Talking Point: US Government Debt and Jobs

Job, Jobs, Where are the Jobs?

The talking point is simple. Average Americans are not spending money, and the economy is stalled, because they don't have much money. It's no use giving tax breaks and low interest rates to product manufacturers, because the people who would normally buy their products don't have money. People need jobs.

It is debatable whether the American public is responsible for 70% of domestic spending on goods and services, but by sheer number their spending potential is huge. They might make up 70% of domestic spending if they had money to spend, but they don't have good jobs.

Why not? Government policies over the past several decades, supply-side (trickle-down) tax policies and corporate globalization policies, have created a record wealth gap. A study by three Citigroup analysts indicates that the top 1% of Americans earn as much annual income as the bottom 60% and the top 1% possess as much wealth as the bottom 90% of Americans. The analysts concluded “economic growth [in the US] is powered by and largely consumed by the wealthy few.” [1] This is borne out by recent statistics showing that growth in domestic product sales have declined at discount stores and have grown in high-end stores and luxury products.

The Solution:

The government needs to set policies to put money in the pockets of average Americans, and I'm not talking about a $600 check; it needs to be tens of thousands per year, which simply put means temporarily creating jobs. The money for these jobs needs to come from the places that it is being hoarded: The richest 1% of Americans and transnational corporations who have benefited greatly from government policies over the past few decades.

After people have had government-sponsored jobs for several years, they will have the money to buy more products and services they need. This will create a market for private sector products and, in turn, support more jobs in the private sector. Eventually, the government can get out of business of job creation.

And yes, these jobs will require more government revenue in the near-term, but will also generate new revenues. In the long run, we'll be more likely able to pay down the US Government debt.

Agree? Let policy makers know:

• Contact the Broadcast Media
• Contact the US Senate
• Contact the House of Representatives

Update: Listen to a professional, Bill Gross, founder and co-chief investment officer of the investment management firm Pimco. "America’s debt is not its biggest problem", Washington Post, August 10, 2011.

Sources:

1. Can the Middle Class be Saved? Atlantic Monthly, September, 2011.

Wealth Gap and Revolution

Lately I've been dwelling on the social strains caused by the wealth gap in the US. Everyone should know the difference between "income gap" and "wealth gap;" income being the annual revenues and wealth being the accumulated revenues or savings. The wealth gap is actually more pronounced than the income gap, but both have been growing for several decades. A recent statistic on wealth gap:

The top 1% of Americans own 40% of the wealth.

The word hoarding comes to mind as does a famous quote:

There is, inherent in the capitalist system, a tendency to self-destruct. - Schumpeter, 1942.

We see it happening before our very eyes playing out in the Washington budget debate. The notion, that giving the wealthy class, or owner class, tax cuts to spur growth is a widely held belief in our society. But this simplistic rule only makes sense when money is tight and production capacity at factories is tight and in need of investment to expand, neither of which hold today; we don't need any more production capacity and even if the owner class were to produce more, the commoners don't have the money to buy the stuff.

What we face is a market that is saturated with production capacity, but no money among we the little people, because the money is being hoarded and used for non-productive speculation. Buying commodities, like grains, industrial metals, oil & gas, have become disconnected from the real economy and turned into a gambling playground for the wealthy (not just Americans).

The tendency is for this kind of hoarding to create social instability (dare I say "revolution"?).
People are catching on to this, and the big questions are 1) will we get to the point where enough people become so destitute that they don't have anything, and thus don't have anything to loose if they rise up? 2) will the honest, wise wealthy people change policies before this happens, if only to save themselves?

Stay Tuned.

Sources:

Show Me the Money, Zine, Autumn, 2001, Tony Honeycut.

Interpreting the 2010 Mid-Term Election

Following the recent election, the establishment narrative has been that Obama over-reached; his initiatives were too liberal and he needs to tack to the right. This view isn't based on analysis, rather it is more a matter of group-think among the punditocracy. To them it's obvious.

However, actual analyses suggest that the right-wing surge in the 2010 mid-term elections hinged on Obama not being progressive enough and thereby loosing the support of his base.

First, lets dismiss with the false common wisdom, promoted by the establishment, that presidents almost always suffer losses in the US House of Representatives during the mid-term elections. It's taken as unalterable fact. It's true that this occurred for George W. Bush and Bill Clinton, but during Franklin Roosevelt's first mid-term election, after he put forth radically progressive programs, the Democratic Party gained seats in the US House of Representatives.

Second, is the contradiction between the establishment narratives of the mid-term elections. On the one hand, losses in the US House were predicted on the basis of an "enthusiasm gap;" the narrative was that Democrats were disillusioned with Obama and thus less likely to work on the mid-term election campaign and come out to vote on election day. This narrative conflicts with the post-election interpretation that says Obama is being too liberal and needs to tack to the right.

Third, there are the numbers. Below is a comparison of exit poll information for US House vote results for 2008 and 2010, each with about 17,000 people surveyed. As a percentage, Democratic voters were a significantly smaller proportion in 2010 than in 2008.

Percentage of Turnout by Party for
US House Vote
2008 Vs 2010

Party Affiliation	2008 Percentage	2010 Percentage
Democratic	40%	35%
Republican	33%	35%
Independent	28%	29%

But percentages only tell part of the story. Did Democrats stay home, or did more Republicans come out in 2010 than 2008.

