Grover Norquist at the City Club of Cleveland

On January 13, the City Club of Cleveland welcomed as its guest speaker: Grover Norquist, President and Founder, in 1986, of Americans for Tax Reform. Norquist's appearance provides a perfect opportunity to examine the work of one of the Right's most influential propagandists. Norquist is the creator and enforcer of the Taxpayer Protection Pledge and has succeeded in convincing 98% of Republican House Representatives and 90% of Senate Republicans to sign it. They apparently have to go to his office and sign it in front of two witnesses.

Let me explain briefly why I refer to Norquist as a propagandist. First of all, a propagandist begins with a core set of beliefs and seeks data to corroborate those beliefs. Any data which do not support the core belief are rejected. On this score, Norquist can be compared to another speaker who appeared at the City Club of Cleveland: Thomas Schatz, President of Citizens Against Goverment Waste. Schatz advocated cutting taxes, but with regard to the data concerning how the government spends its money, he presented information which both strengthened and weakend his own case. Schatz demonstrated that it is completely possible to take sides in a political struggle while remaining true to facts and without becoming a propagandist.

Secondly, Norquist appeals to various emotions, such as feelings of solidarity and animosity, to gain support for a position which is expressed as something factually established. This can be seen in the fact that 98% of House Republicans have signed his pledge. Such a level of agreement is obviously the result of some type of peer pressure.

Grover Norquist is a propagandist by profession. He lives in Washington, D.C. and makes his living by influencing the American political system. Norquist has a B.A. and a M.A. from Harvard University, a background similar to other professional right-wing political activists.

Norquists core set of beliefs are fundamental to the modern Republican party as it has developed since the 1970s.

1. Norquist famously asserted that his goal was to shrink government down to where we can drown it in a bathtub. He didn't repeat this statement at the City Club, but neither did he deny it. Norquist contrasts the European style social welfare state to a more traditional American limited government. Note first of all, the choice of language. Even a liberal like me identifies more with the words "traditional" "American" "government" than to "European" "welfare" "state." But there is no actual content here. The American welfare state is very American and owes its existence to prestigious historical figures such as T. Roosevelt, Wilson, F. D. Roosevelt, Truman, Johnson and Kennedy. When Norquist speaks of something more traditional, I doubt he is referring to the nineteenth century. He is in fact, referring to something which never existed. What is called the "welfare" state is made up almost entirely of programs which Americans support overwhelmingly: Social Secuirity, Medicare, unemployment insurance, disaster relief.

2. Norquist asserts that the Obama administration has brought about a massive expansion in the role of the federal government, which has gone from 20 to 25% of GDP from 2007 to 2012. The truth is that the expansion in federal spending, in terms of dollars, can be entirely attributed to two temporary events: the great rise in unemployment payments and the cost of the economic stimulus. Norquist refers to a percentage, and this has to be attributed to the fact that the GDP went down at the same time as spending went up. There has been no permanent expansion of the federal government at all.

3. Norquist claims the mantle of libertarianism, saying that what the Right wants is for the government to leave them alone. However, the NRA is not leaving us alone in Cleveland. They've passed legislation forcing us to allow concealed hand guns in our city parks. Republicans in Washington have fought against the right of Californians to legalize marijuana. As for business, it is simply not true that businesses lobby principally to be left alone. They lobby to receive benefits from the government and in some cases receive a check from the government at tax time. But yet, Norquist does not refer to them as parasites.

4. Norquist would have you believe that Republicans are against all taxes. In fact, the Republicans are against taxes on the rich and only refer to the income tax and corporate taxes. If they were to look in to the finances of the people employed by Gabriel Brothers, some of whom are those lucky ones paying no income taxes, they would soon learn that the taxes paid by the poor: sales tax, registration fees, social security and medicare taxes have, over all, been increased during the same years Norquist's friends have succeeded in massively reducing the income and estate taxes on the wealthy. Overall, taxes have not been lowered for the middle class.

5. Norquist is a merchant of anger. He equates the following groups with the Democratic party and calls them competing parasites: trial lawyers, labor union leaders, big city political machines, government workers' unions, people locked in to welfare dependancy, well-paid government workers, and "coercive utopians who receive government grants to tell the rest of us how to run our lives." We were encouraged in Ohio when our right-wing governor tried to abolish government workers' unions and the voters overwhelmingly rejected his proposal, understanding that government workers meant first of all: policemen, firemen and teachers and that it is simply ridiculous to say they are overpaid.

