This article explores the economic legacy of Ronald Reagan, and how the policies of "Reaganomics" have led to the decline of the American middle-class, both economically and in terms of political power. This article presents the case the the rise of income and wealth inequality in America over the past 30 years is a product of massive redistribution of wealth, facilitated by Reaganomic policies.
I've always been fascinated by the contradictions in American political ideology. I think the biggest contradiction in American political ideology is within the so-called "Conservative" movement, and its interesting because the contradiction is so fundamental.
Generally speaking, conservatives are social collectivists. Social conservatism, in the most general and universal sense, is rooted in the public enforcement of collective social values. Liberalism is literally the transcendence of the individual over the collective, i.e. the freedom of each individual to believe and act according to their own desires, even when their beliefs and actions are abhorrent to the community.
What is so fascinating about American politics is that the "Conservative" movement of the past several decades has become solidly pro-capitalism, when it is in fact capitalism that is ultimately responsible for just about every ill that conservatives rail against in America.
An important thing to understand about conservatism, and American conservatism in particular, is that there is a populist basis for conservatism. When we look back at the liberal revolutions of the 18th and 19th centuries, of which the American Revolution was one, these were generally populist revolutions for liberalism against elite ruling minorities who were seeking to conserve the traditional, feudal, social and economic systems. The rise of capitalism itself was a part of these liberal revolutions. I get the sense that many people today really don't understand just how radical capitalism really is.
Just speaking anecdotally, two of the most fundamental statements that I hear from American conservatives are: #1 that "they", or "the community", have lost control of the culture (i.e. "liberals" have forced an unwanted culture upon them/America) and #2 that income should be based on work.
If you share those two beliefs (which by the way, both self described conservatives and leftists share these views) then you really are fundamentally against capitalism.
Today's conservatism is a different form of conservatism than the conservatism of the 18th and 19th centuries. Conservatism during that period was plainly a defense of the ruling establishment. If you were a conservative during the 18th and 19th centuries it meant that you were a supporter of monarchy, of theocracy, and of the established aristocracy, i.e. you were against democracy, against religious freedom, against market economies, etc., and so the idea of "populist conservatism" wasn't really considered at the time.
Today, however, we have to recognize that there really can be, and is, a populist basis for conservatism. So what is populist conservatism? From the most fundamental perspective, regardless of any political ideology, populist conservatism rooted in natural human desires to maintain a socially enforced moral code. I do think that conservatism in the general sense is a natural tendency within any social group. Society of course is a social group. Culture is the set of beliefs, ideas, and practices that are produced and held by a social group. Social groups tend to develop self-protecting mechanisms, which are conveyed in the beliefs, ideas, and practices of the social group. These protective mechanisms are inherently "conservative". They work to conserve the culture of the group.
For good or bad, better or worse, social groups tend to produce cultures that protect the collective interests of the social groups. Often times individuals within these groups can be victims of the culture, which is exactly what liberalism is all about, minimizing the collective power of the social groups, in order to grant more freedom to individuals to believe and act as they wish.
What true conservatives really want (I'm not talking here about libertarians, who are often lumped in with conservatives due to them often siding with the Republican party in America) is strong community based collective social power.
So, why do conservatives feel that they don't have strong community based collective social power in America? Well, firstly, because they generally don't have it, for multiple reasons. The most basic reason is of course the U.S. Constitution, which is a fundamentally liberal document, that goes to great lengths to limit the power of the majority in order to protect minority rights, and by minority in this sense I don't mean racial or ethnic minority, but minority beliefs and practices.
But the protection of minority rights in the constitution has only a passive impact on the culture. The most direct impact on the culture comes from capitalism.
Conservatives talk a lot about "family values", and there is good reason for that. The family has the greatest vested interested in its members, particularly its children. In a general sense the family is the most basic social structure, and the social structure in which those within the group have the greatest vested interest in promoting the well being of the individuals within the group and of the group itself. Families tend to be the social group that inherently has the best interests of its members, particularly its children, at heart, and thus is the social unit that typically instills the best "values" within its children. This of course is not always true, as child abuse cases and cases of delinquent parenting prove, but it is generally true.
Beyond the family the local community, often embodied in organizations like churches, schools, and local government, and in a loser sense simply in neighborhoods etc., also has a vested interest in the well being of its members, again, especially the children.
Thus the cultures produced by families and local communities tend to be sets of beliefs and practices that both protect the interests of the local community and that have the best interests of its individual members in mind. Again, there are always exceptions to these generalizations, and often those that don't fit into the social mold become victims of the community itself.
This is where industrialization and capitalism come in.
Industrialization and capitalism go hand in hand, indeed they both gave rise to one another. Capitalism is an economic system in which the rights to newly created value are granted by the ownership of capital, i.e. the owner of the property that is used to create goods and services is the owner of the goods and services produced via the use of said property. The workers, whose labor produces the goods and services, do not have any rights to the products of their labor, unless they themselves are also capital owners, as is the case with small business owners, etc.
This system of property rights of course makes capital quite valuable and played a major role in promoting the increasing development of capital in the form of industrialization and the development of modern corporations and intellectual property rights systems, etc.
How is culture expressed? Culture is expressed primarily in the products that we produce. Our culture is reflected in the homes that we live in, the clothing that we wear, our hair styles, the transportation that we use, the songs we sing, the images we display, the stories we tell, etc., etc.
During the 20th century the industrialized world was transformed from a place where culture was locally produced by communities to a place where culture was produced by highly centralized international corporations.
There are distinct differences between locally produced culture and corporate produced culture.
Locally produced organic culture is the product of local self-interest, i.e. the self-interest of the community. Locally produced organic cultures tends to reinforce beliefs and behaviors that are protective of the community (note here that this is not always necessarily positive, as the community may be run by the mafia or be abusive to minorities, etc.). Locally produced culture has a natural tendency to be conservative. For example clothing styles that are a product of organic locally produced culture will tend to reinforce the sexual behaviors that are collectively deemed in the best interest of the community.
Clothing styles produced by corporations, however, have completely different motives behind their development. And to understand why these motives matter we have to address fundamentals of human behavior and the role of social pressures.
Human beings, as anyone should know, have certain natural behavioral tendencies. Many of these tendencies are "socially destructive". This is a battle we have been fighting for thousands of years, its where the concept of things like sins come from, etc. Sins are basically socially destructive human behaviors. As with all social animals, the individual and the collective are in a constant state of conflict. Individual interests are often at odds with social interests and we constantly play a balancing game both individually and as a group of weighing these interests against each other. Liberalism, in the traditional sense, is the elevation of individual interest over the collective interest.
So, for example, if we take the issue of sexual behavior, a community may have a collective interest in promoting monogamy, in suppressing teen pregnancy and pregnancy, in suppressing adultery, in suppressing the potential for transmission of sexually transmitted diseases, etc. These interests may be expressed in a local culture by the promotion and adoption of conservative dress codes that are not sexually evocative or revealing, etc., and so by adopting standards of dress that diminish sexual expression, the community then feels that it is promoting its interests in socially regulating sexual behavior.
