Imagine your house is burning. You call the fire department but your call isn't answered because every fire fighter in town is debating whether there will be enough water to fight fires over the next ten years, even though water is plentiful right now. (Yes, there's a long-term problem.) One faction won't even allow the fire trucks out of the garage unless everyone agrees to cut water use. An agency that rates fire departments has just issued a downgrade, causing everyone to hoard water.
While all this squabbling continues, your house burns to the ground and the fire has now spread to your neighbors' homes. But because everyone is preoccupied with the wrong question (the long-term water supply) and the wrong solution (saving water now), there's no response. In the end, the town comes up with a plan for the water supply over the next decade, but it's irrelevant because the whole town has been turned to ashes.
Okay, I exaggerate a bit, but you get the point. The American economy is on the verge of another recession. Most Americans haven't even emerged from the last one. Consumers (70 percent of the economy) won't or can't spend because their major asset is worth a third less than it was five years ago, they can't borrow as before, and they're justifiably worried about their jobs and wages. And without customers, businesses won't expand and hire. So we're trapped in a vicious cycle that's getting worse.
But the government won't come to the rescue by spending more and cutting most peoples' taxes because it's obsessed by a so-called "debt crisis" based on budget projections over the next ten years. That obsession -- which serves the ideological purposes of right-wing Republicans who really want to shrink government -- has even spread to the eat-your-spinach media, deficit hawks in the Democratic Party, and a major (and thoroughly irresponsible) credit-rating agency that's neither standard nor poor.
Meanwhile, some lazy (or misinformed) commentators are linking our faux debt crisis to Europe's real one. But the two are entirely different. Several European nations don't have enough money to repay what they owe their lenders, or even pay the interest. That's threatening the entire euro-zone.
But there's no question that the United States has enough money to pay what it owes. We're the richest nation in the world and we print the money the world relies on. The only question on this side of the pond is whether tea-party Republicans will allow America to pay its bills when the debt-ceiling fight resumes at the end of 2012.
Europe is scared of what's happening in the United States - but it's not America's faux "debt crisis" that's spooked them. It's the slowdown here (and the likelihood of another recession), made all the worse as our debt obsession prevents the U.S. government from doing what it should. A slowdown and recession here mean fewer exports from Europe to America. When combined with their genuine debt crisis, this could push Europe's economy over the edge.
The most important aspect of policy making is getting the problem right. We are slouching toward a double dip because we're getting the problem wrong. Despite what Standard & Poor's says, notwithstanding what's occurring in Europe, and regardless of U.S. budget projections years from now -- our current crisis is jobs, wages, and growth. We do not now have a debt crisis.
Every time you hear an American politician analogize the nation's budget to a family budget (as, sadly, even President Obama has done), you should know the politician is not telling the truth. The truth is just the opposite. Our national budget can and should counteract the shrinkage of family budgets by running larger deficits when families cannot.
Americans are more frightened, economically insecure, and angrier than at any time since the Great Depression. If our lawmakers continue to obsess about the wrong thing and fail to do what must be done -- and they don't explain it to the nation -- Americans will only become more fearful, insecure, and angry.
We are slouching toward a double dip, with all the human costs that implies. We don't have to be. That is the tragedy of our time.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
the tent cities, and the hunger, will not be pretty
as Gil Scott Evans put it back in the 70's, "The Revolution Will Not Be Televised"
( http://www.huffingtonpost.com/2011/05/27/gil-scott-heron-dies_n_868363.html )
it'll take till the 75% see, real clearly, in spite of the corporate media's propaganda, what the utter madness (and rank stupidity) of the 25% have brought, MAYBE we'll then see some actual change ...
away from debt crisis stupidity, away from political fear of standing up to foolishness and worse, and away from being 100% bought and owned by Wall Street and Big Money
maybe
it seems, by then, it'll be awfully late ...
the half-full part is it is NEVER too late to change direction, and start working on actually solving real (aka "right" ;-) problems!
Substitute flood water for fire, add "total civil society breakdown", and you've got New Orleans in Katrina.
