Today Ezra Klein posted an interesting piece about the Euro crisis that confirms what I have thought for some time.
You may have heard the standard right-wing talking point that the current economic woes in Europe are directly tied to entitlements. Conservatives made a similar claim about the US deficit, which is why we’ve been talking about that side of the equation instead of higher taxes until recently (thank you OWS).
Both claims, of course stretch the truth — a lot.
The economic downturn (due to the subprime mortgage disaster) and tax cuts for the wealthy are the prime factors in the US deficit.
Entitlements are also not the boogeyman in the European crisis.
Klein’s piece, “A larger welfare state can mean a lower deficit” highlights the case of Germany, which has a hefty welfare state — but didn’t suffer from any of the problems faced by Greece and other Euro-zone countries:
Take Germany. They have a pretty big welfare state: pensions, health care, paid vacations, unemployment benefits equal to two-thirds of one’s income. Indeed, the Organization for Economic Cooperation and Development keeps track of social spending — unemployment, old-age pensions, health care, etc — as a percentage of GDP. In 2007, Germany spent 25.2 percent of their GDP on such things. Greece spent 21.3 percent on social policies. Yet Greece is in crisis, and Germany is fine.
As recently as 1965, the cost of those two systems competed neck-and-neck. That year, Canada spent 5.9 percent of its GDP on health care. The United States spent 5.7 percent. But around that time, Canada was transitioning to its current single-payer system. Over the next four decades, the growth of health-care costs slowed in Canada while it accelerated in the United States. By 2009, Canada was spending 11 percent of its GDP on health care — and covering everyone. The United States was spending 17.4 percent of its GDP and leaving 45 million uninsured. In dollar terms, we’re spending $3,600 more per person, per year, than Canada.
I’m not an economist, but there seems to be some consensus in the articles that I have read that what Klein states is true.
I have seen no convincing evidence that European woes are principally caused by entitlement spending.
In fact, Klein makes a good argument that a strong healthcare system could act as a bulwark against deficit:
If the United States had Canada’s health-care system, and Canada’s per capita health-care costs, we would have a much “larger” welfare state, but we wouldn’t have a deficit problem. Assuming we weren’t spending that money elsewhere, we wouldn’t even have a deficit. Likewise, if any country in the euro zone maintained the United States’s health-care system and our health-care spending, it would have a smaller welfare state, but it would be sagging beneath a debt burden far more onerous than anything anyone in Europe is facing today.
- Contrary To Republican Rhetoric, Europe Is Not In Trouble Because Of Spending And Debt (thinkprogress.org)
- The European Debt Crisis in Three Graphs (bostongazette.wordpress.com)
- A Bankrupt Uncle Sam Hypocritically Lectures Europe On Debt (forbes.com)
“It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again” – Venture Capitalist Nick Hanaeur
Hanauer has put his name on a growing list of 1 percenters who are boldly stating what most economists already recognize.
Writing on Bloomberg’s website, Hanauer observed:
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
“The wealthiest can afford to pay more in taxes. That’s a part of the deal. That makes sense. I don’t know anyone that doesn’t agree with that,” Porat said. “The wealth disparity between the lowest and the highest continues to expand, and that’s inappropriate.” “We cannot cut our way to greatness,” she added.
I hope this is the dawning of a new capitalist idea.
We have lived too long in the shadow of timid CEOs and their sycophants who look no further than the next quarter.
In order for capitalism to be sustainable, a robust middle class must exist.
The article goes on to note that one of the major factors driving income inequality is the outrageous compensation and bonuses given to the top tier of huge corporations.
Instituting practices that reward performance and sustainability would go a long way toward creating a healthy economy.
- Morgan Stanley Executive Calls For Higher Taxes On The Rich: ‘We Cannot Cut Our Way To Greatness’ (thinkprogress.org)
- Silicon Alley Insider: Venture Capitalist Shreds The Idea That Taxing The Rich Is A Job Killer (businessinsider.com)
- Millionaire Nick Hanauer Shoots Down Neil Cavuto’s Straw Men as He Explains Why His Taxes Should be Raised (crooksandliars.com)
- Who creates jobs? The middle class (dailykos.com)
- Study backs up “Buffett Rule” claims (cbsnews.com)
In a November 19 post, Reich gives the following advice to the Deficit Supercommittee (which has since disbanded, after failing to reach an agreement):
1. Make no cuts before unemployment is back under control (down to 5%).
2. Make the boost big enough. We need a huge jobs program with components like the New Deal’s Civilian Conservation Corps and Work Progress Administration to restore our infrastructure.