But, individuals within the community still have a desire to engage in sexual expression and behavior. So there will always be a general desire by individuals within the group to step outside the bounds of the culture to satisfy their individual desires, and there will be particular individuals within the group who have an acute aversion to the norms of the community and seek to subvert the norms of the community but may be unable to do so due to social pressure and/or lack of physical ability to be creators of their own culture.
So in the traditional sense we know that communities tend to promote collective interest through their own locally produced culture. The desires of individuals within the community, however, may be, and often are, at odds with the collective interests. (For example a group of 10 people have one small pie to share between them. The collective interests is to give everyone an equal, relatively small, piece of the pie, yet each individual within the group may prefer to have all, or at least more, of the pie to themselves.)
But what of corporate produced culture? Cultural artifacts produced by corporations are produced for a profit. The interest of the corporation is not the same as the interest of the community in which the corporation operates. The corporation prospers by satisfying individual desires. So even though a community may have an interest in promoting modest dress, a corporation will have an interest in promoting sexually expressive dress. Why? Because sexual expression is a core human behavioral desire. Teens especially have a natural biological desire to be sexually expressive, and indeed to make themselves stand out from the group sexually, and thus wearing sexually expressive clothing that goes beyond the typical clothing of the community is a natural desire of teens. The community, however, has its desire to enforce its culture on teens in order to regulate their behavior in the best interests not only of the community, but theoretically also the best interests of the teens themselves.
But the objective of the corporation is profit. Profit is gained by selling commodities to consumers. You sell commodities to consumers by making products that satisfy their desires, or at least claim to do so. Satisfaction of desires always goes back to baser human instincts, many of which are at odds with collective social interests and indeed are the motivators of so-called bad behavior that we as a social species have been struggling with for thousands of years.
So capitalism and industrialization in the 20th century resulted in a situation where culture was almost exclusively produced by corporations, which is to say, by a relatively small numbers of people who produced large quantities of products, from food to clothing to music to movies. The relative centralization of production that occurred with industrialization meant that culture went from being produced organically by local communities in ways that supported community interests to being designed by small numbers of people in international corporations, who designed culture specifically to serve their own interests, i.e. the profit interests of the corporation. Doing so inevitably meant catering to the base desires of the human psyche, which in many cases is exactly what traditional culture had evolved over thousands of years to suppress.
Capitalism is a product of the liberal revolutions of the 18th and 19th centuries. Capitalism promotes liberalism and thrives in liberal environments. Capitalism thrives in liberal environments because permissive social environments allow corporations to more strongly appeal to human desires and to a wider array of desires, thus allowing for broader markets and stronger sales. As long as things like freedom of speech and minority rights are protected, markets within a capitalist system will themselves drive the culture towards greater permissiveness since this creates greater opportunities for profit. It doesn't matter if you are infavor of a permissive liberal socieity or against, you should still understand the role that capitalism and markets play shaping society.
The loss of control over the culture that conservatives lament is actually a direct product of capitalism. It is a product of culture that is produced by corporations for the self-interest of the corporation, instead of culture that is produced by families and communities for the self-interest of the families and communities.
While conservatives often rail against "Liberals", they really should be railing against capitalism. Indeed, most so-called "Liberals" in America are not in fact Liberals in the classical sense of the word, they really are light socialists, but the thing is, most so-called conservatives are too.
I think the two main reasons that the American conservatism is so conflicted are racism and the Cold War. American social conservatives were never strongly pro-capitalist, especially in the South, until after World War II, and even more-so after the enactment of Civil Rights legislation in the 1960s.
Certainly the dominant big S "Socialist" movements of the 20th century included what can be called progressive platforms, i.e. they included support for things like racial and gender equality, support for reproductive rights, and were largely anti-religious. These things clearly put social conservatives at odds with 20th century Socialist parties and the big S Socialist movements, however "socialism" in the broader sense is not necessarily progressive, indeed there were several socialist movements in the United States during the 19th century and early 20th century which were religiously based and highly conservative. In fact the Mormons began as a socialist movement, and Mormons today retain many elements of their socialist roots. The Amish and Mennonites are also types of socialist societies, which are of course highly conservative.
Traditional American social conservatives were always populist. That populism was heavily tied to the Democratic party and in opposition to the wealthy and Wall Street until a socially progressive platform was adopted by the Democratic party in the 1960s, at which time Republicans adopted a socially conservative platform in order to court voters dissatisfied with the Democratic party. In addition, I believe that corporate America came to be seen by conservatives as a place still ruled by white people for white people, whereas the American government came to be seen (wrongly) as an instrument of undermining white interests in order to promote the interests of minorities, specifically blacks. And this is how, from the 1960s through the 1990s, racism played a role in shifting populist and anti-corporate conservative Americans into a position of being rabid pro-capitalists, along with the patriotic associations between capitalism and America during the Cold War, even though capitalism is actually the root cause of many of the conflicts that conservatives have with modern American culture.
The idea that taxes and the government were the primary enemies of American society became popular in the 1980s as government social programs were portrayed as benefiting minorities, especially blacks, and anti-taxation mentality was infused with the idea that taxes were a means of taking from white people and redistributing their income to black people. That sentiment was never directly expressed, but it was clearly the undercurrent of the Republican resurgence in the American South which took place during the 1970s and 1980s, after the passage of the Civil Rights Act and LBJ's War on Poverty.
And thus a mentality grew within the Conservative movement in the United States that "free-market capitalism" must be great, because that's the framework in which "white people succeed" (without the government dragging them down), because the anti-religious Communists just had to be wrong about everything, and because the opposite of whatever so-called American "Liberals" said must be true.
But the reality of course is far different. The reality is that many of the so-called ills of society that American Conservatives lament are products of capitalism, and some of these so-called ills aren't necessarily ills. For example, the rising divorce rate in America and other modern economies is largely a product of two things: greater women's equality, which gives women greater ability to leave abusive relationships, and the change in the economy from a home based economy to an economy where work is performed almost entirely outside the home where husbands and wives work separately.
But its not necessarily the case that an increasing divorce rate is a bad thing in the first place. Certainly the fact that people are less likely to remain in abusive or unhappy marriages today than they were in the past has to be a good thing. Low divorce rates in and of themselves tell you nothing. We know that in the past, and today in societies where women have few rights and economic opportunities, divorce rates are lower, but also that many women stay in loveless and abusive marriages, where cheating is rampant, where they are physically abused, where one or both partners is depressed, etc. and the families of the American past weren't all like those in 1950s sit-coms either.
