Taxes and Unions Got Us Out Of the Depression

I wonder why no one has pointed out the real reason the Republicans filibustered the "stimulus bill" this week? They blocked an expansion of food stamps, an extension of unemployment benefits, assistance for disabled veterans, help for seniors and a boost for renewable energy.

Here is the reason: Those were not about taxes.

The Democrats caved (of course), so the public now has validation of the notion that taxes harm the economy.

Message: Economy in trouble? Tax rebates and tax cuts will "stimulate" things.

So will this "stimulus" help? Maybe a slight bit. The government will borrow another $150-or-so billion and pump it into the economy. The deficit will be even bigger. The world will trust the dollar even less.

Here is something to think about. This economic problem is about debt. Since Reagan the country and the people in it have been borrowing huge amounts of money to keep things going. (Except for the years that Clinton balanced the budget and was paying back some of the debt.)

Taxes and unions got us out of the depression. Redistribution of income. Taxes on the rich, the money used to build infrastructure and provide good jobs, and unions to force the corporations to give raises and benefits. In a consumer economy you want more money in the hands of the consumers -- not the rich. DUH!

Comments

[dchavern]

I will listen to anyone who is willing to put there hand up and say "I would personally be willing to pay significantly more in taxes." There is no point to any discussion that starts with "tax that other guy". It is always easy to support taking someone else's money.

[LeftRight]

I would be willing to pay more in taxes, provided that they were going to the right things. For example, health care for all. But since I would be taxed more simply to continue a war that I've never supported, no, I want those who aren't paying fair share of taxes to go equal!

[RepublicanBrain]

And what of those who don't support health care for all. Should we be taxed for it? Without the support of the rich, who typically don't support universal health care because they have their own, you'll never get it off the ground.

[abbiehoffmansghost]

Try this simple idea: if a corporation is based in the U.S., if that corporation makes its money in the U.S. and its presence here benefits it and its shareholders, then it should be taxed at a rate of 10% above the rate of individuals. If it has more employees overseas than it has in the U.S. then the rate should be 20% over that of individuals. Let's make good taxpaying folks out of them and they can be more like us.

[realitytrumpsbull]

I've got another thought on this, and here it is: Hold Congress' feet to the fire on this one, say 'this whole part where you try to mortgage the country to the rest of the world just doesn't work for us, pull your socks up and do the federal spending cuts necessary to get the job done' and get a fair chunk paid down. When people come pan-handling at the door to Capitol Hill, have someone up front out there with the moxy to say NO! Make sure everyone INside the building is sober, too, and has a clear understanding of Congress' oversight RESPONSIBILITIES in terms of the budget. The global dominance people need to be drug-tested, and all the folks that've made a career off of living off the military can take a hike, too. They say we have this big huge annual GDP, but frankly I think a lot of people don't trust a blanking word they say about the budget OR the GDP anymore, so, take the Missouri approach here, and say 'show me'.
Don't just inflate the dollar, actually work on those spending CUTS. Don't build more jobs programs, facilitate the development of small businesses, which were the root of our large corporations today. And, employ automation in those businesses to good effect, too. Robots can be programmed to make stuff. So, program.
Build. Sell. Export. Put more education institutions in the business of training people to be proficient at doing that kind of stuff.
Robot-americans don't need unions. Or welfare checks. Or excuses.

[mbaty]

"In a consumer economy you want more money in the hands of the consumers -- not the rich. DUH! "

Exactly! Shout it! Make T-shirts and bumper stickers! We can't even pay our debts unless money is in our hands. And it's our cumulative debt that is bringing the economy down...it will be our cumulative, widespread prosperity that saves the economy.

[drblack]

The rich won't keep getting richer if this happens...this is why I support Hillary Clinton, so as to help the rich and powerful get more rich and powerful.

[1will]

I will agree that the New Deal and public works projects helped average Americans and may have done a little good economicaly. It was however WWII that got us out of the Great Depression.

[Dave Johnson - Huffpost Blogger]

A lot of people say it was the GI Bill, offering education to all the returning soldiers, that led to the prosperity that followed the war. That investment in human infrastructure led to the advances of the following years.

