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Thursday, April 17, 2008

McCain's Economic Assault on the Working Class

You know, after seven years of failed Republican economic policy, John McCain came up with a rehash of the dismal Bush plans that have enviscerated the middle class. Frankly, he ought to fire his campaign staff for unveiling this stuff to a public hungering for authentic change and real relief. It does, however, show just how intellectually and morally bankrupt Republicans, are when it comes to creating new strategies to truly help the middle class.

In fact, even McCain's most loyal base, the newsmedia, thought this plan was ridiculous. Here's what Michael Shear and Jonathan Weisman had to say in yesterday's Washington Post about it.

Sen. John McCain yesterday offered sweeping rhetoric about the economic plight of working-class Americans, promising immediate assistance even as he spelled out a tax and spending agenda whose benefits are aimed squarely at spurring corporate growth.

In a speech billed as the most comprehensive summary of McCain's economic vision to date, the candidate proposed to eliminate the alternative minimum tax, slash corporate income tax rates and offer a grab bag of other business breaks. His most direct proposal for relief to working-class voters was a call to suspend the federal gasoline tax for the summer driving season.
If this wasn't so pathetic, it would be laughable. Suspending a gas tax, while inflation is rising, wages are stagnating, and people can barely afford the high cost of basic food and gas, is absurd. It's not a plan based in reality but in rigid Republican orthodoxy.

Meanwhile, how does McCain propose to jump start the economy? More tax breaks to the very same billionaires who have been getting them all along. If that was effective, we would already have a sound economy from which the average person was benefiting.

The sad truth is during the boom years - and the last five or six years have been a time of strong economic growth and a sizzling economy - ordinary workers never saw any of the benefits of that growing economy. The problem is that the wage differential between the top one percent - the corporate CEOs and top executives - and the average working person has deepened. Here's what the Wall Street Journal, no populist journal, by an means, said back in 2006.
Since the end of 2000, gross domestic product per person in the U.S. has expanded 8.4%, adjusted for inflation, but the average weekly wage has edged down 0.3%.

That contrast goes a long way in explaining why many Americans tell pollsters they don't believe the Bush administration when it trumpets the economy's strength. What is behind the divergence? And what will change it?

Some factors aren't in dispute. Since the end of the recession of 2001, a lot of the growth in GDP per person -- that is, productivity -- has gone to profits, not wages. This reflects workers' lack of bargaining power in the face of high unemployment and companies' use of cost-cutting technology. Since 2000, labor's share of GDP, or the total value of goods and services produced in the nation, has fallen to 57% from 58% while profits' share has risen to almost 9% from 6%. (The remainder goes to interest, rent and other items.)
The article goes on to predict that wages for the average worker would go up.

The Bush administration's defenders, and many private economists, say wages are bound to catch up. "Everything we know about economics and historical experience is that when productivity goes up, real wages go up, too," says Phillip Swagel, a scholar at the conservative American Enterprise Institute who worked in the Bush White House. It took a couple of years for wages to catch up with accelerating productivity in the late 1990s, he says. "This time, it's taking three, maybe four or five."
Yes, that's exactly what movement conservatives from the American Enterprise Institute have been promising for years. But in a cruel irony, wages never went up. The boom went bust and now it's the average wage earner who is being asked to shoulder the burden and tighten his belt while those who caused the housing bubble to burst, like Bears Stearn, are getting their bailout. In short, the boom left behind the vast majority of the middle class, which has never happened in history.

In past economic expansions, even when there was inequality, all classes saw some benefit no matter how modest. And in the recovery from the Great Depression in the 1930s, nobody benefited more than the average worker. For that you can thank FDR and his New Deal, something movement conservatives abhor and have worked feverishly to dismantle.

It took Bush and the movement conservatives to make history by presiding over one of the most dazzling expanions in years, which benefited only the top one percent and left everybody else behind during the gravy years. In fact, everybody else actually lost ground.

And what's McSame's solution for today's bust?
But much of what he detailed was a corporate special pleader's dream: a cut in the corporate income tax rate, from 35 percent to 25 percent, a proposal to allow businesses to write off the cost of new equipment and technology from their taxes, a ban on Internet and new cellphone taxes, and a permanent tax credit for research and development.

He promised to remove the "myriad corporate tax loopholes that are costly, unfair and inconsistent with a free-market economy," but he offered no specifics.

"I wish he'd be as aggressive with tax pork as he is with spending pork," said Leonard E. Burman, an Urban Institute tax policy analyst.