...........The motto of the Federal Reserve: to saddle the public with debt from cradle to grave.
and last a love note from the Banksters:
http://www.illuminati-news.com/bankers-manifesto.html
Actually the S&P downgrade was made simply because our law makers were unable to come to an equitable agreement. More partisan rhetoric and blame will exacerbate the divide and eventually force a further downgrade. In my experience no one party has the answer. A plan purely from one side of the aisle or the other will not forge a lasting solution. Contrary to what the author says here we do have a debt problem. We have recalcitrant law makers that completely unwilling or unable to deal with the root causes of our defecit spending. On the left our lawmakers are unwilling to embrace entitlement reform in the big programs which are causing most of our debt, on the Right the TP and GOP are unwilling to increase taxes and revenue when it is needed in the long term. The author is right on one point alone. This battle didn't have to happen right now, and in hindsight shouldn't have because the economic recovery was fragile and I fear now it may be broken beyond repair.
http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2007.png
Yes, we certainly do, a lot of it.
Today all of our lawmakers are millionaires and have been bought and paid for by the Corporations. The Public goes wanting again. "The Best Government the corporations can Buy"
Corporate America no longer needs us. We've given them so many tax breaks and subsidies that they can remain profitable without the American consumer.
We need to take our power back, as well as our government, by reinstating a "sane" corporate tax rate, closing loopholes and eliminating subsidies. Only then will corporations begin to participate in our economy again and carry their fair share of the burden.
Afterall, they are responsible for our current situation. It's about time we make them take responsibility.
Bottom line - it's the current tax code that is allowing the wealthy to move the corporations overseas, but keep the personal income at lower tax rates, that is running up the deficit.
Excellent article, particular the fire analogy, by Mr. Reich, by the way.
There is absolutely NO historical basis for this claim.
Big business will not hire in American because the cheapest labor is overseas, small business cannot afford to pay a decent wage or offer decent benefits because they are forced to compete with big business using 3rd world labor.
Right now we have 2 options:
Republican: Rid the US of labor laws and regulations, effectively turning the United States working class into a 3rd world population.
Democrats: Same as republicans just complain about it and pass laws to ad regulation just never fund them. However they will leave intact social programs that allow the working families to eat, and receive health care.
Independents: Increase tariffs on imports from countries with 3rd world labor laws making it more costly than hiring workers in the US. Forcing global corporations to hire in the US to most effectively reach the worlds largest market.
A thirty hour work week sounds good in theory, but most small businesses don't work on that schedule. Plus, you're talking about a 25% pay cut for those employees, as we could not afford to pay them 1/3 more, ie, to keep their current salaries the same.
kind of like when you play a championship game you have to -----dig deeper ----play a little harder ---give it 110% ---------the last thing you do is ease off ----or play handcuffed
republican economic strategy ----make cuts ----bench the star player ----
If we only had a conservative in the White House *sigh*
In the context of the Cold War we believed that a 1930s type depression might 'defeat' us. So, instead of washing out the debt, eliminating inefficient entities, we inflated and borrowed.
The George W. Bush years of unfunded wars and tax cuts has placed our economy beyond the point where monetary tinkering can ward off a full blown collapse.
And now, we are in the early stages of a system ending DEPRESSION that began four years ago. Runaway inflation, now in its early stage will provide the coup de grace.
However, my skeptical outlook is largely driven by the drivel coming out of the wealthiest contributors to public policy lobbying. The rich have grown obsessive compulsive about their hoard and their future chances of hoarding more. It's gotten so bad that average people think they're in the "hoarding" wealthy class and make statements of the absurd, all the while ignoring their childrens' futures. The truly wealthy are not foresaking their children, it's assumed that they'll have that few hundred thousand dollars laying around for their future education and start in life. But the average and poor who are carrying water for the rich have not even life insurance to cover catestrophic loss of life. Too many people who want to be rich quick, arm chair experts, but have demonstrated a predilection towards bad study habits. I can't fix lazy and sinful pride, that's where I look for God to help. Not of the economic or political "crises", but the crises of honor, character and love.