The debt created by the presidency of GW Bush

Posted on May 31st, 2011 in Economy,Politics by Robert Miller

Fig. 1 Source of U.S. Public Debt in 21st Century

For many, perhaps most of you, this will not come as a surprise. After all, Obama has outlined this general budgetary reality before, though given the political times we live in, thick layers of redundancy are required to get get simple points across and rational analysis of facts and information has been outlawed for many years by the mainstream media. In many ways, we are on our own, yet on the major issues about the function and responsibilities of government to its citizens, we are in the majority.  That dilemma is one reason why it’s worth paying attention to the Federal budget analysis recently made available by the Center on Budget and Policy Priorities (CBPP), an analytical budget think tank centered in Washington DC. They  have compiled an analysis which describes how the U.S. public debt was created during the 21st Century,  and how it projects forward to the year 2019. It’s quite simple and yet timely because right now the Republicans and some Democrats believe that debt reduction is critical for our financial future and they want to reduce the debt by major reductions in social services, while keeping tax cuts for the wealthy on a continuous upward trajectory. The results of this analysis and debt projections into the future are illustrated graphically (Fig. 1) and express different debt sectors as a percentage of the GDP.  The numbers used in compiling this graph are based on data from  the Congressional Budget Office (CBO); they thus represent data that should resonate with every member of Congress. The CBPP debt analysis was divided into six different sectors including i) the Bush-era tax cuts (which primarily favored the wealthy); ii) the wars in Iraq and Afghanistan; iii) the economic downturn; iv) the TARP, Fannie and Freddie bailout funding; v) debt from recovery measures and vi) “other debt.”  What jumps out at you from a glance at the graph is how the Bush-era tax cuts dominate our debt picture and how the slope of that contribution keeps rising into 2019, exceeding the slope of any other budget segment. At the opposite end, the  debt from the “other” category (gray) was actually decreasing during the Bush presidency so that without our financial collapse (two of them), the tax cuts and our two wars, the United States would have payed down its comparatively small national debt, which was projected to reach zero, near the end of the time line in the graph. In other words without GW Bush for eight years, we might have had a financial nirvana by now. Just think of that foregone possibility and our current inability to begin investing significantly in our infrastructure and gearing up for the major debt we have to our children–to provide them with a safe planet! What a difference eight years of a failed presidency can make.

Of course, you could ask yourself whether the rich were already being taxed unfairly, meaning perhaps we have been spending at unreasonably high, unsustainable rates, which is what the Republicans want us to believe. So, that brings us to the second graph (Fig. 2)which shows how the tax burden on the wealthiest 1% of Americans actually decreased from over 35% in 1979 to under 30% in 2007. Doesn’t it make sense that the wealthy do in fact owe more to America because their wealth has been made possible by the organizational features and infrastructure of our country, including the business, financial and trade centers that we have built up over several centuries?; it does not  seem unreasonable that the wealthy should and could be paying significantly more to enjoy the advantages they have by living in America. What percentage of their income is provided by the circumstantial support mechanisms that are part of our economic vitality? The wealthy should be among the most grateful of Americans and yet, Ronald Reagan encouraged them to believe they should be entitled to keep it all and that possibility seems to be the road now being paved by the Republicans. Surely, for some of the wealthy, we even provided a large measure of their motivation for wealth by telling them how to make money, pitfalls  to avoid and how to develop a sensible strategy for wealth accumulation, though I hope we didn’t teach them how to avoid paying taxes. For that job of course, we have Mitt Romney, who made his fortune guiding wealthy clients into off-shore tax havens and shelters that only the rich can enjoy.

Fig. 2 Tax Rates Paid by Wealthy in 1979 vs 2007

 

So, the graphical data would seem to argue, just from the principle of fairness, that the wealthy could and should pay more in taxes and if we had maintained that policy, if Gore rather than Bush had been elected (heaven forbid that we would honor the public vote which Gore won by more than half a million votes). It is clear from this analysis that the most significant, upward-trending factor in our public debt are the accumulated lost revenues from the Bush tax cuts, which were created out of borrowed money. You will note that the other factors seem to level off in the 2012-2013 period, whereas the projected impact of the tax cuts continues to expand the debt. This is one reason why Obama has drawn a line in the sand against supporting continuation of the Bush tax cuts, which he wants to end in 2012. This analysis reveals something we already knew: the major portion of our current and future public debt can be laid at the doorstep of the GW Bush administration policies and not, as the Republicans want everyone to believe, because of the two plus years of the Obama Presidency. This new graphical reality of our budgetary debt was not allowed to lie fallow by House Minority Whip Steny Hoyer, who used the data to hammer away at Republicans; they will undoubtedly have more to say on this subject as soon as they check with the Heritage Foundation, members of whom fashioned the Ryan budget plan, now the Holy Grail of the Republican party.

