Extension of Bush Tax Cuts for Wealthy Cost More than all the Bail Outs Put Together.

When I posted President Obama: Man of the People? Captive of the Ruling Elite? Political Genius? Or All Three? I really wanted to give President Obama the benefit of the doubt. After all, he inherited, he did not cause the current state of our union, in addition to the terrorist-like demands of the Republican. However, after reading Robert Reich's article, The President’s Last Stand Is No Stand At All: Why the Tax Deal is an Abomination, especially, where he says, "And given that the House turns over to Republicans in January, the President probably won’t have another chance like this one", and then, after finding out that the unemployment compensation package the people received in return for handing what's left of our "wealth" over to the privileged plutocrats doesn't even include the 99ers...well, it's very hard to conclude that President Obama's heart is with the people. Not to mention, the matter of phasing out the estate tax, which, in doing so, would only ensure the increase of future generations of elitist  parasites.

"Repeal the estate tax and within a few decades control over America’s productive assets will be in the hands of non-productive Americans who never lifted a finger in their lives except to speed-dial their financial advisors.

People who inherit great wealth just because they’re lucky enough to have super-rich parents don’t have any particular incentive to be entrepreneurial. They don’t have any particular incentive to do anything. Giving them control over the American economy is like giving control over a Boeing 777 to teenagers with joysticks." -- Robert Reich

Bernie Sanders filibusters

Links:

American 99ers Union - Take Action Now

The President proposed a bill that trades tax benefits for the super rich for benefits for the unemployed through 2011 but this bill does NOT include anything for the 99ers!

We implore you to tell your Senators and Congressmen that they MUST add at least 24 more weeks to the current federal limit of 99 weeks.

While an extension would save 99ers from homelessness in the dead of winter, it would also stimulate the economy in this all-important retail quarter leading into Christmas!

Please recommend to your Senators and Congress persons that in the interest of bi-partisanship, they strike a deal with the Republicans, trading the extension of tax cuts for those making over $250,000/year BUT ONLY in exchange for 24 more weeks added to Tier 4 (or a Tier 5) for 99ers.

Tier 5 Unemployment Extension Needed!

Thirty three States qualified for the Federally enacted tier 4 unemployment extension. The criteria by which a State triggered, and as such became eligible for the fourth tier, came as a result of a State's Unemployment Rate remaining at 8.5% for three consecutive months.

By enacting this important legislation, Washington set a precedent that it considered an 8.5% unemployment rate for an "extended period of time" to be unacceptably high, and as such warranted providing Americans with a much needed financial lifeline.

Given the aforementioned facts, would this not mean that with a current National Unemployment Rate of 9.8%, which includes nineteen consecutive months of a National unemployment rate of 9.0% or above, would necessitate the creation of a
tier 5 extension of unemployment insurance?

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If 1928 = 2007 Then Does 1929 = 2008?

Economist Robert Reich, fascinated by the parallels between the 1929 Stock Market Crash and the Crash of 2008, looked at the research, and saw two years that stood out as having the greatest concentration of wealth at the very top: 1928 and 2007.

He writes about that and much more in his new book, Aftershock: The Next Economy and America's Future.  In particular, he was impressed with Marriner Eccles, former Chairman of the Federal Reserve between 1934 and 1948, who after much analysis, saw that the growth and concentration of income at the top created the "underlying economic stresses that caused the Great Depression."  In particular, the creation and destruction of two bubbles.

1. Middle Class Debt Bubble: The declining purchasing power of the middle class, who no longer had what they needed to keep the economy going because so much of the wealth and income in America went to the very top, so that the only way the middle class could continue spending was by going deeper and deeper into debt.
2. Concentrated Wealth Speculative Bubble: The top 1%, had accumulated so much money they started speculating  in stock, commodities and real estate.  

FDR, with the assistance of Eccles fundamentally restructured the economy.  If one thing didn't work, FDR tried another.

In 1935, FDR legalized unions and added protections for collective bargaining.  He created Social Security, the minimum wage, the 40 hour work week, with time and a half...in other words, he found ways to spread whatever prosperity there was in order to get the economy moving again.

Between that - the reorganization of the economy under the New Deal - and WWII, which put Americans to work, the post war economy became "The Great Prosperity", as Reich calls it, which lasted for 30 years.  By the late 1970s, the concentration of wealth at the top went from 23.5% in 1928 to just 9%.  Is it any surprise that the power elite hate the New Deal...hate FDR...hate...

