The Real Recession Problem: Consumers Are at the End of Their Ropes
Perhaps the silliest part of an already silly stimulus bill is a provision giving corporations big tax deductions this year on the costs of new machinery, instead of spreading those deductions over several years, as is normally the case. The idea is to get businesses to invest in more machinery, which will stimulate the economy.
But accelerated depreciation, as it’s called, doesn’t work. Almost the same tax break was enacted in 2002 and studies show just about no increase in business investment as a result. Why? Because companies won’t invest in more machines when demand is dropping for the stuff the machines make. And right now, demand is dropping for just about everything.
This tax break exemplifies the illogic of what’s called supply-side economics. If you reduce the cost of investing, so the thinking goes, you’ll get more investment. What’s left out is the demand side of the equation. Without consumers who want to buy a product, there’s no point in making it, regardless of how many tax breaks go into it.
Which gets us to the real problem. Most consumers are at the end of their ropes and can’t buy more. Real incomes are no higher than they were in 2000, while food and energy and health care costs are all rising faster than inflation. And home values are dropping, which means an end to home equity loans and refinancing.
Most of what’s being earned in America is going to the richest 5 percent, but the rich devote a smaller percent of their earnings to buying things than the rest of us because, after all, they’re rich -- which means they already have most of what they want. Instead of buying, the rich invest most of their earnings wherever around the world they can get the highest return.
Add all this together and there’s just not enough consumer demand out there to keep the American economy going. We’re finally reaping the whirlwind of widening inequality and ever more concentrated wealth. Supply-siders who want to cut taxes on corporations and the rich just don’t get it. Neither does most of official Washington.
But accelerated depreciation, as it’s called, doesn’t work. Almost the same tax break was enacted in 2002 and studies show just about no increase in business investment as a result. Why? Because companies won’t invest in more machines when demand is dropping for the stuff the machines make. And right now, demand is dropping for just about everything.
This tax break exemplifies the illogic of what’s called supply-side economics. If you reduce the cost of investing, so the thinking goes, you’ll get more investment. What’s left out is the demand side of the equation. Without consumers who want to buy a product, there’s no point in making it, regardless of how many tax breaks go into it.
Which gets us to the real problem. Most consumers are at the end of their ropes and can’t buy more. Real incomes are no higher than they were in 2000, while food and energy and health care costs are all rising faster than inflation. And home values are dropping, which means an end to home equity loans and refinancing.
Most of what’s being earned in America is going to the richest 5 percent, but the rich devote a smaller percent of their earnings to buying things than the rest of us because, after all, they’re rich -- which means they already have most of what they want. Instead of buying, the rich invest most of their earnings wherever around the world they can get the highest return.
Add all this together and there’s just not enough consumer demand out there to keep the American economy going. We’re finally reaping the whirlwind of widening inequality and ever more concentrated wealth. Supply-siders who want to cut taxes on corporations and the rich just don’t get it. Neither does most of official Washington.
posted by Robert Reich | 9:00 PM
88 Comments:
Why can't this country seem to understand that having all the money in the hands of a few doesn't work for anybody. The rich can only get richer if there are consumers with enough money to keep the economy moving forward. Having your money concentrated in the hands of a few distorts everything. For example, most major cities are lacking in affordable housing while million dollar condos and homes are being built for the few that can afford them. Why? Because those few are the only ones who have the money to buy anything. The whole economy gets slanted toward the extremely wealthy because they have the purchasing power. The problem is that, once they buy all they want, what do they do with their extra cash? They have to park it somewhere instead of it being used to stimulate the economy like it would if it were churning through consumers. They invest it in extra million dollar condos or homes, yachts or overseas investments, none of which helps the overall U.S. economy. The whole system fails before our eyes and no one, even the wealthy, benefits from the situation. There needs to be a more equitable distribution of wealth. This is good for everyone, even the rich. Why can't they see that?
If giving money to the poor and lower middle class is stimulative to the economy in times of crises like Bernanke and the rest insist, then why don't they realize that making sure the poor and middle class always have disposable income would be a good policy to keep the economy running smoothly at all times?
Supply side economics doesn't work if there is no demand from the bottom and there can't be demand if everyone is broke.
Dr Reich,
You are right on! Thanks for saying this.
Is this tax rebate actually a tax advance? Won't we have to pay it back?
I entirely agree with your commentary Dr. Reich. I only ask myself if the answer is not both to stimulate the supply and the demand. The idea of a tax cut is benefic, but it has to be combined with a package to stimulate demand.
Makes sense to me. One question, what effect will extending the upper limit on mortgages do? Granted, I live it a state, Maine, where the real estate values are much lower than say SF or Boston, but I thought the idea was to increase consumption. What am I missing?
Mr Reich, your analyses never take into account "imcome mobility". The rich may be getting richer, but hey are nothte same rich people, and the poor may be poorer but they are not the same poor people.
Also, your analyses never take into account innovation. Investment in new products and processes shoudl be less expensive than it currentl yis; that helps consumers through better or new and useful, or lower cost products
Dr. Reich gets it. When consumers can no longer use their houses as ATMs, they max out their credit cards. When the cards are maxed out, there is nothing to do but save and pay with cash. There is no alternative. The policy options on offer appear rather shallow and unrealistic, almost to the point of denying the depth and magnitude of what is happening.
The best consumer is educated, healthy, and free from arbitrary restraint. Any "stimulus" should have this as its core objective.
And the geniuses in government want to solve the problem by making it easier for consumers to borrow money. That's how we got into this mess, borrowing.
Doesn't there come a point where you just have to let the dust settle and quit messing with things for a while?
Everyone seems to think that a tax break will be financed by increasing the deficit, this doesn't have to be so. The Fed can just print money. There is some evidence that they have been doing this already. Where is all the money that they are (secretly) throwing at banks coming from?
We are in the same position as we were at the end of the Vietnam war. We refused to pay for it a the time (guns and butter) and then did so after the fact with a huge inflationary bulge.
Inflation is a hidden tax and avoids having to go to congress and get involved in politicking. It is what all governments do to bail themselves out of long-term deficit spending.
I don't see why things should be different this time. What's the alternative, asking people to sacrifice? The last guy who did that went back to growing peanuts shortly after he floated that idea.
lower mack:
Though there is certainly movement back and forth across the median, the vast majority of those rich who are getting richer are the same rich that were there before. Conversely, most of the poor are the same poor; they may be moving between quintiles but are still the same folks who were in the lower half to begin with.
Admittedly, the primary exceptions are those young people who, when starting out, are in the lower half and then as their careers begin advancing they enjoy "income mobility" to the upper half. These folks are not the majority.
