Bush Recession Comes Home to Roost

unemployed womanAfter years on the job, my friend’s company laid off his entire department, and the county laid off his wife. I told him our spare bedroom is available if he needs it.

Besides the attack on the “crazy spending” government that cost my friend’s wife her county job, a primary cause of such unemployment is the difficulty in getting a business loan. Companies need to make payroll until they close deals in the pipeline, but banks now won’t make loans to bridge that gap because the recent wave of bank failures has made them gun-shy.

This hurts any economic recovery even more because companies really need the laid off people to successfully close those pipelined deals. So my friend is out of work, and companies are struggling with the work left behind, all because of the fallout from deregulated banking.

Republican Mike Oxley remains frustrated that the public blames Congress for the lack of regulation. Congress did pass regulations, but “What did we get from the [Bush] White House? We got a one-finger salute.”

As for that crazy-spending government: after you adjust for inflation, California’s per-capita spending has been flat for a decade and more. Remove increased spending for prisons, and per-capita state spending declined in recent decades.

tax chartTax cuts caused the current budget deficit, not crazy spending. Local government revenues fell 57% after Proposition 13. Even more egregious, the consume-atives™ (they do not conserve), now complain that State funding for local governments to fill that revenue hole meddles too much in local affairs.

This fits with an explicit consume-ative strategy called “Starve the Beast.” When elected, they pass tax reductions but cut no spending. Then they attack programs otherwise too popular to touch because of the deficit. So Bush 43 ran as our savior from terrorism, then, once elected, immediately tried to “privatize” Social Security because it was dangerously “under-funded.” (Actually, its surplus is declining.)

Now we’ve starved the beast, and banks are too scared to lend, so businesses cut workers, and the governor proposes cuts to social welfare programs (but no cuts in corporate tax breaks). His cut to elder care would force many into residential care homes (at three times the cost), or into the even-more-expensive emergency room…or the cemetery. But we can’t afford the luxury of home care workers! (And besides, nursing homes have an excellent lobby, while public health care workers don’t.)

The meme that the public refuses to increase taxes remains prominent in the news, despite the voters passing a recent Oregon’s referendum to do just that. Let’s just ignore the Republicans’ obstruction, despite their minority status, or that losing public services further impoverishes average families. (Who takes care of granny if Social Security goes away?)

Well-funded regulations and infrastructure are essential parts of the American economy. Taxes and regulations do not lead to economic decline; on the contrary, America’s median incomes rose most dramatically after the New Deal’s regulations, when marginal tax rates were highest. Incomes rose only anemically since the current consume-ative narrative began (with Reagan, a man who raised taxes while he was California’s governor, and signed eight tax increases while in the presidency).

The irony is that a timid incrementalist like Obama is now vilified as a “socialist” mastermind for duplicating Mitt Romney’s corporate-friendly health care plan, and/or for refusing to regulate the hedge funds and tax the plutocrats who, in effect, got my friend fired.

Adam Eran

Comments

  1. hwood007 says

    I have limited amounts of money coming in each month. If I contract to send out all that comes in each month plus an additional amount, then I must borrow that additional amount. If I keep doing that for years, then the feathers are going to hit the fan sometime soon. We all must live within our means.

    • Robert Perkins says

      But if you gave back part of your pay (tax cuts)to your employer then you are the reason you would have to borrow that additional amount.You can’t have it both ways…..cut taxs and lose your teachers, fire dept. police ect.Raise the taxs or creat a national sales taxs like a state tax and do away with the irs, then eveyone would pay there fair share….even the rich!!!

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