Feb 20, 2011
Don’t let Wisconsin divide us.
Conservatives and liberals actually agree about the most important things.
In fact, most Americans – conservatives and liberals – are fed up with both of the mainstream republican and democratic parties, because it has become obvious that both parties serve Wall Street and the military-industrial complex at the expense of most Americans.
In reality, all Americans – conservatives and liberals:
Don’t let them.
Before we can honestly look at what’s going on in Wisconsin, we need to dispel some commonly-accepted myths.
People who think that debts and deficits don’t matter are wrong. As two top American economists – Carmen Reinhart and Kenneth Rogoff – demonstrated in December 2009 :
The relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies…
As I wrote in January 2010:
Al Martin – former contributor to the Presidential Council of Economic Advisors and retired naval intelligence officer – observed in an April 2005 newsletter that the ratio of total U.S. debt to gross domestic product (GDP) rose from 78 percent in 2000 to 308 percent in April 2005. The International Monetary Fund considers a nation-state with a total debt-to-GDP ratio of 200 percent or more to be a “de-constructed Third World nation-state.”
What “de-constructed” actually means is that a political regime in that country, or series of political regimes, have, through a long period of fraud, abuse, graft, corruption and mismanagement, effectively collapsed the economy of that country.
Forbes noted in December:
Add the unfunded portion of entitlement programs and we’re at 840% of GDP.
Boston University economics professor and former Senior Economist for the President’s Council of Economic Advisers Laurence Kotlikoff says that the real federal debt is $202 trillion dollars, and that the U.S. is bankrupt.
So we have to reduce our debt.
And yet the government has been spending like a drunken sailor … while slashing taxes.
Not Liberal or Conservative … But Redistribution of Wealth Up to the Ultra-Rich
As I noted last December:
Ronald Reagan gave big tax cuts to the wealthy.
So it is dramatic that Reagan’s director of Office of Management and Budget – David Stockman – calls the Bush tax cuts “the biggest fiscal mistake in history”.
Specifically, Stockman told Dylan Ratigan that Bush’s advisers forecast a $5 trillion surplus over 10 years. But “two unfunded wars and a Fed engineered housing bubble later”, we’re in a $ 5 trillion cumulative deficit. So Bush made a $10 trillion mistake.
Stockman said extending the Bush tax cuts won’t stimulate the economy, the fact that the tax cut extensions will expire on the eve of the 2012 elections will panic politicians and force them to renew them yet again, and that “we’re destroying the economy on Uncle Sam’s credit card.
Indeed, Moody’s and other rating services are threatening to downgrade America’s credit rating due to the extension of the tax cuts for the wealthy:
The rating agency said in a report Monday that last week’s agreement between the White House and congressional Republicans should bolster economic growth in the next two years – but at the expense of the nation’s already perilous budget position down the road.
The agreement to extend the Bush tax cuts for two years and trim workers’ payroll tax contributions for one could raise the U.S. debt-to-GDP ratio at 2012 to 72-73% from around 62% now, Moody’s said. It said that without the tax package, that number might have been around 68% in 2012. [These numbers are low, as discussed above.]
“Unless there are offsetting measures, the package will be credit negative for the US and increase the likelihood of a negative outlook on the US government’s Aaa rating during the next two years,” Moody’s said.
The comment comes as the bond market seems to have reached very much the same conclusion. The yield on the 10-year Treasury has soared to 3.32% from around 2.4% two months ago, as investors bet on a stronger recovery and rising inflation.
At the same time, our leaders are spending like they just won the lottery.
As I wrote last March:
Why aren’t our government “leaders” talking about slashing the military-industrial complex, which is ruining our economy with unnecessary imperial adventures?
And why aren’t they taking away the power to create credit from the private banking giants – which is costing our economy trillions of dollars (and is leading to a decrease in loans to the little guy) – and give it back to the states?
If we did these things, we wouldn’t have to raise taxes or cut core services.
Indeed, many of the country’s top economists say that we no longer have free market capitalism in America, but socialism for the rich – or even fascism. Both liberals and conservatives hate such a system.
And see this short video from England.
The same thing is playing out on the state level.