The young ambitious junior exec working for a hedge fund, making millions, who then breaks out and starts his own hedge fund and commences making billions is not a typical example of what we mean by "income mobility".
Innovation, historically an American strength, has been waning in the US for years. Granted in software and computer services opportunities still exist for easy entry with a chance for rapidly increased income but even those venues are declining. Other service and retail industries can also offer easy entry, often with minimal investment, but these are not usually enterprises that offer significant employment opportunities. In computer hardware as well as many other hard goods industries the innovation is coming from overseas not from the US.
New manufacturing enterprises, which may offer decent employment opportunities for workers, are slow in coming in the US. The ease of entry into these kinds of enterprises coupled with generally higher investment costs inhibit many innovators from effecting their dreams. Those who overcome the initial hurdles and are truly looking for low cost manufacturing are likely to seek overseas factories with much lower labor and facility costs and focus on importing their products.
Lower cost products do not necessarily segue to lower priced products. If you create an entirely new widget with minimal competition your initial pricing may be affected by your low cost. If your widget is just a fancier version of other widgets already in the marketplace then competition via supply and demand pricing will play a much larger role in what is charged.
In the world of mergers and acquisitions we have been going through the "innovators" have tended to be squeezed out or at best muted. Many of them, rather than enter the fray, take their innovation and sell it to the highest bidder and walk away.
The economic prospects for the US, going forward, are scary.
One of the commenters up there, barberoux, said that this tax rebate is something we have to pay back. Is that true? Why are they calling it a rebate then?
robert d feinman:
The money that the Fed is (secretly) throwing at banks is to motivate them make more loans. If they do not desire to make more loans the Fed's "money" is having little affect.
Thanks Dr Reich from the Motor City!!
You speak of the philosophy of Henry Ford, who ushered in an era of American Prosperity like no other. We need more leaders with the vision of the original Henry Ford, not his half-wit descendants who are mostly versed/educated in financial gamesmanship, and whom spend most of their time trying to defensively protect their wealth and maintain their 'perks' of out-sized voting rights in company stock.
Do you think it might be helpful to downsize the financial industry somewhat? choking off these parasites might make a good start to restoring consumer purchasing power.
Hope you'll consider serving again under the next administration.
Art:
I know that's the official story, but it doesn't add up. Banks were always free to borrow from the Fed.
The need for secrecy implies that the money is being lent to keep the banks capital reserves above the required minimum. Any bank that used this facility openly would be known to be in trouble and this would cause a run or other adverse effects on them. See the British Northern Rock bank for what happens when bad news gets out.
Some commentators claim that the banks have lots of money and they are just unwilling to lend it, either because there are few good borrowers, or because of their inability to assess the risk involved. The need for secrecy makes all these claims doubtful.
Feinman's point about inflation as a sneaky way to pay off a large national debt is right on--it is exactly what happened in post-Vietnam America. Hopefully, a new president with a policy of transparency in government will not permit this to happen in secret, and hopefully we citizens will tear ourselves away from entertainment long enough to follow the logic and participate in a decision about how to pay off the (again) humongous national debt.
The headline here (written by Dr Reich i presume) is "consumers are at the ends of their ropes"
of course they are.
The ironic thing is that Dr Reich is on the radio advocating for more immigration of unskilled workers even though past waves of unskilled workers have lowered wages.
Economists at Harvard, and the GAO have both consistently found Reich's immigration policies to be detrimental to wages
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A recent study by Harvard economist George Borjas and colleagues from the University of Chicago and the University of California estimates that immigration accounted for a 7.4 percentage-point decline in the employment rate of unskilled black males between 1980 and 2000. Even for black males with high school diplomas, immigration shrank employment by nearly 3 percentage points. While immigration hurts black and white low-wage workers, the authors note, the effect is three times as large on blacks because immigrants are more likely to compete directly with them for jobs.
A case study of Los Angeles janitorial services cited in a Government Accounting Office report captures the enormity of the shift. It began in the late 1970s, as several small firms began hiring Mexican janitors at low pay, prompting building owners to drop contracts with the companies that employed blacks in favor of the cheaper upstarts. As the immigrant-dominated firms grabbed more business, industry wages slipped from a peak of $6.58 an hour in 1983 to $5.63 an hour in 1985. The number of black janitors in L.A. plummeted from about 2,500 in the late 1970s to only 600 by 1985. Today, the city’s janitorial industry, like apparel manufacturing and hotel services, is almost entirely immigrant.
_____________________
Monetary tinkering cannot correct the structural problems with our economy that were caused, partly, by changes in the federal tax code that created incentives for corporations to move their manufacturing activities to other countries. Until we reverse that process to make it more profitable for U.S. companies to operate in the U.S (and less profitable for them to operate overseas), we will not be able to fix what's wrong with our economy. If 70 percent of our economy is based on consumer spending and a huge chunk of the rest on services, we have a severe problem: a strong economy demands strong internal markets, and strong internal markets depend on dependable employment. In other words, we have a long roe to hoe, band-aids won't heal our economic wounds, and we need to raise and alter the character of taxes on corporations, not lower them.
Right on, Robert.
You got almost the full array of responses on this one. The only missing one is, "What problem?".
Interesting evidence this morning: Countrywide says 1/3 of their subprime mortgages are in arrears or default currently. Their "prime"-mortgage defaults have risen approximately 20% this past year.
robert d feinman:
Your retort, while somewhat conspiratorial, is nonetheless logical but I have a hard time wondering why bank reserves would need bolstering, other than the subprime issue, and the actions of the Fed to offset those have been out in the open.
If banks have low reserves it can only come from two actions. One would be that they are making loans exceeding the reserve requirement; doesn't seem likely since there is not a clamoring for more loans currently and clearly banks are being more restrictive in their lending. Second would be that their deposits have fallen off and they are at or below the reserve requirement which again seems implausible since there has yet to occur that much of a slow down.
If banks are making mega loans then why would the Fed be lowering interest rates?
Is an interesting conundrum but not sure I can accept your premise at this point.
bruce barnes:
We retirees really do need to find a more value added form of recreation.
Just discovered your "overdue" response to the taxing dilemma. Am in the process of cobbling together a response.
I posted this comment over on the Economist's View before I saw the comments that Robert Feinman and Carolyn posted. I think that great minds think alike but mabye fools seldom differ.
The first part in quotes came from a Paul Krugmann op-ed of earlier today.
dirtyal says...
"The fact is that war is, in general, expansionary for the economy, at least in the short run."
