K
Kickin' Ass and Takin' Names
Guest
Checks for $600 Won't Fix Our Economy
By Jim Hightower, Hightower Lowdown
Posted on March 28, 2008, Printed on March 28, 2008
http://www.alternet.org/story/80583/
Washington was excited. The media establishment applauded. Wall Street
smiled. Somewhere, a bluebird of happiness chirped.
In a celebrated display of bipartisanship, both parties joined hands
last month to pass a whopper of a stimulus package. Cash, they crowed,
would soon be flowing. "We're sending a $600 check to you, and $300 to
you, and $1,200 to couples, and...well, almost everyone will get
money! It's manna straight from heaven to get our big ol' economy high-
ballin' down Prosperity Highway," they exulted.
"Not that there's anything wrong with our economy," they quickly
added. "No, no," said the self-congratulatory stimulators.
"Everything's fine. Really fine. Really."
In his State of the Union peroration, Bush insisted, "Americans can be
confident about our economic growth." Treasury Secretary Henry Paulsen
chimed in, "The U.S. economy is fundamentally strong." Buckshot Cheney
came out of his bunker to assert that America has a "solid platform"
for continued economic growth. And Condi Rice assured world leaders
that our economy is "resilient, its structure sound, and its long-term
economic fundamentals are healthy."
Hmmm. If the basics of the economy are in such great shape, why would
we need all this cheerleading by the wizards in charge? You don't have
to be in Who's Who to know what's what. They can whoop it up 'til
they're hoarse, but for most Americans, the kitchen-table fundamentals
are nothing to cheer about. As a fellow in Missouri recently said to
me, "If these are good times, why aren't I having one?"
While it's probably rude of me to look a gift stimulus in the mouth,
this one seems seriously flawed. The feeble philosophy behind it is
the same that shaped George W's insulting comment after 9/11, when he
declared that the highest civic role of the American people is to "go
shopping." Come on, George, America can't shop its way to greatness,
nor will this onetime, government-funded shopping spree lead us to a
sound economy.
Follow the money: Let's say your check arrives and you drive straight
to Wal-Mart to pick out some new clothes, an electronic gizmo you've
been wanting, and a couple of toys for the kids. Pay your $300 to $600
and--listen!--you can almost hear the economic machinery kicking into
gear, stimulated by your purchase of products.
But wait--we make very little of that stuff in America anymore. Those
machinery noises are coming from China, where Wal-Mart and most other
retailers have their goods made. Thus, our leaders are shipping
billions of dollars from our public treasury to you and me, asking us
to spend it in an economy that's based on further enriching Wal-Mart's
wealthiest investors and further stimulating China's massive export
economy. How sound is that? Wal-Mart and China profit--but we don't.
The real economy
You wouldn't know it if you depend on the conventional media for your
news, but the stock market is not the economy, and economic growth is
not the same as economic health. For years, stock prices have been
buoyant and the Gross Domestic Product (GDP is essentially the total
wealth generated by our economy each year) has been growing like a
teenage boy, increasing by more than a third from 2001 to 2007. These
two indicators have become the Holy Duo for defining American
prosperity, and since they have been ascendant, the country's
comfortable economic establishment has happily assumed that all is
well.
These elites are clueless about the real economy. Take Alan Binder, a
former member of the Federal Reserve Board and a policy confidant of
several Democrats, including the Clintons. Earlier this year, this
high-powered thinker was baffled by polls showing widespread economic
pessimism. "People are more sour about the economy than the data would
seem to warrant," he mused.
Alan, Alan, Alan. For the vast majority of folks, the data that matter
are the statistics telling them whether their in-come is keeping up
with their out-go. Macro numbers like GDP and the Dow Jones average
don't put food on the table, gas in the tank, or money in the bank.
Washington's plutocratic policies--which knock down wages, outsource
jobs, prevent unionization, deny health care, usurp worker and
consumer rights, loot pensions, etcetera--have deliberately
"decoupled" the benefits of growth from any notion of shared
prosperity. Even though we've all worked harder and longer to produce
more wealth than ever in America, the GDP's rising tide has not lifted
most boats--and many boats have been swamped. It's not irrational
anxiety that's fueling people's glumness--it's reality.
