READ MY LIPS
Bush Fails Economics
In the spirit of my former job at a certain college test prep company, today's column will begin with an SAT Math question. It's on the long side, so please bear with me:
Ten years ago, Sam was in major debt. His credit cards were maxed out; he owed money all over town. So Sam hired a new financial planner, Bill, who did two things:
First, he figured out ways to make Sam more money--one way was to increase what he charged his clients for his services. Second, Bill curbed Sam's spendthrift, buying-on-credit ways. He budgeted, and stuck to his budgets. He was conservative with Sam's money. It got to be that in a few years under Bill's stewardship, he not only had paid his way out of debt, he had money to spare!
But all that fiscal responsibility went to Sam's head. Bill retired and was replaced by a new financial planner, George. George immediately cut Sam's charges for his services--his huge corporate clients he charged the least of all. And George spent money like it was out of control, mostly on the vacation home he, George, always wanted in the ancient city of Babylon. Acquisition and construction of the home is a lot more expensive than anyone thought.
Today, Sam is in debt even more than he was ten years ago. His credit is maxed out; he is in danger, in fact, of declaring Chapter 11.
And now the question: What should Sam do to get out of debt?
a) Stay the course with George: charge even less for services, and increase borrowing to pay for that vacation home in Babylon
b) Hire a new financial planner, John: charge huge corporate clients more for services, and cut Sam's losses on said vacation home...it was more for George than Sam, anyway
Sam, of course, is the United States of America, and the answer, of course, is B. Uncle Sam should be conservative with his money--which, ironically, means voting for the so-called liberal, John Kerry.
I won't trot out a bunch of indices to prove George W. Bush's economic policies are an unmitigated failure. You know this already--unless Fortune has smiled on you at a casino or Powerball, you and your loved ones are obviously worse off now than you were under the Democrats.
But Kerry will raise taxes, you say. Small government is good! Lower taxes are good!
Alas, it's not so simple. Let's take a hard look at some of Bush's thinking:
"Every American pays less in taxes now than he or she did under Clinton."
This according to Bush-Cheney campaign spokesman Steve Schmidt, the horse's mouth. Unfortunately, it's not true. According to a study by the bipartisan Congressional Budget Office, Bush's tax cuts raised the tax burden on the middle class. Let me say that again: the dwindling middle class has a greater tax burden than anyone else.
"Democrats raise taxes. John Kerry, that liberal, will raise them as soon as he takes office."
I won't deny that Kerry will raise taxes. He has no choice: Bush, like his father and Reagan before him, has borrowed so much money from creditors in China and India and Saudi Arabia that Kerry, like Clinton before him, will have to increase revenue just to pay the interest. This is a Republican tactic: borrow like mad, so the fiscally conservative (yes, you read that right) Democrats have to raise taxes.
Taxes, of course, are what we pay for services the government provides. Some of these services--Medicare and Medicaid, Social Security, unemployment insurance, disability insurance, the war effort in Afghanistan and against Osama bin Laden--are good. Others--a war on drugs that is responsible for more than half the nation's prison population being there for non-violent marijuana-related crimes; the Department of Justice gunning after doctors who believe in euthanasia; the bumble in Iraq--are wasteful.
If you cut taxes too much, as Bush has done, there is no money to pay for services. Something gets cut. And believe me, under Bush, the good services will get choked before something grandiose like the Iraq war effort will.
"If you cut taxes for the rich, the rich, civic-minded citizens that they are, will reward the government by re-investing the savings in the economy, which in turn will create jobs and yield growth."
True, there are rich people out there who are civic minded and do re-invest. Unfortunately, the majority do the opposite, especially when "the rich" also includes "big corporations."
As James Surowiecki points out in The New Yorker, the trend now among blue-chip corporations is not to create jobs, or give big bonuses to their workforce, but to save money. Microsoft, for example, has sixty billion dollars in low-interest-bearing savings.
"Exxon Mobil, Hewlett-Packard, and Intel have more than ten billion dollars each in the bank," he writes. "If you add up the savings of all the nonfinancial firms in the S&P 500, the total exceeds half a trillion dollars, double what it was in 1999, which means that in the past five years American companies have banked almost three hundred billion dollars."
Here is what Bush's economic policies yield: unemployment, recession, stagnant piles of wealth controlled by uber-rich corporations, the tax burden on the shoulders of the middle class--oh, and a needless invasion that my grandchildren will still be paying for.
Sam is in debt again. He needs a new financial planner, and one who is conservative with his money: John Kerry.
—Greg Olear
Editor, LARGEREGO
August 17, 2004
Editor, LARGEREGO
August 17, 2004
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