For example, if the Wisconsin governor was proposing cutting pensions because everyone needed to share in the sacrifice, that would be understandable. But as the Washington Post’s Ezra Klein points out:
The Badger State was actually in pretty good shape. It was supposed to end this budget cycle with about $120 million in the bank. Instead, it’s facing a deficit. Why? I’ll let the state’s official fiscal scorekeeper explain (pdf):
More than half of the lower estimate ($117.2 million) is due to the impact of Special Session Senate Bill 2 (health savings accounts), Assembly Bill 3 (tax deductions/credits for relocated businesses), and Assembly Bill 7 (tax exclusion for new employees).
In English: The governor called a special session of the legislature and signed two business tax breaks and a conservative health-care policy experiment that lowers overall tax revenues (among other things). The new legislation was not offset, and it helped turn a surplus into a deficit [see update at end of post]. As Brian Beutler writes, “public workers are being asked to pick up the tab for this agenda.”
Update … The $130 million deficit now projected for 2011 isn’t the fault of the tax breaks passed during Walker’s special session, though his special session created about $120 million in deficit spending between 2011 and 2013 — and perhaps more than that, if his policies are extended. That is to say, the deficit spending he created in his special session is about equal to the deficit Wisconsin faces this year, but it’s not technically correct to say that Walker created 2011’s deficit. Rather, he added $120 million to the 2011-2013 deficits, and perhaps more in the years after that.
And according to Madison’s Capitol Times:
To the extent that there is an imbalance — Walker claims there is a $137 million deficit — it is not because of a drop in revenues or increases in the cost of state employee contracts, benefits or pensions. It is because Walker and his allies pushed through $140 million in new spending for special-interest groups in January. If the Legislature were simply to rescind Walker’s new spending schemes — or delay their implementation until they are offset by fresh revenues — the “crisis” would not exist.
The Fiscal Bureau memo — which readers can access at http://legis.wisconsin.gov/lfb/Misc/2011_01_31Vos&Darling.pdf — makes it clear that Walker did not inherit a budget that required a repair bill.
The facts are not debatable.
Because of the painful choices made by the previous Legislature, Wisconsin is in better shape fiscally than most states.
[Walker] has proposed a $137 million budget “repair” bill that he intends to use as a vehicle to … Pay for schemes that redirect state tax dollars to wealthy individuals and corporate interests that have been sources of campaign funding for Walker’s fellow Republicans and special-interest campaigns on their behalf. As Madison’s Democratic state Rep. Brett Hulsey notes, the governor and legislators aligned with him have over the past month given away special-interest favors to every lobby group that came asking, creating zero jobs in the process “but increasing the deficit by more than $100 million.”Actually, Hulsey’s being conservative in his estimate of how much money Walker and his allies have misappropriated for political purposes.
“Since his inauguration in early January, Walker has approved $140 million in new special-interest spending that includes:
“• $25 million for an economic development fund for job creation that still has $73 million due to a lack of job creation. Walker is creating a $25 million hole which will not create or retain jobs.
“• $48 million for private health savings accounts, which primarily benefit the wealthy. A study from the federal Governmental Accountability Office showed the average adjusted gross income of HSA participants was $139,000 and nearly half of HSA participants reported withdrawing nothing from their HSA, evidence that it is serving as a tax shelter for wealthy participants.
“• $67 million for a tax shift plan, so ill-conceived that at best the benefit provided to ‘job creators’ would be less than a dollar a day per new job, and may be as little as 30 cents a day.”
State Rep. Mark Pocan, D-Madison, sums up this scheming accurately when he says: “In one fell swoop, Gov. Walker is trying to institute a sweeping radical and dangerous notion that will return Wisconsin to the days when land barons and railroad tycoons controlled the political elites in Madison.”
State Senator Jon Erpenbach says that the unions have already agreed to cuts:
“The state employees have talked about the money and giving up the money, and that’s fine. But what they have a problem with – and what a lot of us have a problem with – is the fact that Governor Walker is taking decades of union law and throwing it out the window and trying to bust the unions altogether, and that’s just not the right way to go.”
“The public employees have said you can take the money – the money isn’t the issue. The issue is their right to collectively bargain their contracts. And that’s where we all have to draw the line.”