This economic distress has grown dramatically under Bush & Company,
but the current administration did not create it. Since the mid-1970s,
the richest one-tenth of 1% of Americans have seen their wealth jump
astronomically, and others in the top 1% have also done well. The next
rung of families, those in the top 10%, has done less well, but has
still enjoyed real income gains. Everyone else--the remaining 90% of
the American people--have not even kept up with inflation, instead
experiencing a drop in their real income.
The best year for the bottom 90percenters was 1973, when the average
taxpayer reported $33,000 in income (in today's dollar value). By
2005, that average had fallen by about $4,000. In other words, after
three decades of explosive growth in GDP, America is prosperous, but
Americans are not! That un-American imbalance is the most important
fundamental of our economy.
Former Labor Secretary Robert Reich points out that middle-class
families have tried to cope by straining themselves. First, as the
wages of working men fell (the median income for a man in his 30s
today is 12% below that for a man the same age three decades ago),
women entered the workforce in big numbers. Today, nearly 70% of moms
with school-age kids work outside the home, almost double the number
in 1970. Reich also notes that there's been a rise in families that
split the work day in half--one parent is at work while the other is
on child duty, then they switch. They're known as "DINS": double
income, no sex.
Second, families have tried to cope by putting in longer hours. We now
typically work two weeks more each year than people did 30 years ago
(also, Americans today average about a month and a half more on the
job each year than our European counterparts).
There are only so many moms and so many hours to throw at the problem,
however, so the past decade has seen the surge of a third way of
coping with declining income: debt. Banks and other lenders gleefully
promoted this by flooding Americans with promises of easy money--a
steady shower of credit cards, subprime mortgages, home-equity loans,
payday loans, car loans, student loans, etc. Further contributing to
the growth in family debt, both health-care costs and the number of
Americans without insurance coverage have skyrocketed, and people are
having to put their medical bills on their credit cards. Overall,
consumer debt has risen nearly 90%in the past 10 years and now tops
$2.5trillion.
It is this tsunami that is presently crashing down on our economic
shores.
This is why nearly six in 10 Americans told CNN pollsters in January
our country is not headed for recession--it's already in one. Also
this is one big reason that 75% told New York Times pollsters in that
same month that America is on the wrong track.
Recovery, not stimulus
Washington's "stimulus" package is a political fig leaf to cover our
leaders' bankruptcy of ideas, gumption, courage, and...well,
leadership. OK, $168 billion is a big leaf, but throwing these
government checks around (including some $50 billion that Bush
insisted on doling out to corporations) will not create middle-class
jobs, stimulate new American production, or address the fundamental
imbalance in our economy.
Even as Congress was passing its feel-good stimulator last month, the
Labor Department announced that the U.S. lost another 279,000
manufacturing jobs in 2007, reducing that key middle-class job sector
to less than 10% of America's workforce for the first time since such
records have been kept. Around the same time, Wall Street banks
announced plans to eliminate some 40,000 middle-class jobs, and
Detroit automakers said they would cut tens of thousands of workers
this year, replacing them with new hires paid only about $14 an hour--
half of the previous wage.
Pundits and politicos are now decrying the reckless, unregulated
financial scheming that fueled the collapse of the subprime-mortgage
industry. These schemes cost 1.6 million people their homes last year,
and more will lose homes this year. Politicians have proposed various
band-aid bailouts, but our leaders don't want us to ask the most
elementary question: Why is there such a huge demand in this wealthy
country for these rigged loans? The key factor is the loss of family-
wage jobs.
Likewise, if there really was a solid, secure, middle-class base under
our economy, America's financial and political elites would not now be
mailing out government checks in a desperate effort to goose up
consumer spending. But whole chunks of the middle class have become
the working poor, unable to sustain the economy. In short, the
fundamentals are not sound.
What America needs is not a stimulus for the false economy of stock-
price enrichment for the top 10% and frantic, debt-fueled consumerism
for everyone else. This is the time to make a sharp break from the
"tinkle-down" economic policies of the past 30 years, turning instead
to "percolate up" economics focused intently on rebuilding America's
middle class and restoring America's unifying ethic of the common
good.