[1will]

Good points about the GI Bill and education. It was still however WWII that got us out of the Great Depression. Claiming it was unions and the New Deal is wrong.
In the wake of WWII America was one of the few modern nations that didn't have it's manufacturing base and infrastructure destroyed. We reaped the benefits of returning soldiers and civilians wanting more goods, services, etc after years of war and rationing. Where were these goods going to be made, burned out factories in Europe or bombed out cities in Asia? America had a good run of manufacturing products with little competition. Unfortunately that has ended.

Unions also had a good run after the war. American businesses were competing against other American businesses. Unions could make demands knowing that their members only had to worry about other American companies taking their jobs instead of foreign companies.

[Photofarm]

Sorry, but WW II got us out of the Depression, nice try to rewrite history.

[Dave Johnson - Huffpost Blogger]

Care to explain how?

Look at the historical charts. A lot of progress had been made on the economic front before the war.

[kdeen]

I was here in 1939 when we began to pull out out the Depression..The war did help immensely, but public works projects did a great deal.

[Canukistani]

I think you're quite right, but it doesn't matter how many times or in how many ways you tell people that there ain't no such thing as a free lunch (TANSTAAFL) they will not believe you. They do not want to believe you. The idea of fixing the books by borrowing money and making it magically appear is just too appealing. People will always be happy to accept temporary wealth today and unwilling to think about having to pay it back tomorrow. All you have to do is talk to somebody with a handful of credit cards that are all maxed out, to see what the outcome is going to be. This doesn't require any special insight. Just look around and see how the people who bought into that dream are doing. That's where this road inevitably leads, it's just a question of how long it takes.

As for paying more taxes, it does seem clear that most of the tax money that the government should be using to fix infrastructure or do some kind of reasonable health care or fix border security or whatever is going into the pockets of the already wealthy as tax breaks. Of course a few crumbs are given to the middle class just to buy their acquiescence, but no more than absolutely necessary. That's been happening for years. Are they building not-for-profit bridges with that money? Are they building roads? Are they working to improve port security? Has it been making things better for anyone but themselves? If not, why does anyone think that's going to change when you give them more?

It's true that if you give government more money, some of it, maybe a great deal of it, will be misspent, but some of it will end up doing some good for everyone. That's what makes it worth doing.

[Dave Johnson - Huffpost Blogger]

"It's true that if you give government more money, some of it, maybe a great deal of it, will be misspent"

Have you ever seen how a corporation spends its money? "Misspent" on sending the CEO's 12-year-old daughter on private jet rides...

But n a democracy, the government spends money where WE say it should be spent.

[Sneaky]

Is that a not-so-subtle suggestion that we as individuals cannot be trusted with our money? Just seeking clarification...

[Canukistani]

You seem to be misunderstanding my intent. By truncating my sentence you lose the point. I'm saying that I believe that even though money will be misspent by any government, at least some of it does some good for somebody so it's still a good thing.

I don't disagree that money given to wealthy people is misspent. It's almost never well spent in the sense of doing anything for the common good. Money given to the already wealthy is generally used in ways that make even more money for those people.

If you want to take this another step, how about the fact that the current government BORROWS money and then gives it to rich people as tax breaks. It also tells middle class people to take their tax rebate and give it to the big corporations in exchange for goods or services that they probably don't need. 'Go shopping', Bush says. Where does that get you?

[1will]

Actually the government spends money wherever the politicians want instead of the people. Most of the Earmarks and Bridges To Nowhere are pet projects that drain gov money yet benefit very few people.
While at the end of the day (or year) corporations are responsible to their shareholders for the bottom line our government does what the politicians want. Once in a while a truly rediculas spending provision might be exposed but most slip through.

[argent1]

If you study the difference in wealth between the top 1-3 percent and the rest of the population from 1912 to present you notice that the gap was terribly wide from 1912 to 1932. Then the gap closed. It stayed pretty consistent from then until 1981 where now the gap has widened far beyond where it has ever been since the end of slavery and the agricultural economy of yore. Reagan walked in and the end of a balance of wealth walked out.
The 1930's was a precarious time and without government economic intervention this country could have faced another civil war. The idea that a man could support a family took hold. Since 1981 two income families, or two or four jobs per family is more common. Even Bush thought a woman who had three jobs to help pay for health insurance was terrific.
I am so glad Romney left the race for president. A perfect example of a Robber-Baron 1912 style. Why shouldn't a single person horde away money into a selfish scheme if he can get away with it over the backs of the many who go underpaid.
Since China now owns us how long will it take for the middle class to be wiped out? Not long, given the minus savings-rate, housing crisis, zero job growth, lousy schools, rotting infrastructure. Then by what means will they be held down from an uprising?

