The 2013 Economy

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We see a lot of phony accounting. Borrowing the SS fund has kept taxes down, not needing to borrow at the going rate. Taxes have been deeply cut from when the economy was booming. Illegal immigrants working below minimum wage have enriched companies and corporations. Education has been cut heavily, and it shows in the spelling on the net. We fund the military with a higher portion of the GDP than when we condemned the USSR for over funding their military while citizens were hungry. We continue payments to agribiz to not farm. We continue tax breaks to oil companies with record profits. Evangelism has become multibillion dollar industry. We have helped put into power most of the dictators we do not like, and funded them ( In the name of anti-communisim we supported Saddam Hussein, Ossama bin Laden, Shah of Iran, Sadat, Hosni Mubarak, Ferdinand Marcos, General Suharto, Mobutu Sese Seko, Augusto Pinochet, Anastasio Somoza Sr. & Jr., Manual Noriega, Fulgencio Batiste, François "Papa Doc" Duvalier, Jean Claude "Baby Doc" Duvalier, Halie Selassie, and Francisco Bahamonde Franco, and later decided we did not like them.). Most employees pay their taxes with withholding while the very rich hide income abroad and many small businesses are very creative in reporting income. We are not honest about our economy.

Greenspan did not believe bankers would put themselves in such risk, which means Wall Street does not understand risk, nor the bureaucrats dealing with them. They called for flexibility, got it in the belief that they would not play Evil Kenevil, and then were encouraged to do so to increase consumption to reduce GW Bush's 6% unemployment. They went splat, and now we are dealing with the injuries.

Those that say the government should be run like we must run our own budget better use a mirror- it has. With Americans owing an average of $8000.00 in credit card debt on top of a mortgage and a second, we do not manage money well. The loan shark is next.

The monster deficits started with Reagan, tripling the debt. He gave us the goodies (cut taxes) and wouldn't do the hard stuff (cut spending). Bush/Cheney restarted this debit problem by cutting taxes for the very rich and corporations in the US, and spending the surplus we had when Clinton left office. The debt doubled under Bush from 2001 to 2007 WITH a republican Congress, and Bush never vetoed one spending bill in that time, and signed the unfunded Medicare extention. He pushed through a tax cut to reduce his 6% onemployment. Then we went to war, not putting the expense in the budget, and the only way to pay for it without raising taxes was to borrow from China. Bush promised that oil from Iraq was eventually going to pay for the war. NO OIL from Iraq to pay the cost of war, so we only keep borrowing from China. He ended with a more than doubled national debit, 7.1% unemployment, a near trillion dollar bailout of Wall Street, and the excessive consumption he encouraged and aided dropping to business killing levels.

Pro business emphasis?" Wasn't it big business that got us into this mess. And less regulation? Have we forgot Enron - which paid NO taxes three of its final five years - and Tyco, and Adelphia, and HealthSouth, and Lehman, Bear, Merrill and Wall St. What of Wal-Mart, that buys most of it's products overseas and treats it's employees like slaves. Or Haliburton, Blackwater and all the other war profiteers. (Wasn't Haliburton opening a new HQ in Dubai or Qatar? But they promised not to move there anytime soon. Sure.)

The Republicans want to cut the budget. Social Security (to take funds we paid in, not an unfunded entitlement), Medicare, unemployment, enforcement of anti pollution laws, education, arts re all in their sights for cutting. But breaks for big oil, agricultural subsidies, and a 2% INCREASE for the Pentagon, we have extra money for them! This is being dictated by the representatives elected by the 3% more convinced to vote tea party by the now unlimited corporate money in elections, out of the 41.5% of the registered voters that did vote, with low voter registration to start. Try to figure out who is in control, and why.

AAA ratings for Enron, World, Mortgage backed securities, etc gone ban-krupt, and a 2 trillion dollar error in their analysis suggest this is all for profit, and they rate according to who is paying them which means their ratings are frauds.

Republicans show concern for tax money spent as "foreign aid" to buy anti terrorism cooperation, and defense of GE paying no taxes as they ship their manufacturing abroad. Politicians control government income, companies control where job income is going, and do more to control the economy than government can.

Corporate socialism (too big to fail); private capitalism (credit card companies protected from bankruptcy, not individuals, like student loans).

Failure to regulate has resulted in less competition, too big to fail scofflaw corporations with loyalty to no business, country or people. Glass-Steagall limited a business to one business, since banking for individuals depends on trust, and protecting accounts from other business failures is the only way to maintain trust.

