Tag Archives: economy

Blaming The Economy’s Victims For Economic Crimes

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Blame the unions, blame the unemployed, blame loans to the poor, blame the government… As income and wealth increasingly go to a few at the top public anger is directed at the economy’s victims.
I am in a clinic all day participating in a medical study, so I was talking to one of the nurses. She brought up that California is in real trouble, is going broke, it’s a real mess. She says she doesn’t know what we’re going to do. She has heard that, “lots of states are going bankrupt. There is no money anymore.”
So I asked her what we should do about it.
She said it is because of the unions. “It’s just ridiculous. They want so much.”
I asked if she follows the news closely, she said she does. “I watch the news a lot.”
Some facts: California is famous for leading the country in a wave of anti-government tax-cutting and into Reaganism. We cut taxes an an anti-government ferver and increased prison spending in a law-and-order fever. Then the federal government cut taxes and increased military spending, leading to big deficits. Now we’re out of money to run the state government and the country is getting there, too. California’s problems have little or nothing to do with what state employees are paid, and a lot to do with tax cuts and people across the state not getting paid enough.
Blaming The Unions
This weekend CBS’ 60 Minutes joined the anti-worker chorus, blaming public employee unions for the problems faced by the states. Media Matters, in 60 Minutes’ one-sided, GOP-friendly report on state budgets describes the segment,

In 2,600 words about state deficits, you won’t find the phrase “tax cuts.” Instead, CBS adopts the Republican framing that deficits are all about spending — frequently with loaded phrasing like “gold-plated retirement and health care packages.” And throughout the report, CBS allows Christie, New Jersey’s Republican governor, to launch attacks on unions and make unsupported claims about budget problems, all without ever challenging his assertions and without including substantive disagreement from Christie critics.
… You’d never know from CBS’ report that a big part of the reason that “Christie and his predecessors” failed to make required contributions to the pension fund is that they decided to use the money for tax cuts instead. [emphasis added]

Mike Hall at the AFL-CIO blog explains that New jersey’s workers and pensions are not the problem,

While politicians like Christie rail against the pensions public employees have secured through collective bargaining–painting them as overly generous golden parachutes, McEntee notes the average annual pension for an AFSCME member is $19,000, and the workers contribute 80 percent during their lifetime on the job.

Tax cuts, income and wealth going to a few at the top, but the unions take the blame because they fight for a better life for working people.
Blaming The Unemployed
The unemployed and the checks they get are often blamed for their plight. They are called “lazy,” and it is even suggested the be tested for drugs. CAF graduate David Sirota, in Why the ‘Lazy Jobless’ Myth Persists

The thesis undergirding all the rhetoric was summed up by conservative commentator Ben Stein, who insisted that “the people who have been laid off and cannot find work are generally people with poor work habits and poor personalities.”
[. . .] The trouble, though, is that the whole narrative averts our focus from the job-killing trade, tax-cut and budget policies that are really responsible for destroying the economy. And this narrative, mind you, is not some run-of-the-mill distraction. The myth of the lazy unemployed is what duck-and-cover exercises and backyard nuclear shelters were to a past era–an alluring palliative that manufactures false comfort in the face of unthinkable disaster.

Blaming The Poor And Government
Republicans on the Financial Crisis Inquiry Commission are sabotaging the commission’s work, demanding that “Wall Street” and “deregulation” not appear anywhere in the report. They are refusing to participate, instead releasing a counter-report blaming the government, claiming We, the People forced the giant banks to give home loans to the poor, and blaming the poor for receiving those loans.
What People Think
People tend to think about what is put in front of them to think about. That’s why everyone goes to see a new movie on the first weekend instead of waiting until they can get good seats with no lines. Wall Street and the likes of the Chamber of Commerce understand this so they put scapegoats in front of the public to mask what they are doing. Right now there is a corporate/right campaign to blame working people for the problems they caused.
Like 60 Minutes this weekend, the news sources are run by big corporations, and they have been saying over and over (and over and over) that unions and the unemployed and the poor and the government are the cause of the problems. (When was the last time you saw a union representative on TV, explaining the benefits of joining a union?) And, naturally, after hearing these things over and over (and over and over), viewers like the nurse at the clinic I am in think they should blame the unions, the unemployed, the poor, the government, too.
So much of the income and wealth are concentrating at the top. Taxes have been cut so far. The things our government does for us have been cut back so far. Working people’s wages have been stagnant for so long.
But the blame right now is directed at the unions, the poor, the unemployed and our government: We, the People.
As the AFL-CIO blog concludes,

The long term solution to state and local fiscal challenges … is “a robust economy, one that is creating jobs and replenishing tax revenue.”

To repeat: The long term solution to state and local fiscal challenges … is “a robust economy, one that is creating jobs and replenishing tax revenue.”
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am also a Fellow with CAF.

California Republicans Demand Mass Layoffs

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How do California’s Republicans think California should solve the state’s budget crisis, which results from people being laid off and losing their houses?  They are demanding nothing less than mass layoffs of state employees. 

