Return of the Bully Mentality

 The Mortgage Corner

The NYTimes Bret Stephens lamented the “bullying mentality” at the heart of the pro-Hamas movement in a recent Op-ed that lamented their attempts to shut down pro-Israeli speakers. Hamas is a movement that wants to completely eliminate the state of Israel.

Such protests have even permeated UC Berkeley, my alma mater. It’s shades of the 1960s and 70s anti-Vietnam protests, but instead of peace loving and ultra-liberal protestors, many of the protests seem to be supporting violence and Hamas terrorists.

Such a mentality, or bullying behavior to use its more common term, is once again affecting the budget battles we still have today, especially concerning aid to Israel and Ukraine, with some Republicans attempting to even block debate on a bill, after the Biden administration was able to pass many bipartisan bills that supported the post-pandemic recovery.

It mirrors bullying behavior I wrote about in a 2014 contributor column for Huffington Post during earlier budget battles, in which I quoted Paul Krugman:

"But nobody expects to see a lot of prominent Republicans declaring that rejecting Medicaid expansion is wrong, that caring for Americans in need is more important than scoring political points against the Obama administration. As I said, there's an extraordinary ugliness of spirit abroad in today's America, which health reform has brought out into the open."

The "ugliness" he speaks of is really a bully mentality. Bullies prey on those weaker than them, and so the most conservative Republicans have tried every trick in the book to oppose any programs that smack of aiding those most in need.

“Not all Republicans are bullies, and not all Democrats enlightened progressives,” I said then. “But the bully mentality of House Speaker John Boehner's "no compromise" tactics, or Senator Mitch McConnell's filibustering of even the most innocuous Obama administration appointments have been the reason recovery from the Great Recession hasn't been stronger.”

And it continues with the attempts to bully House Speaker Mike Johnson into not advancing a desperately needed aid package that MAGA Republicans oppose by threatening to unseat the House Speaker.

Who are the bullies? Republican House members from conservative Red states, in the main that oppose almost any form of government aid—even for border protection that passed with bipartisan support in the Senate.

They belong to the states most dependent on government support. Smart Asset conducted a research on the states most dependent on the Federal government, and found they were Republican governments, with Red states making up 8 out of top 10 dependent states.

GeorgetownPPR

The result of such bullying behavior is easy to see from this Georgetown public Policy Review graph. Beginning 20 years ago median household annual incomes between red and blue states began to diverge—rising per annum to $60,000 in 2018 in Republican-led states vs. some $72,000 in Democratic-led states.

The divergence between Red and Blue states began in 2000 when the Bush administration passed massive tax cuts that took away the 4 years of budget surpluses created by the Clinton administration and cut back many social programs; at the same time it began the wars on terror.

The Center on Budget and Policy Priorities (CBPP), a non-partisan think tank, said at the time, “Despite promises from proponents of the tax cuts, evidence suggests that they did not improve economic growth or pay for themselves, but instead ballooned deficits and debt and contributed to a rise in income inequality.”

It also led to the largest federal budget deficit; in fact, the first one $trillion federal deficit in US history. And “the Bush tax cuts (including those that policymakers made permanent) would add $5.6 trillion to deficits from 2001 to 2018,” said the CBPP.

It began an alarming trend, the “no compromise” behavior that the Biden administrations has attempted to alleviate with such as its New New, Deal Infrastructure and Inflation Reduction Acts that are bringing back good jobs to those Red states.

Such bullying behavior has intentionally impoverished many, and this might be the best of times to study and counteract its effects with a bipartisan spirit that younger generations are keen to support in many polls.

A recent PEW Research poll, for instance, tells us why Gen Z’ers in particular support compromise over no compromise: “…members of Gen Z are more likely than older generations to look to government to solve problems, rather than businesses and individuals. Fully seven-in-ten Gen Zers say the government should do more to solve problems, while 29% say government is doing too many things better left to businesses and individuals.”

Can today’s younger generations overcome such a bullying mentality that has also permeated university campuses and fulfill the promise of a greater bipartisanship they say their prefer?

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Republicans Are the Real Socialists

Popular Economics Weekly

The new Republican Congress is exposing a not surprising fact. Its first actions are attempts to water down The Dodd-Frank Wall Street and Consumer Protection Act, and repealing Obamacare—which will pass the risks of financial meltdowns and medical catastrophes back to us, the taxpayers.