When Barry Goldwater went down to ignominious defeat in 1964, most Republicans felt doomed (among them the then-28-year-old Wanniski). Goldwater himself, although uncomfortable with the rising religious right within his own party and the calls for more intrusion in people's bedrooms, was a diehard fan of Herbert Hoover's economic worldview.

In Hoover's world (and virtually all the Republicans since reconstruction with the exception of Teddy Roosevelt), market fundamentalism was a virtual religion. Economists from Ludwig von Mises to Friedrich Hayek to Milton Friedman had preached that government could only make a mess of things economic, and the world of finance should be left to the Big Boys – the Masters of the Universe, as they sometimes called themselves – who ruled Wall Street and international finance.

Hoover enthusiastically followed the advice of his Treasury Secretary, multimillionaire Andrew Mellon, who said in 1931: "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down... enterprising people will pick up the wrecks from less competent people."

Thus, the Republican mantra was: "Lower taxes, reduce the size of government, and balance the budget."

The only problem with this ideology from the Hooverite perspective was that the Democrats always seemed like the bestowers of gifts, while the Republicans were seen by the American people as the stingy Scrooges, bent on making the lives of working people harder all the while making richer the very richest. This, Republican strategists since 1930 knew, was no way to win elections.

Which was why the most successful Republican of the 20th century up to that time, Dwight D. Eisenhower, had been quite happy with a top income tax rate on millionaires of 91 percent. As he wrote to his brother Edgar Eisenhower in a personal letter on November 8, 1954: "[T]o attain any success it is quite clear that the Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it. The political processes of our country are such that if a rule of reason is not applied in this effort, we will lose everything--even to a possible and drastic change in the Constitution. This is what I mean by my constant insistence upon 'moderation' in government.
"Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt [you possibly know his background], a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid."

Goldwater, however, rejected the "liberalism" of Eisenhower, Rockefeller, and other "moderates" within his own party. Extremism in defense of liberty was no vice, he famously told the 1964 nominating convention, and moderation was no virtue. And it doomed him and his party.

We know who cost jobs, and who saved jobs. GM still exists, as do the jobs, that Romney (Rmoney) would have lost. Business caused the economic problems, and could not fix them, while we have faster job growth than history suggests would be the case so far.

We had economic strength with Clinton, and higher taxes. More so with Reagan. And much higher taxes in the fifties, while building the interstate highway system, and a strong enough economy that mothers did not have to work to afford a house. The 99% paid more taxes and owned more than now.

Supply side economics, Romney's agenda, has been proven false, since record loow cost of money, and huge corporate cash accumulations ( some banks are CHARGING for very large deposits instead of paying interest), have not lead to more investment in new business and employment, due to lack of demand. Demand drives growth, just as unmet demand drives inflation. Cutting taxes with record cheap money will not work.

GW Bush talked a strong dollar but softened it strongly to help export business. Much of government resources are devoted to the economy, so the biggest beneficiarys of these resources are the biggest and richest. Why is earned income (sweat) taxed higher than unearned income? Are the rich going to put that money in the mattress?

How is that different than my pay check? The company is taxed, and I work for the check. If you do not work for the check, why should you be taxed less? Will the rich stuff the money in a mattress instead of investing it?

Did Romney's companies use the Interstate, State Department, Patent Office, Federal Court system, or SEC to help them make money? Use more government resources, pay for them.

Going over the cliff will reduce the military to 29% of the discretionary budget, making it still larger than the next three combined, cause another round of foreclosures on the retired, stress state budgets reducing education in the donor (blue) states and more severe cuts in beneficiary states (red), and keep taxes still lower than during any economic boom. Some bright move.

** While the share of U.S. gross domestic product going to wages and salaries has fallen 10 percentage points to about 43 percent since 1970, the slice going to companies in after-tax profits has surged, doubling to 12 percent since 2005.

Note that the most highly paid CEO is not the most important and difficult job: the one that also has his finger on the nuclear button is paid less than those of the Fortune 500...

The Commerce Department said on Thursday the economy expanded at a 0.1 percent annual rate in the last three months of 2012, scratching an earlier estimate that had showed a small decline. The GDP report showed consumer spending expanded at a 2.1 percent annual rate in the fourth quarter. Inventories subtracted 1.6 percentage points from the GDP growth rate during the fourth quarter, while defense spending plunged 22 percent, shaving 1.3 points off growth.

3/1/2013