[johnhummel]

Very interesting - and a great point.

It's not about "taking the money from the wealthy and giving it to the poor". That's nothing more than stealing.

However - it is "taking some money from the wealthy *who have benefited from the systems that supported them, and returning it back to those systems so that they and others can continue to benefit*".

Those who have made their fortunes in America do so because of their own hard work and ingenuity. And because there is a system of education to help provide them with smarter people. Roads that for a long time were the backbone of our continental business needs. Just courts and laws to ensure that people could compete without have to pay off authorities for graft. Tending to the commons so that all could benefit from clean air and water and healthy food.

Now, we have people attacking the Dept of Education, leaving roads crumbling, telling people that "what's good for business is good for America", without realizing it should be the opposite: what is good for America is good for business! Fix the roads - get goods across faster. Build public transportation systems - give citizens more money to spend on goods while helping them get to work faster, while reducing the price of gas to make goods cheaper to build.

There are those like Ron Paul who don't seem to get that, and while I admire his constitutional ideals, his economics seem to ignore reality. If anything, the 80's and the last 8 years have proved this out. "Voodoo economics" don't work - and we should abandon them just as the world abandoned feudalism and communism as bad ideas.

[kevinabt]

Paul doesn't support the voodoo economics. He isn't in favor of throwing money at the rich and hoping for a trickle down effect. What he wants is lower taxes and less restrictions across the board. The lower and middle class lose a much more significant portion of their wealth to taxes than the rich. They become unable to save or invest in themselves because they have little spare money. Government investments don't usually bring as much benefit as private investments. Who built the first railroads? Who built the first mass transit trolleys and light rail? Who built the first cars and who is building the next generation of cars. It certainly isn't the government. The government subsidizes inefficient things. The true cost of roads and airtravel would deter the over use of them if the government was artificially propping them up. Train and mass transit would be much more common (because they are more efficient) if the competition wasn't being subsidized.
Total communism was a failure, what you are advocating is partial communism. Many times this ends up being a drain on the system, slowing down and wasting resources.

[Sneaky]

So, question. How exactly did taxes and unions get us out of the Depression? You never really detailed how that worked except for vague references to taxing certain groups and redistribution of wealth. Please, tell us more.

I mean, call me crazy, but government slows economy. Its only money is our money, and it has to keep someone of it to keep itself functioning, thus being unable to put as much as it took from us. Middle-man effect. Individuals and private industry, however, have no such middle-man, and thus can directly stimulate and grow the economy. Taxation is what directly feeds the entity that is most responsible for slowing economic growth.

And silly me thought our country never really did effectively recover from the Depression.

[johnhummel]

Taxes, like any tool, can be used for good or for bad. A hammer in a carpenter's hand can build a fine house, while a hammer in a killer's hand can crush and maim a life. In the hands of a surgeon, a scalpel can save a person - in the hands of a fool, it can kill them.

Taxes have the same qualities. If a tax is used to funnel money from the rich to the poor, that's a bad idea. Or just to further the wealth of the already rich, that's just as bad.

But taxes used for good can *stimulate* an economy. Rebuilding roads. Shoring up infrastructure. Paying for education. Taking care of an old and sick populace so people can focus on their jobs and creating their own wealth.

Rich business owners don't do so in a vacuum. This country became a superpower *because* of our infrastructure that allowed them to create wealth, ensuring through the GI bill an educated populace to drive new ideas forward. Taking care of the infirm instead of having them a drag on society (or become a new criminal element).

As for unions - they ensured that the people who actually did the work got their fare pay. How else can you have a nation of people with the money to create new things and innovation, if they live in company towns (which were *loved* by big business) so they never have enough to go beyond "their station"? Look at the situation of Wal-Mart employees who can't even buy the products they sell (ironic, that in many areas Wal-Mart keeps to keep the local tax dollars since they are providing jobs to the local economy - while really being a tax funded method of driving out local businesses with higher paid jobs!).

So, there you go. Now you know. And as for us never recovering from the Depression - better not tell that to the people of the 50's, 60's, and 70's which saw people in huge numbers buying their own homes and setting up their own businesses. Silly you indeed.

[Sneaky]

Interesting thoughts. However, there are a couple things that ought to be noted.