3. Raise taxes on the super rich and tax all income (capital gains included) at the same rate. Restore the tax structure to pre-1980 levels and put a 2% surcharge on income over $5 million.
4. Cut the real welfare — military spending and corporate subsidies. Savings = $400 billion annually.
Reich’s closing plea, of course, fell on deaf ears:
Do you hear me, Washington? Do these four things and restore jobs and prosperity. Fail to do these, and you’ll make things much, much worse.
Unfortunately, there’s not a chance any of this will get through in this political climate.
It seems like we are constantly in a battle to mitigate damage from bad policy and those actively on a misguided crusade to make things much worse, and not making any headway in actually fixing the problem.
Some good stuff there, covering a gamut from lists of good science fiction books for teens to a post eviscerating Frank Miller’s “The 300” in response to Miller’s nasty swipe at the Occupy Wall Street protesters.
* Ask your “ostrich” friends: “Tell us how to avoid “class war” now that 400 families own a greater share of our wealth than 50% of Americans. Is there some disparity that would finally make you worry? When they own more than 75%…Perhaps more than 90%? WHEN will you admit that we’ve returned to the normal condition that reigned in 99% of human cultures? Then will you admit that FDR wasn’t Satan, or that our parents in the “greatest generation” weren’t complete idiots, after all?”
He’s promised to take on the film version of Atlas Shrugged and Avatar, which should be interesting.
I highly recommend taking a look!
I don’t have any great expectations for the State of the Union address tomorrow night.
Paul Krugman has been critical of the signalling coming out of the White House:
The Competition Myth
Robert Reich has a blog summarizing how our country got to it’s current state and what the president should do about it:
The State of the Union: What the Presideny Should Say
There’s much truth in what both of these economists say.
But Obama has spent much of his time trying to appease business interests and surrounding himself with the movers and shakers from the very corporate enclave that helped create our current economy.
It’s not clear exactly what helpful policies will be allowed to see sunlight in a setting in which the president is bending over backwards to satisfy big business.
- Report: Obama to Call for New Investments in State of the Union (news.firedoglake.com)
I watched for two years the coming of the slow-motion train wreck that was Tuesday’s mid-term election.
Of course, the right is crowing that this is a repudiation of liberals and liberal ideology, which of course is wrong.
If this were true, the Blue Dogs would have sailed to reelection, and progressives would have all gone down hard. Instead, it seems progressives did better than the conservative/corporate toadies who call themselves Dems:
Of the 54 seats occupied by members of the Blue Dog coalition, 27 of them were lost to Republicans. (That includes five held by incumbents who either retired or ran for the Senate.) On the other hand, all but three of the much larger group of Progressive Caucus members up for re-election won their seats, including six out of nine caucus members whose races were rated as competitive.
If anything the elections were the result of these things:
1) The timidity of the Democrats — and their inability to put their message out (and highlight their accomplishments)
2) The shit-ton of money poured into campaigns by secretive, unaccountable front groups in the light of the Citizen’s United Supreme Court ruling. Release the Kraken, indeed.
The New York Times has the critical article on this.
“Outside Groups on the Right Flexed Muscles”
While it is hard to sort out the exact difference they made, their success rate, particularly in races in which Republican challengers would have otherwise been badly outgunned, raises the prospect that a relatively small number of deep-pocketed donors exerted an outsize influence on Tuesday’s results.
Yeah. Classic understatement.
The principle right-wing shadow organ has been the hilariously misnamed US Chamber of Commerce. I’ve written about them before, and they look to be one of the most powerful money-laundering outlets for the Bankster set.
As a side note, I find it hilarious the way right-wing nutbags snarl the name “George Soros” (who funds liberal organizations) but can’t find their voice to say anything about Richard Mellon Scaife, the Koch Brothers, front groups like the US Chamber and media vampire Rupert Murdoch.
Until a way is found to get the oversized influence of huge multinational (and in many cases, foreign) money out of the election process, this country is on the fast march to Fascism.
The unbridled celebration of corporatism is about to begin, and the faith of the true believers is unlikely to be broken by any disaster visited upon us as a result.
If these deluded hordes could be swayed by reality, the BP disaster, Mortgage catastrophe and Enron certainly would have done the trick.
The inestimable Bill Moyers recently gave a speech honoring the late progressive historian Howard Zinn. Entitled “Welcome to the Plutocracy”, it should be read by anyone who gives a shit about this country.