However the other leading cause of divorce, the modern economy, is something that could be considered a problem, although there is no clear answer to it. It is doubtful that any modern market-based economy could fully resolve this problem. Certain types of socialist systems could address this type of issue, but many such systems have their own problems as well. Families in groups like the Mennonites and even the Mormons do work together at much higher rates than the average American family however, and have lower divorce rates for that and other reasons, not all of them good.
Instead of addressing ways in which American capitalism has disrupted family structure, though, Conservatives do things like point fingers at homosexuals and somehow blame them for increasing divorce rates among heterosexuals.
What is ultimately so frustrating about misplaced Conservative angst in America, however, is that there is actually a lot of common ground between American conservatives and progressives. Indeed I would say that American conservatives and progressives are in agreement on many core fundamental issues.
American conservatives and progressives often talk past one another because political discussions often go straight to the issues of cause and prescription instead of focusing simply on desired outcomes. When this happens disagreement about causes or approaches in handling issues derails the conversation and common ground is never reached.
For example, lets just go back to divorce rates. No one really is in favor of high divorce rates. Everyone, including conservatives and progressives, would like to see more married couples stay together when children are involved. But when this type of issue comes up, the focus immediately goes to causes, with Conservatives blaming "Liberals" and "gays" and progressives immediately getting defensive and/or calling the other side bigots (which they often are). But in this disagreement the fact that both sides agree that they would like to see divorce rates go down is lost, and thus no progress is ever made toward a solution because common ground is never found, and also because the Conservatives are pointing fingers at scapegoats and not addressing the real root causes of the problem.
The problems that Conservatives have with modern American society are never going to be resolved as long as they themselves remain obstacles to solving them. The reality is that the primary driver of change in American society over the past 100 years has been capitalism. Until American Conservatives understand that, they will continue to point fingers at scapegoats and cling to irrational and distracting arguments about the issues they hold dear, and it is unfortunate because the reality is that many Americans, from the "far right" to the "far left", are actually in agreement on some of these issues.
Against the health care bill, and why...
I've gone back and fourth in my support for the health care reform going through Congress right now, but I'm now pretty firmly in opposition.
I will say though that I think that in many ways the reform legislation will bring about some modest improvements over the current situation, but I don't think that the reforms going through Congress are going to lead to significant long term improvements, and these reforms will likely make meaningful improvements in the future even more difficult.
I think that the basic approaches taken by both the House and Senate are just fundamentally wrong. Indeed I think that the guiding principles laid out by President Obama were fundamentally wrong.
When President Obama laid the foundation for reform he said that one of the key factors guiding reform should be building on the existing framework that exists in America, which means building on the employer based health insurance system.
I viewed that as a mistake right off the bat.
One of the primary goals of reform should have been elimination of the employer provided insurance system. Elimination of the employer based insurance system would have garnered significant support from businesses and employees, and could have laid the groundwork for the adoption of a single payer system in a way that would have been clearly understood as providing a benefit to a large number of people. Everyone, whether they have insurance or not, knows that not having your insurance tied to your employer would be better than having it tied to you employer. Everyone knows that employers not having to hassle with insurance is better for employers.
But here is the key issue. The legislation coming from Congress is most fundamentally off track in that it more tightly integrates the private insurance industry with government. The result of this legislation is going to be to make us more dependent on private insurers, to increase the revenues of the private insurers, and to more tightly integrate private insurers into the fabric of Washington. All of that means that its going to make any meaningful reform in the future more difficult, and that is the most fundamental reason to be opposed to this legislation.
By requiring employers to provide insurance this legislation makes the system more reliant on employer provided insurance.
By requiring everyone to buy insurance from a private insurance company this legislation makes private insurance companies more powerful, despite the regulations put on them.
By not including a meaningful government run competitor to private insurers the most powerful cost control mechanism is surrendered.
By focusing on "competition" and "markets" the legislation only makes standardization and streamlining more difficult.
By heavily regulating private insurers instead of providing public alternatives the private insurers become more tightly integrated into the fabric of government.
The legislation does call for steps to be taken to streamline processes and to standardize forms and payment methods, etc., but on the other hand focuses on increasing competition in the insurance industry, which means encouraging more different carriers to exist in a market which just makes standardization and streamlining more difficult.
I find it ironic that the Republicans have made so much noise over this legislation, because really this could just as easily be a Republican bill. The fundamentals of the bill are reliance on "markets" and the private insurance industry.
The reality is that the profit margins in the insurance industry aren't huge. They run roughly 2.5%-3%. So even if we eliminated all profits and nothing else changed, it wouldn't bring costs down that much, and fundamentally, using competition as the driving force of cost reduction can primarily only affect profits. Higher competition theoretically leads to lower profits margins, but attacking the profit margins isn't going to get much.
The bigger gains are to be made in the areas of system wide streamlining, efficiency gains, and behavioral changes, and these types of gains are best made through the use of government run and/or single payer systems.
My view of the on issue is basically this: In areas of an economy where systematic integration is minor or relatively unimportant, competition and diversity in the market place are good things. However, in areas of the economy where systematic integration is heavy and critical, monopoly systems are superior.
In fact, computing is a perfect example. The reality is that Microsoft established a virtual monopoly in the personal computing and business computing markets, especially in America. Lots of people complained about this, including myself, for a variety of reasons, but the truth is that the rapid and relatively smooth adoption of computing in America from the 1980s to today was only possible because of Microsoft's virtual monopoly.
The fact that everyone was using the same operating system, the same core productivity software, etc., made computing more successful. Monopolies inherently make standardization easier for obvious reasons. What if there had been 20 different operating systems each with about 5% to 10% of market share, and there had been 20 or 30 different widely used word processes and spreadsheet applications, etc. each with their own proprietary file formats, unable to open each-others files, (actually there were for a brief period until Microsoft consolidated the market) etc.
That would be a nightmare of inefficiency. What the health care reform bills do is they remove the anti-trust loopholes for the insurance industry and they keep the state-line rules in place, thereby seeking to encourage the development of dozens or even hundreds of new insurance companies.
Instead of trying to preserve or promote "competition" in the insurance markets to drive down profits, they should be encouraging consolidation to improve standardization, and of course the ultimate consolidation is single-payer.
And there were a few little things that really annoyed me as well, for example the methods of paying for the bills. Neither bill, in my opinion, did a good job of paying for itself. I do agree with the cuts to Medicare, that program has to be financially shored up, and this was a good opportunity to do it. The bills do some of it, but of course not entirely. The tax on indoor tanning was a good idea, but it seems highly out of place since its the only such tax in the Senate bill.
