The economic story that the Republican Party is peddling to American voters is profoundly unpatriotic and dead wrong. It says that the U.S. government is "broke" and helpless and that there is nothing it can do to reduce joblessness. They pretend that less regulation and cutting corporate taxes would somehow eventually solve the problem.
We should not be surprised that the Republicans are taking this approach. It is nearly identical to the one they took during the Great Depression with Franklin Roosevelt. They said in 1938 as they say now that the government can not spend money to create jobs. They overlook the obvious fact that when World War II came the supposedly broke U.S. government raised the equivalent of $16 trillion in today's money over the next four years, the borrowed half of it at very low-interest rates. The government the Republicans are attacking then turned this money into the tools that crushed Nazi Germany and Japan.
It is almost treasonous to try to scare the American public by saying that their government is broke. The Republicans would have Americans believe that the United States is like Greece. How can they get away with this? Greece has to pay 65 percent to borrow two-year money while the U.S. can do so at .15 percent. In other words, Greece is paying 430 times as much as we are. Republicans need to be held accountable for this lie. The U.S. is among the safest places in the World to put money, and for the Republicans to cast doubt on this is -- how can I say it -- grotesquely un-American.
The Republicans also would have Americans believe that too much regulation is prolonging the Great Recession. Again, how can they get away with this? We are in this mess because when they were in power all through the 1980s and then after 2001 they appointed people who did not believe financial regulation or supervision of banks was needed.
Alan Greenspan, their chairman of the Federal Reserve for 18 years, by his own admission failed to supervise bank lending to risky financial players because he believed they would supervise themselves. It is unregulated, unsupervised private borrowing and lending not government over- regulation and government borrowing that brought on this near-Depression.
Republicans say that high taxes are holding back American business and the American economy. President Clinton -- and George H.W. Bush before him -- raised taxes moderately on the wealthy in 1990 and 1993. What followed was a drop in unemployment from over 7 percent to 3.9 percent in the 1990s, an increase in investment in machinery and equipment of 10 percent or more every year, rising wages, record profits for American businesses, and a budget surplus that the Republicans immediately squandered when they returned to power in 2001.
Democrats should be telling the right story about how to end this near-Depression, and it would be powerful. We could lift this cloud of pessimism that the Republicans are spreading to pull America down. Democrats could put Americans back to work again building world-class roads, commuter systems, water and sewer facilities, communications networks, airports, a modern electric grid, schools, universities, and parks. These are all things that China, Korea, and many others are building faster than we are and that should not be.
Republicans say rebuilding America would be too expensive. Ridiculous! Can't they read the charts in the newspapers? Let me repeat that these charts show that the U.S. government can borrow for 10 years at less that 2 percent. The U.S. government could finance at 2 percent a vast program to modernize America using private companies that would employ millions of people. It is practically free money and the American public would get valuable public assets and a more modern, competitive country that would make us swell with pride.
Democrats unfortunately don't talk much about this kind of building program. President Obama mentions infrastructure spending, but he and his experts are not painting the uplifting picture that they could be painting. Instead the fundraising letters I get are full of tired populist rhetoric and I am sick of it.
Fellow Democrats, "Big Business" is not what dragged our country into a reckless speculation and a housing crash. Many responsible business people have supported and would support progressive policies. Let's go after the people who are running the country down and work with those in the business community who, like us, want to build it up.
Another Democratic fund-raising mainstay is a tired poke at "Big Oil." "Big Oil" did not cause this Depression either. Pretending it had a role in it is again outdated populist rhetoric that lights nobody's patriotic fire. The energy industry is one of America's most technologically advanced. If there had been as much innovation and competition in the American auto industry and in the industry making consumer appliances as there is in the U.S. energy sector, the U.S. would be ahead in those areas instead of playing catch-up with China, Japan, and Korea. Encouraging new forms of energy makes sense. Reasonable environmental regulation is necessary. So is vigorous antitrust action if companies get too big, but the rhetoric about "Big Oil" is just wrong.
There are other tired stories that Democrats should discard. Business lobbyists passing out money to members of Congress is not the reason the U.S. is in this near-Depression. Greenspan would certainly have been less popular with bank lobbyists if he had supervised the banks, but lobbyists could not have stopped him: He had a 14-year appointment to protect him from such pressures.
Business lobbying and the opposition of big money are not the reasons that President Obama can't push through job-creating investments in roads and the like. The Chamber of Commerce and the Business Roundtable support a job-creating public works program as does the AFL/CIO. It is the Republican Party driven by its wacko economic ideology that does not understand the difference between investment and spending, and that wants to scare the people away from public investment because their ideology says such investment is bad.
So what is the right economic story for Democrats? Scaring voters as the Republicans are doing -- and then tying the president's hands to make the horror stories self-fulfilling is a dangerous game, and Democrats have to do a better job of countering it. What Democrats should say to the American people very clearly is that the government could end this near-Depression and rebuild our economy if the Republicans in Congress would let it.
Right now American consumers can't buy enough to put America back to work. They have lost $10-15 trillion because of the falling value of their homes, the loss of a large share of their retirement funds, low financial returns on their assets that remain, and of course unemployment. Government has to step up to take the place of the depleted consumer. It has to put money into modernizing the American public plant so that closed factories and offices will reopen and money filters out into the paychecks of all Americans. I am not talking about a few billion dollars for unemployment insurance or for make work jobs. I am talking about a national rebuilding program that does what spending for World War II did for all Americans in addition to winning the war.
America can do it. It can pull itself out of this near Depression. We know we can because we did it before. The Republican pessimists about America --- the "we can't do it," "we can't afford it" crowd -- are dragging America down. It makes my blood boil and we should not let them get away with it.