Crabby Old Lady has been on sabbatical from this blog for a couple of months. Spurred on by the debt ceiling kabuki that obsessed Washington politicians for months along with their general falsehoods and stupidities on the subject of the nation’s problems, she has spent a great deal of that time studying the business press and economics in general.
For all her life, Crabby had assumed that economics, particularly with the need to understand numbers and statistics, was too much for her math-deficient brain. Crabby’s more a word person. But here is a revelation:
If you put your mind to it, if you carefully separate the ignorance, lies, partisan ideology and spin from the facts in any given business news report or commentary from a wide range of publications, anyone with slightly above average intelligence (we’re all from Lake Wobegon at TimeGoesBy, right?) can figure out this stuff.
Leaving the intricate economic models with their convoluted formulae to the Nobel winners, here is what Crabby Old Lady has learned and discerned about the trouble we’re in, broken down to its essentials:
If, as everyone says (Crabby has no reason to believe otherwise), 70 percent of the U.S. economy is dependent on consumer buying, then everything that has been done since the crash of 2008 is useless to improving the economy. Everything that has been done up until now has sent consumers (all of us) to our bunkers.
Twenty percent of eligible workers – the unemployed and the underemployed – do not and cannot spend beyond subsistence level. (Forty million Americans are on food stamps.) Since the Bureau of Labor Statistics does not count workers who, unable to find jobs, have dropped out of the workforce, that percentage is much higher than is calculated each month.
Because wages continue their 30-year gradual drop or stagnation, millions who are lucky enough to have jobs are not buying. They are living paycheck to paycheck, cutting back everywhere they can.
Nervous about where the economy is headed, others with a bit more than the funds to keep life, limb and credit card together are saving it. The savings rate hasn’t been this high in decades.
While the majority of Americans (read: consumer economy) have been losing ground and/or hoarding their money over the past three years, the federal government’s solutions – an array of trillions of dollars in bailouts, stimuli, low- and no-interest loans to corporations – have not only failed to lift the economy, they have, by any measure except corporate profits, dug a deeper ditch. (Well, it’s more complicated than that, but the result is the same.)
The Washington powers that be keep begging corporations to hire people with the trillion-plus cash surplus they are sitting on. But why should they? Without demand for their products and services, there is no point to increasing production.
In addition, corporations, being the greedy bastards they are, pump up their profits year by year laying off more workers and shipping more jobs overseas to low-wage countries without a smidgeon of protest from the government, further impoverishing America. This makes no difference to corporate executives who are stashing their increasing personal fortunes overseas anyway.
While all this continues, the know-nothing and no-to-everything tea party-enthralled members of Congress march the nation ever closer to an economic cliff with no reason other than to thwart a president they openly hate. The goal, chanted by Republican House Leader Mitch McConnell, Representative Michele Bachmann and others, is to make Barack Obama a “one term president.”
Which brings Crabby Old Lady to this: the only hope the people of America have for a brighter economic future is President Obama. Congress sings only one tune, cut poor people’s benefits, and that doesn’t increase consumer demand.
So the president is the only person who can actually do anything productive.
First, however, he must ditch his annoying chant, bipartisanship, which has proved to be as much a failure as the economy. It is evident after two-and-a-half years that Congressional Republicans would rather turn the U.S. into a third-world country than compromise with the president.
Once he has given up that bipartisan mantra, Obama should go gigantic. Crabby has come to believe this is the only possible solution and that if the president will do it, a country that is crying out for jobs will cheer like nothing he has heard since Berlin.
In early September, President Obama is scheduled to make a speech laying out his jobs plan. From leaks so far, the biggest news we have is that he will ask Congress to extend the payroll tax holiday and – let’s chant it together: “deal with long-term debt.”
Oh, ho hum. We’ve seen that movie for the past year and it just means we’ll have to listen to more of Representative Eric Cantor’s shared sacrifice talking points dictated by the corporate chieftains who bankroll his campaign while the economy continues to deteriorate.
