Tuesday, February 10, 2009

debacle or catastrophe?

i watched president obama's press conference last night as he put forth his case for the economic stimulus package currently before congress. several things came to mind.

first of all, with regard to present situation which he inherited. make no mistake, we did not just get into this mess in september, or in the last eight years or sixteen years even. we have been digging this economic hole with a variety of tools for at least the last forty years. this is not solely the result of mismanagement under the bush administration or the clinton administration.

this goes back beyond the "reagan revolution." if you recall, one of reagan's campaign issues was a faltering economy. gasoline prices at the pump had nearly tripled over a seven year period, after well over a decade of relative stability. mortgage rates were climbing, home constuction was suffering, manufacturing plants were closing and american jobs were being shipped out of the country. prices were rising and incomes were stagnant. sound familiar?

so what was the solution then? remember that massive federal deficit that reagan campaigned against, 60 billion dollars in october 1980? according to reagan we needed to balance the budget, increase spending on our national defense and cut taxes so that businesses can afford to invest.

did it work? well, in a word, no. defense spending was increased and taxes were cut, especially for the higher incomes. the budget, however, was not balanced. in fact, the federal budget deficit ballooned under the conservative ronald reagan to then unprecedented heights. the budget deficit when reagan left office was three times higher than what he had inherited. what did the money reagan borrowed buy us? more manufacturing jobs? not hardly. half of all u.s. manufacturing jobs have been exported to "emerging economies."

it's a little bit funny, in light of the facts, to watch the republicans in congress posturing as if they are the guardians of american economic health. every republican administration since 1969 has left our country deeper in debt, and with fewer wealth producing manufacturing jobs than before. one major difference between the current economic mess and the "great depression" is that for the forty years prior to the great depression, our economy had seen a steady increase in manufacturing jobs, i.e., jobs that create wealth by producing a product that people buy, whereas the forty years preceding our current economic debacle have seen the greatest decrease in american manufacturing since the industrial revolution.

to suggest that present crisis can be solved by essentially the same thinking that got us into this hole is absurd. while everyone likes the sound of tax cuts, and it would be wonderful to have a balanced budget and not be mortgaging our grandchildren's future, there is no available evidence that tax cuts create jobs. the simple fact is, jobs are created when people (or goverments) spend. to cut spending from the stimulus package is to render it completely impotent. of course, that what the republicans (following rush limbaugh) want... to see president obama fail, regardless of the effect on our country.

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