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The Trouble with the Trouble with the Economy

June 13th, 2011 · No Comments · Economics, Politics, taxes

We’ve got trouble. Right here in Washington City. And that starts with a “T” and that rhymes with a “G” and that stands for GOP! The Neocon Party is out to use the economy to cause massive trouble for American citizens.

The Republicans want to slash spending because…they say…we are going over the cliff. If we don’t do it, then we will have gigantic deficit problems that will cause the economy to crash and send us into a much worse Recession than the one that Bush and Cheney left us in.

Maybe Bush and Cheney didn’t do it deliberately, (though it really looks like they did) but it doesn’t matter to Grover Norquist. He is jumping up and down with glee. He sees the country as going into bankruptcy. Just what he wants. He doesn’t care.He has become a multi-millionaire by pandering to billionaires, by telling the world that we need to cut personal income taxes, cut estate taxes and cut corporate taxes.

Then, he says proudly, we won’t have enough money to run the country so we’ll have to cut back on government. It will be great, he tells the billionaires and the the dummies and the hicks, who vote for Republicans blindly while cutting their own throats. Don’t look down, he tells them as he moves them to the edge of the cliff…and they don’t. It is called the lemming syndrome…terminal stupidity.

Norquist’s and the Republican Party’s idea of government is where the rich rule, the middle class beg for a job at any wage and the poor just beg. We now have a government that needs about 19 or 20% of GDP to function and we have cut taxes to the point that we only get about 14 or 15 %. What does that mean? It means that the Republicans since Reagan have been running short and building up our debt while pretending to cut government by farming it out.

They farm it out to corporations who charge for services at $65 an hour where clerks with a job and government funded pensions handled it for $18 to 25$ an hour. Of course the services are never as good, and the rates keep going up. They farm out wars, so that we now have more private contract mercenaries in Afghanistan than our own government soldiers.

So how much is that shortfall between 14 and 20 percent in dollars? Well, GDP is about $17 trillion. So, if we took today’s figures, and we shouldn’t, because at present we are in the worst economic period since 1937, but…if we did… we would still have an average shortfall of about $850 billion each and every year since 1981…plus or minus a little. Which means that in the last few years, since Bush and Cheney came in and went out with a bang, or a pop!, we have really been piling it on, and of course now we have lost something like two trillion in revenues from unemployment and we keep losing and we will until we create jobs in the public sector. It is the only way to restore the economy long-term.

So is it any surprise, that, despite the fact that we have cut and trimmed and worried and shouted…that our government is now $14 trillion in debt? Remember this: Since George W. Bush took over in 2001, when we had a SURPLUS..i.e., no debt , and a $5.6 trillion debt…and a balance budget, the Neocons added over $6 trillion in 8 years. They they left an economy so damaged that it lost revenue from workers to the tune of another $700 billion a year additional net loss and created another nearly 3 trillion in two years. So, the Neocons added $9 trillion dollars to the debt in 10 years!

Obama has added nothing. He inherited a running deficit of over $400 billion, every year. He then also inherited an economy that was sliding into recession and had added 8 million unemployed to the already 7 million, actually 14.0 million people out of work. That deficit in added costs and lost revenues costs the government $700 billion a year–$350 billion in lost tax revenues and $350 billion in unemployment and welfare benefits. Obama actually cut the budget, save for the stimulus and for these necessary things, social safety net, by something like 8%. He froze wages…did a lot of cost cutting where he reasonably could.

But the rich aren’t hurting. The spread between what they make and what the workers make continues to grow. Chinese work cheap. And of course so do Republicans. After receiving only millions in campaign contributions, the Republicans blackmailed the President into signing over $800 billion a year in tax cuts to the rich in 2010. The Neocons did it by threatening to starve the unemployed. Literally to starve unemployed workers.

Now…now…after 30 years of under-funding government they want to cut government some more and give tax breaks to big corporations and the rich. This is the GOP plan. This is Pawlenty’s plan, Ryan’s plan…cut taxes for the rich, and cut Social Security and Medicare benefits.

This is what they have been doing silently all along. So why can they come out now and publicly say that they want to enrich the rich and do away with the average worker, the unions, the teachers? Because of the decision made by the corrupt Supreme Court called Citizens United.

Let’s use a dramatic word to exemplify the problem. The Supreme Court in this country has the same power as Hitler had. When Hitler said something would be done, no one had the power to question his judgment or his orders. It is the same with our Supreme Court. They, like Hitler, are the final authority.

This Supreme Court has said that billionaires and giant corporations can pervert the electoral process, can take it over if they have enough money. They have said that if a corporation wants to put a certain school board into a community, or a certain judge or a certain panel of elected environmental experts in a community, state or the federal government, they can spend as much money as they want to do so and they don’t have to tell the people that they are the ones doing it.