First, taxes cannot stimulate an economy, for the reasons I described earlier. They remove money from circulation by imparting a middle-man that would not otherwise be there. I'm not saying they're bad, necessarily, but they cannot stimulate an economy. Repairing critical infrastructure is one function of taxation, but should be a local (State) concern and not a federal one that distributes to states as it sees fit; it's proven to be a poor judge at that.

Second, taxation for CORRECTION is a dangerous precedent, but one I agree with to a point. The problem comes when the taxation is imposed on the wrong people, and therein lies a catch. Federal taxation must be equal, per Constitution, and the taxes necessary to correct for misappropriation of wealth (like you described) would and do hurt the less wealthy. I am, thus, against the concept of federal taxation of any unless it is for all, as required by the very Constitution too many ignore, and the most efficient option is to permit states to tax as they need to. One size doesn't fit all, and the local economies that feed the economy as a whole will know best when and where issues exist that taxation could fix.

And on a side note, since just before WWI we never recovered completely from the dept incurred by the war, which due to inflation and lost of backed money has only grown ever since. Even post WWII, the dept existed and continued to exist, and it was the work of a specific group who printed and circulated currency in such a way as to temporarily "fix" the problems of the mounting dept. Fiat money systems cannot correct themselves, as we are coming to realize.

[Dave Johnson - Huffpost Blogger]

"government slows economy"

Does that actually make sense to you? The government creates the playing field on which the economy exists. It even creates the rules of money. A corporation is only a creation of government. We grant limited liability to shareholders, and other benefits.

You seem to differentiate between government and the people. Why is that? Do you oppose democracy?

[Sneaky]

Let's be clear since you're ignoring the bulk of what I stated, and your last statement especially needs to be amended. Government is inefficient when it is the middle man (like I described and you ignored); this is my primary objection. Examples abound, the easiest to mention being the one mentioned below in other posts about the postal service. It's useless to the point of negligence to keep it since private industry is doing it better, at lower cost, with no government middle man to siphon off costs. Disaster-cleanup is another instance with examples abound in the aftermath of Katrina, when it was private industries doing the bulk of the heavy lifting after the government entities realized they couldn't, and when they could, they couldn't do it well enough.

You're right. Government sets the stage. The problem is when they start playing instead of moderating. The US federal government was never designed to participate. It was designed only to moderate. Let private industry do what it does best and permit competition. How hard is this to understand?

Democracy is rule by the majority. I will always oppose democracy. What I support is a constitutional republic, because it is only a constitutional republic that is bound by law by a document (constitution) to do only what it is told to, and to never cave to a majority when the majority might hurt the minority. Right now, our government continuously creates bills and proposals the majority of the people oppose, often very vocally. The executive continuously ignores the rule of law. The courts have become known for "judicial activism". I can safely say that we are no longer the government, and you know that as well as I do.

[foreffectivegovernment]

Dave:
I'm sorry to say that you are wasting your time and effort trying to explain things to the people who determine my future.

Any time the union workers at General Motors and Ford drive to work in a Honda and vote Republican because they will lower taxes and then bitch because they lost their jobs, you are talking to idiots.

Any time people vote for a Party that tells them they will cut taxes, (Inheritance Tax, Capital Gains Tax), that benefit the wealthy, increase spending on the Military, and balance the budget, and they believe it, you are banging your head against the wall.

When the Democratic electorate decides to vote for a starstruck dreamer instead of someone who has a proven record of working for the middle class and the DNC goes along with them, all is lost.

Thanks for at least trying to explain the problems we have but the voters have been brainwashed as you can see by the above comments.

[swift goat pet for truth]

Let's get back to these Union Workers diving Hondas. Why do they do that? Hondas cost more for the same class of car. And Ford or GM will give a discount to their workers to buy the company's car.

The workers must perceive that the Honda (or whatever) is a better deal that the American car. And since it is not a money issue, it must be quality. So Honda produces a better quality car for which the GM worker is willing to pay more.

I say that is a MANAGEMENT problem because the MANAGEMENT decided to produce a piece of junk at a lower price.

[Dave Johnson - Huffpost Blogger]

Having worked at Ford in the 70's I can attest to the management problems they had then. The management decided to build crap cars, and soak the public with add-ons, service costs, planned obsolescence, etc...