This means redirecting public funding to the public good. Rather than
corporate boondoggles, tax giveaways, privatization scams, ideological
wars, and inept occupations, let's invest not only in America, but in
Americans.
This approach is in the proud footsteps of such public pursuits as the
Erie Canal, Lincoln's Homestead Act, FDR's New Deal (rural
electrification, the Conservation Corps, WPA projects, and so much
more), Truman's GI Bill, and Ike's interstate highway system. These
worthy undertakings produced not only geometric financial returns for
every dollar invested but also generated good jobs, tapped America's
can-do spirit, ignited people's sense of optimism, and created assets
and benefits that still serve us today.
Think of what could be done if we treated people not as consumers but
as producers! Consider just two areas of need that beg for boldness in
harnessing people's energy, ingenuity, and gumption:
INFRASTRUCTURE. As we've often reported in the Lowdown, one of the
most damning failures of our political leadership at all levels has
been its craven willingness to let America's house crumble. From
collapsing levees to exploding underground pipes, a dangerous
deterioration has spread through water systems, roads, schools,
airports, the electric grid, ports, public transit, and other basics,
reaching into practically every community.
It's time to go to work. Three years ago, the American Society of
Civil Engineers calculated that we're one and a half trillion dollars
in arrears on needed infrastructure repairs. That doesn't count the
multibillion-dollar backlog for repairs in our public parks, or such
new needs as bringing our nation's internet and phone service up to
the superior standard of Europe and Japan.
THE GREEN ECONOMY. Here's our future--if we're smart enough to grab
it. Rather than wait on the energy fairy to end America's oil
addiction, let's do it ourselves.
One group in the lead is Apollo Alliance, an exciting coalition of
enviros, labor organizers, entrepreneurs, community leaders, and
others pushing aggressively for policies that link energy independence
with new jobs. The alliance is named after the Apollo moonshot mission
launched by John F. Kennedy in 1961. The subsequent moon landing
excited the country, but this national undertaking would be even
bigger and more exciting. Rather than being an event to be watched on
TV, this clean-energy revolution would enlist people directly to
achieve the goal. Making every home and building in America energy
efficient and developing clean, high-speed rail networks between
population centers would employ millions of people at every skill
level. Backyard tinkerers and computer whizzes could develop and
improve technologies, local businesses would be able to pioneer new
products and services, union apprentice programs would train workers,
and inner-city poor people would be recruited into jobs that can
provide a career path out of poverty.
Yes, this would take an up-front investment, but the payoff is
staggering. Take just one Apollo idea: a plan to create a Clean Energy
Corps. One of the corps' functions would be simply to weather-strip
the homes of low-to-moderate-income folks. There's already a federal
program to do this, but it's so underfunded, understaffed, and
inactive that it has reached only a tiny fraction of the 30 million
eligible homes.
To retrofit them all over a decade would cost about $45 billion, but
look at what we'd get for that sum. Some 225,000 people from the
communities where the work is done would be earning and spending
paychecks there, thus giving an added boost throughout the local
economy. Meanwhile, the weather-stripping would save about $400 per
year in energy use by each home, a national savings in energy costs
over the next decade that would total an estimated $120 billion. All
that for an investment of only about a fourth of Washington's "go
shopping" stimulus.
The Powers That Be can no longer pretend that such a grassroots
recovery program is the sort of big-government undertaking that's
unaffordable. After all, they've already frittered away at least a
couple of trillion dollars to destroy, occupy, and try to rebuild
Iraq, and now they're dumping $168 billion in a fizzler of a stimulus
that completely ignores the fundamental need for a shared prosperity.
If you hear your Congress critter, presidential candidates, or any
other politicians mouthing off about how the underlying structure of
our economy is sound, send 'em a copy of this issue--and tell them to
get to work on a recovery program for all Americans, one that helps us
recover our middle class and our democratic values.
