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There’s More to the Economy Than TaxesPosted on Jul 21, 2008By Marie Cocco When the next president takes office six months from now, it will be both too late and too early to do anything very substantial about the economy. Too late, because the mortgage, banking and energy crises have been so long in the making and their tentacles reach in so many directions that their stranglehold on Americans’ well-being may have only begun to be felt. The first real chance for the new president to make a seismic shift in economic direction isn’t apt to be in 2009. It’s more likely to be in 2010. That is when the Bush tax cuts—essentially, the only economic policy the current president has deliberately put in place during his two terms in office—are set to expire. And that is when future President John McCain or future President Barack Obama must decide if he is going to be a caretaker of conventional wisdom or a creative leader who at last breaks the psychology of using tax policy as a substitute for a broader, bolder economic plan. Using taxes as the centerpiece of—or as a substitute for—a more comprehensive economic policy is the idea that has dominated Washington since the rise of Reaganism nearly three decades ago. McCain at first seemed to have shaken it off when he initially opposed the Bush cuts as too costly and misguided. But then he reverted to me-too-ism in order to please conservative Republicans whose support he needed to grasp his party’s nomination. Obama has shown a milder orthodoxy, but it is orthodox nonetheless. As Bill Clinton did, he would use the tax code to encourage endeavors he finds worthy, whether it’s getting more low- and middle-income people who do not itemize their taxes to be able to deduct their mortgage interest or helping students attend college. He embraces tax cuts for everyone he considers to be middle class, but generally defines the middle as those who make up to $250,000. Yet if the past 30 years or so have taught us anything, it should be that the global forces shaping the U.S. economy are more powerful than a mere tax cut—or tax hike—and they persist no matter what party is in power and who is president. Jimmy Carter confronted an economic situation that was strikingly similar, in some respects, to the one we face today. When Clinton took office, the overhang of deficits and debt created during the 1980s had to be addressed before the investment climate that produced the boom of the late 1990s could take shape.But despite the relative prosperity of the Clinton era, tectonic economic forces continued to be at work. The litany is familiar: Rising health insurance costs increased the burden on businesses, which then cut coverage or shifted costs to workers. Millions of pensions were eliminated. Wage pressure in part from the globalization of the labor force caused Americans’ wages to stagnate, especially for those at the middle and lower rungs of the economy. In 2006, the last year for which data is available, the Census Bureau says real median wages for those who work full time, year-round dropped by slightly more than 1 percent—the third consecutive year of decline. Since 2000, income stagnation has been the most significant economic event for average Americans—though the unglamorous topic rarely makes the evening news. Having mostly missed this larger story, the media now seem stunned by the wave of foreclosures, the intensity of the ire over high gas prices and the pervasive gloom that is afoot. Coverage of the candidates’ economic messages has dwelled on their tax proposals, their energy plans and the relative merits of how either one would bail the country out of the banking mess. But even if every McCain or Obama proposal were enacted immediately, nothing much will have changed because our political system seems incapable of stating the obvious: that the serious erosions of wages, health insurance and pension coverage are themselves a crisis. They require more than the bromides of campaign promises to keep cutting taxes—or to soak the rich. The United States needs nothing less than a new social compact that recognizes what most workers already know: that employers no longer are a reliable source for health insurance or pensions; that workers lack the bargaining power once provided by strong unions and nothing has replaced it. These arguments would make for a transformative campaign. Without them, we are consigned to muddle through until the next full-blown crisis demands a president’s attention. Elsewhere: . CommentsAre you a Truthdig member yet? Login now, or register with Truthdig. Add Your Comment
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A Progressive Journal of News and Opinion. Editor, Robert Scheer. Publisher, Zuade Kaufman.
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By Davol, July 23, 2008 at 10:33 am #
(Unregistered commenter)
I’ve always been against the privatize rhetoric for the reasons playing out now so I’m in I-told-you-so mode. I remember here in Montana a few years back that a Governor Racicot, who later became head of the Republican National Committee, privatized our inexpensive hydroelectric business in the state to a company in Pennsylvania and our previously inexpensive electricity that the state has a surplus of have been going up ever since. I will never forget the lesson of this mistake as my country continues to push for more of the privatize stupidity. Remember back when Cheney was defending Enron who bilked Californians for billions of electricity dollars with orchestrated blackouts? So people want to ignore the history of government serving the people by regulating utilities, and social programs efficiently, with honor, and at a fraction of the cost over a tired, old, yet catchy Reagan sound-bite. Hell let’s go fight the first ever no-bid contract privatized war with a decimated US Military, and see how that works out for US. Here come the Darth Vader (Blackwater) Storm Troopers. Live an learn America.
Report thisBy ej, July 22, 2008 at 11:42 pm #
Problem is that since the end of the Vietnam War the sons and daughters of WWII working class that read this blog have been illusionarily transported to a false sense of uber-working class:::children of blue collar that are bought off by empty vestiges of upward mobility: think dead Tim Russert, son of Big Russ, and all the boomers, former hippies that regale undergraduates with humungous student loans from their sanctimonious perchs as tenured professors or parasites of NGOs or NPOs or Public Television Lackeys who foist countless “pledge weeks” on viewers who are not cognizant that Public Television is funded, in majority, by Corporate Interests. But of course that is alright, because who will Boomer Mommy and Daddy pay off Sally and Johnny’s outrageous student loans unless Boomer Mommy and Daddy can get 20% on Securitzed Mortgage Instruments which inevitably have reduced the real workers to the level of miners in inescapable debt to the Global Company Store.