I maybe agree about wars being expansionary in the short run if the economy really needs stimulation. If the economy is not operating at close to full employment, it expands the economy to employ the unemployed resources.
The real questions are:
1) How long is the short run?
2) What happens when we start running short on labor or raw materials? What happens then?
My recollection of the ten years after our departure from Viet Nam is that we were still paying for that war via inflation and economic dislocation.
"Post hoc, ergo propeter hoc"?--I don't think so. I think that there was a direct connection between Johnson's obsession over both the Great Society and the Viet Nam war, the politically expedient argument that we could have both guns and butter, and the ultimate inflation that the era produced.
In my view, we are well past the time when the war can be considered expansionary and into the time when it will certainly be considered inflationary.
soprano:
Agree with your overall synopsis, only one area of disagreement. Though would not dispute a reversal of any tax breaks enabling the transfer of production overseas, there appears an implication that we need to reward them for keeping jobs here. Likely rewards are more realistic but I get thoroughly irate at big corporations failing to accept that, profits notwithstanding, we are all citizens of this wonderful country and excessive profits should not supercede civic responsibility.
Art:
Bank reserves need bolstering because many of the loans (considered assets in the upside down world of banking) have gone bad and they have to be written off in whole or part.
We have already seen over $100 billion in such writeoffs and the belief is that there are more to come. Notice the number of financial institutions getting infusions of money from foreign investors. Obviously the short term loans provided by the Fed are not enough to cover their losses and they have needed to find more permanent sources of funds.
During the real estate meltdown in Japan many of the banks were technically insolvent. The government bent the rules so that they could consider worthless loans as "non-performing" and keep them on the books at face value.
This kept the banks from going under, but led to a decade of poor economic growth since the banks had no money to lend out.
I don't think the sharks on Wall Street would be willing to settle for just holding on for a decade. There's money to be made someplace!
This is why I don't think there is a stimulus plan; no matter how much they might call it that. This is a give away. Calling it a stimulus plan is just a smoke screen.
Robert,
Thank you for your post. You provide a very good explanation so we, the citizens, understand what is actually happening.
As the President and his supporters promoted the tax break, I was trying to figure out why? I know that we, the people, like the idea of receiving a $600 ($1200 for couples) stimulus. I, like most people, get those little $ in my eyeballs and think about what I want to buy. (e.g. DVR, vacation weekend, etc.) But I kept thinking, why would the President and his cohorts want to do this? What is in it for him?
You clearly explained it. He is giving his supporters, his Big Business PACs, a gimme. Accellerated Depreciation is going to give them a Big Jolt in the pocketbook. No. They won´t reinvest in their businesses for more machines. They will put it all in their off shore accounts and invest in the Euro!
Way to go Dubya!
Admittedly, there is little else they can do. Bush and Co are desperate to hold the bubble until they are out of the White House and safe in some non-extradition country. But more seriously, the system is so impaired that they might as well throw everything they have on the fire and call it a beach party.
As far as I can tell, the only real solution is to call the Arabs, the Chinese and the Japanese and ask for a "do-over". Yes, just ask them to give back all the money they collected over the past ten years. Give it right back to the US consumer.
Anything else is just not realistic.
I'd like to add several ideas.
First of all we have inflationary as well as deflationary forces at work. During the housing boom money was borrowed into existence (inflationary). During the bust (i.e. now) people default on their loans and money vanishes into thin air (REOs usually sell @ 50% off), a deflationary process. To counteract this process we're getting "rebate checks" of $600. Why stop there? Send everybody $5K for X-mas and $1 million for their birthday. Why not?
None of this is going to cure the dilemma we're in. Inflation adjusted wages (and yes most of us actually buy food, energy, housing, tution, health care) have been declining much more than the official government numbers show. WE're out of savings, out of credit and out of luck. Why is this happening? In case you haven't noticed, 2.5 billion Asians just crashed the party but the size of the punch bowl stayed the same. Throw in assorted other developing countries (Brazil, South Africa, Iran, etc.) and you can see that everybody will have to make due with a much smaller serving of goodies than anticipated. Our standard of living is declining, no gimmick, asset bubble or stimulus package is going to change that fact. Not matter how we slice it or dice it, we just can't compete with $1/day slave labor. At least not under the current economic model.
We could maintain an edge through technological innovation. Energy and agriculture/genetics are some of those areas. Unfortunately looking at American Universities it appears our youngsters are more interested in sports, business, speech communications, English and basket weaving. The easy life we've become accustomed too.
Difficult math & engineering science is almost exclusively left to foreign students. I know first hand as I spend many nights at the lab with fellow Chinese and Indian students.
In that sense we better get used to the term downsizing. Ship that Beemer to China, trade that big screen TV in for a radio. I know, nobody wants to hear it but that's what globalization has in store for US.
It's about time someone woke up and said this! Thank you.
Now some of the other problems which make no sense at all:
Trade Adjustment Agreement compensation for displaced workers whose jobs were outsourced. Its a farce! I have often heard radio (npr as well) telling how a displaced worker will receive help on their health insurance. This boils down to a tax credit at the end of the year. HELLO!!!! Anyone that is out of work knows they can't afford to spend $1500 a month plus deductibles on health insurance when they have a family to feed! So this is a rarely used "benefit".
Here in the Twin Cities, the CEO of United Healthcare, Dr. William McGuire, was making $100 million a year.
Now tell me what's better for our economy: one guy making $100 million, or 2,000 people making $50,000?
The greed of a few score CEOs is costing us tens of thousands of jobs, if you look at it that way.
You have hit the nail on the head, the problems with our economy are not with incentives for investment but incentives for consumption. The only problem with Keynesian economic theory is it not good politics to tighten up during periods of prosperity. What is needed is priming of the pump.
Listen Robert - I dont like your liberal views, and you are a totally two-faced at times. Your strong support for ciminals entering the country is contrary to doing what is best for the average American. But, I do agree that the root of the problem is flat wages. Bad trade policies and open borders have left the typical American unable to negotiate higher wages. Rich people have every right to be rich, and we shouldnt target all our frustration that the financially successful in our society like so many liberals do. But the real problem is the system (put in place by the rotten Republicans and the rotten Democrats) that pits good blue-collared Americans against poverty ridden labor in India, China, Vietnam, and Mexico. The housing bubble was a convenient way to keep Americans spending without any additional salary, but now that game is over. Its time to talk Turkey.
robert d feinman:
Let me say at the outset that once you step one foot into the realm of monetary theory my knowledge dissipates. That said, there are a couple of questionable statements in your arguments.