Finally CBPP has also analyzed the Ryan Republican budget–now there is proposal made out of smoke and mirrors. Again this analysis uses CBO numbers:  from CBPP “That means that, despite proposing $4.3 trillion in what would be the most severe and wrenching budget cuts in U.S. history — two-thirds of which would come from programs for people of low or moderate incomes — the plan barely reduces deficits at all over the next decade. That’s because his budget cuts are offset by $4.2 trillion in tax cuts that would go disproportionately to those at the top. In essence, at least for the next decade, this plan is far less a blueprint for addressing deficits and far more a proposal to redistribute large amounts of resources from those at the bottom to those at the top.”  Rather than saving $ 1.6 trillion over the next ten years, Ryan’s budget proposes to provide tax cuts of $4.2 trillion over ten years, while programmatic reductions amount to $4.3 trillion resulting in a savings of $155 billion over ten years, far short of his announced projections.  Ryan’s budget is not a serious budget proposal–its a wealth transfer program from the poor and middle class to the wealthy. It has been put out by the Republicans who think they have the financial power, with corporations that can act like free wheeling citizens, powered by unrestricted in campaign donations, to take over the Senate, keep their majority in the House, capture the Presidency in 2012 and put through serious budget cuts tearing up the social contract between our government and its citizens. In other words, the Republicans plan to shatter the last remnants of the New Deal. As a proposal that lacks credibility, the Republicans are no longer embarrassed by bringing forward proposals that don’t make sense and can’t pass the smell test. The Ryan budget is blatant raw political power at work–they don’t need to explain it except as they choose. They have announced what they are going to do and assume they have the organization and financing to push it through and change America. As Democrats, liberals and progressives, we should take this challenge seriously and make sure the election of 2012 does reshape America, but in a direction opposite to that proposed by the Republicans. Polls show that 78% or more of Americans do not want to cut Medicare and transfer it to a government voucher program as the Ryan budget proposes to do. But those 78% need to show up and vote accordingly and in many states they will have to make sure they have a photo ID in order to vote.  Getting lost in the culture wars at this stage of the debate–the end stage– will not help get the results that are needed. The political battle of the new century will take place in 2012. It will be a question about whether the Bush tax cuts are eliminated or whether we enter into a new round of wealth transfer from the bottom to the top.

RFM

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If we had only listened to Hubert Humphrey

Posted on May 27th, 2011 in History,Politics by Robert Miller

Hubert H. Humphrey 1911-1978

We were overwhelmed  with news that this year is the 100th anniversary of Ronald Reagan’s birth, but we heard nothing about Hubert Humphrey, whose birth has also reached the centennial mark this year. But Rick Perlstein, writing in the New York Times OP-ED section today has not forgotten him and his remarks remind us how much better off we would be as a country today if we had elected him as President in 1968 and adhered to his plans for the nation.  Humphrey was a historic labor figure here in Minnesota, before he became a national figure, as he played a major role in forming the Democratic Farm Labor party (DFL), which remains as the prominent Democratic party in Minnesota today. As a candidate for the U.S. Senate in 1948, Humphrey led the Minnesota delegation to the Democratic National Convention. His insistence on a platform favoring a civil rights issue, led to threats from the segregationists that they would walk out if the platform was approved. No one would have blamed Humphrey if he dropped the issue for the sake of party harmony, but Humphrey bounded onto the floor and gave one of the greatest speeches in political history when he said “To those who say this civil rights program is an infringement on states’ rights, I say this: The time has arrived in America for the Democratic Party to get out of the shadow of states’ rights and to walk forthrightly into the bright sunshine of human rights.” The motion carried, the Southerners walked out and ran Strom Thurmond for President and Harry Truman eventually won the election, as Hubert Humphrey helped to shape the Democratic Party into the party for civil rights. It was Hubert Humphrey, known as the “happy warrior,” who proved instrumental in getting civil rights legislation passed, through his political skills and tireless energy in the 1960s. Contrast Humphrey’s actions with those of the Republican Party who used the civil rights legislation to successfully recruit southerners into the Republican Party. The segregationist south merely switched parties, and they remain an obstacle today for any progressive legislation.
It was tragic that Humphrey lost to Nixon in the 1968 Presidential race, but Humphrey was scarred by the Vietnam War and the divisive Democratic Convention in Chicago of that year. Humphrey hated the war, but running for the Presidency in 1968, he was tethered to Johnson who insisted throughout most of the election that Humphrey needed to adhere to the Johnson war policies, or face his (Johnson’s) efforts to deny his candidacy important sources of campaign revenue. More than half of the U.S. soldier deaths in Vietnam took place after Nixon was elected.