These bills were the perfect opportunity to put in "vice taxes", on things like"junk food", e.g. on sodas, candy, certain condiments, and things like Twinkies, etc. That way the bills would have made more sense, by attacking the health care issues on multiple fronts, both the causes of health problems (everyone agrees that our nation's obesity is a leading cause of our higher costs) and the problems with delivery. They should have put in a provision to identify foods and other products (cigarettes etc.) that are unhealthy and to tax them as a means of paying for the health care system. I would even be in favor of taxes on lifestyle products and services that are identified as particularly likely to cause harm or be unhealthy, such as stake boards, skydiving, etc. and I do many such activities, but I would rather see taxes applied there as long as they are modest (10% or less) because it makes sense to tax the things that are the causes of increased health care costs in order to pay for health care reform and services, and it involves choices, such that if people's behaviors do change, then the taxes collected would go down in relation to the reduced need for services, instead of taxing things that have no direct relationship to the need for services.
The regulations implemented under the bill will all have a cost to them, but since all insurers will be bound by these same regulations, implementing them won't really hurt the bottom line of the insurance companies, they will just pass the costs on to consumers in the form of higher premiums and fees. And this is where the compromise weakened cost control aspects of the bill really come into play.
Some of the benefits of the bill are the following:
Access to Affordable Coverage for the Uninsured with Pre-existing Conditions
Free Prevention Benefits
No Arbitrary Limits on Coverage
Protection from Rescissions of Existing Coverage
Prohibits Discrimination Based on Salary
Clear Summaries, Without the Fine Print
Yes these are all good things, but they all have a price. Without some external force all insurers will just raise prices in order to pay for these benefits.
The reality is that the profit margins of the insurance industry simply aren't the area where meaningful cost savings are going to come from. It was a mistake to make the legislation so focused on attacking the profit margins of the insurance industry, it was a mistake to increase our reliance on the employer based insurance system, it was a mistake to not fundamentally direct the health care delivery system away from a profit driven model.
In every country where they have been successful at providing both universal and lower cost health care, they have done so by removing profit motive from the delivery system. Nothing in the Senate bill even moves in that direction, and the House bill only does so with the weakest of steps.
The health care problems in this country, especially as they relate to cost, are never going to be solved until the issue of profit motive in the system is addressed. These bills don't address it, and indeed they do some things that will increase the role of profit motive in decision making and in the future design of the health care system, and it is for those reasons that, despite a few good individual items in the bills, I am ultimately opposed to them.
I, of course, was a supporter of Barack Obama during the 2008 elections, and I still think that of the options we had he was the best choice, but it appears pretty clear by now that he simply isn't getting the job done. I do think that F.D.R. is the appropriate president to compare him to, and in such a comparison he falls extremely short.
Granted, Roosevelt actually had it easier than Obama in many ways. In Roosevelt's day it was much more difficult to mount opposition to the president. There was no real mass media that had the kind of power that today's conservative talking heads have. F.D.R. himself actually became one of the prominent media voices with his own use of the leading media technologies of the time. There were no major television and radio programs voicing opposition to his policies. There was plenty of opposition in print, but the ability to foster public outrage against the president and his policies simply didn't exist during F.D.R.'s time the way it does now. Likewise, the public was at a different place ideologically in the 1930s than it is today after the Cold War. In the 1930s there was widespread public faith in government and public support for collective programs. While F.D.R. was also called a socialist, the term simply didn't have the impact back then that it would come to have after World War II. Likewise, while there certainly were entrenched corporate interests in government, their power and influence was no where near the level that it is today.
But despite all these things, the reality is that Obama isn't even making an effort at even approaching the mantle of F.D.R. What made Roosevelt the ideal man for the situation is that F.D.R. was a technocrat. Roosevelt was a strong forceful leader who led from the driver's seat, who took the reins of power, strengthened the power of the executive, used the bully pulpit, and cast the special interests aside almost completely. F.D.R. truly is the closest thing to a dictator that this country has ever had, but he was a benevolent dictator in a time of crisis when that type of strong leadership was needed.
What we need in the White House today is a benevolent dictatorial technocrat. In some ways Hillary Clinton does fit this role, but her problem would always have been too much baggage and the fact that she is just not likable. What made F.D.R. successful was that he had overwhelming charm and magnetic appeal, and this is essential for any president using a strong arm. Obama has the charm and the appeal, but he's no technocrat and he's demonstrated no ability to take on the special interests.
America today faces a vast array of complex problems that have been festering for decades. The vast majority of the problems have been created by the entrenched special interests, who have profited from the system and who have a short term interest in maintaining the status quo. Still other problems are created by the American public itself and will require sacrifices and adjustments on the part of the public to address.
This is why we need a president who can be a dictatorial technocrat. We need someone who can design policy around what is the best for the country without being cowed by the special interests and even by public interests. F.D.R. was able to do this largely by using the public against the special interests, which he was able to do by constantly engaging the public to shape public opinion himself. This is where Obama has fallen woefully short, which is surprising given his rise in the campaign based on his rhetoric. That is the area where he should be doing well, and yet he isn't. Clearly F.D.R had the courage of his convictions, but its not clear that Obama does.
What I always like to consider is this: what is the difference between the current system or proposed legislation, and what would be designed by an objective specialist working in a vacuum.
Good policy, in my opinion, is policy that is close to what an objective specialist without outside pressure on him/her would create.
When we look at the policies and systems in place in America today, the entire thing is a mess. All of our policies and systems are riddled with problems, which is almost all a product of the horse trading and vote buying that takes place in the political process. The current health care proposals in the House and Senate are perfect examples of this as well, and demonstrate that even with a Democratic President and Democratic majorities in Congress, we still can't produce effective legislation. The process of "appeasing" the centrists and the entrenched powers in the medical and insurance industries, as well as seniors, has produced absurd, ineffective, and wasteful legislation. Its a situation where more power and less need to appease special interests would likely have resulted in better legislation.
And the really bad thing is, is that I think Obama's term in office right now is a critical time in history, and if he does fail to deliver meaningful reform, as it appears he will, then the results can be quite devastating. Things are made all the more precarious by the fact that there is no clear place to go from here. The Republicans not only have no solutions, they are complete idiots at best. Every policy idea I've seen from them in the past year is of course the exact opposite of what needs to be done. They go farther out into absurdity with each day, and even the serious ones are completely delusional with no pragmatic agenda for fixing America's problems. A case in point is a recent article in the Wall Street Journal by two Republican representatives proscribing a return to the "policies of Reagan" to fix the economy. In the article they denounce the national debt and decry the Obama administration's deficit spending, while saying that "doing what Reagan did" would fix the economy, i.e. cut taxes...
Umm... When Reagan came into office the country had virtually no debt at all, taxes were fairly high on the wealthy, and interest rates were extremely high. Reagan cut taxes on the rich, raised taxes on the poor, cut interest rates massively (well the Fed did), and engaged in massive deficit spending.
When Reagan left office there was so much alarm over the national debt he had wracked up that George Bush Sr. was forced to raise taxes once he got in office to prevent a total budget disaster. Indeed the problem we are in today is because of the massive debt hole that the previous three Republican administrations have put us in, all based on Reagan's legacy of massive debts.