According to ABC News (Bold added),

[the] current estimate is that 90 million people voted [in 2010]. Exit poll says 45 percent were Obama voters in 2008. That’s 40.5 million voters.

In 2008, Obama won 69.5 million votes. So about 29 million Obama voters did not show up in 2010.

Exit poll also says 45 percent of people who voted yesterday were McCain voters in 2008, again 40.5 million. That, vs. his nearly 60 million in 2008, means about 19.5 million McCain voters did not show up.

So Obama had nearly 10 million more no-shows.

The following tables show that, of the Democrats that did come out to vote in 2010, they for the most part stayed with the Democratic party compared with 2008 (91-92%).

However, there were shifts in both Republican and Independent votes away from the Democrats to the Republicans. As a percentage, we see a big shift in Independents voting 51% Democratic in 2008 to only 37% Democratic in 2010.

US House Vote by Party Affiliation - 2010

Party and % of Turnout	% of Vote Dem	% of Vote Rep	% of Vote Other
Democratic 35%	91	7	2
Republican 35%	5	94	1
Independent 29%	37	56	7

US House Vote by Party Affiliation - 2008

Party and % of Turnout	% of Vote Dem	% of Vote Rep	% of Vote Other
Democratic 40%	92	7	1
Republican 33%	9	89	2
Independent 28%	51	42	6

But it's wrong to conclude that Independents simply jumped ship from Democrats to Republicans. About 48.5 million Independents voted in 2008, but only about 34 million voted in 2010, nearly a 15 million voter difference. If the "enthusiasm gap" story is correct, leading to progressive Democrats and Independents staying home, then concluding that voters seek a more "centrist" or conservative policy agenda, based on 2010 exit polls in which many "unenthused" progressive voices were absent, is in error.

Sources:

Re-posted from Challenge the Establishment Blog.

2010 Exit Polls for House voting - CNN

2008 Exit Polls for House voting - CNN

Thanks to GLH Blog for the ABC News information.

We're Not too Enthusiastic about Some Acts

Since when have the Dismalcrats acted like they stand for something principled? OK, we're aware of FDR's New Deal, and Jimmy Carter's stance on human rights, tho he's the one for whom the Carter Doctrine on the Middle East is named:

Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force. - State of the Union Address on January 23, 1980

George Bush can claim that he was simply maintaining consistency with a long-held US doctrine voiced by President Carter.

I highlight the word "acted" in my opening sentence, initially thinking of the synonym "to behave", as in "actions are louder than words." But, there's another use of the word as in, "Ronald Reagan was an actor" .... he acted... as in "make-believe" both in the movies and the White House.

That's what we're seeing with Democrats, and Republicans and the establishment in general, be they conservative or liberal. It's becoming part of the fabric of American culture, instilled by our TV culture. They say lots of nice sounding phrases like "Healthy Forest legislation", and "we're getting tough on Wall Street," and they even act the part.

Another example that comes to mind was an early sign of how Obama would act if he became President... there's that pesky word again. You might recalled the incident during the last presidential campaign when Obama advisor Austin Gouldsby was caught telling corporations not to worry about Obama's statements regarding renegotiating the North American Free Trade Agreement (NAFTA); Gouldsby assured the business establishment that Obama was just rattling the saber on NAFTA to gain popular support.

So, we've had half-measures from the Obama administration at best and sell-outs to the powers on Wall Street and the healthcare industry as well. Is it any wonder why there is an "enthusiasm gap" in the upcoming elections?

Jim Webb on Wealth Gap: 2007 State of the Union Response

Transcript of the Democratic response to president George Bush's 2007 State of the Union Address. The Democrats selected Jim Webb, freshman senator from Virginia, who has populist sentiments. He shared his views on using the economic system for everyone, not just those who have enough money to make more money. This view is taking hold, now that we have several decades of experience that demonstrate the failures free market fundamentalism. The primary failure is that wealth accumulates among a small minority, and away from the vast majority. Jim Webb addressed the wealth gap head on. Hopefully the Democratic Party understands this and will act on it.

Webb framed the issue as, "... how we see the health of our economy, how we measure it, and how we ensure that its benefits are properly shared among all Americans."

When one looks at the health of our economy it's almost as if we are living in two different countries. Some say things have never been better. The stock market IS at an all time high and so are corporate profits. But these benefits are not being fairly shared.

When I graduated from college, the average corporate CEO made 20 times what the average worker did. Today, it’s nearly 400 times. In other words, it takes the average worker more than a year to make the money that his or her boss makes in one day.

Wages and salaries of our workers are at an all time low as a percentage of our national wealth even though the productivity of American workers is the highest in the world. Medical costs have skyrocketed, college tuitions are off the charts. Our manufacturing base is being dismantled and sent overseas. Good American jobs are being sent along with them. In short, the middle class of this country, our historic backbone and our best hope for a strong society in the future is loosing its place at the table. Our workers know this through painful experience. Our white collar professionals are beginning to understand it as their jobs are disappearing also. And they expect, rightly, that in this age of globalization, their government has a duty to insist that their concerns be dealt with fairly in the international market place.

In the early days of our republic, president Andrew Jackson established an important principle of American style democracy. That we should measure the health of our society not at its apex but at its base. Not with the numbers that come out of Wall Street, but with the living conditions that exist on Main Street. We must recapture that spirit today.

See E.J. Dionne commentary, "A Reagan Democrat"
I wouldn't put it that way. He's a populist democrat in the tradition of the agrarian revolt of the late 1800s.