First, loans made by banks to others are Receivables to the bank. Receivables in the entire commercial world are assets.
Second, though it gets confusing, is that the huge losses that we have been seeing are mainly in the Investment Banking/brokerage world. These losses to those firms are not defaults on loans that they issued and are carrying on their books but rather are the values of securities, CDOs and such, that they purchased as income producing assets. As such they would not have any effect on their reserve requirements. Reserve requirements, as I understand them, are based on demand deposits not on entire asset bases. Therefore to state that the Fed is “secretly” giving these firms cash to buffet their reserves is confusing at best.
I would agree that the Fed is attempting to aid these firms and avoid bank failures but most of that has been aboveboard and much discussed in the public arena. The Fed’s actions did appear to me to be little more than sticking gum in the hole in the dam, as in that current commercial, but I see nothing clandestine in their actions. I also look askance at the protestations of the federal government that their plans are merely to aid the homebuyers, not to bail out the banks. Any help given to homebuyers enabling them to keep their mortgages and avoid default has to also aid the ultimate holders of those mortgages. Granted their return rates will suffer and the market price of the packaged mortgage assets will decline, but much of the principal can be salvaged if foreclosure can be avoided.
Also agree that Wall Street is not in the business of holding long term assets for meager returns. With or without help from the Fed or the government, they will conjure up some way to make money from this whole fiasco. Perhaps packaging all the foreclosed properties into securities, with a short term holding period until consumers jump back in to buy these foreclosed homes at bargain prices.
Anonymous 7:41:
Your strong support for ciminals entering the country is contrary to doing what is best for the average American.
A little off in perspective. The average American does benefit from the “criminals” entering the country through lower prices, especially in agricultural products. It is the poorer, unskilled American, that is most hurt by illegal immigration.
Bad trade policies and open borders have left the typical American unable to negotiate higher wages.
More true currently than historically, but misses a larger causative factor. Wage stagnation, for the average American worker commenced in the 70s and 80s. In the 70s, with crescendoing inflation and rising unemployment the attention of the American worker turned more to salvaging a job than to continuing wage growth. The two or three previous decades of relative income equality coupled with the advent of criminal elements into the union hierarchies served to diminish an appreciation for all that unions had achieved, even for nonunion workers.
When the Reaganites took office the business world found an administration sympathetic to the idea that unions were anathema to economic growth. This began a rapid decrease in the effectiveness of, and support for, unions. The aura likely began in the mid-70s when the American auto industry, the quintessential example of union effectivity, got caught with their pants down and commenced massive layoffs with little hope, on the workers part, that it would be a temporary respite. Business leaders had long suffered the unions as step children, as necessary evils requiring attention and compromise but forever inhibiting the desire for unbridled profits. This fall from power of the union’s influence was the root cause disabling the ability of workers to negotiate higher wages.
The selling of the absurdity, known as “supply-side economics”, ushered in with Reagan, which many in the populace seemed willing to buy into, or at least try, created the logical extension that the more wealthy we have the more jobs that will be created and the better off we will all be. Therefore when executive salaries accelerated in relation to all other workers it appeared consistent with the theory. It didn’t appear to be working, after a few years, but what the hell, give love a chance. Meanwhile, like a snowball rolling downhill, executive salaries kept getting bigger and bigger and trickle down turned quickly to trickled on.
Always looking for new ideas to further economic growth, surely encompassing a desire to improve the plights of all Americans, free trade entered the picture. The idea that dropping trade barriers would allow for more exports and thereby create competitive wage jobs for American workers, again, seemed logical. Chalk it up to my naiveté, but I still believe that at the outset, our leaders, Republican and Democrat, believed that premise. No doubt American business pushed the idea, selling (that which we Americans excel at) the promising future that would come; sort of a “Field of Dreams” fantasy.
Alas, American business, much like water and electricity, seeks the path of least resistance; to profits. It is much more profitable to manufacture with low cost labor and import free back to America than to manufacture in America, with high cost labor, and export free, to countries whose populace couldn’t afford the goods. The dream, or lie, quickly segued to a nightmare; ergo, leading to the validity of your last premise.
Its time to talk Turkey.
Letting Turkey into the EU will not solve this problem.
I'm sure both the Democrats and Republican's will give us several more rounds of stimulus before the reality hits the American people. The FED will push rates to near zero and still we will have high foreclosures and a slow business cycle.
Bank reserves are falling because they are bringing back off balance sheet worthless paper on to their balance sheets. Far worse write offs are coming and the extent of the damage will not be known for sometime but given the speed of the recent FED cuts one can guess that the damage is deep and painful.
yes -
consumers are at the end of their ropes - and it is due to low wages - wages for non college educated people have been stagnant since 1970
Dr. Reicht’s suggestion that we consumers are “at the end of our rope” (though completely logical) seems premature, since the purpose of the proposed economic stimulus package is to give each of us more rope still. In case we didn’t have enough already, the additional rope will ensure that we consumers have a sufficient amount to hang ourselves with. This could put a whole new twist on the archaic diagnosis “dying of consumption”.
Just the same, as I eagerly plan out this last shopping spree before my imminent demise I can’t help wondering why the president and congress are not addressing the obvious question hanging over the $150 billion cost of the package:
Where’s the money?
The federal government has no money of its own. It just acts as a purchasing agent for spending taxpayers’ money, and a broker for negotiating loans when our tax dollars run out. And in recent years we’ve allowed the feds to spend far more money than we taxpayers have paid in. — So much more in fact — that since 2000, they’ve had to borrow roughly $500 billion each year to cover their expenditures. Most of the loans came from China (where our manufacturing jobs went), India (where our service and technology jobs went), Japan, (where our automotive industry jobs went) and a variety of middle eastern countries who have us over the proverbial oil barrel, and whose citizens can be seen on the evening news burning our flags while chanting “death to America”.
But beggars can’t be choosers — and since we don’t have the money, we have no choice but to add this $150 billion to our already burgeoning debt to these foreign lenders. The stimulus package will increase each American’s portion of foreign debt by $495 per person ($1,980 for a family of four). That’s a lot of money to borrow when we’re already way over our heads. In recent years America has gone from being the world’s wealthiest nation to it’s most indebted.
By the end of 2008, the national debt is projected to reach $9.7 trillion (a whopping $4 trillion increase in just the last eight years). Equally divided, each American’s share comes to $32,333 ($129,333 for a family of four) not including the proposed $150 billion stimulus package loan.
To make matters worse, 2008 marks an ominous tipping point. The interest payment on the national debt this year is projected to reach $610 billion, which means that for the first time ever, the entire projected 2008 deficit won't even cover the interest payment on what we owe. Going forward we will need to borrow more each year just to cover the interest, while the unpaid principle continues to climb.