We can't cut interest rates anymore, they are already at zero. We can't cut taxes anymore either, hell the problem is that taxes have been too low for the past 30 years, except under Clinton. You can't get out of debt by reducing your income. The fact that Republicans can't seem to get beyond Reagan, and on top of that can't even seem to honestly look at his policies, means that the party is completely bankrupt of ideas at best and is simply dishonest and intentionally subversive at worst.
So we can pretty much be assured that the Republicans aren't going to make any positive contributions to fixing America for years to come, if ever. And yet the Democrats have shown themselves to be impotent as well. I suspected as much but wanted to give them a chance and was hoping for the best.
I do think that there are a few good people in the Democratic party with good intentions and good ideas, but its clear when they have control of every branch of government and they still can't get anything done now that they aren't going to be able to do anything any time soon either.
Think about the fact that it took F.D.R. 12 years in office with Democratic majorities in Congress, and with him stacking the Supreme Court, to make the progress that he did in fixing the American economy and putting the country on solid footing for the future. Its inconceivable, and technically impossible, that such an opportunity will come again. If Obama fails to gain traction and fails to bring about major reforms, then the next 20 years in this country appear to be very bleak indeed.
So much of what is happening in the economy and the healthcare debate in America right now can be traced directly back to the agenda that was set in motion with the presidency of Ronald Reagan during the 1980s.
In demonstrations against the healthcare reform ideas of President Obama around the country we hear the familiar refrain that "government is not the solution to our problem; government is the problem," as famously voiced by Ronald Reagan during his First Inaugural Address, and conservatives also decry any potential that healthcare reform could add to the national debt by increasing the federal budget deficit.
Here is the situation. The federal government is currently massively in debt. The reason that the federal government is massively in debt is because the Republicans have intentionally put the federal government into debt.
When Reagan came into office in 1981, he brought with him a team of economists and political ideologues who had up to that point been outside the reins of power. The presidency of Reagan was truly a revolution in this country. Radical new agendas and policies were put into effect during the Reagan years and a new ruling class of ideologues came to power that would influence the highest levels of politics in this country for generations.
One of the major policy agendas that was put into place during the Reagan presidency was the use of massive deficit spending as a political weapon.
You see, Reagan and his cabinet were ideologically opposed to government domestic spending programs. Reagan and his allies believed that so-called social spending was actually counter productive, i.e. that a dollar spent by the government to help the poor or provide services to the public actually had a counter effect, making the poor poorer and the needy needier.
Their view was that they had to put a stop to social spending. They also knew that many of these programs were popular and hard for politicians to vote against. So their belief was that in order to put a stop to social spending they first had to effectively bankrupt the government. So, what they did was they massively cut taxes on the wealthy, raised taxes on the poor, and gave tiny token tax cuts to the middle class, resulting in an overall reduction of tax income to the government when adjusted for inflation (many Reaganophiles claim that the cuts increased revenues by 80% (or more), but this is only true in pure dollar terms, not inflation adjusted terms. Tax revenues grew at the lowest rate under Reagan compared to those that came before and after him). The next part of the agenda was to massively increase military spending. The only thing harder to vote against than popular domestic programs is military funding. So what Reagan did was he cut government revenue and increased government spending, but with almost all of those increases going to the military.
The result was the largest budget deficits since the presidencies of FDR and Truman during World War II. The big difference, however, is that taxes were very high during their presidencies and the debt was paid back down quickly after the war. There was no plan on paying back the debt racked up by Reagan however.
Indeed the bleeding incurred by Reagan was so dramatic that his successor, Republican George Bush Sr., was forced to raise taxes even after he promised not to. There was nothing else he could do, as Reagan had set the govenrment on a path to bankruptcy had something not been done.
What happened during the Reagan years is basically that the government pulled out a massive credit card and charged everything. Its like you had a grandpa that as he was getting old he started buying lots of nice things for the family: a new car, new furniture, and of course just giving family members cash. Then grandpa died and you found out that all of that stuff that grandpa bought you was on credit cards and that grandpa had racked up hundreds of thousands of dollars in debt, and today what we find out is that we are still legally obligated to pay the debt. So while it seemed like fun and games and a great time when grandpa was alive buying you stuff, now you see that it was all an illusion and that the fun during those times was bought with a lie and that now you have to pay for the careless finances of your grandpa - that what seemed like a nice thing at the time is now wrecking your finances.
That is the presidency of Ronald Reagan, but its even worse, because Reagan didn't even invest in the country so we don't even have anything to show for it. You see, Reagan was fundamentally against domestic spending - he and his cronies thought it was wrong. They reduced spending on everything from education to welfare to highway and bridge construction and maintenance. So, if they reduced spending on so many things, then how did they rack up this massive debt?
(Note: Income Assistance includes Unemployment Insurance)
Military spending. Its all been military spending for the past 30 years that's been driving up the debt.
By 2008 military spending accounted for roughly 30% of the total federal budget, not counting entitlements (Social Security, Medicare, Medicaid), which are paid for with their own separate taxes. It is the single largest expenditure of the federal government. As of 2008 combined military spending and payment on the debt accounted for almost half of the entire federal budget, leaving only 53% of all the revenues collected for domestic spending.
Since Reagan, conservatives and Republican administrations have followed the agenda set in place during the Reagan years: to drive up the deficit in order to use it as an anchor around the necks of anyone who would seek to engage in domestic spending. This is one of the things that Bill Clinton got right. During this first year in office, when he still had a Democratic majority in Congress, Bill Clinton passed balanced budget legislation that set his administration on the path to paying down the debt. Once George Bush Jr., came into office however, with Republican control of Congress, they quickly set about engaging in massive deficit spending again, driving the national debt up to record breaking heights.
This is what people need to realize, the Republicans have been using the debt as a weapon against domestic spending ever since Reagan came into office, and you can't understand national politics unless you understand that. The Republicans would basically rather burn taxpayer money than allow it to go to domestic programs. The Reagan brought to power a whole generation of conservatives who fundamentally believe that government is indeed bad, and their belief is that its better to bankrupt the government than it is to have the government help its people. They have been engaged in a war on the federal government for decades now, and deficit spending is the weapon they have used to try an bring the government to its knees. They engage in deficit spending by ensuring that a larger and larger portion of the federal budget each year goes toward military spending and payment on the ever growing debt, which consumes more and more federal money the larger it gets, which is exactly what the Republicans want because they would rather just burn the money on debt payment than see any of it go toward so-called "social spending".
And they know that any time anyone comes into office and tries to engage in any kind of domestic spending, that the national debt which they have racked up will act as an anchor around their neck dragging them down to the bottom of the sea and making any domestic reform programs highly unlikely to succeed.
