On the debt ceiling.
I'm not a big fan of Reaganomics. Now, I believe that President Reagan's 50% tax cuts for the wealthiest Americans directly resulted in a huge market boom, the creation of a glut of new consumer spending and an large initial influx of cash into the economy from the top - money that helped entrepreneurs like Steve Jobs and Bill Gates launch the computer age, as well as many other opportunistic aspiring businessmen and women start up new industries that specifically catered to a previously non-existent "Nouveau Riche" segment of the population - people who, for the most part, were making their fortunes in the stock market in a way that wasn't possible under the mostly stagnant dow that hovered right around the 1,000 pretty much from the end of WW2 until Reagan took office in 1980. However, there was a lot more regulation of the market and businesses back then as well. It's also important to note that taxes for the richest Americans were higher under Reagan than they are now under Obama. They were even higher than they were when Bill Clinton was in office. So, the reason why Reagan's massive tax cuts for the wealthy "worked" initially is because they were tempered with strict market regulation, strict anti-trust regulation, a 35% upper class tax rate with fewer loopholes and, most importantly, because it was all built upon the strong domestic manufacturing infrastructure upon which our country was built and rose to a world superpower.
All the money that was now going into the pockets of the "job creators", as Republicans like to call rich people now, was mostly being spent directly into the economy. Venture capitalists began to seek out new innovators, like I mentioned before with Jobs and Gates. Wall St. brokers made fortunes overnight and spent copiously on every new toy and gadget they could get their hands on, sending retail numbers soaring. A lot more revenue was going back to the people who ran the businesses that made it, and they were mostly spending it domestically, which obviously grew the economy, spurned new business investment, fueled technology and was very much responsible for the dawn of the computer age and laying the foundation upon which things like wireless communication and the internet were built.
Then some things began to change...
Business owners and the ultra-wealthy, who had seen their wages increase by nearly 600% over the 8 years Reagan was in office, began to see how they could make even more money and have to give even less of it back if only they could get our lawmakers to loosen some of these regulations that were stifling their ability to rake in more and more profits. Corporations who were forced to compete on a level playing field, such as AT&T, who had recently been broken up over anti-trust violations, saw these regulations as an impediment to their market dominance. Such is the consequence of monopolistic competition. When you have a free market that is driven by the desire of companies to be the biggest, baddest kids on the block, there comes a point when you realize that the only way to do that is to get rid of the adults who are watching over your shoulder to make sure you're playing fair. The very nature of our capitalistic business model demands that corporations seek whatever recourse they can in order to maximize profits and eliminate competition. Competition means a smaller share of the pie, less profits. Regulation means being forced to share that pie, less profits. Thus, when you've already got as big of a piece of the pie as you are allowed under the existing rules and regulations, the only way to get anymore is to get rid of some of the other guys sitting at the table, and to do that you have to get rid of the rules that force you to play fair and share with the other kids.
Reaganomics, under a strictly-regulated market and a strong anti-trust legislative framework, with a fair tax system free of loopholes and subsidies, is actually not a terrible economic model. When you infuse capital directly into the market, but attach strict regulations that mandate things like domestic re-investment, job creation, domestic consumer spending and so on, then the "trickle down" model actually trickles down. Granted, it still doesn't trickle down the way that it was sold to the American people in 1980, but it certainly does so more than in today's economy.
When you take away the regulation, when you loosen restrictions on corporate mergers, when you allow lawyers and bankers to write new regulatory legislation that creates loopholes, when you open up international trade without a balanced trade agreement in place, when you give incentives to companies who don't spend their profits domestically... basically, when you allow the inmates to run the prison, you get the current fiscal mess we're in now. You get an extreme concentration of wealth at the top of the economic food chain, and thanks to decades of increasingly loosened regulations, that richest 1% has been able to plug as many holes as possible that used to let that money trickle down into the economy.
That's how trickle-down economics turned our country from a democratic republic to a plutocracy in 3 decades.
And now, because not only the wealth but also the market control is concentrated on such a small percentage of the population, you have the situation we're in today, where less than 6 companies in every essential industry control 80-90%+ of that industry. You have 6 companies that control 90% of all media, 6 banks that control 90% of all money, 6 companies that control 90% of all food produced in our country.
Hmmm... 6, 6, 6... that's a perfectly innocent number, am I right, Christians?
