomplish using the lies of Limbaugh, Hannity and O’Reilly and others as cover. Every time they would drill a new well in a national park, Limbaugh would have a show about how we will run out of oil by next Thursday or the Muslims will be coming over the wall after sundown. Scare, scare, scare….then steal, steal, steal. And in anticipation of an outraged reaction to more public land being given away to oil companies, he would launch some invented tirade against the Sierra Club. While they were reacting, Cheney would send out more Neocon corporate troops to mine more land, cut more timber, drill more wells.

Reagan, Bush, and Bush have put us into a terrible position. They left us $11 trillion in debt. We got nothing for it. The rich, statistically, became richer and the middle class actually lost both wealth and average wages during that period. We not only created a mere 7 million jobs under Bush, we then lost those 7 million jobs under Bush…in one year! Was it deliberate? Did the Neoconservatives deliberately obliterate the line between common sense in offering real estate mortgages and blatant fraud? Did they sell fraudulent mortgages by selling them to people whom they knew had no possibility of making the payments, although they were told not to worry?

The Neoconservatives are now telling us that the national debt is too high. We knew that before. Perot blew the whistle, Clinton pooh,poohed it during the campaign but came right back after the election and raised taxes. He did it, just as the Democrats are forced to do today…without one single Republican vote. These guys haven’t changed. It is merely a new set of crooks doing the same bidding for the corporate mob, hoping to become capos like Billy Tauzin. Push through a $26 billion windfall for the pharmaceutical companies on the backs of American seniors. Do nothing to cut costs. Let seniors eventually pay what they would have anyway, but pick up additional billions from the government, adding to the debt. If you’re Tauzin, get yourself a $2 million a year job running the pharmaceutical lobbying organization. It is criminal yet these crooks pay no price. In some countries there would be a military coup and firing squads would be set up all over the country, festive, like labor day picnics.

If we are a more civilized society then we must honor the will of the people, not wait for 60 senators or 67 senators to decide what 54 percent of the population said—not in a survey but with their votes for Congress and President. We need health care reform, green industries that will create jobs, higher mileage standards leading to flex-fuel cars, duties on American products made abroad by U.S. corporations and then re-imported, and we need very strong…the strongest possible…union organization and worker protection laws we can create. We need to get back to a people-oriented, a Populist society.

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