After Humphrey’s failed election run for the Presidency, he returned to the Senate. As Democrats began to think in terms of affirmative action, it was Humphrey’s contention that too many jobs were disappearing in America and that affirmative action could only be effective if job opportunities were more broadly available. In 1976 Humphrey and Hawkins, a Democrat from Los Angeles, introduced a bill requiring the Federal Government to keep the unemployment below 3 percent and if it lurched above that level, the government had to supply emergency jobs to the unemployed. At that time, not only did the New York Times endorse the bill, but 70% of Americans supported it and believed it was an appropriate function of the Federal Government. This, at a time, mind you that the country was just four years away from their first dose of Reaganomics. How times have changed.
Both Carter and Clinton, two southern Democrats, lost sight of the New Deal, whose torch Humphrey had carried forward for many decades. In his 1978 State of the Union Address, Carter said that “government cannot eliminate poverty or provide a bountiful economy or reduce inflation or save our cities or cure our literacy or provide energy.” By spelling out what government couldn’t do, Carter in many ways was admitting that maybe it was already doing too much and this attitude helped to infuse Reagan’s policy that “government was part of the problem.” This Republican Mantra carries over still today despite the overwhelming evidence that government does many things better and for less cost than private companies. Our healthcare costs today have been driven higher by the for-profit healthcare industry than any other single factor.

When Hubert Humphrey died of cancer in January 1978, the last courageous warrior for the New Deal was gone, though Ted Kennedy carried on in a climate that was increasingly hostile to government.  What we encountered after that was deregulation, elimination of manufacturing jobs, the financialization of America and the increasing disparity between the wealthy and the poor and the stagnation of Middle Class incomes.  Under the overdose of too much Republican rule, our government is no longer viewed as an instrument of wealth redistribution, one of its main functions under the philosophy of the New Deal. Today we have a Republican Party that has been so ideologized, that they believe all government involvement has been a mistake–let private enterprise do it instead. In other words, the Republican party of today would prefer that we have no Erie Canal (supported by New York State, which created Buffalo New York and allowed New York City to develop into America’s greatest shipping port), no transcontinental railway (accomplished with government investment under Lincoln), no Social Security System (FDR), no interstate highway system (Eisenhower), no civil rights legislation (Johnson), no Medicare or Medicaid (Johnson) and no national healthcare patchwork system (Obama): in fact they are trying very hard to undo the last item on the list.  Imagine the country that might have been if Humphrey had been elected in 1968. First, he wanted very badly to end the Vietnam War, so that tragic war would have ended without the inhumane bombing strategy that Nixon and Kissinger brought to the table.  Second, Humphrey wanted to insure that America would be a strong source of manufacturing employment and wealth and he would have strongly opposed many of the deregulatory changes that led to our current economic collapse. So, if we have to endure an unending level of praise for a president (Reagan) whose actions led to the destruction of a government that once aspired to be fair, and whose actions led to a complete  ruination of  the concept of public service, let’s at least remember someone who held public service as an act of the highest possible esteem and lived his life as an exemplary model of a public servant. In Minnesota, after eight long years of Governor Tim Palenty (now a candidate for the Republican nomination for President), we can see the disastrous ruination of a state that was once proud to live and foster the standards that guided Humphrey’s political career. Many of the things that Humphrey stood for were made easier because the had the backing of a liberal, progressive state. But that state doesn’t exist any more. In light of what we see all around us today, what wouldn’t we do to let history roll the dice again, beginning with the election of 1968? I confess that I was very strongly against Humphrey in the election of 1968, though I voted for him because of the odious nature of his opponent. To me, Humphrey was too obligated to Johnson’s war policy, which at the time was all that mattered. But, in retrospect, one can now realize that the outcome of the 1968 election began to seal the future of America as it tilted towards social and political disintegration.

