Defeating The Greater Lawlessness

 Popular Economics Weekly

“The Republicans’ hunger for power has now reached such a point that they have selected and continue to support a president who has lied and cheated his whole adult life; from Trump Casinos to Trump Towers, from stiffing bankers and his workers to cooking the books.” H Green/Huffington Post

NYTimes

We knew as long ago as Nixon’s Watergate that the Republican Party harbored a lawless tendency when it suited them. Why else would President Reagan engineer the illicit Iran contra arms deal with Khomeini, or President GW Bush invade Iraq when UN inspectors already knew Saddam Hussein had destroyed his weapons of mass destruction a decade earlier, I said in 2017?

Now we have illegal tariffs and an unpopular war with Iran, one that will drive inflation even higher and might take years to return to the Federal Reserve’s 2 percent target to fulfill its mandate of full employment with stable prices.

The result? Another recession, sooner or later, as happened during Presidents Reagan (2) and GW Bush terms. In Bush’s case, he managed to turn four years of Clinton budget surpluses (1996-2000) that could have kept social security and Medicare solvent for decades into a worldwide Great Recession (2008-09), the worst since the Great Depression, according to most economists.

President Trump’s Republicans are following the same path with his huge tax cuts while borrowing $trillions to fight his wars, cutting public services to the bone and closing whole departments by firing more than 300,000 federal employees.

Republicans have doubled down on their lawlessness by allowing his illegal wars and tariffs, and maybe what could precipitate the next recession; their determination to deport as many undocumented immigrants as possible without allowing them due process or a legal pathway to citizenship.

Immigrants are taxpayers that add workers to our shrinking population, and their loss is depriving our economy of essential services—agricultural workers that supply our groceries, for starters, but also a large part of construction, healthcare, transportation and lower paying service workers in leisure and hospitality.

This can only be done because Trump’s Republicans either ignore or disregard the civil laws, as well as economic laws, and even the constitution in their hunger for power. This is impoverishing more Americans, not to speak of turning a blind eye to the illegal enrichment of the Trump family and their supporters.

What can be done to return the $trillions in wealth and power that Republicans have taken away from the American people via their massive tax cuts to corporations and wars that were never paid and ignore the most basic rules of capitalist enterprise, such as debts must be paid, contracts and treaties honored?

The sad fact is that the Iran war wasn’t necessary because President Obama had already negotiated a nuclear arms agreement with Iran and Trump’s tariffs have been mostly based on ignorance of foreign trade tradeoffs, not unfair trade practices.

The history of greater lawlessness and hunger for more power is leading to a massive disruption in foreign trade which is the life blood of the world’s economies. It is repeating the mistakes that choked off world trade in 1930 and led to the Great Depression.

The question is how much longer will consumers and voters tolerate the record of Republicans’ failures that have led to four recessions just since 1980 that were the result of their hunger for more power?

Polls are showing that ordinary Americans are beginning to understand what it means.

Harlan Green © 2026

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

Republicans Don't Pay Their Bills

 Financial FAQs

“The new law will reduce federal revenues by significant amounts, even after allowing for the impact on economic growth. It will make the distribution of after-tax income more unequal. If it is not financed with concurrent spending cuts or other tax increases, TCJA (Tax Cuts and Jobs Act) will raise federal debt and impose burdens on future generations. If it is financed with spending cuts or other tax increases, TCJA will, under the most plausible scenarios, end up making most households worse off than if it had not been enacted.” Brookings

How times have changed! Republicans during the Eisenhower era paid for the deficits their tax cuts caused. The Brookings Institution analysis of Donald Trump’s 2018 Tax Cut and Jobs Act has US households paying for it because it added some $4 trillion to our federal debt even “if it is financed with spending cuts or other tax increases.”

The 90 percent corporate tax rate and 92 percent maximum personal tax rate of the Eisenhower era paid for the “new hires, new equipment, and product research which are deductible from taxable earnings.”

In other words, the higher tax rates made corporations use their profits to finance their own growth, rather than pay Uncle Sam. Whereas today the TCJA tax cuts will mostly finance corporate stock buybacks.

And Trump wants to renew the TCJA when it expires this year, which the Congressional Budget Office says will add at least another $4 trillion to our national debt.

It doesn’t have to be this way. The Clinton/Gore government downsizing of the 1990s created four years of budget surpluses, because they negotiated with congress to make the cuts, because they were congressionally mandated programs.

“Unlike the current effort, the cutting didn't start until they had gone through a six-month study process and developed a blueprint of how to best reinvent the federal government,” said a recent Newsweek article on the subject. “Government agencies were brought into the process to determine the best ways that efficiencies could be realized. In fact, the effort was led by some 250 federal employees that remained on their agency payrolls.”

The federal workforce was reduced by close to 400,000 employees between 1993 and 2000, or about 17 percent of the total. The cuts made the government the smallest it had been since the Eisenhower administration, according to the Newsweek report.

Who do the Trump tax cuts benefit? Corporations and households in the top 5% — who earn more than $450,000 a year, roughly — are the “biggest winners.” They’d get over 45% of the benefits of extending the Tax Cuts and Jobs Act, according to a July 2024 analysis by the Urban-Brookings Tax Policy Center and would reduce federal tax revenues by $4.4 trillion by 2035.

So why would Republicans want to reduce federal revenues when we have a $36 trillion national budget deficit that is 120 percent of GDP?

It’s because Republicans don’t want to pay their bills rather than provide social services and environmental protection that would benefit all Americans. That’s their history from at least 1980 when President Reagan declared that “government was the problem” and immediately fired the federal air traffic controllers who were striking for higher pay and better working conditions.

We know how that turned out with the latest brouhaha over Musk’s slashing of the already understaffed FAA workforce that regulates airline travel.

President Eisenhower would have turned over in his grave, if he knew this would happen to the Republican Party.

Harlan Green © 2025

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

Can We Prevent Stagflation?

 Popular Economics Weekly

During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations…The onset of the embargo contributed to an upward spiral in oil prices with global implications. The price of oil per barrel first doubled, then quadrupled, imposing skyrocketing costs on consumers and structural challenges to the stability of whole national economies. history,state.gov

BEA.gov

The 1970s stagflation, a combination of stagnant growth and high inflation, was not a happy time. It caused then Federal Reserve Chair Paul Volcker to raise the Fed Funds rate to as high as 20 percent to tame the inflation tiger in the 1980s and many bank failures.  

It might happen again, but not because of an energy shortage. Friday’s report on the Commerce Department’s Personal Consumption Expenditure Index (PCE) raised alarms that inflation was on the rise, which is one of the two main components of stagflation. Inflation hasn’t been tamed, as it rose 2.5 percent, 2.8 percent without food and energy prices, per the BEA graph.

Stagflation last happened in the 1970s because of the 1973-74 Arab oil embargo that caused gas stations to run out of gas and consumer prices to soar. It ultimately resulted in a 14.8 percent CPI inflation rate in 1980. And it was more than a decade before inflation and interest rates dropped back to single digits, and we lived through three recessions.

