Phony baloney. Just like Walker in Wisconsin, the talk about “austerity” is a bunch of rich white men talking bull shit about what needs to be done. We don’t need austerity. Not the kind the Republicans are talking about. We need prosperity.
You see, the problem with the United States right now is that we have too little revenue and we have had, from 2001 to 2008, a Republican spending spree that took the national debt from $5.6 trillion to $13 trillion. The idea was very simple. Make the Democrats the bad guys. Cut taxes until they were too low to sustain government, then spend more money. When the Democrats come in, let them cut back government and be the bad guys.
The Republicans knew that the broad mass of the people wouldn’t see that they were spending outrageous amounts of money because for every Democratic Congress person who stepped up to complain, ten paid Conservative radio commentators and two Fox News commentators were given scripts by Roger Ailes and Karl Rove that told them to take the opposite argument and ridicule the Democratic complaints.
In 2001, most people don’t realize that the Republicans not only cut taxes but they removed “paygo” which said that you could not spend money unless you somehow paid for it in new taxes or in spending cuts elsewhere. Then they spent like drunken sailors.
By 2008, the Federal budget was about 2.9 trillion dollars. That was the October 2007 to September 2008 period. The income from tax revenue was $1.25 trillion. So you’ve got a big problem. A Big Problem…because 2007-2008 was still comparatively good times. Yes the market had fallen from 14,000 down to 11,000 but that is where it should have been anyway. We had 7% unemployment, but we were going to have that many unemployed anyway because all the jobs were still being shipped overseas.
So, if you have a period when a lot of people were making a lot of money, and all the income you can come up with is $1.25 trillion when you normally need about $2.2 trillion…what does that tell you? Well, here’s what it told the Republicans. It told them to go into the Social Security money…money paid by everyone up to..up to slightly more than $100,000 but no one higher…and simply appropriate it so that the $950 billion you take out (that’s what they took out in 2008 of YOUR Social Security money) makes it seem like we had only a differential of…only…$700 billion before other revenues like corporate taxes, excise taxes, etc.
With other taxes thrown in, corporate taxes, excise taxes, etc, the budget showed a deficit of only $239 billion in 2008. But they didn’t mention that $950 billion was money that they stole from your Social Security. And why is this so intolerable? Because they were the ones who cut the taxes so that they could enrich the rich. They did it knowing that they would steal your Social Security to make it seem not quite so bad. It’s not a political difference of opinion. It is a fact. Bush and Cheney STOLE your Social Security…by the way, not just in 2008, but a similar amount in 2002, 2003,2004,2005,2006 and 2007. They stole it. Robbed you.
Of course it is still going on. Only now it is worse because we have to do it. The Republicans block any attempt to raise taxes or even let tax cuts expire. The Great Bush Recession has put us in such a financial bind, that even using Social Security funds, we have a trillion dollar deficit every year. Here’s how we got to this point.
Their friends on Wall Street created a bunch of new speculative financial “products.” That is how they refer to pieces of paper that are not only NOT products, but in this case had no value whatsoever. Here’s how it worked. I buy a bunch of mortgages. Now you pay your mortgage to me…several of you..many…instead of to the original lender, mortgage company. I then re-sell these mortgages to other people and they are now collecting the mortgage payments.
But this becomes such a good business that I, the Wall Street investment company, need more people to have more mortgages because I need more bundles of mortgages to sell. You see, there are very few businesses that Wall Street can sell that are domestic. There is so little manufacturing done in this country that the main industry…which used to be merely the place you kept your money…is banking and finance. And that business has consolidated into half a dozen major banks.
And why is that? Because: a.) businesses have all been consolidated into only a few in each industry…like communications, television, manufacturing, food, oil, etc. and b.) more and more industries are now being done by foreign countries…like shoes, shirts and socks…and imported by WalMart, Target and Sears. And that doesn’t create jobs which creates taxes, or, in other words, federal revenues.
