The Economy Rules

While the Romney camp celebrates its victories over what is incontrovertibly the dumbest, most untruthful, seriously inept cast of comic characters in the history of American politics and Obama tries to figure out which cowardly Democratic congressmen can be counted on to crawl out of their holes an give him even marginal support, the rest of us are wondering what kind of a campaign we are going to be spectators at.

In 2004 the GOP, recognizing that their core support came from a mixture of gun loving bigots, born again religious fanatics, rich industrialists and splinter groups that saw every government move as an assault on their freedom, stayed far away from anything that was significant to the running of the country, assiduously avoiding the 2 unfunded wars we were fighting and the fact that we had let New Orleans all but disappear. They glossed over what everyone with any economic foresight was warning about, the overextended economy, the credit card looming disaster and the first warnings about the coming housing disaster and they sold us on the true dangers of gay marriage and abortion, two serious problems that actually affect maybe 2% of the nation. Their base believed them and we got four more years of war and a direct line into the greatest depression since 1929.

Are we going to face that kind of race again or are we actually going to get a chance to see what the candidates have to say about important things?

It definitely appears that the road to election or re-election in 2012 is through the economy. Almost everything else has been settled. One guy is bright, articulate and charming with a very mixed record in office, the other is handsome, rich and out of touch, with a record of being a shark in business. One has taken a foreign policy completely trashed by Bush/Cheney and restored us as a world leader and the other thinks the Soviet Union is our greatest fear. Unfortunately not one of his advisors has seen fit to tell him that the Soviet Union no longer exists. Neither seem very high on social justice or the freedoms laid out in the constitution. Neither has an acceptable immigration policy. One is for universal health care and the other, despite the fact that he authored the concept while a governor is now against it. So if you leave out the military, a budget item that everyone wants to cut, but no one has the balls to attack, that leaves the economy.

Of course there are other topics that could be discussed like immigration, contraception, abortion and gay marriage but the GOP doesn’t want to bring them up this time around. They’ve already lost anyone who has any interest in these subjects so they have nothing to gain by airing them. Obama doesn’t want to bring them up either, he’s already won everyone who has any interest in them and talking about them is only an invitation for someone to screw-up and say the wrong thing.

The economy is where it gets interesting because they couldn’t be further apart on how it should play out.  The problem for most Americans is that neither seems to have a realistic idea of how to end unemployment and get people back to work. I say realistic because they both think they know how to do it.

Obama tried with the Stimulus and that’s the way he wants to go again, providing federal funding for jobs projects that will lead to short term recovery and education money that will lead to long term long term stability. The GOP loves to say that the Stimulus failed, but that’s a blatant lie.  1.2 million jobs saved, just in the auto industry, is not a failure, it’s a rousing success. If they were, at least, honest with themselves, the GOP would see that. Of course the Stimulus could have been more successful if the Republicans in the house and the weak kneed Democrats in the Senate hadn’t forced Obama to use 40% of the money in the Stimulus for tax rebates which anyone with any concept of economics will tell you become savings not stimulus. Yes, the Stimulus could have been gloriously successful if not for the interference of the GOP and Democrats cowering behind their chairs in the Senate.

So let’s go to each guy and look at his plans for solving the problem and their chances of working. Romney, with Paul Ryan doing his thinking for him, is looking at austerity. Reduce the national debt, cut taxes further, cut entitlements, with no mention of what to do about military spending.

Obama wants to raise taxes, probably across the board; he wants to spend on infrastructure and education, thereby attacking both the immediate and the long-range solutions to unemployment. He hasn’t yet said how he will do this but it’s looking more and more like it will need both houses of congress to get it done and that’s a very tentative situation.