6. The stimulus program is referred to as taking money from those who earned it and giving it to some one who is politically connected. The truth is that the wealthy in this country have been sitting on their money ever since the recession began. That is what businesses do in a recession. Only governments are able to spend money in a recession. The Obama administration should have spent much more than 800 billion, and their failure to do so means that we are only now, five years later, beginning to reduce unemployment. A truly significant stimulus would have gotten enough people off unemployment and back to paying taxes that it would have paid for itself in a fairly short term.

7. Obamacare involved the "nationalization of healthcare." This goes along with references to Obamacare as "socialized medicine." I have no interest in defending a law which requires me to buy my health insurance from a large corporation and leaves in place the immense profits of the insurance industry. However, it must be said that Obamacare is a corporatist law. It seeks to empower corporations to take care of our healthcare issues. It is false to say anything was socialized or nationalized.

8. Norquist argues that the Reagan tax cuts turned the economy around. The truth is that there is just no evidence that all the tax cuts on the wealthy have had any positive effect on the economy. The massive tax cuts of George W. Bush led to massive deficits and massive unemployment at the end of his administration. The tax increase of Clinton led to a balanced budget and very low unemployment.

We have to rescue our political system from the likes of Grover Norquist. Your congressmen need to stop buddying up to political activists based out of Washington, D.C. and who derive their living and their wealth from misdirecting the justified anger of American citizens.

donaldleach.blogspot.com

How Wall Street "Banks" Fleeced America

In 2002, Pam and I were considering buying a house in western New York state where we lived at the time. Our real estate agent requested that we be pre-approved by a bank for a loan, so we visted the local branch of some bank which I can no longer name. I still vividly remember the entire experience. The behavior of the bank was totally bizarre, but like most Americans in recent decades, I really didn't concern myself with the issue. I was asleep. Most Americans still are.

I enjoy calculating our own finances and knew already how big a mortgage we could afford. The bank employee took all the information I provided and entered it into his computer. He then informed us that we were approved for an amount which was consistent with my own calculations. He provided us with a document certifying our pre-approval, and then, after we had shook hands to say goodbye, he casually tells me: "If you want to borrow more than that, we can arrange it." I remember telling Pam: "That is weird." Why would a bank be willing to loan more than its customer could afford to pay back?

I know now that we were witnessing the early stages of a banking system gone amok, and that what we witnessed was the origin of the American financial crisis of 2008 and of the current European financial crisis. The banks responsible for originating loans had managed to free themselves from the cost of making bad loans. This was, and is, completely counter to the way a normal, honest banking system operates. How it is supposed to work is that the banks share in the costs of bad loans. If its customer can't repay the loan, the bank loses the money it lent. A bank that repeatedly makes bad loans goes bankrupt. Good banks thrive and survive in order to support American free enterprise. It's the American way.

When we moved to Cleveland, in 2005, we were once again interested in buying a house. Housing prices were skyrocketing. The kind of house we were interested in was priced near $200,000. Traditional banking logic said that this was only possible if Pam got a second job. They would want 20% down, leaving us with payments of $860 a month plus real estate taxes. This was clearly something we could not afford, so we rented. Our landlord at the time: Phil, worked for a financial firm originating mortgages. No problem he tells us. He can get us a loan. We should be looking more in the $500,000 range. Maybe even $750,000! Weird. Unless you realize that he got a commission on any loan he originated, no matter how bad the loan was.

Question: "If the bank is not paying the cost of its bad loans, who is?"

So what was going on? That New York bank, and the firm Phil worked for, didn't care if we could repay. They would resell our mortgage on the secondary market; to what I will refer to as the super-banks. In places like Cleveland, people like Phil were out walking the streets in the poorer neighborhoods. They knew that they had nothing to lose. Some poor sucker would think that by working day and night, and with his wife working day and night, and the kids fending for themselves, they could afford to own their own home. Today, many of these people are unemployed, and their meager retirement funds have ended up in the vaults of those Wall Street "banks." They were swindled.

But why would super-banks buy loans originated by people like Phil? The answer is that they had devised means of making short term profits so immense, that they really couldn't bring themselves to care about anything else. They certainly didn't care about the health of American free enterprise. They didn't even care that much about the firm they worked for. I'll only refer to a few of their tricks. First, they took all the mortgages they bought, and bundled them. This allowed them to be sold on the Stock Market, where they argued that the bundles were made up of enough very good loans to make up for all the bad loans. This was a lie.