Report thisBy Smoove, July 22, 2008 at 8:10 pm #
(Unregistered commenter)
Mr. Rothermund:
“LetÂ’s see, the U.S. spends more on healthcare than any other nation”
This country is filthy rich compared to the rest of the world. It doesn’t seem odd to me that we would be outspending everyone.
“The system is choked with bureaucracy.”
So we should un-choke the system with even more bureaucracy? This would be akin to shoving a whole steak down your throat to dislodge the piece you’re choking on.
“if you think the government wastes money, try big business. “
Report thisAgreed, but there is a fundamental difference you’re failing to recognize. Big business wastes THEIR money, while the gov’t wastes OUR(and it is OURS) money.
By Big B, July 22, 2008 at 6:52 pm #
“Think healthcare is expensive now, wait until it gets socialized.”
Report thisLet’s see, the U.S. spends more on healthcare than any other nation. The system is choked with buraucracy. The “market” has led us to a nation of nearly 50 million uninsured, and countless more underinsured. People in our nation go BANKRUPT from crushing medical bills. The policies of deregulation have led us to where we are today, with an economy in shambles. Our government (and it is OURS) is entrusted with running national defense, infrastructure, social security, medicare, and countless other programs that we the people depend on. Yes it could be done more efficiently, but as anyone with experience in the private sector could tell you, if you think the government wastes money, try big business.
By Smoove, July 22, 2008 at 2:49 pm #
(Unregistered commenter)
“Nearly all of the western democracys realized decades ago that privatized (for profit) public services, like health care, education, and public utilities cannot EFFICIENTLY serve a countrys populace.”
Huh? Are you saying Governments are more efficient then markets???
C’mon ladies and gents. Step right up to Universal Health Care! That’s right folks, today’s health care is brought to you by the same people who bring you the DMV/RMV!
You think health care is expensive now? Wait until it gets socialized.
Report thisBy Big B, July 22, 2008 at 12:55 pm #
There can no longer be significant economic growth in the U.S. unless we first get past our provincial opinions that “socializing” public services is a first step towards communism. Nearly all of the western democracys realized decades ago that privatized (for profit) public services, like health care, education, and public utilities cannot efficiently serve a countrys populace. These and other services need to be controlled though a centralized mechanism whose sole purpose is distribution of services to the benefit of ALL citizens of your nation. As seen in the model of the other Western economies, substancial economic growth is best cultivated in nations where workers and corporations can go about their daily business secure in the knowledge that their payroll taxes are providing for their healthcare needs, the education of the next generation, and yes making the trains run (nearly) on time. Many in the U.S. would argue that our government cannot handle the burden of managing basic needs like medical care and education, yet the governments of western Europe, japan, and many other countries like ours seem to do it every day.
Report thisWe must ask ourselves in the U.S. whether we can ever have sustained economic growth again in our nation without a portable system of socialized medicine and an educational system that provides a level playing field for all students, as well as a COLLEGE education for all capable Americans.
Think about this, imagine if, instead of invading and occupying the Middle East, our nation would have spent that one trillion dollars providing a COLLEGE education for every capable American. And when those people finish school they can take their portable healthcare any where in the nation to start a business, build a home and a life without the worries of crushing medical costs and crippling student loan dept. They may even be able to build a house or business with a government incentive providing assistance for alternative energy sources, like solar panels, turbines and geothermal to be used on all new buildings. We may even have enough money to provide incentives for high tech companies to once again make America the scientific envy of the world.
We can do all these things, but we first need to take the bold step of CHANGING! A little socialism mixed in with our massive capitalistic deep pockets would not make us communists, it would only serve to enlighten us.
By Purple Girl, July 22, 2008 at 12:28 pm #
Frankly I have had enough of this Rhetorical BS which has become a mantra for CheneyCorp. the conditions here demand a Surge. An invasion and supprssion of Corp power and influence which has brought not only our economy to it’s knees but has seized our rights and Freedoms.The Tryanny of this Adminsitration and it’s accomplices in Congress and Industry have made this country no different than Saddams Iraq!
Report thisThe so called Surge appears to have been successful in Standing Iraqi’s Up, while Crushing US to the ground- We are in insurmountable debt to foreign investors and have sacrificed thousands of more lives while securing the Oil Regimes strangle Hold on the World Economy and Human lives.
I don’t give a Shit what the Generals see as the ‘Conditions on the Ground in iraq’, when we have been eating dirt because of it!
The Only Surge which has been effective is Ending American Sovereignty!
No cave Dwelling extremeist could have caused the devastating conditions We now face- economically, militarily and Humanitarianly.
Who has proven their HATRED OF THE AMERICAN WAY OF LIFE MORE THEN THIS ADMIN, CONGRESS AND THEIR CORP SPONSOR. WHO INSTIGATED THE OIL STRANGLE HOLD? WHO HAS STOLEN OUR CONSTITUTIONAL RIGHTS AND FREEDOMS. WHO ARE A OUR REAL ENEMEIES,THE REAL TERRORISTS?
Until These people are personally held criminally liable for their acts of treason, War crimes and crimes against Humanity, The Great Experiment has been Conquered by Profiteering Facists!
By southparker, July 22, 2008 at 11:45 am #
(Unregistered commenter)
A-fucking-men! Why is this topic not discussed more in the main stream media? It’s been aluded to over the years, I seem to recall Lou Dobbs focusing on it for quite some time and yet I have yet to hear either candidate address it as a legitimate issue. Are they afraid to anger corporate America maybe? We are destined to revert to the early 1900’s when there were two distinct classes, the wealthy business owners and the slave-labor masses. I have to wonder if the reason more of the masses aren’t afraid, is because they believe they stand a chance of becoming one of the elite. I read somewhere recently, can’t recall where, that “a Republican is someone who works at McDonald’s and wants to be Donald Trump.”
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