It's Our Turn Now
Candidate John McCain gave a truly innovative speech last week that suffered from one fatal flaw. The innovation: cast your speech as a fantasy, looking back from the end of your first term so you can tout all your great accomplishments without the distraction of pesky fact-checkers. The fatal flaw: recent history has shown that his policy agenda is antithetical to his goals. His vision of the future is divorced from his roadmap to get there.
To the contrary, anyone interested in a future that looks quite different from the present, and most Americans are leaning in precisely that direction, needs to remember but one mantra. It's one of the most important arguments progressives can make between now and November, and it's simple, compelling, and unarguably true: we've tried it their way, and it hasn't worked.
Whether it's the economy, the environment, foreign policy, fiscal policy, government competency, judicial fairness... you name it... we've tried it their way, and it hasn't worked.
For this post, let's focus on the economy. We're aided by the fact that we are likely at the end of the economic expansion that began in late 2001, so we can now compare the results from this cycle to previous ones. We're additionally aided by the fact that the work has already been completed by my EPI colleagues Josh Bivens and John Irons. They've done the math, comparing growth rates of all the key variables over this and past cycles.
We'll get to those results in a minute, but consider them in this light: they are the outcome of a natural experiment, one wherein we turned every branch of Federal government, including the judiciary, over to conservatives with a unified vision of the economy. I describe the vision as YOYO (you're on your own) economics, though you're free to amend it to "you're on your own unless you've got friends in high places... in that case, you can plunder the treasure." For the rest, it's "here's a tax cut, a private program, some deregulation, and a nudge into the market place to sink or swim."
Note, for example, that McCain's speech revives privatizing Social Security ("personal retirement accounts) as a policy goal. He reforms health care though the injection of more "market forces," as we're all incentivized to go out and shop for health care in the open market, a plan that has the potential to be both expensive and ineffective. And as I pointed out last week in this space, McCain's tax cuts are Bush's on steroids. He begins with extending the Bush cuts (10-year cost: $1.7 trillion), but that's less than a third of the cuts that he's planning. And remember, in the midst of all these cuts, he's got to pay for a lot more war.
So, what are the economic outcomes of this great, neocon experiment? From Bivens and Irons:
- Of the 10 expansions since 1949, as measured from the end of the recession (trough) to the end of the expansion (peak), the expansion from 2001 through last year ranks last in average growth of GDP, investment, employment growth, and employee compensation.
- Despite [supply-side] tax changes that were promoted as incentives to increase investment, average growth in total investment over the latest expansion was less than half of the post-WWII average, and ranked last in this group. For the full cycle (from the 2001 peak to the last quarter of 2007), investment growth was also less than half the average and worse than all cycles in the last 50 years.
- Corporate profits were the only area of strength in the latest cycle, ranking 2nd strongest among the last the prior 10 cycles.
- The rankings for all 10 full business cycles since WWII show that the 2000s rank eighth in GDP, ninth in consumption spending and employment growth, and last in labor compensation and the ratio of the population employed.
Regarding the variables that matter most to working families, the neocon experiment was a particularly dramatic failure. Employment grew one third as fast as the average over the 2000s business cycle and the unemployment rate, though low on average, was higher at the end of the cycle than at the beginning. Perhaps the most damning indictment is this: for the first time on record, going back to the mid-1940s, the income of the typical, middle-income family was slightly lower last year than at the prior peak in 2000 (see their figure A).
The reason, of course, is that the benefits of the economy's growth flowed largely to those at the top of the scale, an outcome long associated with YOYO'ism. In the history of income inequality data going back to 1913, income is now more concentrated among the top 1% of households than in any other year, bar one: 1928.
So there you have it: the great, neo-con economic experiment is over and the results are in. Outside of the top 1%, there's less income growth than in any past business cycle. The key macro-indicators, such as employment, GDP growth, and investment have also faired uniquely poorly. The anti-government, deregulatory agenda has led to fatal incompetence, a massive housing bubble, ailing global credit markets, and near-recessionary growth for the US. The "ownership society" is a cruel joke: homeownership rates are falling for the first time in decades.