This was also the beginning of the Second Gilded Age so well documented by political scientists Jacob Hacker and Paul Pierson in Winner-Take-All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class that was initiated by President Reagan and supported by the Business Roundtable of Chief corporate Executives.

It began the huge transfer of wealth from wage earning Americans to the owners of capital with successive tax cuts and restrictions on labor organizing, as well as the massive deregulation of industries such as the airlines and telecommunications.

US Corporations took advantage of the globalization of technologies and began the massive move of factories overseas, along with the blue-collar jobs that had built middle America, to countries with cheaper wages and fewer environmental regulations.

The gutting of rust belt jobs in the Midwest resulted in the red state-blue state split we have today, with right to work laws in those states that restrict the right of unions to collect dues from their members, many with wages still stuck at the national $7.25 per hour minimum wage.

This is while economic growth, the other main element of stagflation, is slowing. Why? Consumers are not happy with the high prices and economic uncertainty caused by Trump’s tariffs and Elon Musk’s DOGE massive job cuts, so they aren’t spending as they did in the past, and consumers are the main driver of economic growth.

The loss of tens of thousands of federal jobs and depopulating the service sector industry, the fastest growing economic sector that depends on undocumented workers, will do the same.

This is reflected in falling consumer confidence. The University of Michigan’s final February survey said: “Consumer sentiment extended its early month decline, sliding nearly 10% from January. The decrease was unanimous across groups by age, income, and wealth. All five index components deteriorated this month, led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff induced price increases are imminent.

All of these factors make a reduction in first quarter economic growth more likely. In fact, the Atlanta Fed’s estimate of first quarter growth declined further into negative territory.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.8 percent on March 28, down from -1.8 percent on March 26. The alternative model forecast, which adjusts for imports and exports of gold as described here, is -0.5 percent.

Can we prevent a recurrence, in which we again have double digit inflation and slow to no growth? Trump would have to learn how to negotiate with congress rather than issue unlawful executive orders and take away Elon Musk’s chainsaw for that to happen.

Harlan Green © 2025

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

Who Will Drain the Swamp?

 ANSWERING KENNEDY’S CALL

“This is so bad. We have just gotten list of amendments to be included in bill NOT from our R colleagues, but from lobbyists downtown,” said Missouri Dem Senator Claire McCaskill. “None of us have seen this list, but lobbyists have it. Need I say more? Disgusting. And we probably will not even be given time to read them.”

NICHOLAS KAMM/AFP/Getty Images

Donald Trump will be President and could have control of both the House and Senate again. The same happened in 2017 when he last won on the campaign promise to Drain the Swamp of corruption in Washington.

He didn’t succeed in his first term, actually creating a deeper swamp with rampant corruption at almost all levels of government. Will he do better this time; might he and his Republicans learn from their past mistakes?

Republicans will want more tax cuts, for starters, as well as extend the tax cuts his administration engineered in 2017, The Tax Cuts and Jobs Act, that they passed with House and Senate majorities.

I wrote at the time, “The Republicans tax bill has passed, and it is the greatest theft of taxpayer monies in history; even greater than that of Presidents’ Reagan and Bush I and II that began the immense transfer of wealth to the wealthiest in 1980 with their tax cuts starving the government of much needed revenues that would keep the federal deficits under control.”

Why? It was written by the very lobbyists Republicans and the Trump administration had cultivated during his 2017 election.

More than 130 lobbyists were hired to work in his first administration, and 36 of them have blatant conflicts of interest, working on the same issues they were lobbying on, in violation of Trump’s ethics rules, according to MarketWatch economist Jeff Nutting.

“This is so bad. We have just gotten list of amendments to be included in bill NOT from our R colleagues, but from lobbyists downtown,” said Missouri Dem Senator Claire McCaskill. “None of us have seen this list, but lobbyists have it. Need I say more? Disgusting. And we probably will not even be given time to read them.”

The bill cut Medicare and Medicaid benefits by $1.5 trillion and could add $1.5 trillion to the federal deficit in 10 years according to the CBO. That’s $3 trillion taken from U.S. taxpayers for the biggest heist in history.

We know what happened when Republicans tried this taxpayer sleight of hand before. President Reagan and congress had to raise taxes 11 times to make up the deficits created by the first ‘trickle-down’ tax cuts in 1981. Two consecutive recessions in 1981 and 1982 followed as Fed Chairman Paul Volcker raised interest rates to record levels to choke off inflation at the same time.

Then GW Bush did the same in 2001-03, when he cut taxes again while paying for the wars on terror, resulting in the largest federal deficit in history at the time, as well as the Great Recession.

This did not generate enough tax revenue to pay for the additional debt, so foreign governments and individuals will become more reluctant to invest in U.S. debt, as the deficit continues to grow and interest rates rise.

It can happen again. It is suicidal economics. The U.S. won’t declare bankruptcy. But it will saddle future generations with an impossible debt load and prevent much needed public and private investment that would increase productivity and boost growth.

This happened in 2017, and the stench of lobbyists filling the swamp became so overwhelming in Donald Trump’s first term that it was the reason his Republican majority were voted out of office, as I said.

Is there any reason to doubt it will happen again?

Harlan Green © 2024

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

The Harris Presidency

 ANSWERING KENNEDY’S CALL

What would it mean for Kamala Harris to be our first female President? It’s a historical turning point that affirms women have finally attained equal political rights to men, and American citizens s confirm they want greater personal rights—to expanded health care, abortion, and environment protection that has been held back by a dominant male culture until now.

Should Harris and the Democrats win it would also signal the end of the Second Gilded Age, an age characterized by record income inequality that began in earnest when President Ronald Reagan’s supply-side economic policies began to transfer massive amounts of wealth from working adults (small business and salaried) to the owners of wealth (capital assets) in the 1980s.

cbpp.org

It would give President-Elect Harris a mandate to begin to reverse the tax structures that were the major cause of the record inequality by raising corporate and personal tax rates back to Reagan-era levels, and thus begin to reduce the massive budget deficits that resulted.

President Reagan and Republicans cut the maximum personal tax rate for the wealthiest from 50 percent to 28 percent and reduced corporate taxes from 34 to 28 percent to initiate what economists call the Second Gilded Age, which resulted in our first massive deficit--$400 billion—by the end of his administration.

The massive deficits continued to grow under successive Republican administration tax cuts that resulted in curtailing our social safety net. GW Bush’s deficit grew to $1 trillion, and the Trump administration’s to more than $5 trillion.

A Harris Presidency could also mean an end to our ongoing civil war, a war originally between the industrial North vs. slave-holding South that never really ended with General Lee’s surrender at the Appomattox Courthouse in 1865.

Though slave-owning was banned with the Emancipation Proclamation and Abraham Lincoln’s north winning the civil war, southern states found ways to continue to impoverish former slaves by terrorizing them under Jim Crow laws that even the civil rights acts of the 1960s couldn’t completely eradicate.

Today’s manifestation of our civil war has morphed into a battle between red states controlled by Republicans with a white male/Oligarchic culture continuing to impoverish their own citizens vs. more prosperous blue states with a dominant female/minority majority.