The corporations can form a group called “Committee to keep pedophiles from harming your children” and then attack the school board who may simply want your kids to learn real science instead of the idea that the world is 6,000 years old and that Dinosaurs and men lived together at the same time. The rich these days, many of them, want to keep your kids as ignorant as possible.

Remember, these are not people who want to spread the wealth of this bountiful society. These are people who want to climb the ladder of success and then pull it up after them. They want their kids to go to Harvard. If they have to appeal to bigotry and religious intolerance and superstition to do so, well, that is what they will do.

Let’s get to the point. Austerity will not get us out of our financial mess. But it will do something significant. It will finally and irrevocably impoverish a very large segment of our society. It will impoverish what we now call the Middle Class and make destitute people who are now the working poor and the elderly who rely on Social Security…and there are millions…as their main financial support in old age.

We are talking about a Dickensian society, where, if there is any help at all, it will come from charities, churches and organizations endowed by the rich. And that is just the way they want it. Like kings of old, the people will be their servants, willing or unwilling, and grateful for the crumbs and scraps they throw from the table.

This last election was a disaster. Look at the states of Ohio, Michigan, Wisconsin, Florida, New Jersey and others. Who is paying the bill for the tax cuts to the rich, for the two wars and for the greedy speculators who created the economic disaster…the Wall Street speculators? The teachers are paying the bill. The nurses, firemen, police, clerks and administrators, the paramedics, the librarians….and the average worker in private industry whose wages are being cut and whose health care costs, thanks to Republican obstruction, are still going up.

Here is what the Republicans want to do and here is what will happen if they get their way.

They want to cut from between $45 billion to $100 billion from this year’s Federal budget. So let’s take the high number…$100 billion. They want to do that every year. In fact, Paul Ryan wants to reduce spending by $4.4 trillion in the next ten years. In his plan, we would somehow magically cut taxes from 35% down to 25% on the top income group and do away with taxes for corporations and do away with estate taxes

But the austerity measures are ridiculous. Here’s why . We’re in a recession. Let us suppose that you get paid a dollar, but the recession keeps going. The dollar keeps losing value. So what you get paid is worth less over time. And it is the same with cutting costs. If you cut costs, your costs go down more slowly because you are not cutting them by a dollar but by that reduced value of a dollar…some people use $.65 cents as the real value. So, the more you cut…while it may seem you are cutting a lot…the worse off you become.

Suppose I have $500 in revenue and $1000 in debt. If I cut down my debt by curtailing my spending, and everyone else does the same (in the federal budget example every one is the government) then everything becomes worth less and my $500 of income, which is all I can get, is worth less. But not only that, I have taken away a big part of my ability to make money, unless I was just someone’s brother-in-law just taking up space.

So the more you cut, the slower the economy, the less the value of your assets and the value of the dollar you are earning is worth. It is a long, vicious cycle of reduction and re-group and then more reduction.

But there is an alternative. It is one the Republicans fight with all their might because they know that if it is implemented, like the completed health care reform plan, they will be finished as a political Party. Once the hicke understand that they have been mightily lied to and that the Democrats have had solutions all along that really work….watch out.

Simple. Want to cut $100 billion? Easy. Simply re institute $100 billion of the $800 billion in tax cuts for the rich that were signed into law last year. Want an additional $200 billion…increase taxes by merely $200 billion. Then if you want to cut something, cut the military by $200 billion. Now you are at break even if the economy were where it was in January 2008. Now just create 5 million government jobs and set up a plan to transition those jobs in to the private sector.

How will that work? We have $4.00 gasoline. If we begin to create hyrdrogen vehicles, electric vehicles, put up hydrogen and electric filling stations using existing money in Interior and Energy and slapping a gas tax on the SUVs, then we can do it easily. Easily.

Republicans won’t like it? Who cares? They have been stealing from us for years, Goldman, Sachs, GE, EXXON, BP, Searle, WalMart and Cigna, plus hundreds of other corporations have been stealing from us for years. Now it is time for payback. They could pay at least a minium of ten percent…guaranteed…no deductions. You make a hundred million, you pay ten million to the government. That would be a low, low corporate rate. No deductions.

With a normal workforce of perhaps only 60% of the unemployed, about 9 million of the 15 million back to work, our coffers would be filled. With the new $200 billion in taxes, plus the tax revenue from the government workers and the taxes from the service businesses that would return to profitability, we would break even in one year. After that we can come up with a plan.

But just like the southern border of the United States, you cannot bail out a boat while more water is leaking in than is being bailed out. We need to raise taxes and cut some things…but only non essentials, like military hardware and unnecessary wars. Then we need to restore some of those tax cuts, which will balance the budget. Then when we can safely stop bailing out the boat, we can start to see where we need to cut, and how quickly we need to do so.

Pawlenty and Bachmann and Ryan have all come up with political plans directed at their constitutents. You see, the people who live in Paul Ryan’s district are wising up. They are finally understanding that Paul Ryan’s constituents all live in New York City and do business in Wall Street, not Janesville.

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