Framing the Economy
by Allan Freedman
In 2010, the bipartisan Debt Commission established by the president to address the critical issue of the exploding federal debt made its recommendations which, for the most part, were clearly understandable, sensible, and debatable ways of reforming our entitlement programs and creating a more fair and equitable tax system.
Now, however, driven by a highly partisan Congress, what had been commonsense proposals has been circumscribed by a battle over ways and means of curtailing unsustainable levels of growing deficits and debt (D&D) that are endangering our nation’s economy, our standard of living, and that of our children and grandchildren. Their dire warnings have become the Republican mantra, their game and gambit, to use as an excuse to advance their policies to reduce the size of government, cut spending, primarily entitlements such as Medicare and Social Security.
Reality is different. Paul Krugman writes in the New York Times (5/6/11): “The Treasury Department continues to have no trouble selling debt and remains able to borrow very cheaply, indicating high confidence on the part of investors that debt will be repaid in full.” Again, with respect to the fearmongers, “We’re paying a heavy price for Washington’s obsession with phantom menaces. By looking for trouble in all the wrong places, our political class is preventing us from dealing with the real crisis: the millions of American men and women who can’t find work.”
With 14 million Americans unemployed and an uncounted number of underemployed, and new workers entering the workforce, a darkening miasma of psychological and societal pain and economic loss has descended upon our nation, its workers and their families. But something has gone haywire in that the fastest-growing sector of our economy is, ironically, the financial industry: banking, investment houses, and hedge funds, among others. Their power gives evidence to the growing corporate plutocracy threatening our economic freedom. Krugman again: “The core of our economic problem is mainly mortgage debt that households ran up during the bubble years of the last decade,” at the encouragement of the mortgage industry and the misled public and as the bubble burst, “that debt is acting as a persistent drag on the economy, preventing any real recovery in employment.”
To become protector of our nation’s well-being, the Republicans and their allies want to cut spending, cut taxes, repeal the Affordable Health Care Act of 2010, cut environmental regulations, and cut the newly passed regulations which protect Americans from the policies of the financial industry that brought us to where we are today. This hellish picture framed by our economy’s D&D reminds one of the 16th century painting, The Garden of Earthly Delights by Hieronymus Bosch.
Polls show a growing public resistance to these policies and advocate increased revenues to the balance sheet through increased income taxes on the wealthiest two percent of our citizens.
History shows that social and political systems change essentially not from the top down but, rather, from the bottom up, where great diversity of experience and skills function interdependently and interactively to release a countervailing force at work. This force is beginning to be felt in several parts of the world. Consider the events of the Middle East Arab Spring, and then turn to the bipartisan Biden 2012 Budget Committee’s deliberations which produced proposed cuts in subsidies for ethanol production and an inclination to raise income taxes for the wealthy.
A significant countervailing force in America could do no better than to advance as its agenda the one proposed by the self-referenced “homeless Hamiltonian,” David Brooks: “If there were a Hamiltonian Party, it would be offering a multifaceted reinvigoration agenda. It would grab growth ideas from all spots on the political spectrum and blend them together. Its program would be based on the essential political logic: If you want to get anything passed, you have to offer an intertwined package that smashes the Big Government vs. Small Government orthodoxies and gives everybody something they want. There will be four baskets.”
Summarizing, (1) there would be an entitlement reform package designed to redistribute money from health care and the elderly toward innovation and the young; (2) a targeted working class basket: early childhood education, technical education, community colleges, an infrastructure bank, asset distribution to help people start businesses, a new wave industrial policy, if need be—anything that might give the working class a leg up; (3) a political corruption basket. The Tea Parties are right about the unholy alliance between business and government that is polluting the country; (4) there would be a pro-business basket: lower corporate rates, a sane visa policy for skilled immigrants, a sane patent and permitting system, more money for research.
Adopting this type of agenda and using it as a basis for a national campaign would propel a countervailing force to overthrow the disturbingly inequitable status quo.
Allan Freedman, Buffalo
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