In economic parlance, it is socializing the costs of doing business in order to maximize the profits of business. The attempts to weaken financial regulations are “Kicking Dodd-Frank In the Teeth”, said Gretchen Morgenson in her most recent New York Times Sunday Oped.

“The 114^th Congress has been at work for less than a week, but a goal for many of its members is already evident: a further rollback of regulations put in place to keep markets and Main Street safe from reckless Wall Street practices.”

The story of Republicans opposition to Obamacare is no different. By attempting to roll back the eligibility of millions of uninsured Americans with the Repubs various challenges to the federal health exchange, Republicans will return the cost of maintaining health care once again to taxpayers; by putting those sickest Americans back in hospital emergency rooms, or on government welfare rolls, thus maximizing health costs (which have been declining since Obamacare kicked in). This is even though medical bankruptcies now outnumber all other bankruptcies.

Why don’t Republicans get that this flies in the face of their own ideals of self-sufficiency? Even more egregious for working Americans are their attempts to lower wages and salaries by weakening unions and the collective bargaining of government employees in states like Wisconsin. The result of Wisconsin Governor Scott Walker’s efforts has been slower growth, a larger budget deficit, and less incentives for government employees to increase productivity.

Even California Republican Ron Unz knew this with his initiative to raise the California minimum wage to $12 per hour, which would take many minimum wage-earners off the welfare rolls, yet California Republicans have even opposed that!

It is socialism in a big way that Republicans have always accused Democrats of—putting the cost of running the U.S. on government, rather than individuals and private industry.

It’s something President Roosevelt knew and voiced during the Great Depression. “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”

And until Republicans understand this, they will continue to be the minority party.

Harlan Green © 2014

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Next 4 Years—Back to the Future

Financial FAQs

President Obama’s victory means it’s Back to the Future for economic as well as social policies. It means he now has the mandate to implement what the electorate chose him for—a functioning government to not only fix disasters such as Hurricane Sandy, but the economy; to lead the United States of America into the future rather than backward with Republican economic policies of the 1920s, as Obama said in the third debate.

Yes, that does mean government creates jobs, contrary to the Bain Capital ethos—whether in Detroit, or with clean energy investments, infrastructure building, better regulations that prevent economic disasters, and lower cost student loans that enable a better educated workforce.

That is, if he doesn’t give in to Boehner’s House Republicans who aren’t budging on returning tax rates to the Clinton era, when 23 million jobs were created and there was greater prosperity for all.

Paul Krugman has called it economic blackmail. “Because Republicans are trying, for the third time since he took office, to use economic blackmail to achieve a goal they lack the votes to achieve through the normal legislative process. In particular, they want to extend the Bush tax cuts for the wealthy... So they are, in effect, threatening to tank the economy unless their demands are met.”

The fiscal cliff is not the real problem, or large budget deficits at a time when the economy still needs a boost. It is not really a cliff, according to most analysts. The Center for Budget and Policy Priorities is one of many that say it is more of a slope, in that the effects of letting the Bush tax cuts lapse and the sequester agreement to cut government spending only begin to take effect in 2013.

“In fact, the slope would likely be relatively modest at first (and then much steeper if 2013 unfolds without a fiscal resolution). This means that if there is no agreement by January 1, policymakers will still have some (although limited) time to take steps to avoid the serious adverse economic consequences that the Congressional Budget Office (CBO) outlines in its recent analysis of what will happen if the expiring tax cuts and new spending cuts take effect on a permanent basis.”

Exit polls showed voters tended to blame Bush for the Great Recession, rather than Obama, and so have given President Obama the opportunity to lead us back to fiscal sanity. It turns out Republicans tried to label Democrats as the tax and spend party, but voters decided Republicans have been the real tax-cut and spend party; which is true. Presidents Reagan and GW Bush were responsible for both the largest tax cuts and largest budget deficits since WWII, in their decision not to follow the pay-as-you-go budget rules that said tax cuts had to be matched by spending cuts.

It really boils down to how much to tax which U.S. taxpayers. Conservatives have called for lower taxes in the name of greater freedom from government controls. But Obama’s victory is a victory for the right to choose—the freedom to choose union representation and negotiate wages via collective bargaining, or women’s control of their health, family planning, or even a cooler climate.