What enables the Republicans to get away with massive deficit spending, while still being able to use it as a weapon against their opponents, is that they spend the money on the military, which is effectively politically unchallengeable in this country. You can spend a thousand dollars on the military without question in America, but if you spend one dollar on any domestic program, from education to healthcare reform, the conservatives will jump all over it as fiscally irresponsible. The military is seen as patriotic and essential, while everything else is portrayed as unnecessary.
Quite literally, the American military is destroying America. Very literally the American military is killing Americans. Out of the top industrialized countries, America stands at the top of the list in countries where preventable deaths occur, i.e. deaths that could have been prevented had proper medical treatment been given. Those deaths, some 18,000 a year in America, could be prevented with money that is instead going to absurd military programs that build fantastically overpriced and unneeded weapons that sit in warehouses doing nothing. Today the United States spends more on its military than almost all other nations in the world combined.
That military isn't making us safer, it is killing us.
If we can't afford healthcare reform, the reason that we can't is because of out of control military spending for the past 30 years and the Republican's intentional running up of the national debt.
References and additional info:
The more that I listen to discussions on the American economy in the media the more it becomes clear that no one within range of a microphone has any fundamental understanding of economics. This is partly the fault of news organizations and partly the fault of how economics is understood in American in general.
One example is the on-going truism that gets heard even on NPR and PBS programs, much less channels like FOX, CNBC, and CNN, that one of the problems with the American economy right now is "psychological", that the problem is that "consumers" don't have confidence so they aren't out spending their money like they need to be, and that if we can just "restore confidence" then people will spend more money and the recovery can begin.
Sadly, this passes for "economic wisdom" in America, yet its completely untrue and displays a fundamental lack of economic understanding on multiple levels. It shows a lack of understanding of both economic theory and of the cold hard economic data, which anyone commenting on the American economy should be well versed in, but apparently isn't.
First of all, Americans aren't "not spending" because of "lack of confidence", they are not spending because of lack of money. Secondly, "spending", contrary to popular misconception, is not the basis of economic growth (nor is job creation the goal of an economy). Thirdly, the American economy of the past 30 years has been an illusion built on debt, something which has been pointed out by several people over the past 20 years, though often ignored.
Most economists, at least ones that get into the media, and certainly most pundits, still haven't gotten their heads around the fact that the "normal" economic conditions of the past 30 years were always unsustainable. The American economy has been a house of cards and lies for decades, which is also why the economic predictions of most economists who talk about the recession "bottoming out" this year and the recovery starting in 2009 or early 2010 are baseless.
A lot of this goes back to the state of American economics in general, as it is taught in universities and certainly has it is discussed in the media, even in more serious economic publications like The Wall Street Journal, The Economist, and Forbes, etc.
American economics has become completely devoid of any kind of science, and I believe that this is the case in large part because people don't like the facts that are made clear if you truly understand real economics. The level of delusion in American economics is really astounding, perhaps the greatest academic failure in recent times.
In America economics has become a tool for justification of the status quo, not a means of understanding relationships of productivity and consumption. In America most economics has become completely based on observations of correlation, NOT causation.
Even top economic professionals, some of which currently testify before Congress on matters of the economy, talk about the economy in terms of trends and historical events. These economists have no real predictive ability, which is what science is all about. Their only means of "prediction" is assuming that the future will be like the past, but they have no idea why the past was even like the past. They don't address fundamentals, they just look at graphs and numbers and supply/demand curves, etc.
What is an "economy"? An economy is the production, exchange, and consumption, of goods and services in a population. What is the basis of an economy? Production. Production, production, production.
Historically, from thousands of years ago until the modern industrialized era, production has been the only or primary limiting factor to economic growth. The prosperity of a society was governed by its ability to produce goods and services. What set one standard of living apart from another was the ability of the workers in that society to effectively produce material goods that could be used to improve quality of life.
With industrialization that changed. With industrialization it became possible to produce more material wealth than people could legally acquire. The reason for this was economic disparity. The reason for the economic disparity was that the workers who produced the goods and services were not paid the full value of their contribution in producing those goods and services, with the "surplus value" being siphoned off by executives and stock holders, i.e. capitalists.
When we look at the world economies today we see that there are two things that distinguish one economy from another: the productive capacity of a society and the consumptive capacity of a society.
Today, places like China and India are in the process of building productive capacity. Poverty in India at least is largely due to India not having enough productive capacity to meet the needs of all of the people in India. In China, however, that is largely untrue, there they have tremendous excess productive capacity, but most of that productive capacity has been used to supply goods and services to the West, not their own people. This is somewhat puzzling considering that China is ruled by a so-called Communist regime, but clearly they aren't real Communists, or else this situation wouldn't exist. It remains to be seen what they will do. They should be able to actually increase wages in China and start a transition from being an exporter to becoming an nation of domestic consumption of their vast productive capacity. If that does indeed happen it may be considered one of the first successful transitions to real Socialism, but that remains to be seen and given that they were investing in the US and moving towards more market driven labor markets that may not happen.
The US is a totally different story however. In the US our productive capacity currently far exceeds our legal ability to consume the potential products of production, hence this current "economic crisis". Here is the thing to understand: Our society has the ability to create vastly more wealth, i.e. goods and services, than what we are currently doing, and the only reason that we aren't working at creating this wealth right now is that the workers who create the wealth are not legally allowed access to it.
We have car manufacturing plants all over the country that easily could continue pumping out cars. There is nothing stopping us from making cars as fast or faster than we were 2 years go (maybe its best for the environment that we aren't though). The only thing that is preventing this from happening is that, despite the fact that there is a demand for these goods in terms of need, the people who need those goods aren't allowed to have them. The reason that those people aren't allowed to have them is because they don't have enough money to pay for them. The reason that they don't have enough money to pay for them is not because they haven't been working to create comparable wealth themselves in order to exchange that wealth for a car, rather it is because a significant portion of the wealth that most people in America have created over the past 30 years was never given to them, it was instead siphoned off from the pool of collective value that they shared in producing under the legal entity of a corporation and used to give executives millions of dollars a year in unearned income and used to return profits to share holders.
Those shareholder profits and that executive pay was all the product of the value created by the workers. We are talking about trillions of dollars of redistribution over the decades from workers to the wealthiest 1%. Since the workers were never given that value, which they created, a disparity grew in the economy between the productive capacity of the society and the "consumptive capacity".
Over the past 30 years 90% of Americans have been producing more value than what they have been getting paid for. Likewise, the top 1% have been receiving more value than they have been creating.
The reason that this current economic situation is so bad, and why it has manifested itself so rapidly, is not just because of lack of regulatory oversight or the bad lending practices that led to the housing bubble, etc., those thing are symptoms and manifestations of the underlying problem. The reason why we have had this collapse is that this disparity between value creation by workers and compensation for workers has built up over the 30 years, like the swelling of water behind a dam. During those 30 years various "tricks" were used to mask the problem. These "tricks" included more people per household going into the workforce to maintain the same household income, the growing use of debt to make up the gap between value creation and compensation, and the mass importation of goods from developing economies where workers are paid even less .