So why would people who spend their lives picking stocks and bonds recommend buying these bundled mortgages? Bribery and collusion. Standard & Poors, whose job is to evaluate the safety of investments, rated these bundled mortgages as highly safe. Another lie.

Trick number 2: credit default swaps. This is a type of insurance policy for people who want to make highly lucrative, but also highly reckless investments. In this case, you invest heavily in these risky bundled mortgages. You pay a small percentage of your profit to another super-bank, who agrees to take over ownership of these risky investments should they fail. One super-bank makes money selling the credit default swaps. The other is guaranteed to make money even if its investments fail.

The swindle continued until 2007. As more and more people bought houses they couldn't afford, the value of those houses increased, encouraging even more and more people to buy houses they couldn't afford. The economy was good. People were paying off their mortgages, some were even taking out home equity loans on their current homes that were now worth, they were told, double the price they had originally paid.

Pam and I were wisely suspicious and continued to rent a house until the summer of 2007, when we decided to explore the housing market again. We felt comfortable paying about $150,000, but the price for what we wanted was still around $200,000. But we soon saw signs that the bubble had burst. No one was buying. Some of the houses we looked at in the winter and early spring had been on the market for a year or two. In July, we decided to risk offending the seller and offered $110,000 on a fixer-upper priced at $150,000. The sellers accepted.

In 2008, the price of oil spiked and the economy slowed. Employment slowed and people started defaulting on the bad loans. The super-banks who had sold the credit default swaps were the first to bite the dirt. Lehman Brothers went bankrupt. With the collapse of the banks ensuring the bad loans, the collapse of those banks holding the bad loans would follow shortly.

Did we need to bail out these banks? Is it true that letting them all go bankrupt would have plunged us in to the second Great Depression? I don't know.

I do know that Henry Paulson, George W. Bush's treasury secretary, had been the CEO of Goldman Sachs, which was a leader in the development of derivatives and credit default swaps. And that Goldman Sachs actually grew in wealth, profit and influence in the decade from 2002 to 2012.

Goldman Sachs knew that they were profiting from the disaster and hid it from nobody. You have all heard how the very year that they were "bailed out" they paid bonuses of over a million dollars to 953 of their employees. They paid those bonuses in recognition of the good performance of their company. They knew that they had been successful that year. They had successfully dealt in bad loans and passed on the cost of those bad loans to the American consumer and to the American tax-payer.

Due to the success of their lobbying campaigns, these banks have emerged from the catastrophe still intact and unregulated. The assets of the four biggest American banks: J.P. Morgan Chase, Bank of America, Citigroup and Wells Fargo- now equal 62 percent of total commercial bank assets. That's up from 54 percent two years before the banking crisis. (According to Robert Reich blog: December 9, 2011.) These banks have profited from a highly successful lobbying campaign which has succeeded in passing on blame to the American consumer and has successfully discredited all attempts to regulate their behavior. The two congressmen whose names are on the bill aimed at regulating them: Frank and Dodd, are retiring from congress. Their bill has been mutilated and is not being enforced.

The effects of the policies of these super banks were devastating to the American economy. From the height of the housing bubble to the bottom of its collapse, the value of homes in America declined by $5.5 trillion. The same people who were fueling the economy by taking out home equity loans on their over priced homes, are now saving every dime in a last-ditch effort to rebuild their retirement accounts. Many are unemployed and have stopped paying taxes and are now receiving unemployment, thereby plunging the federal budget in to a deep deficit.

Entire neighborhoods in cities like Cleveland are now boarded up. Where once people were renting their homes, they have now moved out and are packed in living with their relatives. Their meager life's savings have ended up quite literally in the pockets of the Wall Street banks.

But here is the clincher. Our next president will almost certainly be submissive to the authority of Wall Street. Mitt Romney lays claim to business experience in the private sector, but he doesn't say that his experience is that of a Wall Street banker. Romney enriched himself through the success of Bain Capital, which he created in 1984. The specialty of Bain Capital was leveraged buyouts. This is where an investment firm buys a poorly performing company on the verge of bankruptcy. It then proceeds to lay off all the employees and to rehire a greatly reduced number at a lower wage. They then resell the company for a profit.