The defenders of the status quo will howl in protest: the Democrats blocked us, the terrorist attacks and the war changed everything, we must stay the course to victory! But such rhetoric should be dismissed as what it is: the last, desperate gasps of a dying movement.
They've had their turn and they've failed. It is our turn now.
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You have laid out a very compelling argument for voting the Bums out of office. McCain does not understand economics. He is part of the neo-con backed, failed experiment.
However, what is striking to me is that commenters are not flocking to post here. This is information that needs to be dispensed to the masses. It has nothing to do with the color of your skin or who your pastor is or what your wife said or do you love your country.
I hope Barack Obama seize the opportunity and use this data to educate the Hillary supporters who are talking about supporting McCain.
These data are precisely what we need to use against the GOP and not allow them to have their one-sided discussion.
Compelling! Thank you.
The Bush administration has presided over a massive transfer of wealth from the middle class and the poor to the rich, a reverse Robin Hood scheme.
At the end of World War II, corporations paid half the price tag for the federal government. They now pay 7 percent, and many of them pay nothing at all. Meanwhile, the federal government spends more on the military than what it spends on everything else, and much of that ever-increasing cost is flushed down the toilet by going to politically connected no-bid scum like Halliburton — companies that electrocute troops with their shoddy wiring and soak troops in contaminated water.
Even $12 billion IN CASH was looted from the taxpayers in Iraq, while the Bush-appointed officials there watched with a smile (and the numbers of their Swiss bank accounts handy, no doubt).
The rottenness of the Bush administration and the Republican Party cannot possibly be overstated. We haven't even really begun to uncover the extent of this historic horror.
By the way, a democratic republic cannot possibly survive without a middle class. Just another little bonus for you from the ape in the White House.
Your transfer of wealth statement above is a scam. When in history has every middle class home consisted of 3 television sets, 3 video game consoles, every convenient household appliance, 3 cars (including 2 SUV's)....
Every aspect of your claims are LIES; if you are going to lie, do try to make it sound feasible.
Hard proof disputes every single point that your obvious attempt at deception failed to make.
Every middle class home, or just those that are up to their eyeballs in credit card (and other) debt?
'Bottom line is that the only people suffering are those that can't control spending (or buy a home that is beyond means), much like your democratic controlled Congress!'
Actually, the people you talk about ARE the ones in debt, who can't control spending. But I wish you would explain how a Republican
Whaaaat?
I'm not going to waste my pretty fingers answering that stupidity! Besides I have to go turn on all 3 TV sets and then play with my video games!
You know what Americans fear more than terrorism? Losing their health care. That's not a middle class society, pal.
We live in a global economy now. One where the golden goose can pack up and leave if we try to kill it. The only jobs actually tied to our country are service jobs. Manufacturing can be outsourced, and it is.
Other countries have much more favorable tax and regulatory environments. It's no big surprise that many corporations are moving operations off shore. Raising taxes even higher will only speed the process.
It's not 1945 anymore. Pretending like it is, or like it should be, is foolish.
Cutting taxes without any requirements for domestic investment is what led to this mess. The corporations took the tax cuts and other corporate welfare the Bush administration gave them and used it to build or expand their overseas operations.
The American taxpayers have supplied massive corporate welfare to the very companies killing their jobs, so you can shove your "global economy" smoke screen. The US government has also encouraged a flood of illegal immigrants to bring American wages down to a subsistence level. Something more than a "free market" is going on here. And that something is fascism. So it IS 1945 again, but the wrong side has won.
We can have neoconserv
OR
We can have a free America.
We cannot have both, since they are mutually exclusive.
Failed? Failed? They've done more than fail. They have sucked us dry. Perhaps that was the objective all along and they have actually succeeded brilliantly. You know, Congress had a closed door session in March and there is some indication that several representatives were so incensed that they leaked information on what was discussed, which included the coming collapse of the US economy, the possibility of widespread civil unrest, and the necessity to merge with Canada and Mexico (though why the Canadians would want to have anything to do with this is quite beyond me). Here is the link to an article regarding this: http://www
This may, of course be mere speculation and rumor-mongoring, but this is being widely disseminated on the web and I am inclined to lend it at least some credence, because I think that the stuff is going to hit the fan.