There will be nothing left to repair our crumbling infrastructure, deteriorating schools or declining healthcare — nothing for Medicaid (slated to go broke in 2011) or to replenish the Social Security trust fund before reserves run out in 2017.
Given our situation, it seems rather ludicrous for our government to borrow $150 billion so that we consumers so will keep on consuming — especially when reckless borrowing and rampant consuming caused the problem to begin with.
If Treasury Secretary Paulson were a credit counselor and someone came in with more than $32,000 in credit card debt that they couldn't repay, or even cover the interest payment on, would he tell them to borrow another $500 and go shopping?
Oh well… maybe he can help me figure out how to tie a “slip knot”.
Raising taxes on people isn't going to solve much of a problem at least on the federal level.
There's small economic things that could help...
1) raise the working age to 18...flush out kids working. Higher demand for labor means higher wages
2) Get prison labor to grow products to make ethanol (switchgrass) we can build reserves...or better yet get this labor to make solar panels and make local and state governments off grid. This can save money in the long run and under the same taxes perform far more services
3) Take all troops home...we won the war in iraq in three weeks...why are we still there now? Saddam was found, tried, convicted and executed so why are we still there? they have a constitution...the uk and isreal don't even have one...so why are we still there?
4) End free trade. Put tarrifs on foreign goods. The tarrif money would be used for job training for people hurt by free trade.
Robert, we need you back in Washington, supporting the next Democratic President and hopefully in a position to "teach" the reality of what you are saying to the numbskulls who blindly follow Bush and the likes of Reagan and the supply-siders. I just discovered your blog and I've never left a blog comment before.
Economic Downturn Structural Not Cyclical
Our current economic downturn is the direct result of an imbalance in the global economy precipitated through labor arbitrage. Prior to our current condition labor markets were relatively confined within nation state boundaries. Within these boundaries nation states enacted laws in varying degrees to ensure (at least in most developed countries) that labor was provided basic protections against an often times capricious employer. In addition, to laws governing basic worker rights, labor was afforded the right to organize into unions, guaranteed a wage above the level of subsistence, and afforded job security enforced through business custom.
Most important was the assurance that today’s job would not become the lost job of tomorrow. But once the global economy surged past the nation state breakers the obliteration of labor security commenced unabated. With the outflow of corporate capital in search of cheap labor abroad and unregulated inflow of foreign labor via “Temporary Worker Visa” programs (L-1, H1-B, and others) no job was any longer secure regardless of profession. There was talk of retraining workers displaced by these free (or was it lopsided) trade effects but as more and more workers became displaced across a multitude of professions the talk subsided and the realization set in that all meaningful employment had vanished from the United States. The result was a liquidation of competence, purchasing power (consumption), and a once throbbing heart of global economic dominance.
At this point businesses around the globe finally realized that a vibrant global middle class capable of purchasing had died a slow and agonizing death. Slow in that little by little year by year their numbers declined has jobs were lost to lower cost labor markets. But this new army of low cost labor wasn’t able to sustain the insatiable consumption of the global economic engine – its meager wages could barely sustain the basic necessities of existence. The race to the bottom was complete – the economic engine back fired one loud and last gasp for consumption – then expired.
The above will be our shared future both capital and labor if we don’t fully realize that one without the other does not make for an economy. Greed can only be a short term benefit for the long term result is an extreme maldistribution between capital and labor that eliminates any possibility that labor will easily regain a lost middle class propensity to consume. Granted capital will enjoy their excess wealth but this is a hollow transitory victory.
We must come to the realization that our current economic condition is a structural defect that can be remedied only if we work together.
To see the rest of my thoughts visit
http://structuraleconissues.blogspot.com/
anonymous 7:08:
I really like your proposition 2.
Prisons harbor a huge, mostly untapped resource, that if employed in meaningful, productive endeavors, could lead to multiple societal benefits.
Our economy has become driven by two sectors, financial and military. Financial innovation producing credit products created by our best Ivy league educated MBA grads have no value for the economy except speculation and excessive Wall street and CEO bonus packages.
Our military outlays not only for the current war but the cost to maintain our vast overseas network of bases of all types, extensive feedback loop between members of Congress and the Military supply system has become a world of legal kickbacks as various segments of the economy fight over keeping bases and military driven companies within their reach.
These issues are never discussed by the major political parties instead their goals are to remain in power, either Democrat or Republican with little meaningful difference between them regarding these key issues.
In many ways the fall of the Soviet Union and its current rebirth is a lesson in what lays ahead for America.
Economic inequality, huh. So I guess the proposal of the fairest tax is the only way to please you.
What is the Fairest Tax? Why, take ALL my money, and everyone else's money, with NO deductions, exemptions or other loopholes. Take it ALL, let the gov't spend what they want, and then divide the remainder by the number of families in the US (legal and illegal) give us a little to "play" with. In return, the gov't will give each family one automobile with the same standard equipment, one equal home, a food-ration card, assign each family a physician, dentist, non-denominational psycho-helper, etc., etc., etc.
This is the only way I can think to keep fools like me from spending money in foolish ways, and prevent the 'rich' from making too much money. We can all work for some Nationalized Corporation and on weekends cheer for our favorite Rollerball team.
Why wouldn't that work? I can see no way the US couldn't climb out the hole we are in.
Just a thought, brought to you by blind extrapolation.
strictly middleclass engineer:
Excellent extrapolation!
I keep coming back to the plot lines from, "Captains and the Kings" and "Rollerball" as perhaps representing what is really transpiring in today's world.
Strictly Middleclass,
I like it. People won´t go for it though. Too much greed and grass is greener mentality.
You are right. We cannot possibily climb out of this hole we are in.
I am curious as to what is next in store for us. We can always wait for End of Days, as in 12/21/2012
December 21 — The Mesoamerican Long Count calendar, notably used by the Maya civilization among others of pre-Columbian Mesoamerica, completes its thirteenth b'ak'tun cycle since the calendar's mythical starting point. It is conjectured that this may represent in the Maya belief system a transition from the current Creation world into the next...2012 is sometimes claimed to be a great year of spiritual transformation (or apocalypse).
Dee,
strictly middleclass was joking.
He did not intend to be taken seriously. Read him again
art a layman , you wrote earlier
It is the poorer, unskilled American, that is most hurt by illegal immigration
Art a layman, thank you for your comment. Let me ask you, where is the justice in that ?
Shouldn't we all be focused on protecting the unskilled americans from this pressure on them?