Kamala Harris has promised in her platform and speeches that she would be a President for all Americans. That would mean policies benefiting red state citizens as well, such as raising the federal minimum wage from $7.25 that was last raised in 2009.

Currently 14 states haven’t raised their minimum wage since then, or at all. Five red states have not even adopted a state minimum wage: Alabama, Louisiana, Mississippi, South Carolina and Tennessee. Two states, Georgia and Wyoming, have a minimum wage below $7.25 per hour, so that in all seven of these states, the federal minimum wage guarantees at least a $7.25 per hour wage. New Hampshire and Pennsylvania are the only blue states still with the federal minimum wage.

There are other ways the red states have kept workers’ salaries lower that Harris should remedy: lobby to repeal so-called right-to-work laws in 26 states that say members of a union aren’t required to pay union dues even though they enjoy the benefits. The result is that membership in unions has declined, along with workers’ rights to bargain collectively. And those 26 states now have a Supreme Court majority to enforce those state laws.

Democratic majorities have always found ways to benefit more Americans since the New Deal. President Obama was able to pass Obamacare, or the Affordable Care Act, the first universal health insurance that meant insurance companies couldn’t ban clients with existing conditions.

Climate change has become a clear and present danger causing more hurricanes, floods, wildfires threatening Americans that Donald Trump has called a hoax, and would rather “Drill baby drill” for more fossil fuels.

The Biden administration has already begun work on reducing global warming with the Inflation Reduction Act subsidizing alternative energy sources that don’t increase global warming but that the Republican Party vociferously opposes to protect its fossil fuel constituents.

We have lived through a Gilded Age before. The first Gilded Age came in the late 1800s, when the Industrial Revolution made Robber Barons such as railroad titan Cornelius Vanderbilt, banking titan JP Morgan, and Standard Oil’s John D Rockefeller the richest men in their time.

It ended with the death of President William McKinley in 1901, and revelations of rampant corruption followed by Teddy Roosevelt’s Progressive Party and Franklin Roosevelt’s New Deal that created government institutions such as the Federal Reserve to regulate banking and social security, as well as empowering labor unions to level the playing field for workers.

If elected, Kamala Harris and Democrats should be able to continue the new New Deal legislation that President Biden’s Bidenomics’ policies have initiated with more than $5 trillion invested in keeping America great and creating 16 million jobs that have benefited all of our citizens, not just Oligarchs such an Elon Musk.

Musk warned, after all, what would happen if he became the efficiency czar Trump says he wants him to be and cuts $2 trillion from the $6.75 trillion federal budget. There would be no money left for social programs, the military, and drastic cuts in social security and Medicare benefits, say economists such as Nobel Laureate Paul Krugman.

It would also mean Husband Doug Emhoff would become the first, First Gentleman, which wouldn’t diminish the historical record of great First Ladies. Men should take heart that women have equaled men in all ways, not just in intelligence and courage, but have shown a heart large enough to create a United States, not a Divided States of America, when Kamala Harris becomes our new President.

Harlan Green © 2024

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

Path To Economic Recovery--Part II

 Financial FAQs

 

Calculated Risk

As I said in Part I of this series, there is a path to economic recovery from the worst recession since the Great Recession. Firstly, it means studying what economic policies have worked in past recoveries.

It you use job formation as the most important criteria for success, then the Clinton administration wins with its mix of government and private sector programs that cut military spending with the end of the cold war and increase in public spending at no more than 2 percent per year. The policies resulted in four years of budget surpluses from 1996-2000.

The cold war dividend also resulted in the second longest economic recovery on record—1991-2001—only topped by the Obama-Trump era recoveries cut short in February by the pandemic.

Private sector employment increased by 20,970,000 under President Clinton (light blue) in the excellent Calculated Risk, by 14,714,000 under President Reagan (dark red), 11,849,000 under President Obama (dark blue). 9,039,000 under President Carter (dashed green), and 1,511,000 under President G.H.W. Bush (light purple).

But because of COVID-19 during the 46 months of Mr. Trump's term, the economy has lost 2,128,000 private sector jobs (yellow line) to date.

What happened? Most jobs were created, when government spending kicked in to supplement consumer and business activities. Coincidence doesn’t spell facts, as I’ve said, but we can see what worked and to create jobs.

Public payrolls also grew most also during Democratic administrations with the exception of the Reagan administration that wanted to outspend Russia in their arms race. Payrolls grew during Mr. Carter's term (up 1,304,000), then Mr. Reagan's terms (up 1,414,000), H.G.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs). 

However the public sector declined significantly while Mr. Obama was in office (down 277,000 jobs), and during the 46 months of Mr. Trump's term, the economy has lost 870,000 public sector jobs.

Calculated Risk

What exactly did Clinton do to create 10 years of prosperity with budget surpluses to boot?? He was not afraid to raise taxes where it was needed to pay for programs that created more jobs, rather than raise the public debt.

He increased taxes with the Omnibus Budget Reconciliation Act of 1993, his first budget. The Deficit Reduction Act raised the top income tax rate from 28 percent to 36 percent for those earning more than $115,000, and 39.6 percent for income above $250,000. It increased the corporate income tax from 34 percent to 36 percent for corporations with incomes over $10 million.

It also ended some corporate subsidies, taxed Social Security benefits for high-income earners, and created the earned income tax credit for incomes under $30,000.

It raised the gas tax by 4.3 cents per gallon. It also limited the ability of corporations to claim entertainment tax deductions.

The +10 years of tepid economic growth since 2010 were caused in part by limiting government programs (e.g., in infrastructure, scientific research) that would have boosted growth, and because President Obama chose to focus on bringing down national debt after the initial $800B ARRA aid package assisting recovery from the Great Recession.

Republicans in particular seem to have been influenced by the rhetoric of anti-tax activist Grover Norquist when he said,  "I'm not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub," which did tremendous to economic growth during that time.

The irony in this history is that economists are already predicting a huge economic recovery next year once enough Americans have been vaccinated, as happened with the recovery from the 1918-19 Spanish flu-induced recession, and which became known as the euphoric “roaring twenties”.

Harlan Green © 2020

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

Government Was Never the Problem

Popular Economics Weekly

MarketWatch.com

President Reagan’s all-encompassing campaign slogan that “government is the problem” was never the problem. But competent governance has been a problem; in as much as incompetent leaders have been the problem dogging the overall prosperity and sustainable economic growth in our free enterprise capitalist system.

Herbert Hoover was an incompetent leader who was very image conscious (as is our current President). He helped to precipitate the Great Depression by ignoring the changing times—and a stock market crash due to record income inequality of that time. The “roaring twenties” unleashed so much irrational exuberance that the public came to believe anyone could become a Great Gatsby that lived beyond their means if they played the financial markets right.

It took one of our greatest presidents to look behind the mirrors to lift our spirits and win World War II. But then President Roosevelt had already a lifetime of experience running government as an Assistant Navy Secretary in the 1920s, then as the Governor of New York.