Economist Menzie Chen argues that Wisconsin public workers make less than their private counterparts, even when pensions are included. Pulitzer prize winning journalist David Cay Johnston says that Wisconsin’s governor is really trying to bust unions as a first step in driving down everyone’s wages … both in the public and the private sector. Mother Jones alleges that the billionaire Koch brothers – the ones who Supreme Court justices Scalia and Thomas hung out with before deciding to allow unlimited foreign money to pour into American political races – funded the election of Wisconsin’s governor. And Forbes’ columnist Rick Ungar claims that the Kochs are behind the crackdown on Wisconsin unions, as they have business interests in Wisconsin. Whether or not these claims are true is beyond the scope of this discussion, and I haven’t researched them enough to weigh in one way or the other.
On the other hand, as James Sherk of the Heritage Foundation argues in the New York Times:
“It is impossible to bargain collectively with the government.”
That wasn’t Newt Gingrich, or Ron Paul, or Ronald Reagan talking. That was George Meany — the former president of the A.F.L.-C.I.O — in 1955. Government unions are unremarkable today, but the labor movement once thought the idea absurd.
When government unions strike, they strike against taxpayers. F.D.R. considered this “unthinkable and intolerable.”
Government collective bargaining means voters do not have the final say on public policy. Instead their elected representatives must negotiate spending and policy decisions with unions. That is not exactly democratic – a fact that unions once recognized.
But whether or not you think public union workers are whiners and public labor unions harmful or beneficial, the fact is that the governor of Wisconsin is trying to do exactly what the federal government is trying to do: throw money at their ultra-rich friends, and pay for it by shafting the little guy. It almost appears as if the federal and state governments are using “shock doctrine” tactics as an excuse for imposing “austerity measures” which benefit the wealthy at the expense of the little guy just like failed third world countries. (Remember, Reuters claims that republicans are trying to bankrupt states in order to weaken unions.)
Indeed, Governor Walker is a true conservative to the same extent that President Obama is a true liberal … not very much.
Again, if everyone – giant banks and corporations as well as workers – were being asked to share in the sacrifice, that would be completely different. I’m all for shared sacrifice (I work for the private sector, but I’ll sacrifice a little if we can also claw back the ill-gotten gains from Wall Street CEO’s. See this, this and this.)
But that’s not what’s happening. Instead, federal and state policies are making the rich richer and everyone else poorer.
And if you still think that this is a conservative versus liberal issue, listen to what tried-and-proven conservatives (re-read Stockman’s statements above) are saying.
For example, Paul Craig Roberts, whose conservative credentials are impeccable – former Assistant Secretary of the Treasury under President Reagan, one of the people who most widely promoted “trickle down” economics, former editor of the Wall Street Journal, listed by Who’s Who in America as one of the 1,000 most influential political thinkers in the world, and PhD economist – writes:
Obama’s new budget is a continuation of Wall Street’s class war against the poor and middle class.
Wall Street wasn’t through with us when the banksters sold their fraudulent derivatives into our pension funds, wrecked Americans’ job prospects and retirement plans, secured a $700 billion bailout at taxpayers’ expense while foreclosing on the homes of millions of Americans, and loaded up the Federal Reserve’s balance sheet with several trillion dollars of junk financial paper in exchange for newly created money to shore up the banks’ balance sheets.
The effect of the Federal Reserve’s “quantitative easing” on inflation, interest rates, and the dollar’s foreign exchange value are yet to hit. When they do, Americans will get a lesson in poverty.
Now the ruling oligarchies have struck again, this time through the federal budget. The U.S. government has a huge military/security budget. It is as large as the budgets of the rest of the world combined. The Pentagon, CIA, and Homeland Security budgets account for the $1.1 trillion federal deficit that the Obama administration forecasts for fiscal year 2012. This massive deficit spending serves only one purpose–the enrichment of the private companies that serve the military/security complex. These companies, along with those on Wall Street, are who elect the U.S. government.
The U.S. is determined to create as many enemies as possible in order to continue its bleeding of the American population to feed the ravenous military/security complex.
With a perpetual budget deficit driven by the military/security complex’s desire for profits, the real cause of America’s enormous budget deficit is off-limits for discussion.
The U.S. military/security complex is capable of creating any number of… events in order to make these threats seem real to a public whose intelligence is limited to TV, shopping mall experiences, and football games.
So Americans are stuck with enormous budget deficits that the Federal Reserve must finance by printing new money, money that sooner or later will destroy the purchasing power of the dollar and its role as world reserve currency. When the dollar goes, American power goes.