From "The Hightower Lowdown," edited by Jim Hightower and Phillip
Frazer, March 2008. Jim Hightower is a national radio commentator,
writer, public speaker and author of the new book Swim Against the
Current: Even a Dead Fish Can Go With the Flow. (Wiley, March 2008)
By Jim Hightower, Hightower Lowdown
Posted on March 28, 2008, Printed on March 28, 2008
http://www.alternet.org/story/80583/
Washington was excited. The media establishment applauded. Wall Street
smiled. Somewhere, a bluebird of happiness chirped.
In a celebrated display of bipartisanship, both parties joined hands
last month to pass a whopper of a stimulus package. Cash, they crowed,
would soon be flowing. "We're sending a $600 check to you, and $300 to
you, and $1,200 to couples, and...well, almost everyone will get
money! It's manna straight from heaven to get our big ol' economy high-
ballin' down Prosperity Highway," they exulted.
"Not that there's anything wrong with our economy," they quickly
added. "No, no," said the self-congratulatory stimulators.
"Everything's fine. Really fine. Really."
In his State of the Union peroration, Bush insisted, "Americans can be
confident about our economic growth." Treasury Secretary Henry Paulsen
chimed in, "The U.S. economy is fundamentally strong." Buckshot Cheney
came out of his bunker to assert that America has a "solid platform"
for continued economic growth. And Condi Rice assured world leaders
that our economy is "resilient, its structure sound, and its long-term
economic fundamentals are healthy."
Hmmm. If the basics of the economy are in such great shape, why would
we need all this cheerleading by the wizards in charge? You don't have
to be in Who's Who to know what's what. They can whoop it up 'til
they're hoarse, but for most Americans, the kitchen-table fundamentals
are nothing to cheer about. As a fellow in Missouri recently said to
me, "If these are good times, why aren't I having one?"
While it's probably rude of me to look a gift stimulus in the mouth,
this one seems seriously flawed. The feeble philosophy behind it is
the same that shaped George W's insulting comment after 9/11, when he
declared that the highest civic role of the American people is to "go
shopping." Come on, George, America can't shop its way to greatness,
nor will this onetime, government-funded shopping spree lead us to a
sound economy.
Follow the money: Let's say your check arrives and you drive straight
to Wal-Mart to pick out some new clothes, an electronic gizmo you've
been wanting, and a couple of toys for the kids. Pay your $300 to $600
and--listen!--you can almost hear the economic machinery kicking into
gear, stimulated by your purchase of products.
But wait--we make very little of that stuff in America anymore. Those
machinery noises are coming from China, where Wal-Mart and most other
retailers have their goods made. Thus, our leaders are shipping
billions of dollars from our public treasury to you and me, asking us
to spend it in an economy that's based on further enriching Wal-Mart's
wealthiest investors and further stimulating China's massive export
economy. How sound is that? Wal-Mart and China profit--but we don't.
The real economy
You wouldn't know it if you depend on the conventional media for your
news, but the stock market is not the economy, and economic growth is
not the same as economic health. For years, stock prices have been
buoyant and the Gross Domestic Product (GDP is essentially the total
wealth generated by our economy each year) has been growing like a
teenage boy, increasing by more than a third from 2001 to 2007. These
two indicators have become the Holy Duo for defining American
prosperity, and since they have been ascendant, the country's
comfortable economic establishment has happily assumed that all is
well.
These elites are clueless about the real economy. Take Alan Binder, a
former member of the Federal Reserve Board and a policy confidant of
several Democrats, including the Clintons. Earlier this year, this
high-powered thinker was baffled by polls showing widespread economic
pessimism. "People are more sour about the economy than the data would
seem to warrant," he mused.
Alan, Alan, Alan. For the vast majority of folks, the data that matter
are the statistics telling them whether their in-come is keeping up
with their out-go. Macro numbers like GDP and the Dow Jones average
don't put food on the table, gas in the tank, or money in the bank.
Washington's plutocratic policies--which knock down wages, outsource
jobs, prevent unionization, deny health care, usurp worker and
consumer rights, loot pensions, etcetera--have deliberately
"decoupled" the benefits of growth from any notion of shared
prosperity. Even though we've all worked harder and longer to produce
more wealth than ever in America, the GDP's rising tide has not lifted
most boats--and many boats have been swamped. It's not irrational
anxiety that's fueling people's glumness--it's reality.
