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Debt/Hostage negotiationSix moths ago, the Tea Party was heralding their sweeping gains in the 2010 election, taking control of the House and gaining seats in the Senate. Republicans ran on a platform of “Jobs, Jobs, Jobs!”, the Right-of-Right Tea Party caucus promised to “cut out-of-control Federal Spending.” Ronald Reagan was the first to ask the question: “Are you better off now than you were four years ago?” when running for President in 1980. He reprised the question in 1984 when he ran for re-election against Carter’s VP, Walter Mondale. It’s a question Republicans didn’t DARE ask in 2000, and were desperate to suppress in 2004, 2006 & 2008. In 2010, people upset with the slow progress on the jobs front, spurred on by corporate troublemakers that whipped the teanuts into a frenzy over healthcare reform, a mere two years after the economic devastation of Republican control of the White House, and just four years after Republicans turned a $5.8Trillion dollar Debt into a $10.2Trillion dollar Debt in just six years, frustrated voters decided to give the GOP another shot. And here we are. Unemployment back up over 9%, and a manufactured “debt crisis” that may, in the end, end up costing us another “$29 to $58 Billion dollars a year” (caution, link to Fox “news”. I’m not completely sure how Fox come up with “$29 to $58 billion”, as the data they link to doesn’t match Fox’s math.)

Seven months later, unemployment is still hovering around 9%, and our credit rating has just been downgraded for the first time in history… which may force banks to raise interest rates and further repress an already deeply recessed economy. If interest rates go up (to attract foreign investors to fund our Debt), interest rates on Mortgage and Car loans will go up, cutting into those industries. Credit Card rates would go up, dissuading shopping and leaving consumers with less money to spend on other things. If you thought “high gas prices” were cutting into spending and hurting the economy, you ain’t seen nothing yet if interest rates go up. Thank you GOP! And who will they blame in November? President Obama.

Take a look at the (now ubiquitous) “Goolsbey Job Creation Chart“:
 

Private Sector Job creation

 

Notice that near steady climb through May of 2010? You’d THINK someone would look at that graph and ask “What happened in May of 2010 to cause Private Sector hiring to drop off & stagnate?” There were several factors: 1) The government drastically cut hiring Public Sector employees from 226,000 a month in Mar.2010 to just 65,000 by Feb.2011 (ref: Table.5), laying off 114,000 Census workers in August, and 159,000 more Federal employees in September in response to Republican demands that government “cut spending”; 2) Paul Ryan released his “Threat Pledge to America” calling for cutting Medicare to pay for MORE tax cuts for the rich, followed by 3) a Republican website dubbed “YouCut”, the GOP’s Jihad on Spending hyping the idea that “overspending” was responsible for the current economic crisis (never once mentioning that extending The Bush Tax Cuts for another two years accounted for nearly 37% of that “over-spending”). Tea Party candidates were swept into office by an extremely vocal group of economic Luddites becoming involved in politics for the first time, most of whom cited “Fox News” and “Glenn Beck” as their chief sources of (mis)information.

Now, nearly every year since before Ronald Reagan took office, Congress has raised the Debt Ceiling with little or no debate. But this time around, Tea Party hostage takers were adamant against raising the Debt Ceiling, denying the very existence of a crisis and dismissing the warnings of Wall Street as to what would happen if we *didn’t* raise the Debt Ceiling. With the tail wagging the dog, the teanut minority pressured the GOP into rejecting ANY “compromise” that included “raising revenue” through the increased taxation of anyone… even Big Oil or the banks we just bailed out, creating a completely fabricated and unnecessary “crisis” that threatened economic catastrophe if they didn’t get their way. The Debt Limit was finally raised at the last minute in hopes of avoiding a default and harming the U.S.’s credit rating. But in the end, one big name ratings firm, “Standard & Poors” ended up downgrading our credit rating anyway, specifically citing:

“Republican […] resist[ance to] any measure that would raise revenues”S&P Report: RatingsDirect on the Global Credit Portal (PDF), page 4 | August 5, 2011

Corporate Profits surged again in July… 88% since January of 2010 (which I first documented here last November), while unemployment fell only 1/10th of one percent. Kinda blows a hole in the that whole “trickle down” theory Republicans love so much. “If we just cut taxes on ‘The Job Creators’, they’ll create more jobs“. Really? Where’s the evidence of that? Corporations are sitting on almost Two Trillion in cash, many of them NOT PAYING ONE DIME in income taxes. They have more than enough employees ALREADY to meet demand when people just aren’t spending. Why would they hire more? This is the fallacy of the Conservative Economic philosophy in a nutshell. An ideological devotion to an absurd and repeatedly disproven theory that “capital precedes labor”… which, ironically, their own patriarch, Abraham Lincoln, correctly explained the exact OPPOSITE is true:

“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” – President Abraham Lincoln

When was the last time you heard a Republican member of Congress ask, “Where are the jobs” since taking office in January? (Okay, The Orange One said it last July, but this is the same guy who told reporters to “Read my lips”, then muttering under his breath as he walked away, “I can’t believe I just said that.”) Unemployment is higher now than it was just four months ago (following its fourth month of decline), and has hovered around 9% ever since. Their unnecessary battle over the Debt Ceiling may have done the very thing they say they sought to avoid: an increase in the Deficit… which this downgrading of our credit rating might result in if the Federal Government is forced to increase interest rates to attract investors, potentially wiping out any savings cut from the budget. If interest rates DO go up, we’ll have the worst of both worlds: Spending another $100 billion a year servicing our debt AND a Trillion LESS to spend on the things we need because of the budget deal, meaning we get all of the cuts with NONE of the savings. Great job, guys!

So I ask you again (in my best Ronnie Reagan voice): “Are you better off now than you were just six months ago?”
 


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