Regardless, you have the very people who control 95% of the wealth in this country also running 95% of the sources we get our news from. So, these people can shape our opinions about what, exactly, they're doing up there and make sure we blame anyone but them for the mess we're in. They can spin this whole situation and implant seeds of propaganda into our minds so that we equate raising taxes on the wealthy by 2% - a figure that would still have them paying less than they did under the great conservative hero Ronald Reagan - as "socialism" or "Marxism". They make the idea of raising taxes on the richest Americans, even if it's only pennies on the dollar as being economic poison. "Punishment" for the "job creators".
Well, let's talk about those "job creators", shall we?
First, and foremost on the list is General Motors. They, along with Chrysler, received billions in bailout money from the federal government because they were in that elite group of corporations who have become so bloated and all-encompassing due to increasingly loosened regulations that they were deemed "Too big to fail." After receiving tens of billions of tax payer dollars to keep from going bankrupt, GM responded by laying off nearly 76,000 autoworkers. Along with job losses that resulted from closing dealerships, the total figure of job loss associated with GM is around 100,000.
Next up, we have Citigroup. Now, we know that the banking industry got everything it wanted and more from not one, but two bailouts that largely went into their pockets. First was the Bush administrations $750 billion bank bailout, pitched as essential to save our country from "economic collapse". Second was the funds they received under the Obama administration's TARP bailout, which, after the Bush administration basically handed the banks a bunch of money and said "here, use this to pay off your bills", our government came along again and said "don't worry, we'll pick up those bills for ya!" Citigroup was one of the financial corporations that went on a failed bank shopping spree with their bailout money, acquiring all the failing competition they could get their hands on and buying back in at the bottom of the market like a smart investor should. They paid back their bailout money and gave huge bonuses to their executives. All the while, they laid off about 75,000 people. Are we seeing a pattern yet?
Then there's public enemy #2 (or #1, depending on how you look at it) in the bank bailout fiasco, Bank of America. It can be argued that nobody bought up more fire sale properties during the mortgage crisis and domino effect on the banking industry than BofA. They bought out and absorbed dozens of banks and lenders and, like Citigroup, reaped enormous profits and paid back their bailout funds as well. Amazingly, shockingly, surprisingly and every other eyebrow-raising emotion you can pretend actually applies here, they too laid off a ton of hard-working, middle-class employees, despite earning insane profits, being given hundreds of billions of dollars in free money and riding the wave of prosperity that has the Dow almost back where it was before the crash. 35,000 people lost their jobs while the executives at BofA all received huge bonuses.
Even the tech sector wasn't safe. Despite better than expected consumer activity following the recession, Hewlett Packard laid off about 58,000 people from 2008-2010. During the first round of firings, CEO Mark Hurd found himself on the unemployment line when he was let go amid allegations of impropriety with company expenses for personal use. At that time only about 60% of the total workforce that would end up being laid off had been let go. The rest came after the new CEO took over, just after the company purchased Electronic Data Systems. I mean, it makes sense, who needs employees when we can use that money to buy other companies and lay off their workers too!
And then there's Caterpillar. They laid off about 27,500 workers, and like all of the other major corporations who instated massive layoffs, they blamed the sagging economy.
When you see numbers like that, a combined total of just under 300,000 middle-class Americans put out of work by five incredibly large and profitable corporations, during a recession, it almost makes the 18,000 people GE laid off, despite making $14 billion in profit seem paltry.
Even today, Cisco announced it's killing 6,500 jobs.
These are the "job creators" guys, these are the people who the Republicans are telling us must receive further tax cuts, or else! Clearly they must be appeased before they kill again! Keep in mind, these job cuts were all made under the current, Bush-era tax system. The tax system that Republicans insist we must continue to adhere to, lest job creation come to a screeching halt.
My question to that is, since when had job creation been moving?
4.5 million jobs were lost under Bush. Under his tax policies that were meant to encourage the "job creators" to, you know, create jobs. Thanks to his lowered taxes, his increased incentives for the wealthy, his further loosening of regulations and restrictions on corporate "mergers" - the new hot buzzword for "monopolies that we can get away with", 4.5 million Americans lost their jobs under his watch. Even more, the higher the Dow rose, the more Americans got laid off, so that by the time the bubble burst in 2008, more Americans had lost their jobs than anytime in the previous 10 years.