This economic distress has grown dramatically under Bush & Company,
but the current administration did not create it. Since the mid-1970s,
the richest one-tenth of 1% of Americans have seen their wealth jump
astronomically, and others in the top 1% have also done well. The next
rung of families, those in the top 10%, has done less well, but has
still enjoyed real income gains. Everyone else--the remaining 90% of
the American people--have not even kept up with inflation, instead
experiencing a drop in their real income.
The best year for the bottom 90percenters was 1973, when the average
taxpayer reported $33,000 in income (in today's dollar value). By
2005, that average had fallen by about $4,000. In other words, after
three decades of explosive growth in GDP, America is prosperous, but
Americans are not! That un-American imbalance is the most important
fundamental of our economy.
Former Labor Secretary Robert Reich points out that middle-class
families have tried to cope by straining themselves. First, as the
wages of working men fell (the median income for a man in his 30s
today is 12% below that for a man the same age three decades ago),
women entered the workforce in big numbers. Today, nearly 70% of moms
with school-age kids work outside the home, almost double the number
in 1970. Reich also notes that there's been a rise in families that
split the work day in half--one parent is at work while the other is
on child duty, then they switch. They're known as "DINS": double
income, no sex.
Second, families have tried to cope by putting in longer hours. We now
typically work two weeks more each year than people did 30 years ago
(also, Americans today average about a month and a half more on the
job each year than our European counterparts).
There are only so many moms and so many hours to throw at the problem,
however, so the past decade has seen the surge of a third way of
coping with declining income: debt. Banks and other lenders gleefully
promoted this by flooding Americans with promises of easy money--a
steady shower of credit cards, subprime mortgages, home-equity loans,
payday loans, car loans, student loans, etc. Further contributing to
the growth in family debt, both health-care costs and the number of
Americans without insurance coverage have skyrocketed, and people are
having to put their medical bills on their credit cards. Overall,
consumer debt has risen nearly 90%in the past 10 years and now tops
$2.5trillion.
It is this tsunami that is presently crashing down on our economic
shores.
This is why nearly six in 10 Americans told CNN pollsters in January
our country is not headed for recession--it's already in one. Also
this is one big reason that 75% told New York Times pollsters in that
same month that America is on the wrong track.
Recovery, not stimulus
Washington's "stimulus" package is a political fig leaf to cover our
leaders' bankruptcy of ideas, gumption, courage, and...well,
leadership. OK, $168 billion is a big leaf, but throwing these
government checks around (including some $50 billion that Bush
insisted on doling out to corporations) will not create middle-class
jobs, stimulate new American production, or address the fundamental
imbalance in our economy.
Even as Congress was passing its feel-good stimulator last month, the
Labor Department announced that the U.S. lost another 279,000
manufacturing jobs in 2007, reducing that key middle-class job sector
to less than 10% of America's workforce for the first time since such
records have been kept. Around the same time, Wall Street banks
announced plans to eliminate some 40,000 middle-class jobs, and
Detroit automakers said they would cut tens of thousands of workers
this year, replacing them with new hires paid only about $14 an hour--
half of the previous wage.
Pundits and politicos are now decrying the reckless, unregulated
financial scheming that fueled the collapse of the subprime-mortgage
industry. These schemes cost 1.6 million people their homes last year,
and more will lose homes this year. Politicians have proposed various
band-aid bailouts, but our leaders don't want us to ask the most
elementary question: Why is there such a huge demand in this wealthy
country for these rigged loans? The key factor is the loss of family-
wage jobs.
Likewise, if there really was a solid, secure, middle-class base under
our economy, America's financial and political elites would not now be
mailing out government checks in a desperate effort to goose up
consumer spending. But whole chunks of the middle class have become
the working poor, unable to sustain the economy. In short, the
fundamentals are not sound.
What America needs is not a stimulus for the false economy of stock-
price enrichment for the top 10% and frantic, debt-fueled consumerism
for everyone else. This is the time to make a sharp break from the
"tinkle-down" economic policies of the past 30 years, turning instead
to "percolate up" economics focused intently on rebuilding America's
middle class and restoring America's unifying ethic of the common
good.