Of course you ASSUME they failed. Perhaps they've succeeded? You know all the boomers about to retire? Well, since they've lost their homes and their life savings, and can't afford to buy food or drive a car without working, they won't retire in nearly the numbers. It's another guaranteed labor source! Notice lately all the grey haired checkers at the market and fast food restaurants? They're simply manufacturing workers. It seems to be a Wal-Mart Staffing Service.
Let's not go off the deep end and claim all government regulation is good. The massive housing bubble was partially if not mostly a result of the federal reserve meddling with interest rates making borrowing artificially cheap.
While I agree with you that "Fed" policies are partly to blame for the mess we are in, you can't say that their policies are a form of government regulation because the "Fed" is a private entity and is in no way a part of the U.S. Government.
You're right on paper of course, but who appointed Bernake to be chariman of the Federal Reserve? Who confirmed him? Would you compare his level of independence from the federal government to the average American CEO? I don't think you would. The Fed is government regulation all right. It's just a lot less transparent than most.
The housing mess started with Greenspans idea of loosening up the market. Then Bush's appointees looked the other way. This wouldn't have happened if regulations were enforced. The fox was watching the hen house and invited his whole family to chow down.
Puulease..
The primary cause of the housing bubble was in fact exactly a lack of regulation of new lending structures combined with predatory lending (luring non-creditworthy borrowers to commit to loans which were beyond their means).
No one is saying that ALL government regulation is good. Regulating what you read and what you think is bad, for example, and we all hope that you will vote against candidates who support that type of regulation.
So why are we bailing out people now???
If people were stupid and got burned, they should have to pay the price for it, and hopefully will learn a lesson in the process. The same goes for banks. It should be shared top to bottom. From those offering the loans, to those selling the loans, to those buying the loans, to those bundling the loans. Let them all pay for their actions, and don't put one thin dime of taxpayer money into it.
If money isn't so cheap, if there isn't so much liquidity flooding the market, there is much, much less incentive for lenders to reel in people who have no business signing a mortgage. On that point I hope we can agree.
Buzzzz!
-Thanks for playing!
The reason why this country's economy is in the crapper is due to the republicans pulling the regulation off of every industry they could get away with. The explosion of housing foreclosures are in no small part due to the removal of regulations from the finance industry. There was a time when 30 percent interest was considered criminal usery, but now you've got credit card companies charging that much routinely (while they borrow the money at 4 percent), and those sleazy payday loan places can charge up to 1000 PERCENT interest (they do it by making you take out a new loan every week if you can't pay back the existing one). And yet I watched some nut-job from a conservative "think" tank on CSPAN trying to argue that the reason for the spike in housing foreclosures is that the government hasn't removed ENOUGH regulations from the finance industry.
After the Arab oil embargo in the 1970s, high mileage standards for cars were put in place (there were cars on the road that got over 40 miles per gallon) and Jimmy Carter started an alternative energy program which would have alleviated the gas dependence we have today -which Ronald Regan ended. And I dare you to watch the movie "Who Killed The Electric Car", where you can see exactly why GM and Ford will soon be bought by Toyota and Nissan.
Republican's ultimate goal for this country's economy is facism.
Look, I'm no more a fan of usury than you, but I don't think we can legislate morality. If people are too uneducated to understand the positives and negatives of compound interest, then the solution is in education, not regulation. I'd rather not see society fashioned into a padded cell where no one is free to fail or take what seems like an unnecessary risk. However, if you take out a loan you can't repay, you should have your credit rating trashed and that bank should suffer the consequences of losing some money that won't be repaid. I am opposed to government bailouts at the personal or corporate level.
As for high mileage standards and GM and Ford being bought out by the Japanese, shit happens. They were betting on cheap oil, and are now being exposed as having not much of a contingency plan. So it goes. Would Jimmy Carter have saved them? Maybe, but at what cost? How much control / merging of corporations and government are you willing to tolerate?
There are a lot of good comments here. Americans are finally waking up. One important comment is not stressed enough. The Neocons did not do this alone. We the People, helped by allowing ourselves to be terrorized into giving OUR government Dictatorial Powers.