As for Newt Gingrich, he is reported to have been paid $1.6 million dollars for his services as a consultant historian to Freddie Mac, the Federal Home Loan Mortgage Company. This comes as the SEC has brought a civil suit against the CEOs of Freddie Mac and Fannie Mae: Richard Syron and Daniel Mudd, arguing that they failed to properly inform their stock holders of the risky nature of sub-prime mortgages. Mind you, this is a civil case, which means that Syron and Mudd won't be paying any of their personal money for their wrong-doing. It will come from the companies they worked for. Mind you also, the company they worked for was taken over by the federal government in 2008 and saved at a cost of $170 billion so far, and still counting. Finally, let it be noted that these two individuals had a combined income of $30 million from 2006-2008, during which time their corporations went bankrupt. (My numbers come from the NPR version of this story: http://www.npr.org/2011/12/16/143859110/sec-charges-fannie-mae-freddie-mac-officials)

As for President Obama, who has recently adopted some "Occupy Wall Street" rhetoric, his presidential campaign has thus far received more donations from Wall Street than all the Republicans combined. He has presided over an administration which has done nothing to inform the American people of the nature of this national disgrace.

People.

It is time to wake up.

Don't let Wall Street run our country.

Don't vote for anyone, Republican or Democrat, who is dependent on Wall Street money.

That will surely mean you'll have to write in somebody, instead of accepting the choices presented to you next November.

Don't give in to all that corporate financed advertising which is going to try to tell you that the Democrat is a sleazeball socialist and that the Republican is the great savior of threatened small business and American values.

In fact, both parties have sold their souls to the demands of big money.

Social Security 101

This is what you need to know to follow every discussion on Social Security.

First of all, Social Security works by having those workers presently working pay for those workers presently retired. I remember my dad explaining this to me back in 1969 or 70, when he was retiring and we were moving to town. I asked him how Social Security worked and he explained that people of his generation were receiving a gift. That he was going to be receiving monthly checks and the total amount would almost certainly surpass what he had paid in to it.

Social Security is an insurance program. It is not a savings plan. This means that the money you pay in to it is used to pay claims. If you do not reach retirement age, you will receive no money back. If you live past 100, your benefits will never run out.

Understanding this is the key to understanding why George W. Bush's plan to privatize Social Security was a farce. People were going to be allowed to invest their Social Security payments in the stock market. Social Security would have been in an immediate financial crisis, unable to pay out the benefits it was committed to paying. Either it would have gone bankrupt or the government would have had to raise taxes. The end result would have been that money raised from a tax on the working and middle class would have been used to increase investment in the stock market.

From its creation Social Security has been treated as a financially independent entity. The government calculates how much money is taken in, and how much is paid out, and it knows that today it has a $2.6 trillion surplus. It plans ahead and knows that this is enough money to pay every benefit owed to every eligible American for the next 25 years. It also knows that in about 12 years it will start running into deficits. Either retirees need to receive a little less in the way of benefits or more money needs to be paid in to the system. In the budget shutdown game from earlier this year, Obama agreed, by reducing inflation adjustments, to cut the amount of money retirees would receive. He has since backed off on this, but not before losing the waning support of people like me who think that given the great expansion of wealth at the top 1/10th of 1%, it would be more proper to have them, rather than the working class, pick up the slack. But I digress.

Conclusion. Social Security is financially sound. It will need an adjustment some time, but that adjustment is very minor.

So why does Social Security somehow keep entering into every serious discussion about reducing the national debt? This is because in 1968, during the Johnson administration, the government adopted the unified budget. Prior to that time, Social Security dollars were held completely separate from the rest of the federal budget. After 1968, Social Security continued to maintain its own records concerning income, expenses, surplus or debt, but the federal budget added the net surplus or deficit from Social Security to the national debt number. This means that without the Social Security surplus the national debt would be $2.6 trillion higher than we are being told that it is.

Another way of looking at it is to note that in 2010, Social Security's total income was $781.1 billion and its expenditures were $712.5 billion. (All numbers from Wikipedia). This means that $68.6 billion was taken in 2010 from the Social Security tax and used to pay for other operations of the federal government. By about 2023, Social Security will begin drawing down on the surplus paid in to the system by baby boomers. The federal government will then have to find other sources of revenue.

The defense of Social Security is, to me, a basic test of whether a candidate is a true Democrat. Social Security is 100% funded by the American worker and his employer. It is a tax which does not target wealth. Income over $106,800 is not taxed. It is an example of a government program that is has worked exceedingly well and which today has no deficit.

