As economist Dean Baker recently pointed out in his article at Huffington Post, we are still in the midst of the worst economic downturn since the Great Depression. And it might get far worse. Consider that even though the recession officially ended two years ago, there are still more than 25 million people who are unemployed, can only find part-time work, or who have given up looking for work altogether.
This is an outrage and a tragedy. These people's lives are being ruined due to the mismanagement of our economy. During the unprecedented length of their enforced idleness, they are losing their skills, and there seems to be no prospect for ever putting them back to work at any job except McJobs.
We know the cause of this mismanagement and misuse of human resources, and it is this: The folks who get paid to manage and regulate the economy were either unable or unwilling --willful blindness? -- to see the gradual formation of an $8 trillion housing bubble. They didn't seem to be bothered by the doubling of house prices in many areas, nor by the dodgy mortgages that were sold to finance these purchases. Somehow, willfully blind people like former Federal Reserve Board Chairman Alan Greenspan, and his sidekick and successor, Ben Bernanke, told themselves and everyone else that everything was just fine . . as their Wall Street financer friends made hundreds of billions of dollars selling junk mortgage and bogus derivative instruments around the world.
Then the collapsing bubble (that was sure to follow) tanked the economy. Tax revenues plummeted, so local governments had to lay off thousands of teachers, fire fighters and policemen. As a result we ended up spending ever more millions on unemployment insurance and food stamps. And tax revenues plummeted even further. Then we got some tax cuts and some wholly inadequate stimulus spending, in a futile attempt to boost the economy. The primary result was a greatly increased budget deficit, which the Repugs now try to pin on Obama! This in spite of the fact that the enlarged budget deficit came about primarily because of the housing bubble, which was fueled by the Wall Street gambling excesses, that crashed the economy. And yet we are constantly being told by Tea Party Republicans, and now even The Great Compromiser, Obama himself, that our central problem is: out-of-control spending to help the poor and the disadvantaged!
This lie is an outrage that must not be allowed to stand. "Out-of-control spending" for the unemployed and underemployed is, as Dean Baker says, an invention, a fabrication, and a falsehood, with no basis in reality, which politicians are pushing in order to advance a very ugly agenda: President Obama and his Republican owners plan to cut Medicaid, Medicare and Social Security. This way to cut the deficit is especially peculiar, since Social Security is financed by its own designated tax. Therefore, it does not even contribute to the deficit! And to the extent that the crooks in our government steal from the Social Security trust fund, to help them reduce the deficit, benefits will not be paid to all the elderly who have, over their working lives, paid into the fund.
The plans to cut to Social Security, so as to further boost the incomes and wealth holdings of the super-rich, seem especially perverse in view of the fact that the vast majority of retirees are not living especially well right now, and that by the standards of northern Europe, their benefits are meager. The average Social Security check is about $1,100 a month. This would be less than an hour's pay for many of the Wall Street honchos -- whose greed and incompetence (criminality?) brought down the economy.
Yet, when President Obama preaches "equality of sacrifice," it turns out to be the elderly and the poor who are supposed to do most of the sacrificing: His lovely plan to modify the annual cost-of-living adjustment formula for Social Security would reduce benefits for those in their seventies by 3%, those in their eighties by 6% and those in their nineties by 9%.
These are huge cuts. Yet the Republicans are screaming bloody murder because President Obama also wants to raise tax rates on the rich by a shrimp-size 4.6%?! Give me a frigging break! And what if he proposed raising taxes on the wealthy by twice that much?! -- for that's what he is proposing for people 90 years old and older, who are entirely dependent on Social Security! Think of how much more loudly the rich would then scream and how utterly absurd that would be.
Obama is proposing to impose this tax on seniors who had nothing to do with causing the crisis, while he leaves Wall Street untouched!
To put this into proper perspective, understand that even a very modest tax on nothing more than financial speculation could raise more than $150 billion a year or $1.5 trillion over the course of a decade. Is Obama considering such a tax? Of course not -- a financial speculation tax (FST) has never even been mentioned in his debt discussions.
By contrast, the European Union has been actively debating the imposition of a FST ever since the crisis began. In fact, the European Parliament voted for such a tax by a margin of more than 3 to 1. And the United Kingdom has had an FST for decades. Why? Because it raises the US equivalent (relative to the size of the British economy) of almost $40 billion a year -- just by taxing stock trades. Even the International Monetary Fund has come out in support of increased taxes on the financial sector. And yet Republicans in the US scream bloody murder if such a move is even hinted at, here in the states.
Presumably, the continuing political influence of the financial industry explains why so few of our bought-and-paid-for members of Congress dare mention an FST. After all, Obama installed a former director of Morgan Stanley, Erskine Bowles, as head of his deficit commission. (Revealing, isn't it, how so many Wall Street honchos have been invited into the Obama administration?)
So need we look any further for an explanation of why Obamacon is about to gut Social Security and Medicare in response to Wall Street's wreckage of the economy?! The sick reality is that the average worker and retiree (ever more powerless in Obama's America) will then be forced to pay the price for the damage that the Wall Street crew did to the economy! Surely you don't expect the Wall Street rich to pay for it themselves!
So much for "democracy' in America. So much for candidate Obama's masterful con job, that got him into the White House.