But one thing that is home grown is local real estate. So how could they, Wall Street wondered, take part in what had been a fairly stable and increasingly valuable market. (The only time home prices did not go up over the last 60 years was during Reagan’s Presidency when prices dropped by as much as 20% almost unheard of. But that was to stop enormous inflation.)
So, Wall Street lobbyists go down to Washington and they get people like Alan Greenspan to look the other way. Greenspan, after the country collapsed and millions of Americans had lost about 40% of their savings and retirement benefits, said that he was stunned that his free-market principles were wrong. But he was lying. He was on the take; he was part of the scam. All he had to do was to do nothing…which is what he did.
With the government out of the way, Wall Street went on a binge of approving worthless mortgages and backing them up with worthless insurance guarantees, which could never be met. The prices of homes went up because now everyone, or so it seemed, could afford one, whether they really could or not, and the bundles of mortgages were sold at greater and greater value. But they were worthless. When we had a slight downturn in the economy and when some of these adjustable mortgages began to incur higher interest rates….because adjustable mortgages were common in order to get people into a home with a payment they could afford….just to get them in and get the house sold…everything began to collapse.
So millions,tens of millions of Americans lost money in the collapse. Their home values, which were the mainstays for most Americans, which is the reason so many people wanted to buy a home before the prices went out of sight, began to drop and they dropped by about 20 percent. For people who had put no money or little money down on homes at very high prices, the bottom dropped out. Their mortgages were higher than the value of the home, sometimes by an amount that they could immediately see they would never recover.
So now…now we are in the post Bush-Financial-Collapse period…of let’s say, 2009. People out of work and jobs being lost at several hundred thousand a month. Businesses closing. People panicking. President Obama takes over this miserable economy…the worst since 1930…and the Republicans fight every job building measure he tries to enact. They say it is because we need “austerity,” that our problems are from spending too much money.
Let’s get a reality check. In 2008, with a booming economy…although speculative…we had a real $2.2 trillion debt. In 2009, just trying to stop the Bush Recession from becoming another Great Depression, we lost another $2.9 trillion and we borrowed…as we had been doing and now had no choice…another $950 billion from our Social Security fund, which then was in surplus. It’s amazing.
We are so far out of balance it is the height of stupidity to talk about cutting more…we’ve already borrowed trillions from our retirement…until we raise taxes. In 2009, the low, low amount of personal tax revenue, now, with the Recession, dropped from $1.25 to $1.21 trillion. So, basically we have no income and we have no industry and we have no tax base and we are borrowing a trillion a year from us when we’re elderly. And that doesn’t even begin to talk about what the Republicans want to do with Medicare and Medicaid.
So here’s the irony. Think of this. The Republicans cut the top marginal rate from 70% down to as low as 28% (which is when we were told we had deficits in the $400-$500 billion range during the first Bush presidency. But they, in control, increased spending. Then, when they continued these reduced tax rates on the wealthy, which kick in, by the way, only after they have paid the lower rates for their income up to around $300,000, the Republicans started borrowing huge amounts from Social Security in order to come closer to balancing the budget. And now they want to cut Social Security and Medicare instead of raising the taxes….not back to 70% (which is what should be done) but only back up to 40% or maybe 45% of the top marginal rate.
There is no reason to cut holes in the social safety network. The only people who want to do this are two groups. The first group are the oil company owners…and their stock is held very tightly among billionaires even though they are public companies. The only reason pension funds have any oil stock at all is so that the billionaires can cry that if the stock goes down, pensions, widows and orphans will be hurt. That is more patent bull shit. Widows and orphans’ fund managers have plenty of other places to put their money.
We have the largest and most wasteful military in the world. Our military budget is larger than that of all the other nations of the world…combined! If we only spent double what the Russians spend, plus double what the Chinese spend, plus double what all of the Arab world combined spends…we could cut our budget in half. That is how much we spend on the military. We have lost $129 billion dollars that we simply have no idea where. We simply mislaid $129 billion dollars. No one knows where it is.