Any call to end Social Security or to reduce the payment of Social Security benefits can only appear as an attempt to maintain the present circumstances in which a tax on the American wage-earner and his employer is being used to finance the general operations of the government.

When President Obama agreed to reduce future payments to Social Security retirement beneficiaries, he showed his true colors. He sided with the ultra-wealthy against the interests of the working and middle class. He revealed once again that he is neither a liberal nor a true Democrat.

http://donaldleach.blogspot.com/

Wall Street vs the American People

It is revealing to read in the paper on the same day about the Occupy Wall Street movement and the fact that the Obama campaign is breaking records in the amount of money it is raising. From Wall Street. It brags to its supporters about the record number of individuals who have donated, but the record amount of dollars it has received it owes largely to Wall Street.

It has been interesting how many people don't get the point of Occupy Wall Street, including people who are in many ways anti-establishment. I'm thinking of Paul Tukey, my expert for organic lawn care, who filled me in on the Obama administration's quiet approval of genetically modified (he calls it "mutant") alfalfa and Kentucky blue grass seed. Leave it to Suze Orman, of all people to understand it completely (see her October 11 blog: http://www.huffingtonpost.com/suze-orman/occupy-wall-street-approv_b_1005128.html).

Main points: The very year that the taxpayers bailed out the Wall Street "banking" industry, its leadership was maintained and was even paid its normal bonuses. Today these mega-"banks" are once again showing hefty profits. Meanwhile there are still 10 million more people unemployed today than before the crisis. Those who were conned in to buying houses they couldn't afford are living in poverty, sending their kids to schools with 50 kids in a classroom, seeing their police forces cut and dealing with whatever healthcare they can finangle through Medicaid. And it is not just the poor who have been left behind. "Inflation-adjusted median house income declined 7.6% from June 2009 to June 2011." (Suze Orman)

No one resents the wealth of Steve Jobs. The technology to which he contributed will be one of the pillars of the future, post oil economy. Wall Street bankers have done nothing to improve the long-term well-being of the American people. This is so clear to me that it leaves me astonished to listen to people who have no awareness of it.

A few numbers from my April 29, 2011 blog post: Wall Street banker Henry Paulson at that time was being paid 2.4 million dollars an hour. The combined salary of the top 25 hedge fund managers was listed at 25 billion dollars. This is enough money to pay the salaries of 658,000 school teachers. The Plain Dealer confirmed the accuracy of one of our local state senators when she asserted that the banking crisis brought about a loss of $5.5 trillion to American home owners. Banks as we knew them in our childhood shared in the cost of the bad loans they made. These banks did not.

I'm yearning for an alliance with the Tea Party. Could it be that they are not the same as the new Right? When the Tea Party first emerged, I was profoundly hopeful. Then they were suddenly putting forth notions that I still don't think represents them. It seems that they felt a need to put their authentic concerns on more intellectual grounds and became the victim of the right-wing (corporate money-making) propaganda machine.

For a populist alliance with the Tea Party, the left has to realize that the Democratic party has sold out to big money. The Tea Party has to end its alliance with big money. That would allow a national move to take back our government, which seems to be the common ground of the alienated on both the left and the right.

Our candidates for City Council get elected by going around and talking to the voters. We just had one at our door. He wants the support of the people. That is where we have to get to with our federal congressmen. Our Supreme Court ruled that spending money is a form of speech and that corporations, now considered to be people, have the constitutional right to spend as much money as they wish in pursuit of political aims. The right-wing justices did not need to make this ruling. They picked on a minor case (Citizens United vs The Federal Election Commission) to bring about a radical increase in the power of big money over our democracy. The Justices supporting this decision and, in particular, its leader John Roberts need to be impeached.

Slogan coming from Occupy Wall Street: "I'll believe corporations are people when Texas executes one. "

I'm using the term corporation excessively and inaccurately. Big money is also private companies like Cargill and Koch Industries. Also, I understand that corporations are diverse and not unified. But it seems to be the term which best reflects my concerns. I'm trying to shout as loud as I can that big money is squashing democracy. It provides us with our news, and is increasingly funding propaganda research so that its news can refer to its own studies.

The characteristic argument is that government can't do anything right, but it never focuses on how much of our taxes end up in the pockets of the very people getting rich by saying that government can't do anything right.

Lincoln said we fought the civil war so "that government of the people, by the people, for the people, shall not perish from the earth."