The elder statesman of a dead art (journalism) crafts a lesson filled with all the history needed to highlight the consequences of the regressive direction American voters just chose.
Moyers captures the moment perfectly:
Now let’s connect some dots. While knocking down nearly all limits on corporate spending in campaigns, the Supreme Court did allow for disclosure, which would at least tell us who’s buying off the government. Senate Republican Leader Mitch McConnell even claimed that “sunshine” laws would make everything okay. But after the House of Representatives passed a bill that would require that the names of all such donors be publicly disclosed, McConnell lined up every Republican in the Senate to oppose it. Hardly had the public begun to sing “Let the Sunshine In” than McConnell & Company went tone deaf. And when the chief lobbyist for the Chamber of Commerce was asked by an interviewer, “Are you guys eventually going to disclose?” the answer was a brisk: “No.” Why? Because those corporations are afraid of a public backlash. Like bank robbers pulling a heist, they prefer to hide their “personhood” behind sock masks. Surely that tells us something about the nature of what they’re doing. In the words of one of the characters in Tom Stoppard’s play Night and Day: “People do terrible things to each other, but it’s worse in places where everything is kept in the dark.”
In the short term, I am extremely interested in how the alleged principles of the Tea Party zealots breaks against the wall of corporate adulation that is the Republican party.
I’ll be crying into my popcorn as I watch.
- Texas millionaire gives $7 million to GOP group (salon.com)
- Senate Elections: Democrats Take Losses But Hold Upper Chamber (huffingtonpost.com)
- More than half the Blue Dogs are out (dailykos.com)
In the wake of the Citizen’s United ruling by the Supreme Court, unlimited amounts of cash are polluting our election campaigns and buying politicians wholesale.
Robert Reich had a nice piece on his blog Monday about the “Perfect Storm” that threatens our democracy:
He hits all the bases:
- The top one-tenth of one percent of Americans now earn as much as the bottom 120 million of us
- Hundreds of millions of dollars are pouring into campaigns with no accountability whatsoever
- a handful of front groups is laundering the money, and some have taken donations from foreign companies
- Most Americans are in a bad position (unemployment, debt, mortgages) and taxes are rising and services are being cut
- Infrastructure is crumbling
- Politicians refuse to take the most modest step of restoring taxes for top earners (who are now “burdened” with the lowest taxation in 80 years)
We’re back to the late 19th century when the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators. The public never knew who was bribing whom.
Reich is right. And there doesn’t seem to be any hope in sight.
I have no choice but to agree with his gloomy conclusion:
The perfect storm: An unprecedented concentration of income and wealth at the top; a record amount of secret money flooding our democracy; and a public becoming increasingly angry and cynical about a government that’s raising its taxes, reducing its services, and unable to get it back to work.
We’re losing our democracy to a different system. It’s called plutocracy.
Think Progress has continued hammering on this important story.
The organization that purports to represent “small businesses” has already been caught taking money from foreign companies to use in ads in US elections.
Now The Chamber has been revealed holding seminars overseas to help enable US companies to more easily outsource jobs to say — China:
If you need further evidence of whose interests the heavily-funded Chamber reflexively protects, look no further:
Below is an invite to an event sponsored by the right-wing billionaire Sheldon Adelson, inviting local businesses in Florida to come to Jacksonville and learn about outsourcing from Chinese government officials like Li Haiyan, the Counselor for Economic Affairs for the People’s Republic of China, U.S. Chamber lobbyist Joseph Fawkner, and BChinaB, a firm that specializes in helping American firms outsource their manufacturing jobs to China.
How does this help the small businesses the Chamber repeatedly invokes whenever they are criticized?
And as the DailyKos reported today, politicians (especially Republicans) have been caught carrying the water of the Chamber and their foreign benefactors
This cannot be overstated enough: the very next day after his self-labeled “Beijing fundraiser,” [Il-R Congressman] Mark Kirk voted against closing the tax loopholes that encourage corporations to ship American jobs overseas to countries like China.
- Chamber’s true agenda: Corporate profits through outsourcing (dailykos.com)
- IL-Sen: Kirk fundraised in China, then voted to ship jobs overseas (dailykos.com)
- 84 additional foreign companies caught donating over $800k to Chamber of Commerce acct. used for US elections (americablog.com)
This cannot be overstated enough: the very next day after his self-labeled “Beijing fundraiser,” Mark Kirk voted against closing the tax loopholes that encourage corporations to ship American jobs overseas to countries like China.
This is –what do you call it? An issue. Democrats could run on this. If they can break the thrall of corporate cash.
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