Posted on January 19, 2008, Printed on January 19, 2008
The New York Times made it official. The Economy is a problem!
So, now, at last we can discuss it.
Not just discuss it, in rapid order "recession" became the word of the day, from White House, Congress, the Fed and the media.
It's blamed, mostly, on the subprime crisis.
But that's not the problem. It's a symptom. It is the logical, and probably one of the necessary results, of Bushenomics.
Along with low, or no, job growth. Little or no business growth. Depressed wages. And the crashing dollar. (The president has a different vision of the economy. In his vision it's booming! And the number of jobs is growing! Though there is this little blip.)
The idea under which Bushenomics was sold is this:
- The rich are the investor class.
- If the rich have more money, they will invest more.
- Their investments will create more business.
- Those businesses will create more wealth, thus improving everyone's lives and making the nation stronger. They will also create new and better jobs.
Whether or not the people who say such things truly believe them, I cannot say. But that's their pitch, and the media certainly seems to buy it, as do most of the establishment economists.
A more realistic -- and less idealistic -- view of Bushenomics is that the Bush administration and its cronies came at the economy with the attitude of oilmen.
- They inherited a vastly wealth country.
- They looked at it like the oil under the Alaskan wilderness. They craved to pump it out, turn it into cash and grab as much of that cash as possible.
Wherever possible, they literally sold off the assets. This was called privatization. Our biggest asset -- in terms of size -- is, of course, our defense establishment. With privatization, one dollar out of every three for direct military operations in Iraq and Afghanistan goes to private contractors like Halliburton and Blackwater. So when someone says, "Support the troops!" with budget appropriations, they should really yell, "Two-thirds support to the troops! One third support to Halliburton, et al.!"
This is just an estimate. The degree of privatization is unknown. Presumably, that's deliberate. Nor does it count the amount of money the military spends with private purveyors to supply the troops and their operations. It is only the amount that goes directly to private contractors.
But for the most part, the assets of the United States, our collective wealth, could not be sold off in such a direct manner.
In order to turn them into cash, what the administration did was borrow against them.
That is, they cut taxes while continuing to spend lavishly, creating debt.
The debt is owed by all of us, the collective people of the United States.
The tax cuts hugely favored rich people. They also favored unearned income (dividends, capital gains, inherited money) as opposed to the kind of money people have to work for. The very richest got richer.