For the ruling oligarchies, the question is: how to save their power.
Their answer is: make the people pay.
And that is what their latest puppet, President Obama, is doing.
These goals [of propping up foreign dictators who serve U.S. interests] are far more important to the American elite than Pell Grants that enable poor Americans to obtain an education, or clean water, or community block grants, or the low income energy assistance program (cut by the amount that U.S. taxpayers are forced to give to Israel).
There are also $7,700 million of cuts in Medicaid and other health programs over the next five years.
Given the magnitude of the U.S. budget deficit, these sums are a pittance. The cuts will have no effect on U.S. Treasury financing needs. They will put no breaks on the Federal Reserve’s need to print money in order to keep the U.S. government in operation.
These cuts serve one purpose: to further the Republican Party’s myth that America is in economic trouble because of the poor: The poor are shiftless. They won’t work. The only reason unemployment is high is that the poor had rather be on welfare.
A new addition to the welfare myth is that recent middle class college graduates won’t take the jobs offered them, because their parents have too much money, and the kids like living at home without having to do anything. A spoiled generation, they come out of university refusing any job that doesn’t start out as CEO of a Fortune 500 company. The reason that engineering graduates do not get job interviews is that they do not want them.
What all this leads to is an assault on “entitlements”, which means Social Security and Medicare. The elites have programmed, through their control of the media, a large part of the population, especially those who think of themselves as conservatives, to conflate “entitlements” with welfare. America is going to hell not because of foreign wars that serve no American purpose, but because people, who have paid 15% of their payroll all their lives for old age pensions and medical care, want “handouts” in their retirement years. Why do these selfish people think that working Americans should be forced through payroll taxes to pay for the pensions and medical care of the retirees? Why didn’t the retirees consume less and prepare for their own retirement?
The elite’s line, and that of their hired spokespersons in “think tanks” and universities, is that America is in trouble because of its retirees.
Too many Americans have been brainwashed to believe that America is in trouble because of its poor and its retirees. America is not in trouble because it coerces a dwindling number of taxpayers to support the military/security complex’s enormous profits, American puppet governments abroad, and Israel.
The American elite’s solution for America’s problems is not merely to foreclose on the homes of Americans whose jobs were sent offshore, but to add to the numbers of distressed Americans with nothing to lose the sick and the dispossessed retirees, and the university graduates who cannot find jobs that have been sent to China and India.
And Ron Paul – who has very strong conservative credentials, and who won the Presidential straw poll at the Conservative Political Action Conference two years in a row – recently said in his CPAC speech:
We’re going to continue to bail out, we’re going to continue to spend the money, nobody wants to cut. I am sure that half the people in this room won’t cut one penny on the military, and the military is not equated to defense. Defense spending is one thing, military spending is what Eisenhower called the “military-industrial complex” and we have to go after that.
But let’s say government, as you all, I am sure would agree, is out of control, and it’s very hard for us to get a handle on it. So let’s say we even theoretically, and a miracle happens and we balance the budget where we are today, it would be still a disaster because we’re spending too much money. But it wouldn’t change a whole lot. When a crisis comes, guess what happens? Guess who does the bailing out? The Federal Reserve used $4 trillion to pass out without congressional approval and most people say “Oh, well that’s the Federal Reserve’s job to do that.” No, it is our job to check up and find what the Federal Reserve has done, audit them, and find out who their buddies are that they’re taking care of.
The Federal Reserve creates money out of thin air, they can loan to banks, central banks of the world, to other governments and international financial institutions and we’re not even allowed to know. They resent the fact that when I ask these questions, that they don’t have to give us information. That’s why the bill to audit the Fed is the first step to ending the Federal Reserve.
I think and I believe that we have had way too much bipartisanship for about 60 years. …. It’s the bipartisanship of the welfare system, the warfare system, the monetary system, the challenge to our civil liberties, it all goes through with support from both parties. So there’s way too much bipartisanship. This should be a challenge of the issue of philosophy – good philosophy versus bad philosophy.
But where I think we go astray on this exceptionalism is there are some people and sometimes they’re referred as neoconservatives and they’re sort of neo-Jacobins where they believe that we have this moral responsibility to use force to go around the world and say, “You will do it our way or else.” Well force doesn’t work, it never works.
This article was posted: Sunday, February 20, 2011 at 7:32 am