The president needs to ignore the Republicans and go big, bigger than anything since the 1930s. In fact, a lot like the 1930s:
Create a new New Deal – a modern WPA, CCC, etc. The whole country’s infrastructure is falling apart and rebuilding throughout the land will create millions of jobs and not just those paid by the federal government. All the tools, equipment, big machines, transportation, supplies like steel, concrete, etc. have to come from somewhere. That means manufacturing jobs in the private sector.
All these new jobs will create other new businesses that grow up in the cities and towns where there are jobs. Empty storefronts will open again. Homes will be bought. Local tax revenues will grow.
And while the president is crafting this jobs program, he should, when feasible, target in particular the local projects Republican Congress members want in their districts. Then, when he gives that speech in about two weeks, SELL it.
Play hardball the way Republicans do. Choose one of those Republican projects and lay out in detail how that community will improve while their broken bridge or rail line or schools are fixed: the number of new jobs, new businesses, projected taxes and how many fire fighters, teachers and police can be rehired.
Do this and dare the Republicans to refuse to pass it. Crabby Old Lady didn’t think this up herself, you know – a lot of people with strings of letters behind their names are saying it too – and she is certain the people of America will support him big time – if he goes big time enough.
How to pay for it? Come on, Ben Bernanke, print more money. You already did that by the trillions for the bailouts. Now do it not just for the people, but for the future of America because we’re not getting out of this recession/depression by cutting benefits on the people who have already given all they have.
Sure, it will probably lead to some inflation. We can handle that for awhile. We cannot handle much more of this economic disaster. (See London riots.)
Still, a bold jobs program is not enough. Here are a few budget items that need to be implemented. Crabby is not picking on rich people for revenge. It’s because all the jobs programs in the world won’t help much if the wealth distribution gap is not reduced.
And don’t worry about those Congressional Republicans. If the president goes big enough on all this, the people will see to it that their Congress members support these items too – or lose their jobs:
Raise taxes on corporations. “Experts” keep saying that business is not hiring because they have no confidence in what the federal government might do next meaning raise taxes or impose more regulation. Those are red herrings. They are not hiring because there is no consumer demand. With jobs and, therefore, demand, they’ll pay the taxes and live with the regulations which, in most cases, are needed.
Allow the Bush tax cuts on the rich to expire and taking it further, increase taxes on the wealthy whose income, including capital gains and dividends, is above $1 million. The rich will squeal but in their day-to-day lives will barely notice it. (They should be happy we don’t return to the highest tax bracket of the Eisenhower years, 91 percent.
Neither corporations nor rich individuals are “job creators” as Republicans keep insisting. We are years into this recession and corporations have not hired anyone to speak of. And what are individuals doing – hiring a nanny? A housekeeper? A pool boy?
Of course, the salary cap on Social Security should be eliminated. This alone will come close to ensuring the program for the next 75 years with only a couple of other smaller tweaks needed to close the shortfall completely.
For elders, absolutely no decreases of any kind to Social Security. Not just for current beneficiaries, but everyone. In today’s economy, workers cannot possibly save for retirement.
Half of workers make so little money they pay no income tax at all. With income that low, Social Security is their only hope for a minimal retirement which isn’t good enough, but a big jobs program that Crabby outlines could help change that.
Crabby Old Lady is leaving out a lot of nuance and details. Foreign policy (which makes her eyes cross), corruption on Wall Street, corporate control of Congress along with the awesome stupidity and cupidity of many of its members each play a part.
After weeks studying the economics of the left and right, conservative and liberal, historical and current, she believes this is America’s best, maybe only chance to avoid a decade or more of continued unwinding because the only way the economy will get better is to get more people working, millions more. Congress will not do that so the president is the only elected official who can.
Of course, Crabby could be wrong. However, solutions of the past three years have failed so how much worse could these ideas be.
At The Elder Storytelling Place today, Mary B Summerlin: An Invitation to Dinner