Hoover was a mining engineer before entering politics. President Reagan, the ‘Great Communicator’, was also image conscious as a former actor. His rise to power came from being the great communicator for Big Business that wanted to gain more power and globalize its work force; therefore Reagan reduced the power of labor unions to bargain for their rights and instituted trickle-down economics.

We know how that ended. Whole industries were deregulated in the name of free enterprise and allowed to form monopolies. Very little of our national wealth has consequently trickled down to the rest of us; except maybe for the top 10 percent income earners since the end of the Great Recession.

Corporate CEOs now earn more than 300 times the average salary of their employees. AT&T’s CEO is apparently scheduled to retire with a lifetime $274,000 per month pension.

President Reagan became a great leader for the wealth-holders in extracting more wealth for themselves, in other words, but not for those workers that actually produced it. And now we need competent governance more than ever to extract us from this oncoming Great Recession, or Depression, depending on how quickly Americans can return safely to work from the damage done by COVID-19.

Even Treasury Secretary Mnuchin predicts we could reach a Great Depression level unemployment of 25 percent, if we don’t return to work sooner. But studies show that the recession will be prolonged if we return to normal before implementing all the CDC-administrations guidelines of social isolation, testing, and contact tracing until an effective vaccine is created.

“We need to find ways of getting the people who are healthy, who are at lower risk, back to work and then providing the assistance to those who are most at risk, who are going to need to be quarantined or isolated for the foreseeable future,” Minnesota Federal Reserve Governor Kashkari said in a recent CBS Sunday interview.

But such a plan depends on leaders that can lead all Americans, the poor as well as wealthy. Whereas, Jennifer Senior New York Times Op-ed contributor has perhaps described the current administration best: “Vice President Pence may talk about a “whole-of-government approach” to the pandemic, but what we really have is a government of holes,” she said recently.

We will have to slog a long, hard road until we get to either an effective therapy or a vaccine, even with good leadership. It’s hard for me to see a quick, V-shaped recovery because of what we are facing, and now we have so much mixed-messaging coming from Washington that creates even greater uncertainty.

The only competent leadership is in states like New York, California, and Michigan—mostly blue states with Democratic governors. So I ask, why must the response to a pandemic that doesn’t recognize borders be so partisan?

Harlan Green © 2020

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

A New Year’s Wish—Greater Prosperity for All!

Popular Economics Weekly

Although this cannot happen until results of the 2020 presidential election overturn a Republican Senate, I wish for something that President Eisenhower has said best. With higher tax rates that prevailed in the 1950-1970s, corporations in the past chose to spend their wealth on investments for future growth that were tax deductible, rather than pay the government.

Corporate tax rates since then have dropped to a low of 21 percent today.  What have corporations done instead with their record profits? Rutgers Economic historian James historian has been sounding the alarm about the results:

” So corporate profits do not drive economic growth — they’re just restless sums of surplus capital, ready to flood speculative markets at home and abroad. In the 1920s, they inflated the stock market bubble, and then caused the Great Crash. Since the Reagan revolution, these superfluous profits have fed corporate mergers and takeovers, driven the dot-com craze, financed the “shadow banking” system of hedge funds and securitized investment vehicles, fueled monetary meltdowns in every hemisphere and inflated the housing bubble.”

The architects of the Reagan revolution tried to reverse these trends as a cure for the stagflation of the 1970s, said Professor Livingston, but couldn’t. “In fact, private or business investment kept declining in the ’80s and after. Peter G. Peterson, a former commerce secretary, complained that real growth after 1982 — after President Ronald Reagan cut corporate tax rates — coincided with “by far the weakest net investment effort in our postwar history.”

There are many ways to look at the huge wealth disparities suffered by Americans whose household incomes have stagnated since the 1970s, when maximum tax rates were still in the 70 percent range. Americans wanted lower taxes so they could become voracious consumers, rather than pay for government services, which caused public investment to decline at the same time that it became the government’s job to create all the necessary public investments to protect consumers, and invest in their future.

It was public spending that in the past had enabled the building of our modern infrastructure of interstate highways and energy grid, as well as scientific research that led to the moon landing and Internet, for starters.

President George W. Bush’s tax cuts had similar effects between 2001 and 2007: real growth in the absence of new investment. According to the Organization for Economic Cooperation and Development, retained corporate earnings that remain uninvested were 8 percent of G.D.P. in 2000. 

They have reached a record 14 percent of G.D.P. since then, even with a looming $1 trillion annual federal budget deficit.

Populareconomics.com

Sadly, corporations began to spend their growing wealth from lower taxation on themselves and their lobbyists that where able to push through legislation to strengthen their monopolistic consolidation (via deregulation) and labor unfriendly legislation,

It has resulted in the likes of such undemocratic lobbying entities as ALEC, the American Legislative Exchange Council, the advancer of red state policies such as voter ID laws that restrict voting rights, protector of NRA gun rights like Florida’s Stand Your Ground law that protects shooters rather than their victims, and the fossil fuel industry that has no interest in protecting our environment.

The ironic result is that consumers haven’t become wealthier with all the available and cheap consumer goods, haven’t really benefited from higher GDP growth, even with the increased employment we have today in lower-paying service jobs.

The decline in corporate tax rates to the current 21 percent has been disastrous for householders’ wealth and health. It is at the core of America’s record income inequality.

So let us wish for a greater prosperity for all in the New Year!

Harlan Green © 2019

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

In Search of a Moral Economy

Financial FAQs

vox.com

Vermont Senator Bernie Sanders defined a moral economy in a recent Duke University dialogue with the Reverend William Barber II: “A moral economy is one that says, ‘In the wealthiest country in the history of the world, all our people should be able to live with dignity and security.’”

We don’t have to quote the very progressive U.S. Senator to know what a moral economy should look like. One has only to study the history of income and wealth redistribution since 1980 when demand-side economic theory—the Keynesian economics of English Lord John Maynard Keynes that guided Roosevelt’s New Deal—was replaced by so-called supply-side policies—under the conservative but never validated premise that enhancing the wealth of holders of capital with lower taxes and regulations would maximize production, while suppressing the rights and wages of their workers.

History since then has borne out the immorality of what came to be called trickle-down economics—record income inequality in the American workforce. Its rationale came from a diagram on a napkin that then White House Chief of Staff Dick Cheney took to heart as the mantra that guides conservative Republicans even today.

It’s an absurd equation. President Reagan at the time believed that lower taxes would motivate workers to work harder and produce more. The problem was reducing everyone’s taxes would stymie government programs that helped to level the opportunity table. It was the wealthiest that benefited most with reduced personal tax rates that were as high at 92 percent in the Eisenhower administration, which financed the federal highway system, sent us to the moon, and instigated many of the public programs that have made America so productive.

It’s hard to know where this thought process came from. History shows that people work just as hard—sometimes even harder—when they receive a smaller share of their paycheck; especially when a portion goes to insure future benefits like workman’s compensation insurance, social security, Medicare and Medicaid.