However, not to worry:

The insufferable suffering would soon expire,
as Reverse Robin Hood appeared with bailing wire.
President Reagan, the almighty, we bow to thee;
to the rescue, lift us up, oh great missionary!
The excess wealth transfer will soon commence,
and return us from this horror to a new pretense.
-- a top 1%percenter from 1980

"It became apparent to me, as a capitalist, that if I lent myself to this sort of action and resisted any change designed to benefit all the people, I could be consumed by the poisons of social lag I had helped create. [...] ...men with great economic power had an undue influence in making the rules of the economic game, in shaping the actions of government that enforced those rules, and in conditioning the attitude taken by people as a whole toward those rules. After I had lost faith in my business heroes, I concluded that I and everyone else had an equal right to share in the process by which economic rules are made and changed."  -- Marriner S. Eccles

"As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nations economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped. That is what happened to us in the twenties. We sustained high levels of employment in that period with the aid of an exceptional expansion of debt outside of the banking system. The time came when there were no more poker chips to be loaned on credit. Unemployment further decreased the consumption of goods, which further increased unemployment, thus closing the circle in a continuing decline of prices.This then, was my reading of what brought on the depression." -- Marriner S. Eccles

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Failure to Distribute Economic Prosperity to We the People Broke the Economy

Robert Reich, in the New York Times, today, hits the nail on the head regarding the state of our economy, why things are not improving, and the way to end the Great Recession.  Reich points out that the maldistribution of income is a key factor in the collapse of our economy.

Why?

Because when the richest individuals receive a disproportionate share of the wealth, it leaves our system vulnerable to economic shock caused by the disruption of the interaction between supply and demand.

In other words, not enough of the proceeds arising from the enormous amount of production we've seen over the last thirty years was/is getting to the people who will exercise their purchasing power. That is, the working person, who spends his wages immediately, mostly because he has no other choice, returns his income to the stream of purchasing power, thus creating demand, so crucial to keeping our economy running. If most of the income distributes to the wealthy, or savers, this will short-circuit the economic flow.  When savings are not returned to the stream of active purchasing power, that part of the "income arising from the process of production will not be translated into the salaries, wages, rents, and profits needed to buy back the output of the economy." *

The propensity to invest is much more uncertain. Unlike most consumer spending, capital expenditures are made with the expectation of profit, which depends on finding a market. In good times, people are confident and investment is likely, however, when the unemployment rate is high and the economic forecast, bleak, slowing capital formation.

For the last three decades, tax rates for the wealthy have fallen substantially, while their income has risen rapidly. Real incomes for the top .01% have jumped more than 300% since 1980 and real income has doubled for the top 1%.  How did this happen?  Well according to David Moss from Harvard Business School, deregulation, in addition to tax breaks for corporations, slashing of the social safety net, etc. - legacy of former President Ronald Reagan - played a major part in the growing wealth divide. Moss discovered that income disparities between rich and poor grew as government regulations eased.

Therefore, extending tax-cuts to the rich will not stimulate our economy; rather it will more than likely transform the Great Recession into another Great Depression.

"Where have all the economic gains gone? Mostly to the top. The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income."

* Heilbroner, Robert. Making of Economic Society. p. 155 Prentice-Hall, Inc, 1962.

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Devout Laissez-Faire Reagan Appointee Declares Failure of Capitlism.

Aside from greed, stupidity, and corruption, it's clear that today's economic meltdown has much to do with a general lack of transparency, deregulation of the financial system, excessive leverage, the financial engineering of overly complicated and opaque securities, compensation mechanisms that in the words of James Surowiecki, "even when people recognized the possibility of dragons, they decided it was in their short-term interests (even if it wasn't in their company's interests) to run the risk of getting incinerated anyway", and a blindly or naively optimistic view of free market capitalism that ignores the inevitability of market imperfections.