The Romney/Ryan plan depends on a thesis that has failed historically everyplace it has ever been tried and is currently failing in Europe. Austerity is just not the way out of depression. It is the coward’s way to hang on until you slowly starve to death. Yes, the deficit is important, very important, but not as important as people feeding their families. Fortunately, there has never in history, been a time, where the size of the deficit is less important than now. Why? Because interest rates are so low that it is the perfect time for our government to borrow money. It is definitely not the time to raise interest rates. Cheap money allows the government to run a larger deficit at the same price as previous lower deficits that were achieved at higher interest rates.

All we have to do is look around at the rest of the world. The BRICS; Brazil, India, Russia, China and South Africa, the nations that were pushing the limits of expansion, just a few years ago are slowing precipitously, due, to a great extent, to the increased price of labor in those countries,. Europe, which, went down as fast as we did, pushed hard for austerity programs, but those programs have all but destroyed their economies, sentencing the entire of the EU to a growth rate slightly under negative -.5% while we struggle along at between positive 2 & 3%. Not great but a hell of a lot better than Europe.

So what happened, Europe is catching on. Conservative governments have been voted out in Greece and France and more are on the skids.

I hate to go back to the definition of insanity, but the right wing keeps wanting to do the same old thing, and somehow expects to get a new outcome. It just ain’t gonna happen folks and the sooner you realize it the better off the country will be.

There has never been a better time, interest rate wise, to borrow money and pump it into the economy than now, but that’s not the only way. We have to raise or change taxes. Doing both would be best. Our current tax code is just a favor factory for rich powerful interests. How do we fix it? I think we should take away all personal deductions except for certain charities and first house mortgage interest for those who make under a certain figure, like $200,000 per year. The only charities that would be deductable would deal with health, children’s services, poverty and specific educational situations like scholarships but not building programs. Religious and political giving would no longer be considered charity, simply because it’s not. Look up the definition.

On the business end, the rates would be lowered to reflect other countries but all the perks would be cut out. The only deduction would be for cost of goods and services.  The concept of capital gains would be eliminated from the code. It is one of the most regressive tax concepts ever imagined in the wildest wet dreams of the rich. Why should a man be taxed less on the rewards of money invested than on the fruits of his actual labor. It’s a ridiculous concept. Of course all subsidies, like farm, oil and others would end. To be fair, certain ones, like farm, would be replaced by some kind of disaster insurance, which will be sorely needed if we do not immediately change our ecological policies, especially in regard to energy. That is what the Democratic policy should be and what I think Obama could win on. It remains to be seen how much of it he agrees with and how much he has the stones to adapt

On the other side there’s the Romney/Ryan plan. It’s simple and direct. They’ve made it so, for the benefit of their constituency. Cut entitlements, to encourage people to be self-sufficient and to hold down the deficit, lower taxes on the rich to encourage them to use that money to create new jobs. This will in fact create new jobs but they’ll all be in the yacht building business.  And finally don’t touch military funding.

Based on these two approaches, which I think I have stated fairly, (my conservative friends will think differently), I don’t see how Romney can win. But it is the GOP that has stated that it will push the economy as its main platform. Why are they doing this?

Well, to be fair, they do not state their platform exactly as I have. They think that Obama has not pulled us out of the recession and that this is their wedge. I watched Grover Norquist, he of no tax pledge fame, babble about how Reagan dragged us out of the recession in the ‘80s but he doesn’t get that lie to float. What Reagan faced was just a small wrinkle compared to what Obama faced when he took office. Norquist doesn’t want to hear hat 890,000 people lost their jobs in the last quarter of the Bush administration or that the country GDP dropped by 9%. Conservatives don’t want to hear that. Norquist, himself has said that the modern GOP (get that-modern) doesn’t support Bush or his policies. That’s interesting considering that they are trying desperately to go back to those policies by trying to change all the restraints that the Dodd/Frank bill had put on the big Wall Street firms. Once again the truth escapes their mouths.

Let’s hope that the American public, most especially the undecided center will have the insight and do  just enough work to get the facts on these two possibilities. If they do it will be crystal clear which will lead the country to prosperity and which will doom us to be another Japan,