This means redirecting public funding to the public good. Rather than
corporate boondoggles, tax giveaways, privatization scams, ideological
wars, and inept occupations, let's invest not only in America, but in
Americans.
This approach is in the proud footsteps of such public pursuits as the
Erie Canal, Lincoln's Homestead Act, FDR's New Deal (rural
electrification, the Conservation Corps, WPA projects, and so much
more), Truman's GI Bill, and Ike's interstate highway system. These
worthy undertakings produced not only geometric financial returns for
every dollar invested but also generated good jobs, tapped America's
can-do spirit, ignited people's sense of optimism, and created assets
and benefits that still serve us today.
Think of what could be done if we treated people not as consumers but
as producers! Consider just two areas of need that beg for boldness in
harnessing people's energy, ingenuity, and gumption:
INFRASTRUCTURE. As we've often reported in the Lowdown, one of the
most damning failures of our political leadership at all levels has
been its craven willingness to let America's house crumble. From
collapsing levees to exploding underground pipes, a dangerous
deterioration has spread through water systems, roads, schools,
airports, the electric grid, ports, public transit, and other basics,
reaching into practically every community.
It's time to go to work. Three years ago, the American Society of
Civil Engineers calculated that we're one and a half trillion dollars
in arrears on needed infrastructure repairs. That doesn't count the
multibillion-dollar backlog for repairs in our public parks, or such
new needs as bringing our nation's internet and phone service up to
the superior standard of Europe and Japan.
THE GREEN ECONOMY. Here's our future--if we're smart enough to grab
it. Rather than wait on the energy fairy to end America's oil
addiction, let's do it ourselves.
One group in the lead is Apollo Alliance, an exciting coalition of
enviros, labor organizers, entrepreneurs, community leaders, and
others pushing aggressively for policies that link energy independence
with new jobs. The alliance is named after the Apollo moonshot mission
launched by John F. Kennedy in 1961. The subsequent moon landing
excited the country, but this national undertaking would be even
bigger and more exciting. Rather than being an event to be watched on
TV, this clean-energy revolution would enlist people directly to
achieve the goal. Making every home and building in America energy
efficient and developing clean, high-speed rail networks between
population centers would employ millions of people at every skill
level. Backyard tinkerers and computer whizzes could develop and
improve technologies, local businesses would be able to pioneer new
products and services, union apprentice programs would train workers,
and inner-city poor people would be recruited into jobs that can
provide a career path out of poverty.
Yes, this would take an up-front investment, but the payoff is
staggering. Take just one Apollo idea: a plan to create a Clean Energy
Corps. One of the corps' functions would be simply to weather-strip
the homes of low-to-moderate-income folks. There's already a federal
program to do this, but it's so underfunded, understaffed, and
inactive that it has reached only a tiny fraction of the 30 million
eligible homes.
To retrofit them all over a decade would cost about $45 billion, but
look at what we'd get for that sum. Some 225,000 people from the
communities where the work is done would be earning and spending
paychecks there, thus giving an added boost throughout the local
economy. Meanwhile, the weather-stripping would save about $400 per
year in energy use by each home, a national savings in energy costs
over the next decade that would total an estimated $120 billion. All
that for an investment of only about a fourth of Washington's "go
shopping" stimulus.
The Powers That Be can no longer pretend that such a grassroots
recovery program is the sort of big-government undertaking that's
unaffordable. After all, they've already frittered away at least a
couple of trillion dollars to destroy, occupy, and try to rebuild
Iraq, and now they're dumping $168 billion in a fizzler of a stimulus
that completely ignores the fundamental need for a shared prosperity.
If you hear your Congress critter, presidential candidates, or any
other politicians mouthing off about how the underlying structure of
our economy is sound, send 'em a copy of this issue--and tell them to
get to work on a recovery program for all Americans, one that helps us
recover our middle class and our democratic values.
From "The Hightower Lowdown," edited by Jim Hightower and Phillip
Frazer, March 2008. Jim Hightower is a national radio commentator,
writer, public speaker and author of the new book Swim Against the
Current: Even a Dead Fish Can Go With the Flow. (Wiley, March 2008)