The housing crisis was just the crack in the dam of tricks which was the catalyst for the collapse of the existing unsustainable situation.
So why was that unsustainable and unfair situation allowed to exist and build up in the first place? Well, largely through right-wing economic propaganda disseminated via the mainstream media, lack of any serious scrutiny of our economic system by the media, lack of tolerance for dissenting and critical voices on economics in the media and in our society, and lack of real economic education in American universities.
Even today, even while the effects of American economic policies are demonstrating clear failure, the mentality of Americans, especially as it is on display in the mainstream media, is still largely that of right-wing delusion.
Republicans and others still act as though the expansion of government spending over the past 30 years has not been a product of Republican policy, yet it is directly a product of the Republican policy of privatization. Basic economic theory says that privatization will lead to higher costs in government, not lower, and indeed the real data from the last 30 years shows this to be a fact.
Private entities work to maximize profits. If government is the source of revenue then maximizing profits is going to mean what? Its going to mean that private industry now has a greater inceptive to manipulate the government, a greater incentive to lobby for contracts and to spread corruption. Government now has to pay the cost of doing the work plus the profits on top of it. The Military Industrial Complex is the perfect example, a very high profit margin industry that makes millionaires and billionaires of some people, all of which comes from tax payer dollars.
As privatization increased the government budget ballooned. The Republicans claimed the privatization was going to be the key to reducing government spending, but in fact it has predictably had the opposite effect. Indeed what privatization did was provide a profit motive for wasteful government spending.In the past wasteful government spending happened due to incompetence, but now with privatization it happens by design and the Republicans are the leaders of agenda that created such a system.
People still talk about all income as having been "earned" or "made" even when it clearly wasn't. A case in point is the reported 20 million dollar income of the Washington Mutual CEO who was officially on the job for 17 days and received $20 million in compensation. Even the stories bemoaning this fact talked about how he "made $20 million" in 17 days, or how he "earned $20 million" in 17 days. That's the point, he DIDN'T make it, he DIDN'T earn it, it was given to him by taking it from other people, it WAS redistribution of wealth.
The money had to come from somewhere, and he obviously didn't create $20 million in value in 17 days on the job as the bank imploded into failure, so where did that money come from? It had to have come from the workers, investors, and customers of WaMu. It was stolen from them and given to him. He never created any value, but was handed $20 million. The only way to describe that is redistribution. That is just an extreme example, but that has been the status quo for execute pay in America for the past 20 years.
Every multi-millionaire and billionaire in the world today is a recipient of collectively created wealth. There isn't a single individual in the world who has single handedly created billions of dollars worth of value. Every single billionaire and multi-millionaire has received their income by being part of a system of collectively created wealth, whereby collectively created wealth is transfered to them.
And yet, here in the midst of this economic collapse brought on by the wealthy, the dominant narrative in the mainstream media is that any form of tax increase on the wealthy is "punishment of success and hard work".
A recent segment on the Colbert Report that showed news pundits bemoaning a so-called "war on success". You can view the segment via this link: The Word - Rand Illusion
That people could even get on television and make these claims at all shows a deep level of delusion in American society, where even the majority of the people who are getting ripped off by the wealthy believe that they are the ones dragging the wealthy down.
Yes, there are people who don't work and receive welfare. These can be called freeloaders, that's fine, whether it is or isn't their fault, the fact is that they are receiving value that they didn't create. True. But do these people really think that a hedge fund manager with an income of $3 billion in 2008 really worked that much harder and contributed that much more to the economy and society than a school teacher with an income of $30 thousands? To believe that you have to be delusional. You have to have no grasp of reality, no concept at all of what an economy even is or what value creation is. Do these pundits really think that Rush Limbaugh spouting hot air on a radio every day is creating more value than an engineer developing medical technology devices? Do they really think that a basketball player is creating more value than a construction worker who builds homes every day? Do they really think that an executive at a large corporation is personally creating $30 million a year in value for the economy and that the workers doing the actual work to produce the products that the corporation sells are really only creating $30 thousand worth of value a year? Do they really not understand that the executive pay is a redistribution of the value produced by each of the workers to the executives? Do these people really not understand that all capital gains are a tax on worker compensation? Do they really not understand the implications of an economy where over the past 30 years an increasing portion of national income has gone to capital gains, where the the portion of capital gains income going to the top 1% has increased dramatically, and worker pay hasn't beaten inflation in three decades (aside from one brief period where it barely beat it)? Do these people really and truly believe that 95% of the population is holding back the top 1%? Do they really think that the top 1% would be better off without everyone else? I can tell you, the fact of the matter is, is that they would be much, much, much worse off. Their wealth and lifestyles are only made possible by the work of millions of people. It takes millions of people to create the wealth that they personally own. They haven't created it by themselves.
These issues are not addressed in the American mainstream media because when you start to get into them it leads to very challenging questions for the core principles of our entire economic model. The entire economic narrative in America is based on a completely flawed assumption, which is that all income in America is completely fair and exactly compensates the recipient for value that they created. But that fundamental assumption is not true, which is why there can be no meaningful discussion of taxes or redistribution, or anything else. Until you acknowledge that the 30 million dollar incomes of executives for the past few decades have been unearned income that was a redistribution of wealth from the workers to the executives then you can't discuss taxation. Until you acknowledge that capital gains are a tax on labor then you can't discuss taxation. Until you acknowledge that the incomes of rock stars and basketball players and actors and news pundits are a luxury provided by redistributing value created by productive workers to entertainers then you can't discuss taxes. All of those tertiary professions depend upon a base foundation of core productivity. All of those incomes are a tax on the base production of essential goods and services. All of those incomes are only made possible by the work of other people, other people who have less income, not because they don't work as hard and not because they aren't contributing, but because of an unfair economic system that allows technology and the legal system to redistribute wealth from the productive working majority of the poor, middle class, and modestly wealthy to an undeserving super rich. Yes some of the rich have made contributions and do deserve high levels of wealth, but even they have received more than their fair share, more than they themselves have contributed. A part of their wealth is earned, but an even greater part is unearned, it comes for redistribution.
Until that fact is confronted in America no meaningful economic discussion can take place, and likely no real resultion to America's economic problems will occure.
Barack Obama's plan for a windfall profit tax on oil companies, with the revenue to be used to send every American family a check for $1,000, or $500 to individuals, has been greatly disparaged by John McCain, the Republicans, and the oil companies themselves.
Yet, John McCain chose a running mate whose state has been doing essentially the same thing that Barack Obama is proposing since 1977. Indeed, Sarah Palin bragged in her RNC speech that due to the dramatic rise in oil prices she was able to double the size of the check that the state of Alaska will send to everyone this year to $3,200 per man woman and child. Yes, instead of Obama's $1,000 per family, what that means is that a family of four (husband, wife, and 2 kids) will get $12,800 from the state this year.
