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At a time when the economy needs vast and purposeful help from the federal government, America faces a peculiar handicap: Neither political party really believes in liberal economic intervention or knows how to do it. Democrats are still not over their infatuation with Hooverite fiscal austerity--embracing budget surpluses, bemoaning deficit spending. Other than serving their wealthy friends, Republicans work at dismantling government's ability to steer and stimulate the private economy. Both parties are enthralled by the most conservative advisers, Federal Reserve Chairman Alan Greenspan and former Treasury Secretary Robert Rubin (now at Citigroup), who counsel caution. Democratic Senate majority leader Tom Daschle expressed doubts about any stimulus program, fearful that next year's budget might go into deficit.

This reluctance to act boldly will have to change very quickly. The economy was already in contraction before September 11. It needs hundreds of billions in new federal spending--yes, deficit spending--to counteract the great shrinkage under way in consumption and business investment. No one knows the severity of what's unfolding, but false optimism will make things much worse. Acting too fast and spending too much have economic risks, but none compare to what can unfold if Washington is too timid.

Back to basics. As John Maynard Keynes and American originals like Marriner Eccles, FDR's Fed chairman, taught, when the economic engine starts to seize up, government is the only force capable of jump-starting it--pulling idle capital into real investment while bolstering the incomes and confidence households need to buy things. It does this by borrowing the money from private sources--running large federal deficits financed by Treasury bonds--and spending the money in ways that generate waves of collateral economic activity. Deficit spending is not an unfortunate side effect. It is the necessary cure. America is especially vulnerable now to a deepening contraction because Washington is flush while companies as well as households, particularly those in the bottom half, are mired in debt. An aggressive government stimulus program is essential to regenerate the wherewithal--and the motivation--for business and families to renew their spending. If we are truly at war, the government must also do this in ways that renew social trust and a sense of equity. Patriotism cannot endure if the reigning ethos continues to be "winner takes all."

The $15 billion bailout for the airlines is a disgraceful start. Washington couldn't avoid aiding these terribly mismanaged companies, but it demanded nothing in return for the taxpayers or the workers being laid off by the tens of thousands. When Congress bailed out Chrysler twenty years ago, Lee Iacocca volunteered to work for $1 a year, labor got a seat on the board and the government took warrants in exchange for its cash infusion, later redeemed in full. This time hapless Democratic Party leaders refuse even to demand that the CEOs stop ripping up union contracts. The insurance industry is next in line for a handout, and there will be others. If more bailouts follow the same pattern, America's newfound unity will swiftly curdle into bitter resentments.

The agenda must be of sufficient scale to make a difference--and pump out money quickly. Top-end tax cuts, the Republican answer to all questions, are particularly inappropriate; companies and capitalists aren't likely to invest when consumers are cutting back. Particularly laughable is the reflexive Republican call for a capital gains tax cut, as if investors need an incentive to sell stocks.

The government's $40 billion emergency appropriation for reconstruction and the military is only a hesitant start. Washington should immediately ship $40 billion or $60 billion (or more) in revenue sharing to state governments that are being forced by balanced budget requirements to cut spending or raise taxes. And rather than cut domestic spending to pay for the huge bundle just approved for the Pentagon, Congress should fully fund domestic programs--particularly those in education, nutrition, housing and health. Congress should also act immediately to aid those workers being laid off through no fault of their own. A sensible program would extend unemployment insurance to thirty-six weeks and raise the average benefit to $300 a week. Special provisions are needed for short-term, contract and part-time workers, who would otherwise not be eligible for assistance. The Economic Policy Institute estimates that a decent unemployment insurance program might cost $30 billion a year.

On a grander scale, America has huge unfilled public investment needs that can easily cost more than $1 trillion over the next five years. The money can buy things people and society want and need:

§ Education. School boards have a backlog of thousands of desperately needed school construction and repair proposals. A $40 billion school fund could generate construction jobs and contracts across the country in a matter of weeks.

§ Health. One essential defense against terrorist attack with biological or chemical weapons is to rebuild our decayed public health infrastructure--laboratories, public hospitals and clinics, and properly staffed public health departments with modern computer and communications systems.

§ Transportation. To counter highway congestion and the nightmare of air travel, the country needs to develop alternatives like high-speed trains. This takes planning and time, but many projects are ready to go. For example, MAGLEV Inc., a Pittsburgh consortium, has been seeking federal funds to demonstrate a high-speed train that could get to Philadelphia in ninety minutes.

In addition, Congress can swiftly get money into the hands of those most likely to spend it. The next tax rebate can be targeted to low-wage workers who got nothing from the Bush tax cut; it would pump about $10 billion into the economy. The government could require all contractors to boost pay to a living-wage level. Aggressive new wage standards should be part of the government's quid pro quo for corporate bailouts. Indebted families need "stretched out" payment terms so they can keep spending.

After decades of conservative government, the list of needs and possibilities is long. Alert citizens must understand that it's time for Washington to act boldly, on a scale commensurate with the challenge. They must awaken Washington politicians from the stupor that suffocates imagination.

The facts about Bush's tax cuts are being kept from the public.

Finally, President Bush is "deeply worried" about the economy. Yep, in remarks last week, he even went so far as to observe that "the recovery is very slow in coming."

Daniel Patrick Moynihan is a disappointment to those who counted on him to uphold the banner
of ethical social change.

Treasury Secretary Paul O'Neill is turning out to be a dangerous crank.

With the Bush Administration, the corruption isn't hidden in the Lincoln Bedroom. It's paraded in your face. On June 18 Treasury Secretary Paul O'Neill lunched with executives of leading financial houses at Windows on the World high atop New York's World Trade Center. His unstated purpose was to help raise $20 million from the companies he regulates, as an initial ante for a private advertising campaign to promote Social Security privatization. When George W. Bush joked during the campaign that the rich were "my base," he wasn't kidding.

