Is it already too late for America? I'm starting to think that the anti-tax, anti-government conservative movement that started in the mid-70s, elected Reagan and led to the terrible Bush Presidency may have effectively destroyed the country, leaving it bankrupt, corrupt,ungovernable, ruled by a wealthy elite -- and we're only now just starting to realize it. To cover tax cuts we stopped maintaining the infrastructure and started borrowing. To satisfy their hatred of government we increasingly stripped away rule of law, regulation, and belief in one-person-one-vote. We are seeing the consequences of all of that coming back to roost now.
Reagan left us with massive debt and ever-increasing interest payments. Bush left us with $1.3 trillion deficits and a destroyed economy that would force further increases in the borrowing for years - to be blamed on Obama. The "free marketers" gave away our manufacturing base that will take decades and massive capital investment to recover. Obama can try, but it may just be too late to do anything about the borrowing. We need massive investment in jobs and infrastructure, and a national economic/industrial plan. But, with their own Reagan/Bush debt as ammunition, conservative ideologues continue to block every effort at investment to get out of the mess we are in.
After a 25 year career in Washington, Sam Brownback has suddenly become aware of the staggering size of the U.S. debt -- and not a moment too soon, as he's ambitiously seeking the Governor's mansion in Kansas this cycle. The Kansas City Star explains:
...Sam Brownback of Kansas [snip] along with 23 colleagues from both sides of the aisle, believe that the imbalance between spending and revenue is too worrisome to ignore.
But as usual with Brownback it's just another move of political expediciency. Just as Brownback is leaving the Senate he's suddenly rediscovered his inner "fiscal responsibility" just in time for election.
During his time in Congress, a staggering $7 trillion has been added to the U.S. debt -- with hardly a peep in opposition from Kansas' junior Senator. In fact, as I'll detail below, Sam Brownback has been a leading contributor to the problem over the last two decades.
Great News! The good life will soon return to America. Auspiciously, months before the holiday shopping season began, Americans were told that after more than a year of fiscal recession, or what some have characterized as akin to an economic depression, consumers were optimistic. The confidence index and other indicators were much improved. Manufacturing executives assured the public, the engine that drives the free enterprise system was in a "sustainable recovery mode." In the very near future, products, and people's sense of need, would be fabricated again. Everything will be right with the world, economically. Few feared the threat that, long ago, Americans had come to accept. The foundation of a democratic system had eroded in favor of consumption.
A few months ago I would not have been aware of the late economist, Hyman Minsky (1919-1996.) His theory, known as the "Financial Instability Hypothesis (FIH)" was not a matter of public discussion as we watched our economy go directly into the toilet and the recession grow and get more dismal.
Had I known about Minsky, however, I would have seen this coming in the 1980s when the Reaganites began to dismantle government regulation of banks and the investment markets. FIH says hat stability is inherently unstable.
Byron Dorgan (Dem. - North Dakota) was on C-Span this morning to discuss the elements of the Senate's upcoming Credit Card Bill. I'm not sure what he thinks he can accomplish, but at the very least, he is making us aware that the CC companies are big players in the screwing of the American Economy.
No wonder we're all drowning in debt. Over the past 30 years, a college degree has become increasingly necessary for anyone who hopes to earn a middle-class standard of living. Yet over the same period of time, the cost of tuition and fees at public four-year universities has increased ten times faster than the median family income for families with children. That's a crisis of stagnating wages as well as a problem of soaring college costs. Either way, something's got to give.
At the Drum Major Institute, we've been making that point for years (see, for example, former DMI Fellow Maureen Lane's substantial body of work on higher education as a route out of poverty), but the statistics never cease to amaze me. The effort to afford higher education is the essence of the middle-class squeeze. So it makes an excellent subject for Vice President Joe Biden's Middle-Class Task Force.
When the task force convened for its third meeting in St. Louis last week, they followed the now-familiar format. They issued a staff report that defines the problem as the administration sees it; highlights what the administration is already doing to address it; and lays out a potential future path without committing to any new policy initiatives.
The staff report captures the problem beautifully and sets precisely the right goals for the Administration. "The ability to afford a college education without being buried in debt is an important aspiration and a legitimate expectation... for any family in America...The President is committed to making sure that every student has the opportunity to earn a postsecondary credential or degree." So far so good.
The round up of existing accomplishments includes an array of impressive first steps. The value of the maximum Pell Grant is up, and the President wants to shield funding from the vicissitudes of the annual appropriations process; the stimulus includes an expanded tax credit for college tuition; finally, the President's budget proposes to shift student lending away from the pork-laden program to subsidize private lenders and back toward the more efficient Federal Direct Loan program.
The task force is less inspiring when it comes time to suggest next steps. Since the report states that "the Obama administration does not officially endorse all of these ideas, but the task force views them as worth of further analysis" we might expect some expansive thinking. And there are some good - if hazy - ideas in there: bolster community colleges, improve "529" college savings plans, help states cope with economic downturns without cutting college funding. The most intriguing idea involves enabling graduates to pay back their loans at a fixed percentage of their income, so people who pursue less lucrative careers aren't crushed by debt. Still, none of this quite matches the magnitude of the problem.