But conservatives latched onto several Austrian economists who hated almost any form of authority; so much so that they advocated limiting the powers of democratically elected governments to care for their own citizens. Such was the fear of centralized authority by economists like Fredrick Hayek in his book, The Road to Serfdom, called any regulations to tame capitalism a form of enslavement without recognizing that raw, unregulated capitalism meant serfdom and exploitation of those workers.

Graph: metroscan.com

We do now have a better understanding of how capitalism—the worst economic system, except for all of the others (to paraphrase Churchill)—works for Main Street as well as Wall Street.

It means in part returning to the much more progressive personal tax rates of earlier U.S. administrations—before President Reagan made the immoral tax cuts that even underfunded the military at the time, and initiated the massive federal debt burden we carry today.

All the public programs funded by governments enhance prosperity and productivity in some way—whether it’s to upgrade our infrastructure, fund new health discoveries, strengthen the public insurance and pension programs; and protect the environment, without which no Americans can prosper over the long term.

Then we can afford to protect those most in need. That is what a moral economy looks like.

Harlan Green © 2018

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

Our New 'Drip-Down' Economy

Popular Economics Weekly

Graph: Marketwatch

The results are already in on the current administrations tax and economic policies. They are carrying Ronald Reagan’s trickle-down economy to an even lower level. Let’s call it the ‘Drip-Down Economy’, since none of the benefits will reach the bottom wage-earners. In fact, they will lose money and benefits with the latest economic policies enacted by the Trump administration and Republican congress.

This is when corporate America is expected to post its best quarter of profit growth in seven years, according to Marketwatch’s Ryan Vlastelica. Through 2016 “For the poorest American families, in the lowest fifth of wealth, their net worth shed 29 percent over that period (actually 2007-16). Drops of at least 20 percent were also seen in every income percentile for those in the 80-89.9 percentile, where the decline was a more modest 5 percent. The wealthiest decile, however, saw a jump of 27 percent, as seen in the above chart.”

Nobelist Paul Krugman has chimed in on the same growing inequality topic several times, since the recently passed record tax cuts that finally gave Republicans what they wanted—much lower corporate and small business tax cuts (including real estate LLCs like Trump’s) will further increase the record federal debt:

“Anything that increases the budget deficit should, other things being the same,” says Krugman, “lead to higher overall spending and a short-run bump in the economy (although there’s no indication of such a bump in the first-quarter numbers, which were underwhelming). But if you want to boost overall spending, you don’t have to give huge tax breaks to corporations. You could do lots of other things instead — say, spend money on fixing America’s crumbling infrastructure, an issue on which Trump keeps promising a plan but never delivers.”

The main problem with the new tax bill is it allows an additional $1.5T added to the deficit over ten years, while cutting Medicare and Medicaid spending by almost as much. This is while most S&P 500 corporations have said it doesn’t change their overall spending plans (except for a few token raises).

To rub even more salt into the wounds of working adults, their incomes still aren’t rising above inflation, as has been mostly the case for the past 30 years.

“Average hourly earnings were expected to approach the 3 percent line two years ago when the unemployment rate first started to move below 5 percent, let alone the sub 4 percent rate where it is now,” says Econoday with the accompanying graph.

 Graph: Econoday

The tight labor market is especially evident in what’s often called the “real” unemployment rate. The so-called U6 rate includes people who can only find part-time work, and those who’ve gotten so discouraged stopped looking in the past 12 months. It fell to 7.8. percent in April to drop below 8 percent for the first time since 2006. The labor market almost back to normal, in other words, yet it hasn’t boosted the incomes of most working adults.

So why do we have even worse inequality today with nearly full employment, in which economic benefits are being taken away from not just the lowest income brackets with reduced health care and other benefits, but almost all of us?

All signs say we are nearing the end of the second-longest growth cycle since the Clinton era’s 10-year 1991-2001 boom years, as I said last week; and once again a huge amount of debt has accumulated that ultimately has to be paid for.

These are the conditions that ultimately led to both the Great Depression and Great Recession. Are we to have an even greater recession, or depression—God forbid?

Not unless something is done in the next congress to restore those benefits and rescind most of the tax cuts that are neither benefiting most of US, nor improving the record budget deficit.

Harlan Green © 2018

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

Aren’t Tax Cuts Wonderful?

Popular Economics Weekly

Those were President Trump’s words on the $3.2 trillion in tax cuts enacted by the Republican majority congress before Christmas. “These are the biggest tax cuts in history, even bigger than President Reagan’s.” He’s right that they will be wonderful for corporations, and the highest income earners, but not for most of U.S.

So President Trump will have to show that these cuts continue to create jobs.  He has promised 10 million jobs in the first four years. The numbers are looking good in his first year, the ninth year of this economic recovery from the Great Recession. But one ingredient is lacking; government job creation. Federal government job rolls shrank during Trump’s first 11 months, and history shows that governments have to hire enough to keep up the job numbers, and provide essential services that aid economic growth.

The real problem is tax cuts have never created many jobs. Though accounting for job creation under the various presidential administrations is tricky since business cycles don’t match presidential terms, they provide a superficial look at which tax policies have worked best.

Graph: Calculated Risk

Taxes were raised during President Clinton’s eight years with 20, 966,000 private payroll jobs created. President Reagan comes in second at 14,717,000, but had to raise taxes 11 times to reduce the ballooning deficit caused by the tax cuts. The difference is that Clinton had no recessions during his terms, while Reagan had two during his early years. But taxes were raised in both cases to create more jobs, in part to fund enough government jobs that are needed to create a fully employed economy.

Under Clinton, 1,934,000 public sector jobs (i.e., federal and state) were created, and 1,414,000 under President Reagan, whereas federal jobs declined 14,000 in Trump’s first 11 months, according to the Washington Post.

Graph: Calculated Risk

President Obama actually lost jobs during his first months as president due to the Great Recession, but ended up with 1,937,000 jobs in his first term and 11,756,000 jobs over eight years. And government payrolls actually declined 268,000 during Obama’s eight years due to a number of factors; which was when Republicans took over control of the House in 2010 and cut federal spending when they cared about deficits.

Alas, that is no longer so, as the new tax bill is actually programmed to add $1.5 trillion to the national debt, and President Trump wants to reduce government budgets by 30 percent in 2018.

It will not create the necessary jobs to keep job rolls full and deficits down. Government spending is necessary to fund all the programs that the private cannot or will not, including health care, public infrastructure, education, and R&D that fund future prosperity.

How did we build our highway system, go to the moon, and create the Internet? With government spending. But that was done before 1980 when government became the problem for Republicans and tax cuts the answer.

Now it seems that budget deficits are no longer a problem for Republicans, and President Trump is counting on those 10 million new jobs to justify the tax cuts. He may be off to a good start, but it is the ninth year of this recovery cycle, and the post- World War II record is ten years that included President Clinton’s term.

Harlan Green © 2018

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

More Republican Lawlessness--Greatest Heist in History

Financial FAQs

The Republican’s tax bill has passed, and it is the greatest theft of taxpayer monies in history; even greater than Presidents’ Reagan and Bush I and II tax cuts that began the immense transfer of wealth to the wealthiest in 1980, starving the government of much needed revenues that would keep the federal deficits under control.