The future belongs to those who have recognized that the richest have been helping themselves, rather than the country. It belongs to those who see that government is for the common good, rather than the few. This is the direction, however halting, that government has been marching ever since the New Deal began to cure the flaws and real damage that unrestrained capitalism can cause—back to the future.

Harlan Green © 2012

What Happened to the Bush Tax Cuts?

Popular Economics Weekly

The debt ceiling debate is about to begin again, and House Speaker Boehner has said he will continue to press for more tax cuts without raising additional revenues, reviving the possibility of more budget gridlock and credit downgrades. "I believe that raising taxes at this point in our recovery is a big mistake," Boehner told reporters. "At a time when we're trying to help small businesses create jobs, this proposal would kill jobs."

But it is a mistake to cut taxes without raising revenues. We know GW Bush’s tax cuts enacted in 2001 and 2003 to revive an economy flattened by the dot-com bubble bust have cost plenty. And we know what happened to all that money saved by corporations and individuals.

Not much. Just 3 million jobs were created during Bush’s 8 years, household incomes did not even keep up with inflation, and yet corporate profits are up more than 14 percent as a percentage of GDP—the highest in history.

So most of the money flowed to corporations—who are currently hoarding more than $2 trillion in cash—and the top 1 percent income earners who benefited most from the tax cuts. And since the top 1 percenters spend less of their money than the 99 percenters, much of it is being held in banks that have almost $1 trillion in excess ‘zero sum’ deposits that aren’t being put to work to revive this economy.

Graph: CBPP

Then what would really put all that cash back to work to grow jobs and the economy? We know the answer is to invest more money to grow the future, but how without even more debt? Dr. Robert Shiller of Irrational Exuberance fame, and Cornell Professor Robert Frank have written wonderful New York Times Op-eds on just how to do it.

It’s almost absurdedly simple in principle. Dr. Shiller says that William Salant, then a member of President Franklin D. Roosevelt’s White House staff, and Nobelist Paul Samuelson, then of M.I.T., developed a “balanced-budget theorem.”

“It asserts that if a country raises taxes and expenditures by the same amount in a time of high unemployment, and if monetary policy is accommodating, the national income grows by exactly the amount of the tax, so that after-tax income is unchanged.”

And Professor Frank disputes austerity proponents who say governments can’t spend beyond their means indefinitely, any more than businesses or families can. He says “It’s a fair statement if we’re talking about the long run. But in the short run, it’s utterly false…Consider an indebted family that must decide whether to borrow $5,000 to install additional insulation in its attic, a project that would reduce its utility bills by an average of $100 a month and require loan payments of $50 a month. In the short run, obviously, the project would increase the family’s indebtedness. But can there be any doubt that the family would be better off, in both the short and the long run, by going ahead with it?”

In other words, one must spend money to make money, and it can be done in a balanced way. That also means it can be done with either public or private monies that gives a public benefit, such as making up the $2 trillion deficit in infrastructure repairs. And if private business won’t invest sufficient funds, as at present, then public monies must be used.

Graph: CBPP

We also know that tax cuts don’t create jobs or spur growth by themselves. The Bush tax cuts are the most current example; in fact helped to cause the Great Recession. For much of the excess profits were spent on market speculation—especially in subprime loans and payday lending to the poorest among us—that caused the housing bubble.

An excellent book by Gary Rivlin, Broke, USA: From Pawnshops to Poverty, Inc. -- How the Working Poor Became Big Business, documents that “Poverty Inc. was a roughly $150 billion-a-year industry at its peak, Rivlin calculates, after totting up revenue at pawnbrokers, payday lenders, money-wirers, rent-to-own operators, tax preparers who offer instant tax “refunds,” subprime credit-card providers, subprime-mortgage lenders and all the rest”, according to a Bloomberg News review.

We also know the cost of the Bush tax cuts, which had to be paid for with taxpayer dollars, since they were one of the major causes of the deficit due to the lost revenues at a time we were paying for 2 wars.

Graph: CBPP

It’s more than $3 trillion to date, according to the CBPP, and would cost taxpayers another $3.6 trillion if extended over the next 10 years. In fact, if the Bush tax cuts were allowed to ‘sunset’ this year, the federal budget deficit would stabilize. So it makes no economic sense to advocate tax cuts without revenue enhancers, and there are plenty, from closing loopholes, to certain interest exemptions. So austerity is not the answer—neither here nor in Europe.

Harlan Green © 2012