The sharp drop in household income in 2009 is being used by the rightwing to suggest the Obama stimulus did not work. The rise in the poverty rate to its 1994 level is similarly fodder for the rightwing Republicans.
In truth, the longer-term data on household incomes and poverty present a much clearer case of economic failure, not of the Democrats but of the Republicans. One would expect family incomes to go down and poverty rates to go up in recession -- especially the sharpest recession since the Great Depression. How did Obama's stimulus cause this? Surely, it didn't push up interest rates to stall the economy. Interest rates are now about rock bottom. Surely, it didn't cause inflation. There is none.
In fact, the Obama government spending arrived just in time to keep the unemployment rate from rising much higher than its ultimate 10.1 percent. Consumption in mid-2008 was about to fall off the cliff and federal spending saved the day.
A true reading of the basic data about the economy obliterates any justification for new rounds of tax breaks for the wealthy and the other rightwing Republican economic schemes -- the policies they are quite remarkably now trying to resurrect. As I say, it is one thing for incomes to fall in recession. But household income never recovered its 1999 level during the Bush economic expansion. That is saying something. The poverty rate stayed well above its 1999 low as well during expansion. The Bush tax cuts of 2001 and 2003 simply did not revive the economy in any way Americans had come to expect. Incomes and poverty rates were poor in these years.
But here is the outright killer. Those big income tax reductions for the wealthy under Bush were supposed to generate lots of entrepreneurial activity and capital investment. And the Bush policies also included cuts in capital gains taxes and taxes on dividends. These were the magic exlixir. Now, capitalism was free to work its magic.
But what happened was that capital investment, a source of economic growth, actually weakened compared to historical growth rates. Richard Bernstein, the former Merrill Lynch economist, recently noted that the 2000s was the worst decade for investment since World War II -- by far.
Facts of course don't deter ideologues -- or some politicians willing to sell the country down the line to win election. Income growth has been poor for a generation now, the experience of the late 1990s the only exception. Poverty rates reached their 1970s low only once -- momentarily in the late 1990s. So much for the maligned 1960s, which reduced poverty rates from 23 percent to 12 percent.
The proportion of people with health insurance has kept declining as well and in the recession soared to record levels.
Most of this dismal performance occurred under Republicans, and all of it under the anti-government ideology that took hold especially with Ronald Reagan.
In a recent debate I had on BBC radio, a rightwing economists said the reason big government is bad for growth is that every tax dollar is deadweight. This is an old, simplistic and devastatingly cruel argument. I doubt the recipients of Social Security benefits think their money is deadweight, or those on Medicare, or those who are possibly enjoying a newly paved road or decent schools for the kids.
What's more, history tells us clearly that big government simply does not slow growth. Government does a lot to promote growth -- education, roads, healthcare, law enforcement. There is no serious sophisticated data to back up the claim that big government or higher taxes results in slower growth than in nations with smaller government. Some economists will produce a contentious study to make the claim, but it is always shot through with holes, as other economists quickly point out.
But back to today. Big government did not produce the current crisis. Poor regulation, steeped in anti-government ideology, was the main cause. Private enterprise given an utterly free hand did it.
It was the seven years of poor economic performance before the 2008 collapse that should get the real attention. This was the test of Republican economic policy, and rarely has history been so conclusive. Those policies failed miserably. If the Democrats cannot make any hay out of that record this election, they are in the wrong profession.
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Cross-posted from New Deal 2.0.
What does it take to wake these people up?
The Dems will pay the price come November for not fighting for the American people
½ measures avail them nothing
Yet they all act like nothing is wrong Politics as usual!
They figure to lie low in Washington hoping all this will blow over by November
And constituents will forget?
GET REAL! Come November we won’t get mad -- But we will get even!
Obama just signed 26 billion dollars for teachers ? And GOV workers ?
(reported on yahoo news)
(yea like that will stimulate the economy?)
Face it folks we are so deep into Debt doesn’t matter who gets in,,
no one can fix this mess Dem or Repub.
Are on the eve of destruction perhaps not yet ?
But the summer of discontent is upon us
And it is very…….. ugly out there! (RAGE)
Obama philosophy : Throw more money at it! (That fixes everything!)
( Bigger government will save us all! )
2012 THE PEOPLE WILL SPEAK -- throw the BUMS out!
WAKE UP AMERICA ……………………..!
Blog this
This government has become an ENTITY unto itself.
And resents John Q public telling it what - we think it should do!
(How dare you --- WE are the U.S. Government!)
Have we not seen this ARROGANT ATTITUDE with Obama care and any suggestions - sent in are (promptly Ignored!)
The Federal Government has become self serving unit feeding itself
And no longer cares for the American people or it’s needs We have seen this with the 99er‘s the gov kicked 260,000. Off of unemployment This Gov. works AGAINST the interest of the America people and is concerned only about growing itself larger !
The power brokers of Washington Obama ,Peloski, Reid, Levin ect………………
Are so ENTREANCHED They feel they cannot be touched not by the American people or anyone else~!