The Neocon Corporations and Media "brainwashed" many Americans and divided Americans from Americans in a classic Divide And Conquer strategy. We were too ready to turn on each other as we were robbed by the Neocon Corps.
We now have the chance to change things for the betterment of ALL Americans. We can only change things if We first change Ourselves.
Obama and Ron Paul have helped, now its up to US!
That's all very nice and all but a teenager that has read one sensible book about economics would have known that there is no neo-con economics and that the Bush presidency was bound to make people worse off. And it was no experiment either. They knew exactly what they were doing.
Furthermost, it is not the neocons that have had their turn and failed. It is us, the ignorant public, that has failed miserably and that's exactly why the neocons could steal their turn... As Lewis Black is already saying for years, maybe it is not the politicians that suck. Maybe something else around here sucks, like.. the public. You get what you deserve, you should learn to deal with it. Here's to the disinformation society and a public becoming too stupid to even procreate.
You're right, by their definition, the neocon policies have not failed, since they were specifically designed to give as much as possible to the uber-rich while at the same time causing those of us at the lower rungs of the ladders to be happy to work for slave wages, thus giving even MORE to the uber-rich.
Having said that, since they need those very unwashed huddled masses to get elected, and they STILL need them to get elected, and they will claim the same things that they claimed before (that neocon policies will help the unwashed huddled...
Could not agree with you more. We as a voting public are way to ignorant and stuck up on things like how a candidate bowls, or whether they drink beer with us or not. If we stop being such a cosmetic minded people,we ourselves can correct the things that are so obviously wrong with our election process. Whether a person is Black, a Woman, or wears a Flag Pin have too much influence on who we put in leadership. Because somebody wraps themselves in an american flag
does not translate into patriotic american. Because someone is soft spoken does not translate into weak hearted. The same old bull!@#$ that has kept this Nation from realizing its potential like Racism, Sexism, Traitors pretending to be Patriotic, and last but not least Religious Fanatisism, are still here hampering us today. If we want to avoid becoming a third world nation we need to do somthing substantial about these hinderances. If not these things will suck the very life out of a so called great nation.
Great article, Jared, but let's focus a few more searchlight-beams on that phrase "a lot more war."
Really, "the Neocon experiment" was "not-so-neo" neo-fascism. It was, and it still is, "all about war," just as Gen. Eisenhower so accurately predicted back in January of 1961. It was, and still is, a massive war-crime that this time was perpetrated -by- the government of the United States. If it were subjected to the Nuremberg Principles that our forefathers literally wrote, many of our leaders would hang.
This is a problem that we simply cannot "ignore." We can't just say that impeachment, as the lawful penalty for such explicit criminal behavior, can be "off the table." There are tremendous implications here, because the entire world is watching.
It's one thing to say that "this was a social experiment that failed." But it's quite another when a substantial part of that "social experiment" was, and is, an international crime that has so-far gone unpunished.
"What does this country stand for," Jared? What kind of nation have we become? What kind of nation will we be?
The world watches.
Rabid liberals. Too looney for words.
Sophistry means and proves nothing, Jerry. C'mon... straw-talk against straw-men? This is our =country= that we're all talking about, and even when we've got criminals that we call "Mister President" or "Your Honor" or even "Mister Justice" ... if they're crooks, they're crooks.
As for me and my house, I'm not willing to put up with that. I don't think you should, either. Nor should any one of about 300 million other people that I know about.
If you're put in a position of high honor and power, by golly, your performance of that office is supposed to be "above reproach," and if you violate that trust you've just done actual damage to hundreds of millions of people. For that, you get thrown out. Then you get a trial, with every right the Bill of Rights proscribes. If you get convicted, you get punished.
Period. No exceptions. You should be obliged to go to your public-office every single day knowing that, if you break your oath, this =SHALL= SWIFTLY AND SURELY HAPPEN to you.
Law: use it, or lose it.
Is it possible to impeach an entire government?
One more time.... http://www
Read Charlie Reeve's essay.
The Constitution says that "'any civil officer' Shall be impeached.
It's the one and only positive law-enforcement duty that is assigned to Congress. (Expulsion of a Member of either house is similarly provided-f
Consequently, the answer is yes: it's pretty much possible to impeach an entire government.