Robert I resent being told I'm at the end of my rope, actually I am at the end of my HELOC equity loan!!
Robert,
Met and spoke with you at the French Hotel.
What ever possessed, your friend, Bill Clinton to sign the repeal of Glass-Steagle? Many of the problems we have today flow from that signing.
Kenneth Smythe/Yaheba
this is a great explanation of something confusing and overwhelming .....I think my rope was never long enough.....sigh....
thank you for explaining all of this...
Inflation is just another word for devaluation of money, and devaluation of the Dollar is the best solution for the US at the moment. Its like a town on a hillside which suffers a landslip; the town slides down the hill of a piece, leaving a few cracks in roads and buildings, and a different view of the rest of the world, but life goes on at a lower level.
Any other solution of economic stimulus is just putting off the inevitable; the solution to runaway debt is NOT more debt! The solution to wildly overvalued 'assets' is NOT another bubble!!
Ultimately the US has to join the rest of the world economy. Oil is the same price all over the world, so machine production is the same cost everywhere. But labour is much cheaper elsewhere so US real wages HAVE to fall to international levels eventually, especially as there are 10,000 Asian workers for every single American worker! Which way do YOU think wages are going to go?
To counter every statement about education in the US: my husband has three masters degrees: math, physics, and electrical engineering. Math thesis published in the top American math journal. He has not had a telephone call for a job interview in 5 years, not even so much as a telephone call. His resume on Monster had a total of 9 hits in four years. So formal, top notch academic education in math and engineering counts for nothing.
Why worship something that is made of nothing but sand and dead trees. Most folks will simply walk away from their problems.
www.debtamendment.com
to art a layman
you are right when you say that the unskilled members of our community (many of them black) are hurt by Dee's decision to invite 20 million illegals in.
These illegals compete with our native born unskilled
last night Hillary said much the same thing - Dee's policies have pushed up unemployment rate among black men
However, art a layman, you seemed to not let this statement bother you - you recognize that Dee's policies hurt the unskilled among us, but you don't comment on whether that bothers you or not. please share your feelings with us.
let us know where you stand
You are ignoring the real issue - it stinks to lose your job due to Dee's policies, but it is worse to lose your life.
The Southern poverty law center has always stood up for us and for our community before, and they continue to do so today, speaking the truth about the "undocumented" people that Dee has brought to our communities.
http://www.splcenter.org/intel/intelreport/article.jsp?aid=722
L.A. Blackout
Acting on orders from the Mexican Mafia, Latino gang members in Southern California are terrorizing and killing blacks.
by Brentin Mock
Anthony Prudhomme's stepfather, Lavalle, had no idea the young man was murdered for racial reasons until his killers went on trial. (Todd Bigelow)
LOS ANGELES, Calif. -- Ascending the steep steps that lead from the street to the scene of her son's murder, 47-year-old Louisa Prudhomme is charged by a Doberman Pinscher.
Prudhomme reaches over a gate and gives the guard dog a rough pat on the head.
"Sam doesn't seem to remember me," she says.
What Prudhomme will never forget is that just past the snarling Doberman is the apartment on a hill where six years ago her 21-year-old son Anthony was shot in the face with a .25-caliber semi-automatic while lying on a futon she had purchased for him from IKEA. He died wearing a shirt that read, "Keep the Peace."
Anthony Prudhomme was slain by members of the Avenues, a Latino street gang. But he was not a rival gang member, or a police informant, or a drug dealer. The Avenues did not target him for the content of his character, or even the contents of his apartment.
They targeted him for the color of his skin.
Hillary is now speaking the truth about black unemployment - i am convinced she will also speak the truth about what the SPLC discusses. Hillary has proven she is more willing to stand up for the black community than Obama is.
You go Hillary!
Please, please take the time to read the SPLC web site.
This goes beyond the usual cynical politics discussed on this blog - this is a life and death issue
Anon, You are incorrect about what Hillary said. She said:"employers who exploit undocumented workers and drive down wages, there are job losses...So, I know that what we have to do is to bring our country together to have a comprehensive immigration reform (CIR) solution."
She is saying what I am saying!
http://immigrationmexicanamerican.blogspot.com/2008/01/watching-democratic-debates-live-now-on.html
PS: Your trying to stir up anger between African Americans and Hispanics on Robert´s blog, mine or Prof B´s is not working. Sorry! Read SPLC as suggested!
PPS: Your demonizing of me and mischaracterizing my views isn´t working either! Sorry (2)
anonymous 4:55:
Was not suggesting any justice in either case. Was merely trying to improve the precision of your statement. I certainly agree that we should be focused on improving the plight of the unskilled worker.
That improvement should come from improved wages and job opportunities but also will require some personal motivation to improve his/her skills.
donal lang:
But labour is much cheaper elsewhere so US real wages HAVE to fall to international levels eventually, especially as there are 10,000 Asian workers for every single American worker! Which way do YOU think wages are going to go?
A seemingly logical conclusion but totaly unrealistic. Our nation, our economy, our standard of living cannot be maintained at Asian labor rates.
Further, it is not only labor rates but lack of regulation, leading to poor quality goods, government control and intervention and financing and in some instances ownership, that impair the ability of free market forces to level the playing field. The general level of living standards in many Asian countries allow that meager, even subhuman, wage rates appear to be, manna from heaven.
Overtime, even in countries like China, the standard of living/wage spiral will drive wages higher. Look at the commerce history of Japan and South Korea.
The huge difference between the US and those Asian countries that currently have reached some economic parity with us, is American greed. Look at the huge disparity in executive compensation packages in Japan and South Korea compared to US corporations. Absurd! The continuing pressure from Wall Street for US corporations to continue year over year profit growth of 15 - 20% is unsustainable.
This Wall Street pressure maintains a constant impetus on US business for productivity gains (not altogether a bad thing) to continue profit growth. The problem arises when those productivity gains are not shared with laborers below the executive suites and when the productivity gains lead to job cuts.
Until or unless American business comes to the realization that success and profit growth is uniquely integrated with the efforts of all employees and, that success and those profits need to benefit all who are a part of the story, I fear we are headed downhill, economically and as a culture, leading to the demise of the great American experiment.
Wages falling to some sort of international level will only hasten that demise. Your argument also loses luster when you compare us to Europe. European wages are not far different from US wages, certainly their social benefits are far greater, yet they seem to be maintaining their competiveness in the global economy. Part of that is again, executive compensation.
Yes, their economic growth has been slower than ours but did we learn nothing from our childhood lesson of the "Tortoise and the Hare"?