It was written by the very lobbyists Republicans and the Trump administration have cultivated since his election. The stench of the DC swamp that Trump promised to drain has become overwhelming.

More than 130 lobbyists have been hired to work in the administration, and 36 of them have blatant conflicts of interest, working on the same issues they were lobbying on, in violation of Trump’s ethics rules, according to Marketwatch economist Jeff Nutting.

Graph: @clairecmc

“This is so bad. We have just gotten list of amendments to be included in bill NOT from our R colleagues, but from lobbyists downtown,” said Missouri Dem Senator Claire McCaskill. “None of us have seen this list, but lobbyists have it. Need I say more? Disgusting. And we probably will not even be given time to read them.”

The bill will cut Medicare and Medicaid benefits by $1.5 trillion, and could add up to $1.5 trillion to the deficit in 10 years according to the CBO. That’s a $3 trillion outright theft from U.S. taxpayers that makes it the biggest heist in history.  It is why the top 1 percent of earners have garnered almost 100 percent of national income created since the end of the Great Recession. 

As I noted in an earlier column, Harold Myerson said in The American Prospect, “The United States now has the highest percentage of low-wage workers – that is workers who make less than two-thirds of the median wage- of any developed nation. Fully 25 percent of all American workers make no more than $17, 576 a year.”

We know what has happened when Republicans tried this taxpayer heist before. President Reagan and congress has to raise taxes 11 times to make up the deficits created by the first ‘trickle-down’ tax cuts in 1981. Two consecutive recessions followed as Fed Chairman Paul Volcker raised interest rates to record levels at the same time.

Then GW Bush did the same in 2001-03, when he cut taxes again while paying for the wars on terror, resulting in the largest federal deficit at the time, and the Great Recession.

This will not generate enough tax revenue to pay for the additional debt, as I noted in an earlier column, so foreign governments and individuals will become more reluctant to invest in U.S. debt as the deficit continues to grow and interest rates rise, while crowding out other, important investments.

It can happen again. It is suicidal economics. The U.S. won’t declare bankruptcy. But it will saddle future generations with an impossible debt load, and prevent much needed public and private investment that would increase productivity and boost growth.

Harlan Green © 2017

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

Why Is Mortgage Lending Still Restricted?

The Mortgage Corner

We can thank the Great Recession for most of it. Banks have become much more conservative, and builders are building approximately 50 percent fewer residences vs. the 2 million housing units at the height of the housing bubble.

And the very Great Recession was in some ways worse than the Great Depression, when FDR’s New Deal created jobs for those that couldn’t find work. Whereas conservative economic ideologies have triumphed since President Reagan under austerity policies (such as the 2011 government shutdown over raising the budget cap), which have restricted government spending at a time when the private sector has refused to reinvest in productive growth, even though corporate profits have soared to record levels as a percentage of GDP.

The Urban Institute has dug even deeper into the causes of tight credit. Since private sector lending dried up after the Great Recession, government GSEs, such as Fannie Mae, Freddie Mac, FHA and VA; all with some form of government guarantee, have had to step in to revive the housing market. So they account for more than 80 percent of all residential lending.

And because the US Treasury completely appropriated all the assets and profits of Fannie and Freddie in 2012, which account for 60 percent of all residential loans, they have imposed additional fees on any but the best credit risks to protect taxpayers. This in effect raised the cost of qualifying, which in turn reduces the pool of eligible home buyers and borrowers.

How much, asks the Urban Institute? “According to our estimates, an additional 1.25 million loans would have been made in 2013 if the cautious standards of 2001, rather than the severe standards of 2013, had been in place. Between 2009 and 2013, the number of “missing” loans grew from 0.50 million to 1.25 million annually, for a total of more than 4 million missing loans over the five years.”

Behind all this data lies another, more sobering fact—the record income inequality that occurred since the 1970s and was the major cause of the Great Recession. Incomes have flowed so fast to the upper income tiers since its end in 2009 that 96 percent of all income gained since then has gone to the top 1 percent.

This is in part because of the stock market rebound and loss of all those homes from the housing bust. It resulted in some $4 trillion in lost housing assets for middle-class homeowners in the main, the main source of their wealth.

It’s a phenomenon named Monopsony by economists, or the increasing monopoly power of Big Business in particular to control labor costs due to marked lack of competition. This is explained in lucid detail by Kate Bahn, an economist at the Center For American Progress, a progressive think tank.

“While overall the labor market looks fairly solid, it’s still lacking on measures of competitiveness that are giving employers outsized ability to set low wages,” says Prof Hahn. “They can reap higher profits by exploiting their workers who don’t feel confident enough to leave their current job in search of a better one. (It’s evidenced) by the historically low rates of people moving across geographies.”

Graph: BLS/Econoday

The Labor Department measures it as the quits rate in their JOLTS report (Job Openings and Labor Turnover Survey) that tabulates the number of Hires and Separations each month. There was a 1 tenth downtick in the quits rate to 2.1 percent, “a subdued reading that points to lack of movement between jobs and lack of wage pull for employees,” said Econoday. The separations rate also fell, down 1 tenth to 3.5 percent.

The gap between openings and hiring first opened up about 2 years ago signaling that employers are having a hard time finding people with the right skills, said Econoday. The current spread between openings and hirings is 429,000, the widest since September. But remember, the US economy is so large that more than 5 million jobs are created and lost per month.

One would think the high number of available jobs means higher wages for all, as employers bid up salaries to attract them, but not so; just for the highly skilled. Those blue collar and service jobs that require less skill don’t have the competitive advantage of higher education and training that would boost their salaries.

And that is why the credit and housing markets have skewed towards the highest income earners, and will remain so, unless more New Deal-type programs (such as promised infrastructure spending, universal health care, stronger labor laws) help to bring back the middle class.

Harlan Green © 2017

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

Who Killed Our Middle Class?

Popular Economics Weekly

It’s becoming clear that our Middle Class—the midsection of U.S. earners and consumers—has shrunk alarmingly. And this is the main reason for the political polarization today that in the words of journalist Christopher Hedges, has driven the Republican Party “insane”.

Our society has become so polarized that Donald Trump needed the support of the Ku Klux Clan, white nationalists, and Vladimir Putin to become President-Elect. Whereas it has been the Middle Class values of probity, honesty and a belief in science, first satirized in Moliere’s Le Bourgeois Gentilhomme, (The Middle Class Gentleman), that has been the stabilizing influence in American politics since WWII.

The main difference between poverty and middle class and between middle class and wealthy, noted one researcher, “is belief in, and planning for, moving up as a working assumption.” A report from the Pew Research Center found that, for the first time since the 1970s, families defined as “middle income” are actually in a minority in the US – squeezed from both ends by an enlarged poverty-stricken group below them, and an enriched group above them.

Graph: Fortune Magazine

This graph shows the shrinkage of those defined as middle class from 1979 to 2014—from 38.8 percent (gray line) to 32.09 percent (blue line), according to a Pew research study. The shrinkage reads like a textbook example of the future that French economist Thomas Piketty predicts for the world in his best-selling, Capital in the Twenty-First Century.