The reality is, the nation's public colleges and universities have raised tuition and shifted costs from the states onto students and their families in good economic times as well as bad. A critical part of the story about rising public college costs is tremendous public disinvestment from higher education. The policy not only undermines the middle class but harms the nation's economic competitiveness. To reverse course, the federal government should consider how to help states renew their commitment to public colleges and universities. The middle class depends on it.
by Zach Carter, Media Consortium MediaWire Blogger
Progressive media is sounding the alarm on the AIG bonus scandal, demanding that policymakers stop repeating Bush administration mistakes and offering concrete solutions to the dire economic situation those missteps have created.
Former Secretary of Labor Robert Reich describes the bonus insanity in a blog distributed by AlterNet. "Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid," Reich writes, noting that institutions like AIG "are no longer within the capitalist system because they are no longer accountable to the market." If AIG is not accountable to the Treasury Secretary of the country that owns an 80% stake in AIG, then the company has unlimited access to taxpayer coffers without being accountable to anyone at all.
By Zach Carter, Media Consortium MediaWire Blogger
President Barack Obama rolled out his highly anticipated federal budget proposal on Thursday, and while the plan represents a dramatic departure from the priorities of the Bush administration, its ultimate impact may be crippled by a counterproductive bank bailout.
As Obama bails out AIG and Citicorp and probably all the automobile companies, we are still not sure where the new jobs will come from... or if they will come at all. We wait to see the massive hirings to fix bridges and highways or the "shovel ready" projects from the states get started.
Yes, It's been about a month and only a couple of weeks with the legislation in place. However, saving AIG seems to be much more important than employment, and maybe it is.
Senator Barabara Mikulski of Maryland was back at her old tricks this week in the Senate (where, to be sure, terrible legislation was in no short supply). Back in November when Congress was considering the auto bailout, the Senator proposed making the interest on auto loans, along with sales taxes, deductible from a household's federal income tax. The legislation is designed to save jobs at car dealerships, save consumers money, and boost sales tax revenues. The Senate voted to include the tax break in the stimulus package. In November, I pointed out:
But people aren't buying [cars] and most of them probably shouldn't be.
Certainly, they should not be buying a car if $1,500 (at the end of the year) is all that is separating them from a new Dodge Minivan. Not only does the tax break encourage early replacement of perfectly good cars (the break expires at the end of 2009), but it encourages already debt-ridden Americans to assume more debt. And it is not even clear that stoking demand for cars will be sufficient, even if higher interest rate loans appear more affordable to purchasers. Secretary Paulson has emphasized, along with the WSJ, that loan availability depends on the securitization market, which has "for all practical purposes ground to a halt."
This week, I had the opportunity to participate with my fellow 5th district candidates in a forum sponsored by WPSU TV to discuss job creation and economic conditions in the 5th Congressional District. As we fielded questions on the various issues, I paid close attention to how my views on job creation and retention along with overall economic development strategy differed from my opponents. What I heard from my Republican opponent was numerous statements about "incentives" and "tax credits" to entice businesses to locate or expand in the 5th district.
You'll have to forgive me in advance - I'm a bit of an amateur on this issue, but I think I understand the broad trends. If I'm factually off somewhere or conceptually a bit incoherent, please do correct me.
There are a lot of things that progressives and the MSM discuss in terms of progressive policies - protecting the environment, health care, the right to organize, etc. However, beyond noting repeatedly that Americans are in a "mountain" of debt (latest example), I haven't seen very many stories on policy responses to this massive problem that is at the heart of the current economic crisis. This is an issue not just for the countless people who have debt problems, but also for the global economy, and so it should be winnable, in some form or another, and be extremely popular politically within the United States. It even has Christian roots. This debt forgivess MUST be packaged with debt forgiveness for other countries as well, if it's going to be advocated by progressives, because otherwise it's not going to help the hundreds of millions - if not billions - of people that are going to be damaged by the global financial crisis, and is more broadly going to endanger world security, including for Americans.
Some policies, like expanded health insurance coverage or a revision of the draconian bankruptcy bill that was passed recently or reducing the possibility of deportations of undocumented people, would reduce the possibility of danger incurred with existing debt, but they won't fundamentally redress the power that debt gives banks over people in the United States and everywhere else. This principle is true whether it's a loan from the IMF to Bangladesh or whether it's a credit card bill from Bank of America to John Q. Public.
Now, banks and the banks that bought their debts are not stupid (now). They know that in order to avoid going belly up, they need to make sure that as much of the income stream they're counting on comes in. Which means that they'll support something like a federal bailout, as happens everytime a company goes bankrupt, and they'll support one for consumers as long as they get their debt written off by the government. However, this is where their interests and the interests of citizens of the United States and every other country that is in debt to finance capital as well as other sectors of big business diverge.
Whereas banks will want the government to assume the debt and have people pay them or some other mechanism that will displace the risk from them to the government, what this will not do is liberate people from the actual debt. More succinctly, it doesn't matter to an individual company if you're broke - as long as you get you debt paid off by taxpayers or government borrowing. However, this does nothing to increase the spending power of the American consumer - which in turn contributes strongly to the global economy's prospects. And so this is an area where big business can be split in half and part of it allied with ordinary people (i.e. how "progressive policies" get implemented in the U.S.).