It is time for America to step back and assess the paradigm. A return to relative income equality via spreading the generation of wealth among the entire populace and a return to emphasizing production over consumption is the only solution. This is unlikely to occur voluntarily so using the tax system and regulatory options seems our only salvation.
kayxyz:
Sorry for your husbands misfortunes. I believe you have mentioned that you are in North Carolina, as am I. In North Carolina we have a burgeoning Community College System, has your husband attempted pursuing that avenue? Likely the pay is not commensurate with his previous earnings but I understand it's decent and last I looked the community colleges were not all hung up on PhDs, so he would seem an excellent fit. If nothing else it could tide you guys over until he could find something else.
The Kabuki dance we refer to as the employment process is fraught with numerous inequities not the least of which is that overqualified is often worse than underqualified. It is curious and frustrating that with his credentials he has been unable to secure employment but that should never create disdain for the educational accomplishments he has attained.
anonymous 8:04:
Would that all issues were as simplistic as many web bloggers like to make them.
Hillary's answer last night, to my mind was better than Obama's overall, but it was nonetheless typical political jargon. She acknowledged a problem and suggested a concerted, communal solution.
Obama did make one salient point. The unemployment rate among blacks has been a cancer that has existed for many years and while aggravated by illegal immigration is not caused by it.
The illegal immigration problem is much more problematic as a security issue than a jobs issue. The initial wave of illegal immigration did truly take many jobs which other Americans, white, black or green, did not seem anxious to take. They were primarily the low wage, heinous working condition jobs in agriculture. Probably in early stages they were more impactive on the legal immigrants than on blacks or others. Granted this has segued to the construction industry, manufacturing and the service sector. No doubt the scenario drives down wages for all the unskilled. The wage depression effect from illegals is not nearly as detrimental as the lose of jobs here to the overseas bastions of cheap labor.
No one can avoid the fact that the biggest villains in this dilemma are the employers who hire the illegal laborers; paying them below standard wages and depriving them of the safety and benefits which the government and labor unions fought many years to bring about.
The villains here are not the illegals. With exceptions, they are for the most part, merely seeking a better life and better opportunity for themselves and their offspring. They are not dissimilar to our ancestors who forged mountains and rivers; fought indians, grabbing their lands and treasures, and outlaws; weathered storms and droughts; all to seek a better way. And they often achieved their better way by taking illegal actions.
As for gangs and thugs who kill others, blacks and whites, Americans and others; this, too, is not a new phenomenon. These kinds of actions occurred long before a huge influx of illegal immigrants. For years many of these kinds of actions were perpetrated by whites and blacks. The fact that it is now Latinos may be new but not the activities.
Do we know whether these events are occurring by illegal or legal immigrants? In either case your arguments begin to take on more of a general racist tint as opposed to a focus on illegal immigration.
Hillary was right, and Obama concurred, the answer lies in turning around the direction of our country. It requires a comprehensive immigration policy but even more, it requires that we, once again, create in this country, decent jobs paying livable wages, allowing all of our citizens an opportunity for seeking advancement and growth through education and hard work.
I wonder how many of you realize that your U.S. Federal Reserve Board is actually privately owned and run. It is not controlled by the people of America or "their" government at all......and yet the Federal Reserve dictates to you what interest rate you must use.
If you really, really want to know what's going on with your entire financial industry, stocks, mortgages, then maybe its about time for all of you to investigate http://www.apfn.org/apfn/reserve.htm
You said it,"The problem is that, once they buy all they want, what do they do with their extra cash?".....well, if they now have everything they want, then there's no reason for them to help out society by spending or investing.....especially in the U.S. economy with all those debt-ridden consumers.
A massive financial transfer of wealth is about to occur in your country.....from the middle-class and upper-class society to the richest of the rich 1% households.
This transfer happened in 1929 and its about to happen again. This time instead of people taking on loans to buy stocks to create artificial infaltion in value, it will be the people who took on mortgages to buy houses that had artificially high value. It's just a massive price correction for the American consumer.
And that doesn't even include your credit card debts & Trillions of dollars in hedge funds tied to the debt-ridden american subprime mortgage holders. Wait until that kicks in......god help you.
As I have watched each financial crisis of the past decade or so arise and unfold, coupled with the US governments abysmal foreign and domestic policies, I cannot help but think this is well thought out, planned, and executed.
anonymous:
Let me add.
My hope is that one of the biggest benefits of Obama's success so far in the political skirmish for the presidency, whether ultimately successful or not, is that black Americans and all minorities will realize that any dream is possible.
I am not so naive as to believe that racism has disappeared from our culture nor do I think that the road for young black males and females has been leveled by the removal of all barriers. Black folks still face far more obstacles and obstructions on the pathway to success, whatever that may be, than we whites or even Asians and perhaps Latinos. Nevertheless, Obama has exhibited that great things can be achieved if one has the drive; the ambition and the perserverance to fight through any barriers put before them.
Is it fair that some face more difficulties than others? Of course not. It is a fact, however, that very few achieve without running across some degree of unfairness or perceived inequity? The poor no doubt start well behind the curve. They begin life, normally, with no strong influence motivating them to succeed. In their families and their neighborhoods there are usually no voices imploring them to rise above and out. There is no one providing them a map or a methodology for advancing beyond that existence which their families have provided. Somehow, somewhere, they have to seek and find that desire, that drive which enables them to see a brighter path. To see that whatever one can dream of is achievable. To understand that the road is rockier for many but that many have traveled it before and many will after and it is up to them to garner the will to be among those many.
Mr. Obama, though not starting at the bottom of the socio/economic ladder, did face many of the obstacles that all non white ethnicities face. He overcame those and achieved and achieved and achieved again. Like the Eveready Bunny he kept going and going; fighting and fighting; not willing to let someone else define him but rather pursuing the ideal to define himself. It would appear he's done a damn fine job.
All of us, not born with silver spoons in our mouths, (or a silver foot; homage to the late Ann Richards) are faced with two choices: We can live our lives as martyrs, as victims, ever expounding the greatness we could have achieved if the deck were not stacked against us; bemoaning the inequities that fate and culture have employed to shackle us; or, we can shred that deck; we can grab all the cards and select those which will aid us and discard the rest; looking for that means, those avenues that lead us toward the goal. We can face those inequities, fighting through them, and cast off those shackles, one by one as we jump each hurdle.
Many of us, black, white, brown, yellow, whatever, will not reach the pinnacle, our energies may wane, other events in our lives may force a redirection, but whatever level we achieve will be a source of pride and joy. We will know that we have enjoyed a life well-lived and we will have set an example for those who follow us. This scenario has helped our culture accept and aid the advances of all the less fortunate.