The Administration has lurched straight from its tax cut to privatizing Social Security. On June 11 the sixteen members of Bush's Commission to Strengthen Social Security, all handpicked by the White House for their prior support of private accounts, announced that they are unanimously in favor of using part of Social Security taxes to create "individually controlled personal retirement accounts" to be invested in the stock market. Commission co-chairman Richard Parsons, co-chief operating officer of AOL-Time Warner, made the costs clear, saying the panel would consider raising the retirement age and cutting benefits. "For future retirees, you can consider everything on the table," he said.

A coalition of citizen organizations led by the Institute for America's Future and including labor, women's groups, the National Urban League, senior and youth groups, and disability activists immediately denounced the commission members as "astonishingly unrepresentative of the views held by most Americans concerning Social Security's future." A week later two members of the House Ways and Means Committee ran into a Midwestern version of the same citizens' coalition in Missouri when they conducted a "field hearing" to promote privatization. According to the St. Petersburg Times, committee chairman Bill Thomas had envisioned the hearing as an opportunity to foment an "intergenerational clash" between retirees and Generation Xers on Social Security reform. Instead, seniors and young people demonstrated for "intergenerational solidarity" against privatization.

Similarly, O'Neill's airy power lunch was punctuated by a protest rally organized by the AFL-CIO, the Institute for America's Future, the New York Statewide Senior Action Council, the 2030 Center (for young people) and other groups. Joined by Representatives Jerrold Nadler and Jan Schakowsky, the protesters denounced the blatant impropriety of O'Neill's helping solicit private funds to lobby for a plan that will generate billions for financial barons like Morgan Stanley, American International Group, Citigroup and Deutsche Bank, all of whom were expected to be at the lunch.

To repeat what we've said before: Social Security is not in financial trouble now and may never be; just tweak the actuarial assumptions used by the privatizers and any shortfall disappears. But even if more money is needed at some point to pay benefits, sensible solutions are at hand--the simplest being to raise or remove the cap on the amount of earnings on which Social Security taxes are levied. That idea, of course, does not go down well with the high-income crowd that supports Bush.

By the fall, the Bush Administration will hang around the neck of every Republican running for Congress a detailed plan for privatization, and Bush and O'Neill will be publicly identified with the campaign designed to sell this lemon to the American people. In 2002, Americans will have a clear choice to make.

A Nation analysis finds that benefits to Bush, Cheney and the Cabinet could top million.

An activist think tank is fighting the right at the ballot box--and winning.

If all goes as the GOP has planned, George W. Bush will have on his desk by Memorial Day a $1.35 trillion tax bill that is wrongheaded and an utterly inequitable pander to the privileged. Every American should be clear about what this bill is: a blueprint that will define the political and social landscape we live in for decades to come. The immense tax cuts will not only disproportionately benefit the wealthy and increase the widening gap between rich and poor, they will also severely circumscribe the government's capacity to help improve the lives of all Americans. (As if to prove the point, the Senate Finance Committee voted out this tax giveaway the same day the Senate voted against increased funding for teachers to help reduce class size.) This downsizing--indeed, emaciation--of government is of course exactly what the right is aiming for. Grover Norquist, "field marshal" of the Bush tax plan, was quoted recently in these pages saying that his goal is "to cut government in half...to get it down to the size where we can drown it in the bathtub."

Under the plan, the 400 richest multimillionaires will receive tax breaks worth an average of $1 million a year. The poorest working families will get zip, even as the nation faces a growing investment deficit measured in children without healthcare, families without housing, overcrowded airports and neglected alternative energy and conservation. Senate "moderates" claim they improved the bill, which is true. Under the original Bush plan, 26 million children in low- and moderate-income families would get no benefit from the tax plan. Under the modified bill, that drops to 10.6 million. The $58 billion a year handed to the wealthiest 1 percent could be used to lift another 2 million children out of poverty, provide health insurance to 5.1 million uninsured children, fund universal preschool and expand childcare services to more than 9 million children--two-thirds of those eligible.

Besides being unfair, the bill, which stretches the cuts over eleven years rather than Bush's original ten, is dishonest--in reality a stealth raid on the Treasury. The Senate earlier voted to cut the Bush tax plan by 25 percent. To meet this, the Finance Committee simply backloaded the bill even more than originally planned--phasing in the full tax cuts later so they don't count under the ten-year limit used to estimate its costs. The $1.35 trillion giveaway balloons to $4.2 trillion in the next decade, after all the provisions kick in. It also calls for ending popular tax breaks in a few years--like the tax credit for research and development--in the confidence that no future Congress would choose to do so. Plus the bill is designed so that 40 million taxpayers will eventually be subject to the Alternative Minimum Tax, insuring changes that will add dramatically to the total cost. And the Republican Congress is just warming up: Even now the K Street lobbyists are cooking up ways to lard a minimum-wage-increase bill with fat corporate tax cuts.

Bush has peddled this tax cut as the elixir for a good economy and a bad one, for rising gas prices and declining stock prices, for small businesses and waitress moms. The repeal of the estate tax is shamelessly presented as a way to save family farmers, even though advocates cannot locate one farm that has actually been lost because of the tax. It's all hype, lies and distortion.

Remember--in 2002 and beyond--those responsible, from Bush to the Republican majority that marched lockstep in support, to the handful of Democratic renegades who provided the margin. They must be held accountable for this travesty.

He's an archconservative who thinks big and knows how to get things done.

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