With President Obama's speech on Monday and Speaker Boehner's speech yesterday, we can put the Democratic and Republican Party economic plans side by side. What is stunning is that neither side offers a serious diagnosis or a solution. The truth this time is not in the middle, a compromise of the two views. The truth, alas, requires a new view, and probably a new party.
The President's plan is another example of short-run gimmickry. The President wants to cut taxes in 2012 and raise them afterwards. The idea is to give a quick jolt to the economy, on the theory that the economy mainly requires a temporary stimulus to get it back on track. This is the same stimulus approach that has been tried since 2009. We have a learned the obvious: a series of short-term gimmicks does not add up to a long-term strategy.
The Republicans want a long-term strategy, but one that would take us in the wrong direction. The Republican mantra, repeated relentlessly since 1980, is that tax cuts and deregulation are the solution to growth and employment. The Republican tax theory is simple: higher taxes reduce economic growth and job creation. Since government spending must be paid for with taxes, either now or in the future, cutting government spending is necessary for tax cuts and job creation.
The problem with the Republican position is simple: it's wrong. Government spending helps with job creation (and higher incomes) if the spending raises the productivity of workers. An economy without a public education system might have jobs, but they will be jobs digging ditches. An economy without a national science foundation might have jobs, but jobs at low wages selling the products of Chinese high-tech companies. An economy without interstate highways may have jobs, but they will be sweeping floors at a local restaurant rather than selling products to world markets.
This is why the Republican Party's premise of tax cuts as the solution to all ills is so deeply misplaced (aside from being so greedy, as it is motivated by the compulsive need of Republican billionaires to keep every penny of their fortunes). Consider high-tax Sweden. The top marginal tax rate is 56%. There is a value added tax of 25% (the U.S. federal government, of course, does not have such a tax). And the unemployment rate is 7.4%, compared with America's unemployment rate of 9.1%. In fact, Sweden's employment rate (the share of the adult population that is employed) is around 75%, compared with America's employment rate of under 70%.
Sweden's government supports primary and secondary education, vocational skills, university tuitions, job training and matching, and scientific research and technological development. Sweden spends more on R&D as a share of GNP than the U.S., around 3.6% compared with around 2.6% in the U.S. The results show. Sweden creates high-quality, well-paying jobs for nearly all its population. The U.S. instead caters to the top, the third or so of Americans who can afford a university degree, while the rest of society is thrown to the wolves.
America doesn't have a job crisis per se, but a crisis of good jobs. There are plenty of jobs in America, washing dishes, carrying heavy loads, picking fruits. They won't get you out of poverty, feed your children, or keep you in your homes. Texas specializes in them, by the way. The Republican plan might even make a few more of them. With enough Republican policies, we might truly emulate low-tax, low-income Guatemala (where tax collections are around 12% of GNP), but that might be unfair to Guatemala, which after all faces bigger challenges than the U.S.
Neither Obama nor Boehner, neither Democrats nor Republicans, have offered a serious response to America's dual economy, society, and labor market. If you have a college degree, your cohort's unemployment rate is 4.3%. No jobs crisis there. If you lack a high-school degree, your cohort's unemployment rate is 14.3%. The median income of adults with a high-school degree is $21,000. The median income of adults with a bachelor's degree is $43,000, and of those with a professional degree is $80,000. Unfortunately for American reality, less than one-third of adults over 25 have a bachelor's degree or higher. And these days, more and more poor and working-class kids are dropping out of college because they can't make tuition.
Most Americans now are suffering the decline of American living standards and loss of American competitiveness as both parties turn their backs on education, science, and infrastructure. The Census Bureau reported this week that median household incomes declined for the third year in a row. American companies are earning huge profits, but overseas. Rich Americans can still protect their living standards through the private provision of health care, education, gated communities, overseas homes, and foreign bank accounts. For the rest of society, two parties add up to zero solutions.
America's revival will come through a new political movement, one that isn't on the political take, one in which the incumbent President doesn't feel the compulsion to raise $1 billion in campaign contributions while the leading opposition candidate isn't yet another corrupt Texas crony of the oil industry. The new third party will thrive on free social media, will wade boldly into minority communities and into run-down neighborhoods of the white working class, and will wage a campaign to tax the rich and the corporations to rebuild America at home, not to build the bank accounts of the super-rich in the Cayman Islands and other favorite tax hideaways.
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Alan W. Silberberg: Sudden Onslaught of Gov 2.0 Sometimes Breeds Fear
Most Californians don't support Paul, and won't; also, most people see that straw polls are meaningless. Let the GOP think that Paul is popular here. He's unelectable nationally, as are most if not all of their candidates.
Yes, the 1% already own the gov't, so far. The decade isn't over; it's just begun, and again things and times are changing...as Bob Dylan noted. Hang in there.
"Suffering teaches compassion. May you have a chance to learn".
But this article was clear, concise and filled with a new perspective.
Boldly and unapolegetically written. I must say I'm beyond impressed!
Thanks for telling it like it is. Much appreciated.
(And I'm a huge supporter of Obama. But I also see both sides more nuanced and clearly. Obama needs to go in and get his hands "more dirty" for Real results.
This is the strongest argument of all for a third party.
Shifting the business of America to War is the other reason we need a third party.
Duh.
It's odd that you'd see a Democrat even notice this . . . I mean his plan is to cut taxes and sign 3 more free trade deals . . .
Yes, we need innovation, good paying jobs and reliable infrastructure. No, there are no quick fixes, but it could happen in one generation. Two of the most reliable indicators of poverty are single motherhood and lack of education. Frankly, the former is a result of the latter. Teach a girl to think, and she will usually think better of having a baby before she can afford one.
If we were to put the same focus and effort into giving our entire population an excellent education that we put into getting a man on the moon or nation building in the Middle East children in kindergarten today will graduate from college or tech school in 15 to 17 years prepared to create and innovate.
And America would have missed getting into the 21st century on time by only 26 years.
". . . you eventually run out of wealthy people."
I'll take my chances.
From US Code, Title 29, Chapter 7, Subchapter 2, Section 151 of the National Labor Relations Act:
"The inequality of bargaining power between employees .... and employers........ tends to aggravate recurrent business depressions, by depressing wage rates and the purchasing power of wage earners.......
It is hereby declared to be the policy of the United States to eliminate the causes of certain substantiaÂl obstructioÂns to the free flow of commerce......by encouraginÂg the practice and procedure of collective bargaining...for the purpose of negotiatinÂg the terms and conditions of ...employment or other mutual aid or protection."