And McCain's proposed "middle-class tax cut" -- a full repeal of the alternative minimum tax -- stretched the definition of middle class. Of the 4 million taxpayers paying the AMT, 93 percent earn between $200,000 and $1 million, according to the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution.
Folks, we've seen this play before. We know how it ends. It ends with tax breaks for the wealthy who need it least, lip service and faux populism for the middle class, high unemployment, under-employment, no health care plan, no investment in infrastructure or education, and just as an extra bonus, a war in Iraq that goes on for another hundred years.

This man is no maverick. He's as Republican as they come and as bad for the country as they all are.

5 comments:

Isophorone said...

The article also said that 2003 was the latest year for which data were available. Bush's tax cut only went into effect in 2003. Since then, the economy has boomed, tax receipts (mostly from that top 1% of the wage earners whom you abhor) have increased dramatically, and unemployment has been down. We had better economic growth than anything achieved under Clinton (who also helped spark the economy by cutting capital gains taxes)!

So you think Obama's idea of doubling the taxes on capital gains is a good idea? HA!

By the way, have you ever gotten a job from a poor person? Didn't think so!

J. Tyler Ballance said...

We can no longer tax-break our way to prosperity. Anyone who thinks our economy is "booming" must be in the defense industry, because most other sectors are not healthy.

I won't vote for Obama or Billary, because I don't vote for politicians who spout empty, feel-good platitudes.

I do wish that there was a nominee who espoused real solutions, such as dramatic tort reform that would reduce the damage done to business by frivolous lawsuits and related jacked-up insurance rates.

I would like to have some sort of medical cost mitigation plan that would allow our strategic manufacturing base to be restored.

Related to the above point, I want to see more incentives for domestic manufacturing and penalties for multinational corporations who exploit slave labor in Communist China and other low wage nations, while eliminating U.S. jobs.

I want to see strong anti-trust actions against Wal-Mart and other businesses that exploit workers and destroy local, small businesses.

I want to see no more undeclared U.S. Wars and I want us out of Iraq as soon as possible. Those folks have had plenty of time to form their own government. It is time they are free to govern their own affairs.

I want to see an Apollo program level of effort to achieve national energy independence by 2020. Through the use of tax incentives and investments in new technology, coupled with domestic production of oil gas and nuclear power, we should be able to free our children from the economic oppression that we have suffered for the past several decades.

AnonymousIsAWoman said...

Isophorone,

You don't actually say anything that contradicts me. I agree that this has been a long and successful period of economic expansion. The problem with all your statistics is that they don't show in any way how this expansion has helped ordinary, middle class workers. That's because it hasn't, as even the WSJ admitted.

Furthermore, tax receipts have not kept pace with the deficit. That deficit, btw, contributes to inflation, which we are now starting to experience too.

As for your questions, has anybody gotten a job from a poor person, it's really beside the point. Yes, rich people provide jobs - but if I'm skilled and working hard, I'd kinda like to not be poor myself :)

J. Tyler, I agree with a lot of what you say. But who will you vote for then? McCain won't do the things you say you want. With Phil Gramm, one of the foremost movement conservatives, wedded to the free-trade-free market model of the economy, a McCain administration truly would be more of the same as we've had for the last seven years.

You can't wait for perfection, you've got to pick what's possible and either Clinton or Obama gets us closer to it than McCain does.

Isophorone said...

OK, Karen,

This expansion has actually helped lower class workers become wealthier as well. In fact, you should read the Wall Street Journal more often, and you would learn this quite easily. I believe also the Journal outlines McCain's economic plans, which would provide a lot of benefits that J. Tyler is seeking.

Yes, the rich get richer, but, see, the POOR get richer too! The pie got bigger. Don't you get that?

With Clinton or Obama, you will get at best Clinton circa 1994 (stagnated economy) or, more likely, Jimmy Carter circa 1980.

You are right and wrong about the tax receipts. What you don't realize is that tax receipts have, in fact, been increasing at an astounding pace, and were on track to wipe out the deficit. The problem has been increased government SPENDING, particularly on domestic discretionary and the growth in entitlement programs. Of course, the housing crisis has (probably) slowed down some of the increase in government receipts (though we will probably get some numbers in a few months), but Congress as run by the Democrats has definitely increased spending.

I don't want you to be poor, either. But I believe in removing the roadblocks to you (or me, or Tyler) getting rich.

AnonymousIsAWoman said...

Iso, with all due respect, by any legitimate measure, it's simply not true that the middle class has kept up and gotten wealthier. There is so much documented evidence of the wage disparity and stagnant wages. Not only are the poor not getting richer, they are falling behind.

I promise you when I get back from seeing my dad next week, I'll dig up the evidence for you.