In 1971, there were 80 million households in the US defined as middle income – compared with a combined 52 million in the groups above and below. Now, there are 120 million middle-class families, but 121 million rich and poor – “A demographic shift that could signal a tipping point,” says Pew.

So who or what is at fault for the result; record income inequality last reached in 1929 that led to the Great Depression? We can fault President Reagan, who was first to break the unions with his firing of all federally employed Air Traffic Controllers that belonged to PATCO, the traffic controllers union.

Or conservatives’ espousal of the Reagan motto, “government is the problem,” which caused massive downsizing of government regulation, as well as regulators, and the ensuing de-regulation of whole industries, such as the airlines, telecommunications, and financial markets.

But the truth may be much closer to the present—in fact, from the Presidency of Bill Clinton. For it was President Clinton who veered so far to the right in his 1966 reelection campaign (thanks to Republican strategist Dick Morris) that he preempted the Republican platform by continuing to deregulate the financial markets with the repeal of the Glass-Steagall Act that separated FDIC depositor-insured banking from higher risk investment banking, financing the addition of 100,000 more police to combat the drug epidemic, and downsizing poverty programs with welfare reforms that took tens of thousands off the welfare rolls, which required them to take low-paying menial jobs to receive even a limited amount of financial support.

The Republicans, as Chris Hedges said, were thus driven politically insane into the waiting arms of Trump's rascist, anti-immigrant voting block. President Clinton had preempted the bread and butter issues (such as law and order, smaller government, family) that were once their own, which led to formation of the Tea Party, and a new political civil war declared on Big Government ruled by the northern elite that had ruled for so long. It was our 150 year-old Civil War taking a new form, in other words, but with almost the same mix of combatants.

Hillary Clinton, unfortunately, wasn’t able to break away from the Clinton mix of conservative economics (e.g.,balancing the federal budget) and social liberalism that resulted. The culture wars against abortion, civil rights, and welfare (including Obamacare) were the only issues the Republican Party had left. The result was and is President-elect Trump, an ideologist of neither party. Trump is an advocate of no government, where possible, who can count on the loyalty of only his most trusted associates and family.

Sound familiar? It is politics of the tribe, the close=knit family, held by gangsters and oligarchs, with everyone else to be treated with obfuscation and outright deceptions.

Even more significant is the record inequality since 1979, resulting from the loss of those policies that built up the middle class after WWII, policies from the New Deal, such as social security and Medicare, entitlements, unionization of whole industries, leading to the unparalleled prosperity of the 1950s and 60s.

So let us hope a majority of our politicians realize, as a majority of Americans still do, that our prosperity and stability rest on a middle class that hasn't given up hope for a better life.

Harlan Green © 2016

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

What, Now A Trump Recession?

Popular Economics Weekly

Economists are already warning that if President-elect Trump’s policies are enacted, such as initiating trade wars, or the wrong tax cuts, or even cutting back on social security and Medicare benefits, we could see another recession, similar to the Great Recession that occurred during GW Bush’s term.

Whether his policies can be enacted depends on several things, including his unpredictable behavior, and perhaps the outcome of his November 28 RICO trial in San Diego for running Trump University as a criminal enterprise. Judge Gonzalo Curiel has just ruled that Trump’s inflammatory campaign statements can be admitted as evidence in his trial.

The Bush recession was caused by too lax regulations that caused the housing bubble (by allowing excessive bank leverage), tax cuts that increased the budget deficit while we were fighting two wars, and then Greenspan’s Federal Reserve decision to raise interest rates 16 consecutive times to bust the housing bubble.

It’s terrifying what President-elect Trump will be able to do when he controls all three branches of government (as soon as he appoints a ninth Supreme Court Justice) and carries out his campaign pledges.

Carrying out his pledge to deport all aliens when there is already an outflow of immigrants will devastate agriculture, construction, and any other industry that relies on low-cost labor, for instance.

His promise to ‘fix’ Obamacare (or abolish it outright) will endanger health benefits for the 20 million now covered by it. This makes healthcare much more expensive, since it puts the uncovered back in Emergency Room care for serious illnesses, which puts the cost of their care back on the hospitals.

And as the New York Times reports, “This is going to be a president who will be the biggest regulatory reformer since Ronald Reagan,” Stephen Moore, one of Mr. Trump’s economic advisers said in an interview on Wednesday. “There are just so many regulations that could be eased.”

It could be everything from repeal of Dodd-Frank, the successor to the Glass Steagall Act that protected federally insured depositors from risky investment banking, to repealing environmental regulations that combat global warming, and not only abolishing Obamacare, but the current Medicare system as House Speaker Paul Ryan is threatening to do.

Graph: Marketwatch

And we are reaching full employment levels, which will surely mean the Fed will begin to raise short term rates in December. This is happening already in the bond markets, as evidenced by rising longer term interest rates in anticipation of a soaring budget deficit, if Trump’s plan to increase both infrastructure and military spending while cutting taxes is implemented.

The central issue, though, maybe Trump’s misbehavior in dissing those elements that made American great. “Trump’s bigotry, dishonesty and promise-breaking will have to be denounced,” said David Brooks today. “We can’t go morally numb. But he needs to be replaced with a program that addresses the problems that fueled his ascent.
“After all, the guy will probably resign or be impeached within a year. The future is closer than you think.”

But President-elect Trump’s destruction of almost all decency in his grab for overwhelming power has let that Genie of discontent out of the bottle. We know what happened in the 1930s and even earlier when such ruthless tactics were used.

Harlan Green © 2016

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

The Clinton Growth Presidency

Popular Economics Weekly

It’s remarkable. Donald Trump chose Detroit to make his economic speech, where he accused the Clintons of causing Detroit’s employment problems with their trade policies.

Is he kidding? The Detroit Big Three automakers didn’t lose jobs because of trade pacts, but because of the Great Recession. They built the wrong size gas guzzling hogs at a time that consumers wanted smaller cars, so it was a government bailout that saved them. Trade pacts have hurt some workers, but benefited many more by bringing in new export-oriented, high tech jobs.

He is shooting at the wrong targets. He wants to bring back the old economy via a trade war with China, abolishing the minimum wage, suspending government regulations, and lowering tax rates; even the inheritance tax that only affects those with $5 million plus to pass on. But he says nothing about income inequality or the budget deficit, which can only be cured by concentrating on developing a new economy that brings in new jobs based on new technologies and a new environmental awareness.

It won’t do any good to accuse Obama of “failed economic policies” because those blue collar workers lost their jobs in the Midwest rust-belt states. Some 10,800,000 million jobs have been created during the Obama recovery years. President Obama is now in third place (purple line in graph) behind President Reagan in second (per yellow line) with 14,735,000 jobs created, and President Clinton (blue line) in first place with 21,000,000 jobs created during his 8 years.

Graph: Calculated Risk

Trump also proposed lowering the maximum corporate tax rate to 15 percent that he said would boost jobs and investments. Problem is, corporations have already hoarded some $4.5 trillion in cash and cash equivalent securities from their record profits they aren’t spending on anything but higher CEO salaries and stock buybacks that enrich corporate execs and their stockholders even more.