When oil and gas prices went up dramatically, and filled up the state treasury, I sent a large share of that revenue back where it belonged — directly to the people of Alaska.
- Sarah Palin, RNC speech, September 3, 2008
If this policy is such a good idea for Alaska then why not do it for the whole country? The program is very popular in Alaska, and Republican Sarah Palin is obviously a strong supporter of it, so does that mean that the Republicans favor this type of program for the country?
No, when you discuss doing this same type of program for the country the Republicans and the oil companies of course, call it socialism, they say it will hurt the industry, they call it un-American, etc.
But here are some facts. The program is overwhelmingly supported in one of the most conservative states in America and economists overwhelmingly agree that it benefits the Alaskan economy. It is also clear, due to the fact that the same payments are made to everyone, that it benefits the poor the most and the wealthy the least. And for the oil companies it buys loyalty for oil drilling from Alaskans. There is a reason that most Alaskans want to open up A.N.W.A.R., because they will get bigger checks if it happens.
This gets to other issues as well though. There is a reason that Sarah Palin was able to reach a peak approval rating of 80% in Alaska (its down into the 60s now), and that's because of the increased size of the checks going to everyone in Alaska, which are made possible due to the increasing oil prices.
So, why does John McCain say its good when Sarah Palin cuts oil money checks to everyone in Alaska, but when Barack Obama suggests doing the same thing for the rest of the country John McCain says its a horrible idea?
But there is more. Alaska is unlike any other state in the nation. While almost every state in the lower 48 is facing major budget problems, and while states like New York and California send more money to the federal government than they receive back in payments, Alaska is the king of subsidies. Alaska's coffers are running over, despite the fact that, as Sarah Palin notes, she cut and eliminated basically all state taxes. Indeed Alaskans pay almost no local taxes at all due to the fact that the state gets almost all of its revenue from taxes on oil companies, which Sarah Palin raised during her time as governor.
Palin was sworn in as governor on Dec. 4, 2006. Over the course of 2007, she fought to raise taxes on oil companies. Alaska gets about 85 percent of its state revenue from oil taxes, and as fuel prices skyrocketed, Palin complained the state wasn't getting its share of the windfall. She successfully pushed for a law that raised taxes on oil profits to 25 percent from 22.5, winning passage in the State Legislature in November 2007. The increase amounted to an estimated $1.6-billion annually more for the state.
But guess what, despite the fact that the Alaskan state treasury is benefiting from high oil prices, what Sarah Palin has also done while governor is increase the amount of money that Alaska gets form the federal government. Yes, that's right, that means that everyone in the lower 48, plus Hawaii, are the ones paying the taxes for Alaskans. Indeed Alaska is the most freeloading state in the nation; the entire state is, essentially, a "welfare queen".
Our state budget is under control.
We have a surplus.
And I have protected the taxpayers by vetoing wasteful spending: nearly half a billion dollars in vetoes.
I suspended the state fuel tax and championed reform to end the abuses of earmark spending by Congress.
I told the Congress "thanks, but no thanks," for that Bridge to Nowhere. [By the way Alaska kept 100% of the "Bridge to Nowhere" money]
- Sarah Palin, RNC speech, September 3, 2008
How did Sarah Palin reduce taxes in Alaska? By taxing oil companies and shifting the burden to the rest of the nation. While she cut taxes in Alaska she also created the largest state budget in Alaskan history, getting all of the money from the federal government and oil revenue. Guess what, that doesn't work at the national level! And also guess what, its easy to become popular in your state when you give people checks from oil companies and you eliminate their taxes by robbing from the federal government!
She did the same thing while she was the mayor of Wasilla (1996-2002). She cut property taxes by 40% but dramatically increased the town revenue by hiring a lobbyist to go to Washington to get federal dollars, mostly earmarks. She ended up securing tens of millions of dollars from the federal government for tiny Wasilla while cutting taxes for its residents.
But even that is not all. You see, Alaskan oil companies pay taxes to the state of Alaska, which is where Alaska get a lot of its revenue, but the oil companies get to write-off their state taxes against their federal taxes, so, you guessed it, the tax payers of the lower 48 + Hawaii get a double whammy.
Alaska receives back $1.87 for every $1 paid in federal taxes by Alaskans. By contrast, California only gets back $0.78 on the dollar. Effectively, Alaskans are stealing from California (and about a dozen of other states that pay more than they get back) in order to give themselves tax breaks.
In the video below Sarah Palin talks to her church about how Alaska is the richest state in the nation in terms of natural resources and how they have all of this wealth, yet Alaska is still the most subsidized state in the nation!
This was one of Sarah Palin's big selling points in Alaska. What made her popular, just like what made Ted Stevens popular, was her ability to get more money from Washington than Alaska contributed.
In the video below Sarah Palin says "God bless" the folks who are able to bestow such a "largess" on Alaska from the federal government.
How can John McCain campaign against raising taxes on oil companies and using a windfall profits tax to send checks to American families when that is exactly what his running mate did in Alaska to gain her popularity?
Does Sarah Palin's experience for a year and a half in the biggest welfare state in the nation, a state with a budget unlike any other state in the nation, really provide her with knowledge of how to cut taxes for the rest of the country? No it doesn't, because she cut taxes in Alaska by taking from the rest of the country, even though the state is already getting a huge bonus from rising oil prices. Yes, keep in mind, that a portion of the cost of fuel at the pump is going to pay for the big welfare checks that Sarah Palin is giving to the people of Alaska, but is campaigning against giving to the rest of the country.
"Gov. Palin represents a new generation. She's already one of the most successful governors in America and the most popular.Well, for that matter, neither has John McCain, so by this logic Sarah Palin has more experience than John McCain.
And she's already had more executive experience than the entire Democratic ticket combined.
Well -- well, the first day -- as far as I'm concerned, the first day she was mayor, she had more experience as an executive than -- than Obama and Biden combined."
- Rudy Guliani, September 3, 2008 at RNC
"he's never run a city. He's never run a state. He's never run a business. He's never run a military unit. He's never had to lead people in crisis.Guliani said the same thing about John McCain during the primaries.
He is the least experienced candidate for president of the United States in at least the last 100 years."
- Rudy Gulani, September 3, 2008 at RNC
"Guliani, who never served in the military, said McCain 'has never run a city, never run a state, never run a government. He has never been responsible as a mayor for the safety and security of millions of people, and he has never run a law enforcement agency, which I have done.'"So, apparently Sarah Palin is now one of the most experienced people in politics, after being mayor of a town of 5,000 people for 6 years (it was 5,000 when she was mayor, though some sources cite its current population of 8,000-9,000), during most of which she had hired an administrator to actually run the office, and governor of a state with a population less than 700,000 people for a year and a half.
- Rudy Guliani, November 4, 2007
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