STATE OF THE UNION
Vince DeHart: “Is this a GREAT president, or what? Barack Obama makes me PROUD to be an American!”
TWO PERNICIOUS MISCONCEPTIONS
The Mitch McConnell crowd believe that “by any standard” the President “has been a disaster for our country.” And that global warming is a hoax; Darwin’s theory of evolution is hokum (the planet is only a few thousand years old) — and on and on. Donald Trump seems pretty sure the President was born in Kenya. Seventy percent of those who voted to reelect George W. Bush believed Iraq had played a role in attacking us on 9/11.
There is a lot of misinformation out there.
Two particularly widespread — pernicious — misconceptions are that we should pay down or pay off our national debt and that raising taxes on the wealthy would hurt the economy.
It’s fine to run deficits so long as we expand our debt more slowly, in most years, than we expand our economy. This is what we did from 1946, when the National Debt peaked at 122% of GDP, to 1980, when it bottomed out at 30% — before Ronald Reagan arrested that healthy trend. He — and then George W. Bush — so slashed taxes for the wealthy and ramped up military spending that they sent that 30% debt ratio soaring back up to 100% by the time Bush handed Obama a $1.5 trillion deficit and a global economy on the brink of catastrophe. (Bill Clinton, in the interim, managed to lower the debt ratio; as Barack Obama has now again begun to do.)
By way of illustration, if we were to run $500 billion deficits for each of the next 50 years but grow GDP at 2.5% plus 2% inflation annually, by 2065 the debt would have ballooned to more than $40 trillion (!!!) . . . yet that seemingly horrifying number would represent less than 30% of GDP — lower than the ratio Reagan inherited from Jimmy Carter.
To try literally to “pay it down” — let alone “pay it off” — by raising taxes sharply and/or slashing spending, would be insanity: it would plunge the economy back into recession and the same nose-diving vicious cycle of unemployment and lower tax receipts and higher safety-net payments — with even higher deficits, not lower — that President Obama managed to pull us out of.
(For those who still insist Obama is responsible for more debt than his predecessors, note, first, that “his” $1.5 trillion 2009 deficit was for the fiscal year that began October 1, weeks before he was even elected and months before he took office — this was clearly Bush’s deficit, not Obama’s. He was handed such a disaster that the next few years’ deficits were pretty well dictated by Bush’s gross mismanagement. Never before had we attempted to “finance” wars by cutting taxes, let alone slashing them, as Bush did.)
(Note, also, that while the “Obama” deficits are huge in absolute dollars, relatively speaking they are less so. Ronald Reagan inherited a National Debt under one trillion dollars — and tripled it. George W. Bush inherited a National Debt that, because of the Clinton surplus, had actually begun to shrink modestly — and doubled it. Like Clinton, Obama is once again lowering the debt relative to the size of the economy as a whole. It’s unlikely to have doubled by the time he leaves office. But if it does, there’s at least a reason: pulling out of a nose-dive toward depression requires massive deficit spending. Ronald Reagan and the Bushes had no such reason.)
Yes: If President Obama were proposing to raise $320 billion in added taxes over the next 10 years — and nothing more — that would suck $320 billion of demand out of the economy and might indeed hurt growth and employment, as the Republicans assert with one voice it will. “It’s a nonstarter!” Totally unthinkable! A fantasy!
But here’s what they’re missing (or pretending to miss): the President doesn’t propose to have that money disappear (i.e., reduce the deficit). Most of it would stay in the economy . . . to pay for community college tuition and books and lodging; to lower taxes (and increase the earned income tax credit) for the middle class and lower income workers.
So money would not be sucked out of the economy — it would simply be redistributed and spent by others. Which is an appalling concept when the redistribution flows from the wealthy to everyone else . . . but was just fine for the decades when more and more of the nation’s wealth was being redistributed to the wealthy (and especially the 1% of the 1%, who fund so many Republican candidates and dark money groups).
If this unthinkable redistribution is permitted to occur, we will become a society that builds modestly smaller mega-yachts and supports the purchase of modestly fewer $50 million condominiums (this nice one just went for $100 million). But also a society that has fewer children living in poverty and that invests more in their health and education and — as a result — our future prosperity. (A healthy, educated workforce is more productive.)
It’s a matter of priorities: Is your first priority helping the already best off, like Jeb Bush and most other Republicans? Or is it addressing the problem of our growing inequality and shrinking middle class, like Barack Obama and most other Democrats?
The last little piece of this is the canard that raising taxes on the wealthy kills jobs. Nick Hanauer decimates that notion in this must-watch short video I keep linking to.
For those who want the newer, longer version, it’s now available here:
Quote of the Day
It was never my thinking that made me my money. It was my sitting.~Jesse Livermore
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