When I look at, well, the last six to eight years, what I see most of all is Organized Crime. I see that all three Branches have been infiltrated; that they have cross-ruffed the game to protect one another instead of overseeing one another as "checks and balances" intended. And the net result has created 300 million ... Plaintiffs. Including you. Including me.
Okay, "you're a lawmaker." Goody for you. The law still applies to you, most-especially "the Supreme Law of the Land," and without it, not a single one of the principles in the Preamble to the Constitution can ever come true; nor, for that matter, the Declaration of Independence. I think those 500-odd people are outnumbered rather considerably by more than 300 million Plaintiffs.
"It's 'the law,' you say? So be it."
"They've had their turn and they've failed. It is our turn now."
Thats what worries me. From the frying pan into the fire.
Obama is already talking about SUVs and thermostats at 72.
What next? Speed limit at 55? Reminds me of Carter.
Conserving energy is the only real control an individual has. Drive your SUV's 80 MPH if you like and set your thermostat to 90, just don't complain about the cost and don't expect the Government to solve your problems. Drive less and wear a sweater!
NARROW MINDED? Its ok to be out of your comfort zone- Learn
ON the Nosey.....
And just what's so bad about that? I drive 55, except if the road conditions are unsafe for that speed. I keep my thermostat at 73 in the summer, and at 67 in the winter. I also don't drive an SUV, I'm driving a hybrid. This has resulted in my spending far less of my income on energy, and yet I'm STILL spending more than I ever did before. If EVERYONE were to conserve energy in such ways, then the costs will go down!
The 55mph speed limit was a shell game. CAFE standards worked. Unfortunately, they haven't increased since Reagan. The US automakers have been crying for the last 25 years that they can't meet increased standards. BS. The Japanese can, The Germans can, The Koreans can. These corporations are so short-sighted they actually acted as if gas would be cheap forever. They keep building (and promoting) large SUVs and ignoring the market for smaller more efficient vehicles and once again they are in trouble. Even though we were first with research and development of hybrids. Who was first to the market? The US companies just used that as a con to keep government off our backs. Market-based solutions don't always work. They depend on the public reaching some sort of tipping-point before they kick in. Unfortunately, sometimes that means we wait for a crisis, such as gas getting to $4.00. Food prices out of sight. Global-warming, etc.
According to the IRS, at the end of Jimmy Carter's presidency the top 1% got 8% of earned income. In 2005 they got 23%. We need change we can beliive in.
The establishment has never been honest with the American people regarding Neoliberalism. The MSM and the so-called "Academic Elite" sold a fraudulant shell game to the public. They sold this flaming bag of dogshit by telling us about these "Welfare Queens" and "Evil Labor Unions" sucking us dry and how we were held back by these so-called "Socialist" policies that Americans forgot - gave us a middle-class.
The tenants of Neoliberalsm could have been simplified to a handful of talking points (expressed in simple terms) and debated publicly. If it happened that way, even the most "Conservative" Americans (under $300k) would realize this is the same concentrat
Unchecked Capitalism ("Neoliberalism, "neo-classsical", "Trickle-d
This is exactly the kind of data Obama needs to use to cement his role. This data needs to get into the everyday thought process of Americans, it needs to replace the concerns for American Idol and Does Pupi hate Becky? They need to understand that there is a far more important game going on and if they don't play they will loose it all.
People are getting it.
According to the CIA Yearbook, in terms of income inequality (based on the Gini coefficient) , the United States is now on about the same level as Nigeria, The Philippines, Kenya, Cameroon, Uruguay and Jamaica.
We have so avoided the idea of social justice we are rapidly becoming a third world nation where few people have an enormous amount of money and many have very, very little money or opportunity. The biggest difference is we still have enough money to be a military and economic superpower.
The progressive agenda is one of fairness for all. This has been characterized by the right as creeping socialism or even communism. It is neither. It is simply a more just way to live. In a just and fair society, there is adequate health care for all. A good education for all. And a decent chance for all to share in the benefits of the economy.
