Populist Daily

Politics, Culture and American Life

Populist Daily header image 1

Who Created the Recession and Who Can End It

March 15th, 2010 · No Comments · Economics, Health Care, jobs, Politics

Jobs, jobs, jobs. It is the mantra of the Liberals. It may also be the mantra of anyone who is out of work and would like to simply earn a living. Seems too much for the Neoconservative Neanderthals to understand.

There is one thing that the Liberals and Progressives must lodge firmly in their consciousness about the disloyal opposition of the Neoconservative Right Wing. Only when their ox is gored do they respond. How many times must we hear of Republican legislators not merely voting for but initiating anti-gay legislation only to find out that they too, are gay…nothing wrong with that, but also sexual deviants?

We have 2.7 million people who would have lost their unemployment insurance if it had been entirely in the hands of Senator Bunning or Senator Kyl. The deficit hawks cannot understand how anyone would even consider any more stimuli for the unemployed or benefits to the poor.

On the other hand, the Neoconservatives are against modifying any of the semi-fraudulent mortgages that were foisted upon the public. Not only were these mortgages sold under false pretenses, some 3 million more of which may go into foreclosure this year, further retarding the growth of the economy, but they made thousands of mortgage brokers rich beyond anything they would ever have expected or deserved.

So it is time we did something intelligent for once. The original stimulus was not enough because the Recession, or Depression, was much more severe than anyone would admit. When you lose 760,000 jobs in the first month of the year, as happened in January of 2009, you have to know that things are not looking good. Especially after you have been losing over 500,000 jobs a month for the previous 9 months or so.

When the stimulus was passed, about $200 billion was dropped immediately into the coffers of state governments. Even this only slowed the pace of job loss by something like half and even then only after several months. This was more than a serious recession. We’re in a Depression.

The reason it does not seem like one is that the average person doesn’t go to the food kitchens, the free food pantries, where demand has quadrupled. Many don’t see the tent cities in many of the 20 or so cities around the country where they exist, places like Sacramento, Reno, Seattle and Nashville. The AFL-CIO is demanding that Wall Street, either begin to loan some money to start the economy or pay more taxes. If they want to return to the same bad old ways, say the Union members, then let them pay some meaningful taxes on those derivatives so the government can get the economy started.

Structural unemployment was already underway in the latter years of the Bush II Administration. In the “Ownership Society” the individual would take responsibility for a number of those activities that are now shared by government. This would allow each individual more economic freedom. The individual would now take control of his or her health care, responsible for saving enough and for staying well enough so that health care costs would remain manageable for the individual.

Remember the idea about privatizing Social Security? The individual would take responsibility for his or her own retirement fund, with a 401K-like program, managed by professionals but, again, the responsibility of the individual citizen. If the market crashes, you lose, and it is your own fault. In return, each citizen would have returned to him or her a much larger share of the taxes currently being paid. This would enable the person to own more, own personal property, including a home.

Home ownership, in fact, became a hallmark of the Bush Administration, working with the Chairman of the Federal Reserve, to keep interest rates low and working with mortgage companies and organizations like Fannie Mae and Freddie Mac to support mortgages for low income individuals, and for more leveraged mortgages for all individuals. Soon, because of another Bush policy—no regulation—mortgage companies began to make the kinds of mortgages that were unheard of in previous years.

Wall Street firms became involved by offering supposed guaranteed insurance for packages of mortgages that were purchased by investment firms and then sold to individuals, to pension funds, and to general investment funds, including mutual funds. So how could anyone lose? AIG, for example, ostensibly a solid and huge insurer would back would back these securities that were made up of multiple mortgages.

This was the basis for the economic whirlwind that spiraled up and then down. More real estate was purchased. Prices went up causing more people to want to be involved. More of the securitized mortgages were insured and sold. One day, the system became so large, values so overpriced that it faltered and failed and everything collapsed in on itself. Financial firms failed, credit seized up and businesses, with no credit, shut their doors. The economy basically crumbled and took 7 million jobs with it in one year.

Enter Barack Obama. Now, not only did he walk into a $1.3 trillion deficit for the first year of his tenure as President, but jobs were still falling in the first half of 2009 by several hundred thousand a month. Before he can get any kind of policy in place, the unemployment rate drops two more percentage points, millions more jobs lost almost overnight.

He immediately put into effect, astoundingly by February 2009, one month after taking over, a plan that is distributing $787 billion to various entities, some private and some public in ways that the economic advisors say is the most efficient and long lasting. Neocon Republicans, however, whom Obama thought might join in a reluctant but bi-partisan effort, wanted tax cuts. They said it was for economic reasons, but the tax-breaks on recessions had little effect in the previous several years. Obama agreed to it, but that part of the economic stimulus shows no effect whatsoever…no results at all.

The people who needed money, who could have used the funds immediately were given unemployment insurance, food stamps, etc. They didn’t need tax breaks. They had no taxes to pay. They were unemployed. And those who made over $350,000, for example, had no incentive to spend a tax windfall. With the economy faltering they already had increased spending and bargaining power. The tax breaks diverted $157 billion to people who already had jobs, had incomes that they were spending and did not need nor in many cases did not want more tax breaks. What they wanted was a strong economy.

Immediately after putting the stimulus package, as much money as an obstinate Republican Senate would let them, the Democrats and President Obama turned to health care reform. Certainly one reason was President Obama’s key economic advisor, probably more knowledgeable than anyone on the long-term effects of runaway health care costs, Dr. Peter Orzsag. So began a year-long effort to create a health reform plan that could surmount the 40-vote obstruction of the Republican Senate on any feature or system that would harm the health insurance industry.