What about the slow economic recovery? It’s mostly due to poor economic conditions worldwide, such as caution due to Britain’s Brexit withdrawal, China’s slowdown, and plunging commodity prices that have hurt developing countries. But it’s also due to misplaced austerity policies that have restricted new investment in favor of cutting public spending in Europe and the U.S. because of the fear of ballooning budget deficits, when just the opposite is needed—investments that will increase jobs, and so tax revenues to pay down those deficits.

We really have only one model of successful deficit reduction since WWII—Bill Clinton’s. That is why Hillary has mentioned Bill’s record of record growth that created the most jobs of any presidency since WWII, and 4 years of actual budget surpluses. It was due primarily to defense spending cuts as the Soviet Union collapsed and a higher maximum tax rate (40 percent). The economy grew for 10 years—from 1991 to 2001, before the do-com bust and short recession that ended on November 2001, just 2 months after 9/11.

So Hillary proposes to equalize income inequality with a higher minimum tax rate of at least $12 per hour, and would support $15 per hour in higher priced regions, while raising taxes and closing tax loopholes of the wealthiest to pay for tuition-free public colleges, universal health care and paid maternity leave—something that the developed countries and most developing countries already have.

Hillary’s economic platform should enable US to catch up with what the rest of the world provides for their citizens, in other words.

Harlan Green © 2016

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

Why Did Michael Moore Invade Those Countries In Film, "Where Do We Invade Next?"

The answer is so simple, and sad.  Mr. Moore’s latest eye-opening documentary, “Where To Invade Next?” visits countries that have learned from, and adopted our laws and policies, policies that no longer exist in the U.S. of A.; such as tuition-free public colleges (Slovenia), prison systems that rehabilitate rather than punish (Norway), where drug use is not a crime (Portugal), and 8 weeks paid vacation is the law (Italy).

His film shows America on the way to becoming a Third World country, somewhat lost in the last century and falling behind other developed countries and many developing countries, in caring for our citizens.

Perhaps the most moving segment was that on women’s rights. We who were not able to pass the Equal Rights Amendment that prevented discrimination against women in the 1970s, were imitated in countries like Iceland with the first democratically elected President in 1980, and where women’s rights are enshrined in their constitution (Tunisia, a Muslim country).

For some reason, beginning in the 1970s, these countries began to give more rights to their citizens, while America, the world’s oldest democracy, took them away.  Germany has enshrined collective bargaining in their corporations, where 50 percent of the governing board has to be made up of its employees, whereas many states in the U.S. have either banned collective bargaining, or the paying of dues to support collective bargaining, in 25 right to work states. 

And Icelandic corporations must have at least 40 percent of each gender on their boards, which was made law after 2008 and the collapse of their banking system.  The 3 largest banks all filed for bankruptcy, and some of their all-male executives went to jail, the result of “excessive, testosterone-driven risk taking” said a commentator on their trials.  The result was a mass revolt by Iceland’s women that demanded a greater role in the running of their own country.

Michael Moore interviewed Iceland’s special prosecutor for financial crimes, Olafur Hauksson, who said he had learned his prosecution techniques from Bill Black, a U.S. special prosecutor who had convicted bank executives resulting from our Savings and Loan scandal.  But no U.S. executive has been prosecuted since, much less convicted, for their excessive risk-taking and disregard of financial regulations during the subprime meltdown and Great Recession.

Why have such more modern democracies passed us by?  Moore hints that maybe they have learned from their horrific past of religious and world wars to care better for their citizens.  But the U.S. hasn’t learned from the biggest stain on our democracy—slavery.  We still enslave mostly African Americans in our prisons, thanks to the war on drugs initiated by President Nixon, after President Johnson had signed the Civil Rights Act that finally gave Blacks the same rights as other American citizens.

While crime rates have gone down, the number of people incarcerated has gone up in U.S. prisons. According to Human Rights Watch, 2.3 million people were incarcerated as of 2007. The United States has the largest incarceration rate in the world with a staggering 762 per 100,000 residents. Compare this to the U.K. whose rate is 152 per 100,000 residents, or Canada whose rate is 102.

Graph: Policy.mic

So many prisoners create a large workforce. According to truth-out and the Left Business Observer, “the federal prison industry produces 100 percent of all military helmets, ammunition belts, bullet-proof vests, ID tags, shirts, pants, tents, bags, and canteens. Along with war supplies, prison workers supply 98 percent of the entire market for equipment assembly services; 93 percent of paints and paintbrushes; 92 percent of stove assembly; 46 percent of body armor; 36 percent of home appliances; 30 percent of headphones/microphones/speakers; and 21 percent of office furniture. Airplane parts, medical supplies, and much more: prisoners are even raising seeing-eye dogs for blind people.”

And why do we no longer have tuition-free public colleges?  It perhaps began when Ronald Reagan was elected Governor of California in 1966, UC Berkeley was a hotbed of protests, and tuition-free for California residents. 

Governor Reagan didn’t believe such an education should be free for rebellious college students.  His most famous action of that time was the firing of the UC Berkeley Chancellor Clark Kerr for not following his orders to ban the student protests. Reagan vowed to “clean up that mess in Berkeley,” warned audiences of “sexual orgies so vile that I cannot describe them to you,” complained that outside agitators were bringing left-wing subversion into the university, and railed against spoiled children of privilege skipping their classes to go to protests, according to Dissent Magazine, describing that time.

            “He cut state funding for higher education, laid the foundations for a shift to a tuition-based funding model, and called in the National Guard to crush student protest, which it did with unprecedented severity. But he was only able to do this because he had already successfully shifted the political debate over the meaning and purpose of public higher education in America.”

California was becoming more conservative, in other words.  Instead of seeing the education of the state’s youth as a patriotic duty and a vital weapon in the Cold War, Reagan cast universities as a problem in and of themselves—“both an expensive welfare program and dangerously close to socialism”. He even argued for the importance of tuition-based funding by suggesting that if students had to pay, they’d value their education too much to protest.

Reagan’s assault against higher education was only the beginning of the neo-cons attack on our educational system.  Their real purpose was an attempt to dumb down the electorate by crippling our public school and university systems.  The fewer that were well educated meant the fewer could challenge the power of those that supported the so-called Reagan Revolution.

So there is a reason our educational system ranks lower than 20 or more countries in the world.  M Moore visited Finland to learn why they are ranked #1 in the world, according to the Programme for International Student Assessment (PISA), “a standardized test given to 15-year-olds in more than 40 global venues.”

He interviewed teachers, students, and education officials. They all said their students’ welfare came first, and standardized tests should be abandoned.  They had learned from our educational system that once upon a time allowed more free time for social interaction, little or no homework, when music and art were an important part of our educational curriculum from elementary school onward.

            Perhaps that is the saddest revelation of Michael’s film.  How we have come to undervalue the lives of so many American citizens, including our own women and children.

Harlan Green © 2016

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