In the years ahead, we can change the terms of the conversation and move away from the right's concept of social Darwinism, where only the strong survive, to a shared society where everyone has a better chance of becoming strong.
The debacle wrought by George Bush and Republicans back to Reagan gives us our best chance to make this change. It will require that enough Americans agree a more equitable society will be better for them. That's a tall order, but we have the opportunity in front of us.
I completely agree! One problem is Republicans who are still voting on only one issue; abortion. That's why my mother is voting for McCain and we argue constantly that it's not the most important thing to vote on and she says that it is.
I say, it's the economy, stupid.
Some will get it, some won't.
a baby's life is more important than a few dollars. your mother is correct.
Aren't you glad she did not believe as you do, while she was pregnant with you?
Yeah, someone will get it.... when they begin to see their tax bills skyrocket once a democrat gets the white house!
A very tall order, but after the last few months and the number of people who seem to be awakening from their apathy... Its allready starting to happen.
It's not over yet. When the full costs of this war are realized, and the baby boomers have all retired, and our debt holders come calling, this country will have an economic crash beyond anything in our country's history.
BEZ, you have brought up some issues most avoid like the plague, but it's comming.
Somebodies got their eyes open...
Don't be fooled again yal!
McCain's Problems Must See... http://www
Obama's Problems Must See... http://www
I agree, things could get far nastier first.
Bush may leave office next year, but whats been done will haunt us for a long time.
remember who own's the printing press. the gov will simply print more money and pay back debt with devalued currency. THEN your going to see a REAL recession / depression / inflation nightmare
O.K. Im going to try and put something tangible in this debat. Imagine for a second your a big time
bank president looking for a security company to protect the assets of your Bank. You've got two security companies vying for the contract to do the job.You have one of the companies that has been in business for years. They have experienced people working for them. When it comes to security they are a household name. When you check their actual performance record though,every bank that they were supposed to protect was robbed and put out of business. The other company has not been in business for long, but the jobs they have managed to get, they have protected the intrest of the clients that hired them. As the President and the one responsible for the bank, which one would you go with.
There is no try; there is do, or do not. Hopefully, a person responsible for so many people's assets and the long-term health of a financial institution would rely on more than his own personal judgement to make such a crucial decision. As Obama has chosen to use the word 'we' in his campaign, so should a president of any corporation. This is one of the flaws in the logic of the 'YOYO' crowd (I love that term, it's better than saying 'pull yourself up by your bootstraps' - thanks Mr. Bernsein); that every man is an island.
Yeah an Island.
Spend your whole life wandering around on your island all alone and then get sickor some one invades your island!
Suddenly you need other people to desperately to heal you or protect you.
Yeah an Island all to yourself all for yourself! Smart thinking DUDE!
If there is a failure or a breakdown in an Obama presidency, will he use the word 'I' as in "I'm responsible'? 'The buck stops here'.
I agree that you would need more than one person to make such a decision when it affects so many. I was really trying to frame it as if the PEOPLE of AMERICA was the President of the bank. It is the people that will suffer the consequences or the bnefits of that decision..
In the USA? They would go with the one that would pay them off with money in an overseas account for the contract!
They would also demand to have notice of any problems so they could sell off their stock a few weeks before the problems come to a head.
Payoffs and corruption the American way!
Or, the one run by a woman. LOL
Here's something tangible: jail the crooked bank presidents -- they're the ones doing the robbing. Then nationalize the financial industry. Ditto the insurance and energy industries. Those who have run this country into the ground don't deserve to see daylight again.
Do we exist to serve the economy, or does the economy exist to serve us?
I agree with TWO of your suggestions. We need to nationalize our energy industries, and our insurance industries. However, the financial industry (except at the very top, the fed should be a govt agency!) needs to remain a private industry. In spite of this we need to ensure that they are regulated the way that they were for the entire post WWII time frame!
"When you check their actual performance record though,every bank that they were supposed to protect was robbed and put out of business."
Why were they even allowed to submit a contract? They should have been in jail. Experience is an over used phrase. Cheney and Rumsfeld's experience got us a war and more than 4000 dead americans. Not to mention soon to be $5.00/gal gasoline after oil prices climb to $200/barrel.
Visionary leadership is what's needed.
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