[not one of the sheep]

So let me see if I understand the concept. Do like President Clinton and cut the military funding to bare bones and leave it for another person to rebuild it. Put Social Security funds into a "lock box" which of course doesn't exist but make the paper work show that it does. When Clinton left office we were in a recession but of course that would be Bushs fault because he was elected. They were both big disappointments. The Dems lost control of congress because of Bills stupidity and they were spending our money like kids in a candy store. The Repubs started with the grandest of intentions but of course got drunk with power just like the Dems did. Now we're in the same boat as the Dems forgot why they're there and checked their brains at the door. The revenues are up but of course the spending is out of control. As many things have to to be addressed to change the course of the economy to infer that tax increases and the unions are the saviors for a recession is juvenile and a page out of the DNC talking points. Spending cuts will have to be made but the outrageous spending proposals made by all the candidates and congress will surely bankrupt our great country.

[Dave Johnson - Huffpost Blogger]

"Do like President Clinton and cut the military funding to bare bones"

I suggest you look at the actual record.

"Put Social Security funds into a "lock box" which of course doesn't exist but make the paper work show that it does."

Yes, that is what Gore advocated. Bush instead spent it.

"When Clinton left office we were in a recession"

I suggest you look at the actual record.

"The Dems ... were spending our money like kids in a candy store."

I suggest you look at the actual record.

"Spending cuts will have to be made"

The two huge areas of spending are :
1) Military
2) Interest on the Reagan/Bush debt.

[not one of the sheep]

OK Dave, let's look at he actual record of just a couple of these topics.
Between 1992 and 2000 Clinton cut nat'l defense by half a million personnel and $50 billion, the army lost 4 active division and 2 reserve divisions not including the massive cuts to the other branches. Clinton traded and sold US military missle technology to China while delaying of stopping funding to US anti missle systems, Global Hawk, Predator, GPS guided bomb systems, Long Bow Apache just to name a few that are used today to save soldiers lives.
According to the Council of Economic Advisors the stock market was in a decline in March of 2000 along with business investments which were falling in the 3rd quarter of 2000. Jobless claims were increasing indicating the front end of a recession.
As for Dems spending, according to the Joint Economic Committee in a report from April of 1998, congressional spending had increased from 229 billion in 1990 to 271 billion in 1995 and so on. Spending cuts or at least reduced to the out of control social programs.
The old "blame bush and regan" banter is old and worn out. There is plenty of blame to go around for repubs and dems. They ALL feel asleep at the wheel.

[kevinabt]

Isn't it about 25% of spending that goes to SS and medicare? That is a big chunk as well. Almost as much as the 30% that goes to interest on borrowed money.

[foreffectivegovernment]

Tax cuts my ass.

The Bush administration cut taxes. This provided less money for all programs except defense. The Bush administration cut money that funded state programs they had mandated. My local property taxes, grocery prices, water and garbage fees, and local school taxes increased to provide money to fund these programs.

How does this benefit someone who owns his home and lives on a fixed income.

What kind of proof do you people need to realize that the Republican idea of Peace and Prosperity only applies to people other than you?

[desmirl]

The one thing you simply nailed is the fact that the Democrats caved and that their gutless response makes the failed policies of the Republicans look good. Reid and Pelosi must be removed from power and replaced with Democrats who have guts, brains, and hearts. There out there -- check out the junior senator from Virginia -- but they have to be given a shot a leadership.

[realitytrumpsbull]

I think the tax 'code' is a big joke, and I find that to be fairly depressing. The reason it got that way? Everyone trying to angle in and get financial advantage for themselves. Blow it all away and go 10% flat tax or something. Recycle THIS economic 'model'.
How much of the job market is just one big sunshine story?

[Ides]

10% flat tax would bankrupt the country, forcing us to buy more debt.

The easiest thing to do would be to close corporate loopholes and make everybody pay 30% on their taxes. The middle class tax rate would go down and the big 20 percent that owns 80 percent of the wealth would pay the debt off in less than half a decade.

[Dave Johnson - Huffpost Blogger]

Let's say I own a store. I pay $80,000 a year for goods to sell, and sell them for $1000,000. YOU want me to pay $30,000 taxes! That is a "flat tax" with no deductions.

No thanks.

And if you're saying I can "deduct" the goods I bought to resell, then we are right back to arguing over what constitutes a legitimate deduction. Right back where we started.