Tuesday, August 29, 2006

Catastrophic and Reckless: How Bush brought America to the brink of economic ruin!

Just a year ago Bush played guitar while New Orleans drowned. Nothing has been learned. Nothing has changed. New Orleans is morbidly fascinating because Americans, intuitively, have seen in that disaster our nation's future. But Bush, like a fiddling Nero, stays a failed course amid warnings that our nation is falling apart at the seams heading for third world status and catastrophe.

The warnings come amid the valid assessment that Bush's tax cut for the rich failed to make good on two empty promises: it did not trickle down or prime the economic pump and it did not pay for itself as Bush himself had promised it would. In fact, the poor have gotten poorer, the rich exceedingly rich. The nation is bankrupt to boot. The dollar is allowed to slide and we are dependent upon China, Japan, and the EU to keep the anemic dollar propped up. Were it not for that we would have no purchasing power at all.

Ronald Reagan made the same promises in 1982 —but, according to the US Census Bureau, only the upper quintile prospered. Every other income group lost ground even as Reagan's deficit grew exponentially. Unfortunately, Bush is still being assessed. But just one year after Congress bowed to Bush and passed the tax cut of 2001, the Brookings Institution would write:

The official federal budget outlook has deteriorated dramatically since early 2001, due to last year's tax cut, the economic slowdown, and the terrorist attacks on September 11, 2001. In addition to the pressures from the long-anticipated increase in entitlement spending as the nation ages, the government now also faces growing spending needs for defense and homeland security. These trends imply that future taxes must rise, future spending outside of defense and the elderly must decline, or obligations to the elderly and to defense be reduced.

—Alan Auerbach, William G. Gale, and Peter R. Orszag
June 2002, The Budget Outlook: Options for Restoring Fiscal Discipline, Brooking Institution

But GOP supply side, trickle down economics also promises more opportunity, a growing economy, more jobs.
Some in Washington say we had to choose between cutting taxes and cutting the deficit….Today’s numbers show it to be a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring. That’s what has happened.

—George W. Bush

But that's not what happened. Wealth has never trickled down and there is no "higher pie". A Treasury Department analysis refuted Bush directly, confirming in its analysis what many experts and Bush critics had been saying all along: tax cuts do not come remotely close to paying for themselves. [PDF] . In other words, the two promises of "trickle down" theory are dead wrong: wealth does not trickle down and tax revenues do not increase to make up the short fall.

As Dizzy Dean said: it's deja vu all over again! Why does the GOP insist upon repeating failed strategies. Reaganites promised that the stimulated economy would outgrow the deficit and the budget would be balanced "...within three years, maybe even two." It didn't! Reagan tripled the deficit and, on the way, he doubled the size of the federal bureaucracy. Reagan's tax cuts were followed promptly by the longest and worst recession since Herbert Hoover's Great Depression. As Robert Freeman correctly points out: "...Jimmy Carter's last budget deficit was $77 billion. Reagan's first deficit was $128 billion. His second deficit exploded to $208 billion. By the time the "Reagan Revolution" was over, George H.W. Bush was running an annual deficit of $290 billion per year."

How will Bush compare to Reagan? By the year 2002, Citizens for Tax Justice were already writing:

Over the ten-year period, the richest Americans—the best-off one percent—are slated togwb0602a.gif - 10559 Bytes receive tax cuts totaling almost half a trillion dollars. The $477 billion in tax breaks the Bush administration has targeted to this elite group will average $342,000 each over the decade.

By 2010, when (and if) the Bush tax reductions are fully in place, an astonishing 52 percent of the total tax cuts will go to the richest one percent—whose average 2010 income will be $1.5 million. Their tax-cut windfall in that year alone will average $85,000 each. Put another way, of the estimated $234 billion in tax cuts scheduled for the year 2010, $121 billion will go just 1.4 million taxpayers.

Although the rich have already received a hefty down payment on their Bush tax cuts—averaging just under $12,000 each this year—80 percent of their windfall is scheduled to come from tax changes that won’t take effect until after this year, mostly from items that phase in after 2005.

1968 was the year in which measured postwar income was at its most equal for families. The Gini index for households indicates that there has been growing income inequality over the past quarter-century. Inequality grew slowly in the 1970's and rapidly during the early 1980's. ...

Generally, the long-term trend has been toward increasing income inequality. Since 1969, the share of aggregate household income controlled by the lowest income quintile has decreased from 4.1 percent to 3.6 percent in 1997, while the share to the highest quintile increased from 43.0 percent to 49.4 percent. Most noticeably, the share of income controlled by the top 5 percent of households has increased from 16.6 percent to 21.7 percent. Over the same time period, the Gini index rose 17.4 percent to its 1997 level of .459.

Income Inequality, Census Bureau

The trend began then has continued: October 2003 figures from the U.S. Census Bureau make stark reading:
Median household incomes are falling The number of Americans without health insurance rose by 5.7 percent to 43.6 million individuals.

The number of people living below the poverty line ($18,392 for a family of four) climbed to 12.1 percent — 34.6 million people.

Wages make up the majority of income for most American families. As "Downward Mobility," NOW's report on workers and wages illustrates, many American workers are facing corporate efforts to cut pay and benefits, which could lead to more American families struggling to stay out of poverty.

