With bond insurers bailing, and implosions at the major ivestment firms (now aren't you glad you didn't let Merril Lynch take over your Social Security funds?), US companies begging for cash from foreign governments, international markets plunging on every word from Wall Street or our illustrious Decider-Man, with all of this, can we finally admit that Republicans don't know or don't really care how to properly manage an economy?
Here's the deal, kids: since the 1980s we've been betting the farm- literally- that investment is the answer. We've tried over and over again to create a bullet-proof US econmon using three tools: optimism (or magical thinking, have it your way), debt, and speculation.
Optimism fuels the speculation: the dream that we can all get rich together when we throw money at the right things, and the government will reward us by lowering taxes on the returns. The '80s were the decade of Wall Street schemes and junk bonds and deregulation. Debt soared, publicly and personally, and enough people made impressive enough sums that it looked like maybe it was working if you didn't look too closely.
We defunded infrastructure and poor people. We watched homelessness become a fact of life. We lived through the collapse of Savings and Loans- which we're still paying for. Eventually, we had to take a tax incerase, and then a recession hit us. Economists say that it wasn't a serious recession, but I remember it, and it was very hard on a lot of middle class people.
The '90s gave us free trade agreements and the dot com boom. Free trade which failed to hold manufacturers outside of the US to any standards in human rights, safety, or environmental responsibility meant that jobs began to migrate. And not just menial jobs. We all know educated specialists who had to train their overseas replacements.
The saving grace of the '90s boom was, of course, that we also had instituted some responsible fiscal policy in the federal government. We had balanced budgets and reasonable taxation and in the end, a good sized surplus. This meant that government actually had some cash to respond when the dot coms burst and the economy took a short dip. And the fact that much of the rampant speculation was targeted at dot coms specifically meant that the bust directly affected a relatively small set of people. While I did see a friend lose a very lucrative job and change careers, my household wasn't really affected. A couple of friends anxiously sweated the NASDAQ, but my job not only stayed secure, my income continued to rise.
Tis term has brought more debt that we could have imagined, zero responsible thinking in government, and a return to the fantasy of instant riches for all. Unfortunately, the specualtion was based mostly in the houseing sector, which affects a much broader section of the population than Sillicon Valley ever did. From the first time home buyer- now deeply in debt from the purchase of an over-valued home, to everyone in the mortgage industry, home insurers, the trades in the field, the suppliers, the purchasing people and all of the office staff- hundreds of thousands of people are watching their ncomes either steeply decline, or disappear completely.
And this time, the government has no money.
Bush and the congress appear to be working out an agreement, but I fear it will be a stupid, expensive one. Tax rabtes? Big deal. I'll probably pay off some debt. More corporate tax breaks- for "investment"? Who cares? At my company, we won't be putting anything into "investment" until we can start operating in the black again, and that's going to depend on a whole lot of middle class people with a lot more than $800 to live on.
Extending unemployment is a good idea, but there'smuch more that needs to be done. I don't think anything will change until next year, with a Democrat in the White House. And then, that Democrat will need to make structural changes that the Republicans will go crazy about.
But it's time. And can we all be honest about that?
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