Every single budget compromise that has been negotiated has been rejected by the Republicans. They say there is one, and only one, budget solution they will vote for: mass layoffs of state employees and contractors.  They want the state’s teachers fired, construction employees fired, firefighters fired, DMV workers fired, medical workers fired and mass firings from the rest of the state’s departments.  And when they are done with that they demand cutbacks in medical care for the elderly, disabled, blind, and everyone else.

How are they getting away with this? 

Continue reading →

Stimulate The California Economy And Balance The Budget

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California’s unemployment rate has soared to 8.2% — third highest in the United States!  We need to stimulate California’s economy.  We need a massive jobs and infrastructure investment program, rebuilding our roads and bridges and schools and making our buildings energy-efficient, and hiring more teachers and police and firefighters.  We can do this, while balancing the budget at the same time.

How can we do this?  We can raise taxes on big corporations and the wealthy and use the money to stimulate the economy and balance the budget and get things moving again.

Our economic system is not perfect, so over time income tends to concentrate at the top, which makes it harder for most people to get by.  People spend less and things slow down.  We are seeing this today — wealth has massively concentrated at the top, and the consumer is “tapped out.”  No one is buying cars and Christmas sales will be much lower. 

Taxes on the wealthy and corporations fix this by recirculating money that has bunched up at the top.  Taxes provide the resources that We, the People can then use to stimulate the economy and get it moving again.

The corporations will try to say that this tax increase will slow the
economy.  But this isn’t what has happened when this has been done in
the past.  Actually history shows that taxing the wealthiest and
corporations helps our economy.  This is not surprising when you realize that more people with more jobs and money to spend is a good thing in a consumer-driven economy. 

There is a problem, though.  In California we have a rule that we cannot pass any tax with less than a two-thirds vote.  A little over half the people voted to impose this two-thirds requirement — and now 100% of us are hobbled for doing what we need to do to fix the economy.  Instead of stimulating the economy we have to lay off teachers and firefighters and road workers, further worsening the recession, because cutting budgets is the only option available.  Even if 55% or 60% of us would rather hire people and stimulate the economy, we still can’t.

So we need to change this rule.  We need to be able to pass taxes on the corporations and the rich, and get the economy moving again. 

We Prosper From Higher Taxes, Not Lower

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I came across the article, Why the Economy Grows Like Crazy Amid High Taxes, by Larry Beinhart, and it says some things that the people of California should hear.

Beinhart make some very good points. first, he points out that if you look at the periods of higher taxes, you see that these are the very periods when the economy does much better. He writes,

Examples include World War II and the Truman-Eisenhower years, when it
was around 90 percent, and the Clinton years, when it was high relative
to the preceding and following administrations.

He also points out that big tax cuts are often followed by bubbles and crashes, like the big crashes of 1929, 1987 and 2008.

Beinhart says that one reason for this is that low taxes encourage businesses to distribute profits rather than reinvest them in their companies. When taxes are low the owners have incentive to grab all the cash they can out of the company.  But when taxes are high every dollar they take out of the company is immediately reduced.  If the money stays and is reinvested in the company the company’s value grows and can later be taken as capital gains.  As a former business owner I understand how this works. 

Beinhart writes,

With high taxes, the only way to retain the bulk of the wealth
created by a business is by reinvesting it in the business — in
plants, equipment, staff, research and development, new products and
all the rest.

The higher taxes are (and from 1940 to 1964 the top rates were around 90 percent), the more this is true.

This creates a bias toward long-term planning.

If
a business is planning for the long term, it wants a happy, stable work
force. It becomes worthwhile to pay good wages and offer decent
benefits.

So low taxes cause companies to only think a few months ahead and sacrifice their long-term good for short-term gain, instead of planning to be in business year after year.  Also, low taxes encourage a fast-buck climate in which takeovers and disruption rule.  Beinhart writes that when the Reagan tax cut era took over,

It was no longer enough for a business to be a reasonably good business, making steady, reliable profits.

Indeed,
that became a very bad condition for a business to be in. It made it a
target for takeovers by people who were willing to milk them of their
profits.

There is a lot more over at the article, so go read the rest.

This holds important lessons for Californians.  Along with Beinhart’s observations, there are other reasons to think that low taxes harm the economy.  For one, it is the nature of our economic system that a few people can come into possession of huge shares of the wealth.  This dries up the economy because regular people don’t have enough of a share of the wealth to allow them to spend much on consumer goods, etc.  We are seeing this happening today.  On top of that we are seeing the government forced by tax shortfalls to lay people off just at the time we need more people to be able to buy houses, cars, etc.  Taxes provide jobs and redistribute the wealth in multiple ways, so that regular people CAN buy houses, etc.

But in California we have rules that don’t let us raise taxes, even though we can see that we need the income so that the state can keep teachers, firefighters, roadworkers, etc. employed!  We as citizens actually tolerate rules that keep us from asking corporations and wealthy people from pitching in to help fix the economy!  It is time for us to start looking at how to fix these rules that hobble us during times of economic emergency.