My dream is that Obama's example, and Hillary's, will help those facing whatever obstacles to establish their own dream of what is possible for them and they will set in motion an inertia, an energy that will draw others into the flow; both to follow and to assist.
Ask not what others can do for you; ask what you can do for yourself and others. That was the real meaning of JFK's famous quote.
Planned Destruction of America
http://planneddestructionofamerica.blogspot.com/
Corporate America: What Went Wrong?
http://corporateamericawhatwentwrong.blogspot.com/
Art a layman is absolutely correct when he says
___
The unemployment rate among blacks has been a cancer that has existed for many years and while aggravated by illegal immigration is not caused by it.
______
Research by George Borjas finds that a relatively small percentage of the blacks that are unemployed are unemployed because of mexican immigration.
Similarly, while it is true that La Raza is waging a campaign of ethnic cleansing against blacks, this impacts only a small % of the blacks in the US.
Let's keep this in perspective. Not all the problems of blacks in the USA will be solved by deportation of the illegals
You are wrong
this is simple
Robert Reich invited millions of illegals in to the USA
these illegals drive down wages of African Americans
Read the research of Dr Borjas
it is crystal clear
Interesting, anonymous arguing with anonymous.
Could we be living through a real life Jekyll and Hyde?
From the start of this thread
Which gets us to the real problem. Most consumers are at the end of their ropes and can’t buy more. Real incomes are no higher than they were in 2000, while food and energy and health care costs are all rising faster than inflation. And home values are dropping, which means an end to home equity loans and refinancing.
Wouldn't it make sense to get home prices rising again - that would restore some consumer confidence
Well now when everyone speaks globalization, just what do you think that means?
It means this: jobs will go to the lowest wage bidder on the planet, enabled by the internet. this is the corporate utopia vision. And it continues to unfold.
The net affect? Poor countries get richer. Rich countries get poorer.
And its hard to turn back now. We cannot take back the manufacturing jobs we shipped out the last two decades.
So get ready to be a poor american.
Good News. Our hero Robert Reich is on ABC This Week right now, assessing Super Tuesday with others!
For art: quick word to say my husband and I both took the shortest, least expensive biowork course, at two different community colleges so as to compare. The biowork course is very specifically targeted to tobacco buyouts, the Golden Leaf fund. I know at least three people, and there are probably more, for whom the biowork course did not lead to employment.
However, the North Carolina community college system is good and is the only lifeline to short-term fixes pitted against the giant globalization going on.
I just put my credit card bills on the desk of Elaine Chao, Elizabeth Dole, and pointedly asked Liddy Dole to send me the Trade Adjustment Authority steps. Of course, they don't fit my husband's needs, but I am working to change the steps.
Thanks to Dr. Reich for speaking at NCSU; I take a microbiology course two nights a week; otherwise, I would have attended. I listened to a partial rebroadcast and noted what you said about globalization and technology (software).
Why do people call him Doctor Reich? Smart guy who has a law degree and is a professor. He is not a PhD and thus don't call him Dr.
anonymous 10:36:
An individual acquiring a Juris Doctorate degree may be acknowledged with the title of "Dr.". Get over yourself!
I really enjoy your blog entries. even if they are occasionally depressing.
I'm curious though, if in figuring out wages, you included healthcare expenditures by employers. I've generally seen wage increases that may have been directed to employees get redirected into increasing health insurance costs. I've also seen employers abandon providing health insurance benefits because it's simply too expensive to do so.
I know this wouldn't account for the great disparity in wages but for lower wage earners, the health insurance costs are an ever increasing drag on wages.
I guess I'm curious if you treat health insurance contributions by employers as wages, have wages declined as much as we think?
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Robert,
I am not an economist or a POLITICAN; however, despite what the models and statistics state, America is in a recession.
I am an average American. I have a college education, currently working on my master’s degree and hold a white-collar job (nursing administration). I own a home (no predatory mortgage), drive two cars, have one credit card and two kids (not college age-thankfully).
My husband and I both have incomes above the average American family and just above any tax credit available to middle-class families. Our income grew approximately thirty percent since 2000.
Based on this background information, we should be immune from any economic slowdown. Wrong.
While we are making our bills, we are not spending. Our rate for savings needed to be cut 50% to make ends meet. We are not going out shopping, out to dinner, to the movies, theater. No vacation this year either. I know most Americans who are in far worse predicaments and our situation may be seen as, “so what, a little less fun and a little belt tightening…big deal.”
Yet it is a big deal.
My family represents what has floated the economy. We spend. We buy cars. We attend institutions of higher education. We infuse local businesses by going out for dinner, attending cultural events and shopping. Given our financial background, if we have cut back, those with lesser incomes are really struggling and minimumally impact the economy.
So what factors have changed our spending habits? Food prices, gas prices, utilities, and taxes, and insurance (with no rebate/refund credits). These increases equate to $2000 per month. Our discretionary income was $2000 per month 18 months ago. So, now it is understandable how our middle class family is contributing nothing to stimulating the economy. We are just maintaining.
The scariest part is Washington doesn’t get it. After all, we are not officially in a recession. I find this ridiculous. I don’t know how the economists and politicians of this country can’t see this. Perhaps the economist should stop analyzing data and the politicians stop vying for votes and take a REAL look. Americans are hurting and for many of us, the economy collapsed over a year ago.
Dr. Reich, You claim to be a friend of 40 years to Hillary Clinton, with friends like you she done not need enemies.
She has the support of The American Federation of Teachers and The American Nurses Association. Need I say more. She gets my vote, hands down.
Obama is left doing a lot of explaining about his friends. His Syrian friend Rezko, in federal trial for fraud, under Judge Patrick Fitzgerald. Obama most likely will be called to testify his connections, as well as his sharing Rezko's bounty. He will have to explain his connection to Iranian ties, his ties to his friend Prof.Khalidi who says he supports Obama for president "because he is the only candidate who has expressed sympathy for the Palestinian cause."
Khalidi is formally from Chicago and a former fund raiser and friend of Obama. Khalidi is at Columbia and also supported the most recent appearance of President Ahmadinejad. Prhaps this is why a Rabbi has traveled to Ohio to explain why they must vote for Hillary Clinton. Perhaps you should have too.
Our primary concerns with our ecomomy are our loans with China. Pernaps as good Americans the Corporations, namely Oil companies with 32 Billion per Quarter profit, make an outright loan of money to the Government to pay off China. Would you feel more secure owing the American Corporations or China?
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