Despite all the evidence, many of the conservatives are trying to market their own version of why our financial system crashed, and that is that the crash is actually the fault of government regulation. However, there are a few "free market" cheerleaders who have reversed their Panglossian ideas about laissez-faire economics. One of those men is Ronald Reagan appointed, Judge Richard Posner, author of A Failure of Capitalism The Crisis of '08 and the Descent into Depression

The conservatives believe the depression is the result of unwise government policies. I believe it is a market failure...Without any government regulation of the financial industry, the economy, would in all likelihood, be in a depression. We are learning from it that we need a more active and intelligent government to keep our model of a capitalist economy from running off the rails. The movement to deregulate the financial industry went too far by exaggerating the resilience—the self-healing powers—of laissez-faire capitalism.

The depression has hit economic libertarians in the solar plexus because it is largely a consequence not of the government’s overregulating the economy, by doing so fettering free enterprise, rather innate limitations of the free market.” -- Judge Richard Posner, appointed to the US Court of Appeals for the Seventh Circuit by President Ronald Reagan in 1981, and one of the nation’s most prolific legal defenders of free-market economics.

I greatly admire Judge Posner's willingness to rethink some of his fundamental beliefs about free market capitalism, however, after listening to Robert Reich, who I respect immensely, and the Judge discuss it on Tom Ashbrook's On Point radio show, I'm not sure he (Judge Posner) is fully convinced.

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$46 Billion to Subsidize Farming "Corporations"

$46 billion is the total cost Americans pay to subsidize an industry that has not needed subsidizing for a very long time. Less than 2% of all Americans work on a farm today yet we continue to shell out $11 billion dollars to farms that are more like "corporations", in addition to the 18% tariff paid on agricultural imports as opposed to the 5% tarrif paid on other exported, bringing the grand total to $35 billion a year.

Farm subsidies, a temporary remedy for small farmers during the Depression, have been renewed continuously since the collapse of the farm economy during the era that John Steinbeck so vividly portrayed in The Grapes of Wrath.

As Robert Reich pointed out, our outdated...,

"...farm policy is the single most damaging thing we're doing to the world's poor. Ending farm subsidies and tariffs would be the single most important thing we could do to reduce global poverty....

...half the population of the developing world depends on farming for their livelihoods. They can’t earn what the global market would otherwise pay them because America’s subsidized farm exports keep prices artificially low."

Mr. Reich gives the example of American cotton growers. We export cotton for over half the amount it takes us to produce it, effectively leaving farmers around the world in a no win situation. If we put an end to farm subsidies, prices would rise naturally, increasing the value of exports from other countries around the globe, giving those farms a chance prosper, decreasing the amount of poverty worldwide.

Between the $42 billion dollars spent to incarcerate mostly harmless marijuana users and the $46 billion needlessly spent on the agricultural industry, we could probably cover a good percentage of the 47 million uninsured Americans.

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In Honor of Labor Day

Robert Reich argues our nation of citizens has transformed into a nation of powerful consumers and investors driving our country's focus on securing, protecting and maintaining the integrity of our labor force out.

“You and I are complicit. Our “great deals” are somebody else’s lower pay and some corporation’s lobbying."

Consumers, many times thwart the effort of corporations to "do the right thing" by refusing to pay the additional cost required to make "the right thing" work. Reich points out consumers will choose to save a penny rather than contribute to a worthy cause citing the "dolphin-safe" canned tuna example.

“Consumers wanted a dolphin-safe product,” but “if there was a dolphin-safe can of tuna next to a regular can, people chose the cheaper product. Even if the difference was a penny.” -- J. W. Connolly, former president of Heinz, parent company of Star-Kist,

Star-kist scrapped its effort to protect dolphins because consumers were not willing to spend an extra penny.

With the advent of the internet and other new technology, newly empowered consumers tipped the scale in their direction, all of a sudden making American businesses cater to consumers to give them what they want, lower prices...and they got it, Wal-Mart being one example.

According to Reich, Wal-Mart gave into consumer demand, and took the necessary steps to ensure its consumers get lower prices. Unfortunately, lower prices come with a huge price and that is forfeiture of the rights and protection of labor.

I admit I used to be the first one to seek out lower prices and consume as much as I can thinking I had scored big-time, but not so much in the last couple of years. I finall realized most of the "stuff" I had accumulated occupied precious space for absolutely no reason other than to make the the "stuff" I do have use for unusable because I needed a GPS system to locate it, whether it be a can of tuna, my favorite shirt, can-opener or the remote control.

Maybe, Wal-Mart's not so bad after all, or "we the people" are not so innocent.

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