Obama is neither a Liberal nor a true Democrat

I like to use the term "a true Democrat" to refer to someone who believes in and fights for the view of government entertained by Roosevelt, Truman and Johnson. Similarly, I hesitate to call the views today dominating the Republican party as Republican. Ronald Reagan is what I think of as a Republican. Or Barry Goldwater. Our retired Senator Voinovich of Ohio was a Republican. On the other hand, our current Ohio Senator Rob Portman and Governor Kasich are so different that I hardly feel it is accurate to refer to them as belonging to the same party. The first three were citizens. These new guys are political players who draw their inspiration from right-wing (corporate) think tanks and the right-wing press. When they left congress they hung around in the corporate sector and now they are working to bring corporate government to Ohio. (At the turn of the twentieth century, Standard Oil owned both Ohio Senators, so this is historical déjà vu).

It is becoming increasingly evident that Barack Obama is not a liberal. His views are very difficult to distinguish from those of Mitt Romney. Indeed, I've gone to referring to ObamaRomneyCare. (As governor of Massachusetts, Romney signed healthcare legislation into law that is eerily similar to the Affordable Healthcare Act.) Not only is Obamacare not socialist, it isn't even liberal democratic. It is based on the notion that the role of government is to leave initiative to the private sector, dominated today by international corporations. If you object to the mandate that people must buy health insurance, keep in mind that the mandate is for them to buy private insurance, which for practical purposes means buying it from some corporate entity.

During the debate over the debt limit, Obama repeatedly stated to his Republican opponents: "I have to deal with my people on the left just like you have to deal with those on your right." In other words, Obama was equating his liberal progressive wing with the Tea Party movement. His goal was and is to situate himself halfway between the Tea Party and the liberals in his own party, which situates him in that space that used to be occupied by something that was called "the moderate Republican," but which doesn't exist anymore. There's a blog to be written on the systematic elimination of this creature starting around 1980.

During the great debate on the raising of the debt ceiling, Obama took to referring to the need to cut "entitlements." In other words, he took up the perspective that either, 1) the United States of America is too poor to spend money on the poor, sick and elderly or 2) the "Government" is not the appropriate means of caring for the poor sick and elderly. These perspectives are by definition conservative perspectives. Of course he expressed pain at taking up these perspectives, which is typical of the now disappeared "moderate Republican" creature. Roosevelt, Truman, and Johnson argued explicitly that these perspectives were false and immoral. That's because they were Democrats. What today has come to be called Liberals.

Obama's course of sacrificing liberal principles in order to compromise with the new Right seems senseless and incoherent. It may be, however, that his advisors are simply responding to the power of big money. To maintain its power, big money needs to be perceived as independent of either political party, and donates to the candidate perceived as being independent of politics. This also explains Obama's simultaneous denunciation of the progressive left and the Tea Party. These are the two groups with the political patriotism to push for reform of the political status quo.

Thoughts on the Economy

A new economic term to be learned: the Liquidity Trap. This is when investors have money to invest, but no where to invest it. We have one today. In order to put money in the Bank of New York Mellon, you have to pay the bank. This is because neither the bank, nor the investors who put their money in this account, have any use whatsoever for cash. No one is buying anything, so it would be foolish to invest in the economy. It is obviously an absurd state of affairs, when the government seems unable to pay its bills and corporations are basically paying no taxes. Wall Sreet Journal blog, August 4, 2011, by Jon Hilsenrath. http://blogs.wsj.com/economics/2011/08/04/bny-mellon-deposit-fee-life-in-the-liquidity-trap/

Interviewed an individual today who wanted a part-time retail job nights and weekends at Gabriel Brothers. She had worked 10 years in a factory and when it closed she was making $17.00 per hour. She spent two years in another factory which also closed. She then got hired at Lake West Hospital, but is paid so little that she now wants to take on an evening and weekend job to make things meet: $7.50 per hour. We talk to these people all the time, but they find it very difficult to actually perform well at two jobs.

Daniel Griswold, Director of Trade Policy Studies at the Cato Institute, founded and funded by the Koch Brothers, gave the following statistics in his talk to the City Club of Cleveland. I didn't right the numbers down, so my memory might be off, but very slightly. In 1990, it took 10 man hours to make a ton of steel. In 2000, it took 5. Today it takes less than 2. There are two obvious conclusions. First, this increased productivity means that all things made of steel are much cheaper than they would otherwise be, and this is a wonderful thing for all Americans, especially the working class. Second, the effect on employment is a catastrophe for the working class.