For those of you more interested in Humphrey’s life and political impact, there is an excellent two-hour documentary “Hubert H. Humphrey: The Art of the Possible” available and you can go here for general information on the film as well as a more complete description of his life and its impact. A truly remarkable public servant and a model for all who aspire to public service as a tool for social good, not as a tool for destroying government functions.

RFM

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ALEC pushes to deny voter rights

Posted on May 23rd, 2011 in General,Government,Politics by Robert Miller

You have recently heard of ALEC, the American Legislative Exchange Council, through any number of articles, including a few postings of my own such as “McCarthyism in Madison” and “Madison in the news again.” I first heard about ALEC through U of Wisconsin (Madison) professor William Cronon and his website “Scholar as Citizen.” Like many of you, I am a late comer to perceptual knowledge of ALEC, yet they have been spinning their spider web for decades–just waiting for the right group to come along.   I am always suspicious of the word “exchange” in a title, like, say for instance, the “stock exchange,” especially in view of the recent revelations we have heard about the duplicitous and perhaps criminal behavior of investment firms such as Goldman Sachs in their personification of greed and avarice (you can read an excellent article by Matt Taibbi in Rolling Stone on this issue). But, back to ALEC: they are the group responsible for writing state legislative laws that are driving the Republican Party to a well-coordinated set of legislative proposals, especially  in those states where they have control of the law-making apparatus.

According to Lou Dubose and his recent article “How to Pass Bills and Influence Legislators” (Dubose is Editor of The Washington Spectator), five minutes after President Obama signed the Patient Protection and Affordable Care Act (our new national healthcare bill) into law, Virginia Attorney General Ken Cuccinelli, who had staked out the Federal Court House in Richmond Virginia, filed the Commonwealth of Virginia’s challenge to the new national healthcare plan by declaring it unconstitutional. A bill endorsing this interpretation had already been passed by the Virginia Republican General Assembly, who based their bill on the “Freedom of Choice in Health Care Act,” a template written by ALEC. One month after Obama had signed the new healthcare act, the ALEC group could boast that their “Freedom of Choice” legislation had been passed in Idaho, Arizona and Virginia and was in the legislative process in 35 other states. ALEC manufactures bills and state Republican legislative bodies pass them with very little change: it’s a Republican state bill manufacturing center (there doesn’t seem to be much “exchange” in the process). No assembly or further thought required, just fill in a few blanks. It is primarily the actions of ALEC that make the laws against healthcare, the legal challenges to the healthcare act and the new legislation that removes bargaining rights for public employees, an action in full bloom in Wisconsin, as well as the new stringent anti-immigration law in Arizona. And now they are gearing up to deny registered voters the right to vote in the 2012 election, using methods never applied before.  So for all intents and purposes, it’s a small group whose legislative templates are creating the uniformity of action we are seeing in Republican legislatures all across the land: an attempted act of mass synchronization. Is this an un-American form of behavior? Shouldn’t each state be writing legislation that relates to the special needs of their own constituencies? Where in these legislative templates are the state interests spelled out and who among the state’s residents are served by each of these bills? Couldn’t each citizen of a Republican controlled state legislature engaged in passing these bills claim taxation without representation?  Since when do state legislatures pass laws for a national agenda? Is this not another defect and admission of utter incompetence by the state and federal Republican legislators who seem to need templates for their legislative priorities (Paul Ryan’s conservative Republican budget was written by the Heritage Foundation)? Are these Republican legislators incapable of writing their own laws? Apparently they can’t write sensible laws on their own.  This is an American version of mass hysteria, hoping and pushing for a train wreck. We are surely dealing with the most destructive generation in the history of our country, disguised in the form of a major political party.  Can we help steer them so that the train wreck is all theirs and not ours too? Well, for one thing, we could remove the tax-exempt status of ALEC.

But what we have seen so far from ALEC is just a warm-up for what they are undertaking now: they are attempting to limit voter participation by passing “photo ID” laws, whose purpose is a thinly veiled attack to disenfranchise Democratic voters over those who typically vote Republican. ALEC is now energized to change the voting laws in as many states as possible, so that some form of photo ID is required to vote. This effort is a blatant attempt to eliminate voting rights for mostly democratic, mostly poor and mostly black eligible voters of each state. According to a study carried out by the Brennan Center for Justice at New York University, 11 percent of U.S. citizens do not have a current photo ID, including 15 percent of low income voters, 18 percent of young voters and 25 percent of black eligible voters. In Texas, poll workers will reject college student IDs, but will accept hand gun licenses as a valid ID. How’s that for skewing a policy?