We spent years and years and years on billions and billions of dollars on the F-22 and Osprey…and cancelled them. We spent money indiscriminately to favored contractors like Bechtel, Halliburton and Blackwater and when Bunnatine Greehnouse blew the whistle, she was not praised but transferred! We could cut $200 billion from the military budget tomorrow and never blink. We have 11 aircraft carriers. No other country in the world has more than 1, and most of those are with our allies. Our military is like a gross, fat, hog with a great public relations department and guns.
We spend billions on space but nothing on inner cities. A $50 billion investment in our inner cities over ten years…which is nothing…maybe one aircraft carrier…would create an entire jobs market among those most in need of jobs, resuscitate our cities, increase the GDP and growth rate and return ten times the expenditure in real terms.
We let corporations register in the Caribbean as non-American corporations but live and work here with manufacturing in the third world. Under this arrangement these billion-dollar corporations pay no taxes at all in this country. We hear that U.S. corporate taxes are too high. Yet the president of an American oil company that paid no taxes to the United States while making tens of billions of profits said that they should not be charged taxes because they pay “40%” elsewhere in the world.
So why does the Chamber of Commerce say that the U.S. has the highest tax rates in the world when one of its largest members says they pay 40% and our top rate…which obviously no one pays…is only 35%. This company paid nothing to the U.S. government but he wants to take away Social Security and Medicare.
What is the real problem that is causing the furor right now…specifically now? The problem is this…and it is a “created” problem. We have lost about $700 billion from the recession. Costs about $350 billion in unemployment, welfare, etc. for the 15 million unemployed. And we lose about $300 billion to $350 billion in tax revenues from the number now unemployed. So, before, we had a deficit of roughly $300 billion. Now we have a deficit of $300 billion plus another roughly $100 billion..or a trillion dollars…every year.
We get about $330 billion from corporate taxes right now. We don’t need to increase corporate taxes. Leave them the same, drop the concessions to all kinds of industries and then simply levy a minimum tax of 10% on profits…no exceptions. Every big corporation pays at least the minimum 10%…to have some skin in the game.
The part that is created is the notion that we have no way to create jobs. That is ridiculous. We have demand for everything from hydrogen cars to a national electrical grid to miles and miles of wind mills and solar panels. If the Republicans can continue to make the American people believe that for some idiotic reason we cannot begin to build our alternative energy programs, we will never create jobs.
We should do more drilling for oil and natural gas. We should take back all the leases from the oil companies that they have not used and set up withing the EPA a separate fossil fuel capture department. There are plenty of patriotic, qualified geologists, petroleum engineers, drilling workers, and petroleum management people to make up a good company that will eventually fade away.
This is a good job for government. The money would go into U.S. coffers to build up the alternative energy business, with no diversion of funds into the pockets of oil company billionaires. We could build a couple of new refineries which would prove to most Americans that the idea that refineries are being held up by environmentalists is ridiculous.
All these things, higher taxes, oil revenues going directly to the government, more security being focused here at home to cut our military expenditures by 30% would all go to balancing the budget. Now, having said that, we need to change Social Security…raise the rates if necessary…to make it a safe and secure but higher payment for those retired. Either that or we need to make a mandatory retirement fund a part of every person’s wage package, not paid for by the employer and fully transferable from job to job for a lifetime, you put in a minimum…maybe ten percent…it is invested into mutual funds by large organizations like those now handling state and federal pension funds.
We need to make Medicare for All the law of the land, basically single-payer healthcare everywhere in the country. It would reduce health care costs to levels like those in Europe,which means it would cut our medical costs by 40%. If you now pay $1,500 a month, you would pay $900. Not free but it would be deducted and would continue to rachet down as hospital and doctor and drug costs gradually come down.
This is it. This is what we need to do.