The international economy has undergone a fundamental shift in the last 30 or 40 years, which requires the American people to engage in thoughtful and open-minded discussion. The problem is that the the economic changes have created immense corporate and personal fortunes which have nothing to gain and everything to lose from thoughtful and open-minded discussion.

In a series of speeches in 1933, 1934, Franklin Roosevelt addressed the nation to state the necessity of government providing work to the people. He said that if industry was unable or unwilling to provide jobs, then the government would have to do it. Over the next 10 years, the US government created 11 million jobs.

Many Americans have been convinced that the government should not be involved in creating jobs, but I believe the alternative is an extended period of high unemployment and low wages and all the negative social consequences which result from that. There seems to be a mood sweeping the country that the time has come to suffer.

Why We Have a Large Federal Deficit

I. Our government decided that corporations should not have to pay for anything.

According to Richard Wolff, Emeritus Professor of Economics at University of Massachusetts Amherst, Democracy Now, 7/20/2011: "If you go back to the 1940s, here’s what you discover, that the federal government got 50 percent more money year after year from corporations than it did from individuals. For every dollar that individuals paid in income tax, corporations paid $1.50. If you compare that to today, here are the numbers. For every dollar that individuals pay to the federal government, corporations pay 25 cents."

II. Our government decided that the extremely wealthy should not be called on to contribute more than anyone else. From 1940 to 1970, the highest earnings were taxed at 70% or more. At one point the rate hit 91%. During these 30 years, the economy boomed. Reagan lowered the highest rate to 28%. Clinton raised it to 39% and balanced the budget. Bush lowered it back to 36%. You may think it unfair to tax anybody at a rate of 70% and up, but the results of this major shift in taxation have been dramatic. In 1977, the top 1% of Americans had 9% of the nation's wealth. Today, they have 20%. Today, 120 million at the bottom have the same combined wealth as the 150,000 at the top. While corporations publish record profits, wages and employment are in a long-term state of decline. The top 1% of Americans makes close to 25% of the total income made in America. Just moving the rate back to 39% would make a tremendous difference.

The right-wing propaganda machine likes to speak of "a vast expansion of government under Obama." This is total nonsense. Ezra Klein posts a blog reproduced in yesterday's Plain Dealer, which shows where the debt really came from. To read the original post: tinyurl.com/4xogtb5 (I can't seem to copy his graph, so I'll have to describe the content).

Under Bush, 2002-2009, new costs incurred totaled 5.07 trillion. The biggest four items being:

1.) 1.469 trillion: multiple wars. (Joel Stiglitz argues that the total cost of the Bush-Obama wars will hit 5 trillion.)

2.) 1.812 trillion: Bush tax cuts (non-stimulus tax cuts first proposed by Bush during the 2000 election. He was concerned about the Clinton surplus. This is true. Not sarcasm.)

3.) 0.773 trillion: 2008 stimulus and other changes

4.) 0.608 trillion: Non-defense discretionary spending

Under Obama, projected 2009-2017, the new costs minus planned cuts total 1.44 trillion

1.) 0.711 trillion: Stimulus spending

2.) 0.425 trillion: Stimulus tax cuts

3.) 0.278 Non-defense discretionary spending.

4.) 0.152 trillion: Health reform and entitlement changes

It deserves repeating that the bulk of the current deficit comes from the consequences of having over 9% of our workforce unemployed. Not only did those people stop paying taxes, they are receiving unemployment and other government benefits intended to help them until they find a job. In the meantime, the government is doing nothing to get them back to work. Indeed, the government is laying people off.

In the Cleveland Public Schools, they are discussing whether class sizes will hit 50.

So far Obama has:

1) Agreed to cut Social Security benefits. He backed off after pressure from his own party.

2) Agreed to raise the age when the elderly can begin Medicare. He backed after pressure from his own party.

3) Signed on to a deficit reduction package which does nothing to increase revenue.

In a speech to the U.S. Senate, Bernie Sanders, Senator of Vermont said the following: "Despite Democratic control over the White House, despite Democratic control over the Senate, despite overwhelming opposition from the American people, a small minority of the members of the Republican-controlled House have successfully pushed an extreme right-wing agenda onto the American political landscape. It is an ideology which believes that despite the fact that the rich are getting richer, the middle class is shrinking, and poverty is increasing, all—all of the burden for deficit reduction should rest on working people."

August 2, 2011

http://donaldleach.blogspot.com