But, don't take my word for it, I have a chart right here!
Damn those pesky numbers! Always getting in the way of the corporatist Republicans and their "Taxes only kill jobs" rhetoric! Well, there's the data. That is the culmination of 8 years of tax breaks, subsidies, kickbacks, loopholes, and deregulation. That's the grand finale of 2 terms in office spent artificially inflating the economy by funneling cash directly to the wealthiest Americans and working a boom & bust housing and lending market to the breaking point, just to prove to the rest of the world that 9/11 only made us stronger.
That's what happens when you take Reaganomics and remove the rules, regulations, tax rates, lack of loopholes and strong anti-trust legislation from the equation. That's what happens when you build a house of shit upon the shaky foundation of trickle-down economics.
I said I wasn't a fan of Reaganomics, and this is a perfect example of why. Designing an economic model around giving wealth to the wealthy only encourages spending when there's an incentive to do so, whether it be the promise of more wealth through growing business, or the punishment of less wealth, through taxation. Simply handing wealthy people more wealth and saying "You can either hang on to this and be really rich, or spend it and be less rich, whatever you want to do." Pretty much guarantees they're going to hang on to it. And, when you then ask those same wealthy people "Hey, do you mind helping us write fiscal legislation and new regulatory guidelines? I mean, you guys are so rich and smart, we could really use the help!" You're officially handing the robbers the keys to the bank.
Never mind the fact that, while all this explosion of wealth at the top is taking place, wages for the middle class have been almost completely stagnant for 30 years. Never mind that crime rates have risen dramatically and in direct proportion to poverty rates. Never mind that more middle-class families are applying for government assistance for the first time ever than at any other point in our nation's history. There has been so much damage done to the middle class by the corruption of the trickle-down economic system that it would take a month of daily posts like this for me to fully articulate them all. Yes, Reaganomics allowed the market to grow exponentially and create a massive influx of wealth into the private sector. Yes, Reaganomics spurned massive job growth and corporate up-sizing. Yes, Reaganomics created scores of new millionaires and billionaires and a decade of wild and carefree consumer confidence. But, once the guys at the top figured out how to rig the tables, once they targeted and eliminated all the pesky rules and regulations that were keeping their greed in check, once they figured out how to work the system better than a welfare queen with a pocket full of social security numbers, then all that prosperity, all that exuberance, all that newfound optimism turned into the systematic pillaging of the middle class. Most of those small business that were started under the economic optimism of the Reagan era, and grew into large, successful companies, are closed now. Many more have been absorbed... excuse me... "merged" with larger companies. The net result is millions of lost jobs. MILLIONS of lost jobs. Where I live, in central California, the unemployment rate in my county has been at or above 20% since 2007. That's almost 5 years of 1 in 5 people being out of work. When you factor in people who have been unemployed so long they aren't even on the rolls anymore, people who have simply given up on trying to find a job in this dismal market, that figure is more like 1 in 4 people.
So, yeah, it's hard for me to be a Republican cheerleader. It's hard for me to sit here, in one of the economic "ground zeros" of the housing market collapse, and take the Republicans in congress seriously when they say all of our problems would be solved if we would just cut government spending and give more tax breaks to the "job creators". Are they talking about the "job creators" that closed down 3 plants here in the last 5 years, laying off nearly 3500 people? Are they talking about the "job creators" just over the hill in the silicon valley who have laid off almost 10 times that number? You want to cut government spending? Shit man, the government is the only company that's still hiring in this economy!
Maybe they need to take a listen to their hero, good ol' Ronald Reagan, the Great Communicator. Maybe they need to listen to his speech on the debt ceiling before they continue to demagogue it to the point of default. Maybe they need to listen to his speech on unions before they continue their nationwide campaign to strip collective bargaining rights from hard-working, middle-class Americans. Maybe they need to hear his comment about closing corporate loopholes and making sure everyone pays their fair share. Maybe they need to hear it from Ronnie's mouth, because for some reason, when Obama says the same thing, they all scream "SOCIALIST!" They all cry "MARXISM!" They all bemoan the horrible way we're treating those poor, poor "job creators" who are currently hard at work, killing jobs.
Or, maybe some "Reagan Republicans" need to ask themselves, is this the party I signed up for?