The health insurance industry spent $400 million dollars or more, giving campaign contributions, running television commercials, but most heavily organizing groups to go around the country lying about health care reform and the bills being offered in the Congress. White supremacist groups and fanatical Right Wing groups were brought into marches and into the health care meetings of Congress members. Tea party members had rallies outside government buildings with signs showing the President as a Nazi, as Hitler, with vile slogans…nothing to do with health care reform.

Nationally syndicated RightWing talk show hosts, who make up literally 9 out of every 10 radio talk shows in the country, sent out a daily barrage of lies about health care legislation—that there were death panels, that it would bankrupt the country and that it was a Communist government takeover. By the end of 2009, the Republicans in Congress had stalled final passage and Democrats were looking for ways to combine the bills passed in both Senate and House in order to get at least some of the very strong benefits in a bill that the President could sign.

After much battering by the forces of the Health Care Lobby, the epic struggle will now come to a close, and thank God, Americans will finally have some legislation on a par with Medicare and Civil Rights and Social Security. Now Americans will have both health and personal property and not be forced to decide which to keep. Because enough Progressive Democrats and a strong President fought for them, Americans will be better off soon and from then on.

In order to do this, government did neglect the fight for jobs. It was not totally overlooked. It has been clear that the Republicans will and have filibustered any kind of serious jobs bill. They have filibustered in the Senate 112 times. And each time they do, there is a struggle, days and occasionally weeks of delay. Seventy—70—pieces of legislation that passed in the House of Representatives, each one designed to create jobs, are stalled in the Senate because of the 60-vote rule. All 40 and now 41 Neocon Republican Senators out of 100 have voted…every single time… against legislation on health care, jobs, and any kind of stimulus.
The Democrats are a much less homogeneous political party than the Neoconservative Republicans, who, as Fundamentalists, believe that the world will end soon anyway, and so we should apparently prepare for that first. Still Democrats were able to marshal 60 votes on many occasions even from part-time Democrats like Senator Ben Nelson of Nebraska, whose state votes Republican about 60% of the time and is the most Republican state in the nation.

According to places like the New York Times and the Wall Street Journal, just 5 banks control 48% of the country’s finances. These are the “too big to fail” banks. The Federal Reserve and these big banks, plus financial firms, like Goldman, Sachs, have a responsibility to push credit, money, into the market place so that businesses can resume, grow and begin hiring. But that is not happening. So job growth will be slow unless government steps in. But now, suddenly, the Neocon Republicans want us to cut back, stop funding ventures, pull on the reins, and cut back all spending “before it is too late.”

This is the same group that spent $5 trillion dollars more than incoming revenues from 2001 to 2008. In 2008 and 2009, their Great Recession, caused by inattention and lack of regulation (i.e. showing up for work as government employees and supervisors) cost another $1.8 trillion in TARP funds, in a huge budget deficit and eventually resulted in the expenditure of stimulus funds. Of course the biggest government losses came from lost tax revenue from people who had no jobs and therefore paid no taxes and businesses that went broke and paid no taxes. This is the legacy of George W. Bush and Dick Cheney. We really need to stop and remind ourselves of what the Bush era did to us.

A completely arbitrary war that killed 4,300 U.S. soldiers and untold Iraqi civilians and another disaster—the shameful lack of response to Katrina and the negligence of going on a golfing vacation while ignoring serious warnings of a terrorist attack, delivered in a memo by the CIA in August 2001. These are the people who got the most from not one, but two, tax cuts while conducting a war. These are the people who now want to cut back on Social Security and Medicare and unemployment.

Millionaires made $43,000 additional on every million of income and now do not want to let those tax cuts retire. The country is broke. Their pals bankrupted us so they could have huge tax breaks. They pay far too little as it is. They will not let up until the wealth shift of 34% to the top 1% has become 70% or 80%. If the People want the country back, these are the ones obstructing the return of middle class America.

Jobs will come from Democrats and their allies alone. The Neoconservative Republicans will continue the blitzkrieg about cutting the deficit and obstructing and blocking progressive jobs legislation. We have an annual GDP of $17 trillion. If we collect taxes properly and fairly, that is enough…even with most manufacturing at present sent abroad…to make this country solvent.

The rich who were funded by the Neocons must now fund the recovery. An adjustment of from 35% top rate to 50% top rate, plus making some changes in our trade policies, a cut of ten percent or so in our $600 billion defense budget, and the adoption of health care reform…and all our problems will be solved. Balance what the people need with the need to have 700 bases around the world, 50,000 troops in Japan, 70,000 in Western Europe. And we don’t need dangerous private armies like the 14,000 Blackwater troops in North Carolina running loose all over the country, responsible to no one.

The sooner people look back to recent history and see the greed and the audacity of the Republicans, the sooner we will make the right decisions for all the people, not merely the rich. For example, let us recall, that after several Republicans cheated Native Americans out of approximately $100 million concerning issues over their lands, the Interior department gave away, many parts of our national parks, belonging to all Americans…to oil companies, timber companies and mining companies. The woman who did it is not in jail. She is not hiding somewhere in disgrace. She is running for the Senate as a Neocon Republican from Colorado.

The Republicans need not be afraid…not of terrorists nor of a bankrupt America. But all Americans and particularly those who want and need a good job should be very afraid that Republicans might once again gain control of power in this country. Then we would need to worry about our freedom, our economic well-being, and perhaps our very lives.

Tags: ······

No Comments so far ↓

Like gas stations in rural Texas after 10 pm, comments are closed.