Is there something we can do to derail ALEC’s push for the voter photo ID requirement? Something perhaps we can deal with in the short run was raised by Dubose in his article as he discusses the issue about whether ALEC should exist as a tax-free organization. ALEC is currently classed as a 501(c)(3) IRS code designation, which gives tax-free status to its donors. This tax-free status means they must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3); none of its earnings can inure to any private shareholder or individual. In addition, it may not be an action organization (i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates (Words underlined in the original description). As Dubose puts it “while it [ALEC] complies with the tax code by avoiding the funding of election campaigns or explicitly lobbying, ALEC is the single largest source of pro-corporate, anti-regulatory and culturally conservative legislation in the country.” ALEC is openly campaigning for the overturn of “Obamacare,” and is now promoting legislation to disenfranchise voters by demanding “photo ID” as proof of voter eligibility, knowing full well the statistics just cited.  The New York Times had an editorial on April 27th in which they accused ALEC of promoting the “largest legislative effort to scale back voting rights in a century.” The problem with this legislation is that it turns out to be popular, primarily because of the scare tactics about illegal immigrants. Here in Minnesota for example, 80% of registered voters are in favor of a photo ID requirement to vote. If the legislation passes through both state houses (each of which is controlled by the Republican Party) and the governor (Mark Dayton, a Democrat) refuses to sign it into law, it will go onto the ballot for the fall 2012 elections and if it passes, it will become part of the state constitution. Some have suggested that if this law passes in Minnesota, the governor should sign it and hope that the legislature, in a future moment of sanity, will repeal the law. This is very tricky, but it indicates that states which pass the photo ID law, may have a huge advantage for favoring Republican victories for the election of 2012. It appears that Wisconsin, Michigan, Pennsylvania and Florida may pass these laws and Minnesota may join them depending on the actions of our governor.

ALEC has been operating since 1973 when it was founded by a small group of right-wing activists and elected officials. One of the most prominent founding members was Paul Weyrich, a far-right cultural conservative who was involved in establishing the Heritage Foundation through funding from the Joseph Coors. But ALEC is also known for the people involved in the group that are not recognized in the current iteration of their version of history. Missing from the listed ranks of its founders is Buz Lukens, the Ohio Congressman who lost his seat to John Boehner in 1990, after being convicted for paying a 16 year old for sex (Lukens, who died last year, was also convicted in 1996 of taking $15,000 in bribes, for which he served 30 months in prison). Other founders include Woody Jenkins, a former Louisiana legislator who was involved with Oliver North when he was trying to overthrow the elected government of Nicaragua, while working in the basement of Reagan’s White House. Jenkins was involved in an election scandal and fined when it was disclosed that his campaign manager had filed false disclosure forms to hide the purchase of a mailing list from former Klu Klux Klan leader David Duke. Perkins is now the director of the Christian-right Family Research Council. As Dubose points out, ALEC’s current leadership would prefer that we know their origins based on more reputable members such as Henry Hyde (former congressman of Illinois), former Wisconsin governor Tommy Thompson and former Michigan Governor John Engler, and several other well known conservative Republicans.

Today, ALEC boasts about 2,000 members who are state legislators, each of whom pays biennial dues of $100.00. But that doesn’t begin to meet the operating budget of ALEC, whose $6.9 million budget is primarily derived from corporate members who pay $7,000 to $10,000 annually, a fee which is tax-deductible; these corporate members stand to make better profits through ALEC-based legislative initiatives. Included in the corporations that support ALEC are the ever-present Koch Industries, ExxonMobil, Wal-Mart, AT&T, the American Bail Coalition, GaxoSmithKline and Reynolds American. As Dubose says, this is essentially the “right side of the Business Roundtable.”  Surely, these efforts constitute a breach of the rules under which ALEC currently enjoys a tax-exempt status. It is my understanding that removing ALEC from their tax-exempt status does not require legislation, only a ruling by the IRS; such a ruling would be promptly followed of course by a challenge from ALEC and then perhaps the Supreme Court would ultimately decide on their right to a tax-exempt status. Historically, the Supreme Court would prefer not to be involved in tax issues, but exceptions have been made in the past and this case could become one of those exceptions. This issue should be a firestorm, but it is yet to ignite as such, though it is already evident as an issue in the 2012 election (I have relied heavily on Lou Dubose’s excellent reporting on the subject of ALEC for this posting).

RFM

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