The results in black and white:
  • Twenty percent of the population owns 84% of our private assets, leaving the other 80 percent of the population with 15.6 percent of the assets.
  • In 1960, the wealth gap between the top 20 percent and the bottom 20 percent of Americans was thirty fold. Four decades later it’s more than seventy-five-fold.
  • Either way -- wealth or income – America is more unequal, economists generally agree, than at any time since the start of the Great Depression…
  • And more unequal than any other developed nation today.
Inequality.org
Why are failed strategies repeated? The GOP prescription seems to be: just take another dose of whatever it is that's making you sick.

Unfortunately, there is an entire caste of people who leech off the labors of others. They dare to call it "free enterprise". GOP policies have built our economy around our chief export: death and destruction. It is served up by our biggest industry, the biggest single slice in our budget pie chart —the military! Tax cuts, meanwhile, favored a tiny elite even as purchasing power of the ever poorer American working class depends upon the good graces of China. One is tempted to believe that what normal people perceive as Bush incompetence is, in fact, a deliberate and cynical GOP policy. Bush may have given the game away when he addressed a meeting of the "upper one percent" of the population —the primary beneficiaries of his tax cut. Predictably, he smirked and called them his "base".

Some updates with the very latest Census Bureau info:

Data show one in eight Americans in poverty

WASHINGTON (Reuters) - In the world's biggest economy, one in eight Americans and almost one in four blacks lived in poverty last year, the U.S.
Census Bureau said on Tuesday, both ratios virtually unchanged from 2004.

The survey also showed 15.9 percent of the population, or 46.6 million, had no health insurance, up from 15.6 percent in 2004 and an increase for a fifth consecutive year, even as the economy grew at a 3.2 percent clip. ...

The last time poverty declined was in 2000, the final year of Bill Clinton's presidency, when it fell to 11.3 percent.

The stagnant poverty picture drew attention from Democrats and others who said not enough is being done to help the nation's poor.

"Far too many American families who work hard and play by the rules still wind up living in poverty," said Rep. George Miller (news, bio, voting record) of California, the top Democrat on the House Education and Workforce Committee.

Around a quarter of blacks and 21.8 percent of Hispanics were living in poverty. Among whites, the rate edged down to
8.3 percent from 8.7 percent in 2004.

"Among African Americans the problem correlates primarily to the inner-city and single mothers," said Michael Tanner of CATO Institute, a free-market think tank in Washington. He noted that blacks also suffer disproportionately from poor
education and lower quality jobs.

Black median income, at $30,858, was only 61 percent of the median for whites. ...

The Bush Record: More Poverty, More Uninsured

Bush says “the foundation of our economy is solid, and it’s strong.” That’s true, for some: corporate profits have now climbed to their highest share of GDP since the 1960’s.

But new Census Bureau data show the real state of the current economy. The Bush record on combating poverty and insuring more Americans is an undisputed failure.
Poverty, All Races (Millions)

Number of Uninsured (Millions)


More on the new census data HERE.

A great update courtesy Mark:

Devaluing Labor

By Harold Meyerson
Wednesday, August 30, 2006; Page A19

That America is as dead as the dodo. Ours is the age of the Great Upward Redistribution. The median hourly wage for Americans has declined by 2 percent since 2003, though productivity has been rising handsomely. Last year, according to figures released just yesterday by the Census Bureau, wages for men declined by 1.8 percent and for women by 1.3 percent.

As a remarkable story by Steven Greenhouse and David Leonhardt in Monday's New York Times makes abundantly clear, wages and salaries now make up the lowest share of gross domestic product since 1947, when the government began measuring such things. Corporate profits, by contrast, have risen to their highest share of the GDP since the mid-'60s -- a gain that has come chiefly at the expense of American workers.

Don't take my word for it. According to a report by Goldman Sachs economists, "the most important contributor to higher profit margins over the past five years has been a decline in labor's share of national income."

As the Times story notes, the share of GDP going to profits is also at near-record highs in Western Europe and Japan.

Clearly, globalization has weakened the power of workers and begun to erode the egalitarian policies of the New Deal and social democracy that characterized the advanced industrial world in the second half of the 20th century.

For those who profit from this redistribution, there's something comforting in being able to attribute this shift to the vast, impersonal forces of globalization. The stagnant incomes of most Americans can be depicted as the inevitable outcome of events over which we have no control, like the shifting of tectonic plates.

Problem is, the declining power of the American workforce antedates the integration of China and India into the global labor pool by several decades. Since 1973 productivity gains have outpaced median family income by 3 to 1. Clearly, the war of American employers on unions, which began around that time, is also substantially responsible for the decoupling of increased corporate revenue from employees' paychecks.

Washington Post

Here's a breaking story somewhat off topic, but timely, indeed:

Bashir: CIA used 'micro nuclear' bomb in Bali

Indonesian Muslim cleric Abu Bakar Bashir claims America's top spy agency was involved in the devastating 2002 Bali bombings.

Bashir, who was convicted and imprisoned for having prior knowledge of the attacks which killed 202 people, including 88 Australians, is also appealing for the lives of three convicted bombers to be spared.

Bashir, the spiritual leader of Jemaah Islamiah (JI), was released from prison in June after serving nearly two years.

Amrozi, Ali Ghufron - also known as Mukhlas - and Imam Samudra are awaiting execution for their part in the plot.

In an interview tonight on ABC television's Foreign Correspondent, Bashir claims the device that killed most people in the Bali attack was a Central Intelligence Agency (CIA) "micro-nuclear" bomb. ...









The Existentialist Cowboy
Post a Comment