Voter APATHY can no longer be tolerated, We need all voters out there in NOV. and in 2012
If we want a country left for our grandchildren to grow up in - (who are already buried under a mountain of national Debt). And their great great grandchildren will still be paying this debt off - when they retire we need to act now this Nov. and in 2012.
Stop the insanity in Washington and take our Government back from the Rich, from lobbyist and power brokers of Washington
OBAMA said hope and change? To borrow a quote from a friend
WHAT HE MEANT WAS HOPELESSNESS AND CHAINS!
WAKE UP
You think that Lehman went from profitability to bankruptcy in one year under Democrats and their policies.
In some ways I hope that your team wins this election and in 2012, so that when the country completely fails we can completely blame it on people like you who want to protect the rich, because you are under the delusion that someday you will be rich.
Unfortunately, the rest of us who know better will be forced to suffer along with you.
TRICKLE DOWN ECONOMICS HAVE NEVER WORKED AND NEVER WILL.
In the past few decades, any kind of process work - anything that codified or systemized - has been computerized or outsourced to the lowest-cost country. The number of processes having the people taken out of them continues.
It isn't Republicans that are changing the type of work that's being done - it's progress,
What this will do is free up people for the Knowledge Age where people think for a living.
It's as if it's 1902 and Democrats are standing up and screaming that we are losing our farmers to the factories. Wake up. The middle class will come back as the economy is being reborn in a new era. Don't blame politicians, and don't blame businesses. This is natural and necessary and screaming that it isn't "fair" won’t stop time.
By 2005, as a result of all this computerizing, outsourcing and other process improvements, 40% of employees are considered to be knowledge workers. Mid-management and above, it's 100%.
What do you want to do, make a law that says you can't outsource low paying jobs overseas? When that doesn't work, are you going to pass a law that you can't automate systems and eliminate jobs? Can we legislate no progress? Is it possible for the Democrats to pass a law that takes us back to the industrial age?
Relearn and refit for the Knowledge Age and stop blaming others for the loss of the middle class.
Are "progressives" against
Every long term relationship requires mutual benefit. For any business to survive long-term, it must provide a benefit to its clients and customers, as well as the employees.
The Victorian Age picture liberals paint of corporations is laughable.
I think that the ability to succeed AND the ability to fail creates initiative and drives economic growth. Mutual benefit creates strong business relationships and continuous improvement.
Socialist countries fail because it stifles initiative by inhibiting individual effort by limiting consequences.
Respectfully.
Arianna believes that its both the democrats and the republicans that have screwed the middle class.
But what's screwing America and the middle class is the GOP ideology. That by giving to the rich will bring about a new age and more jobs for everyone. But that didn't happen. The government gave more tax breaks to the rich and off they went to outsource their way with that money into China.
We have failed big time as a country. We have failed to educate our people of where the true threat lies in tearing our country apart. Its the GOP ideology. Its trickle down economics and the people who implement such nonsense.
These forces are too strong to defeat. We are made ever so weaker by the media and Fox news saying that the true threat are the muslims and Obama's socialist ideas. The more people that believe this the more likely that the people will vote democrats out of office and usher in politicians that will vote to give more tax breaks to the rich and to remove regulations from wall street and so forth.
Democrats and Republicans didn't screw the middle class. Its the GOP ideology of mindlessly following orders from wall street that they need to screw main street out of even more money.
I sure wish the author would have noted that the Obama changed the way they are calculating the poverty rate earlier this year . . . everyone knew this was coming.
.The Obama administration announced Tuesday a new formula that will take into account a wider range of factors in determining who is poor. The Supplemental Poverty Measure will provide a more accurate portrait, the administration says, of how many Americans are struggling financially, though it will not entirely replace the existing poverty measure in use since the mid-1960s."
Aughts were a lost decade for U.S. economy, workers
There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.
Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 -- and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.
And the net worth of American households -- the value of their houses, retirement funds and other assets minus debts -- has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.
"This was the first business cycle where a working-age household ended up worse at the end of it than the beginning, and this in spite of substantial growth in productivity, which should have been able to improve everyone's well-being," said Lawrence Mishel, president of the Economic Policy Institute
Then we had international economic collapse under bush.
Who do you blame?
OBAMA!!!
Still blame Saddam for 9/11 too?
We might mention that China eliminated all the capitalists in their country in the 50's and 60's and are now the country with the biggest surplus in human history. On the other hand, the United States took the leash off the capitalists in the Reagan 80's and have kept it off for 30 years. It is now the poorest country with the greatest debt of any country in human history.
And the lesson the rapidly collapsing American capitalist propaganda machines repeat 24/7: capitalism is a good thing and socialism is evil.
The only thing that makes the situation slightly tolerable is that we're not a Muslim or Christian country and we still enjoy some modest freedoms and rights, like voting for some government officials and theoretical free speech, although, they seem to be shrinking as well..
You're kidding, right?