It may come as no surprise to you, dear readers, that people these days are misinformed about basic facts as it relates to how our country is financed. This blog entry will be a simple step by step explanation of how the system works.
Unemployment:
Yesterday I had a colleague complain about the state having to pay unemployment for all the teachers that are going to be laid off. While her point was good, and well intended (it’s a shame to have money come out of the government coffers to pay for someone who is out of work as opposed to at least getting something for it), she made a clear mistake in her logic: in every paycheck, for every employee, a portion is set aside for unemployment insurance. In other words, when a person becomes unemployed, they are merely recouping what they have paid into the system. It is insurance that we are forced to buy, and like all insurance, some people end up using more than others. When it comes to unemployment insurance, I’m pretty happy (fingers crossed) not to have to use it.
Social Security and Medicare:
For the most part, the same is true of Social Security and Medicare. These are specific taxes that are taken out of each and every paycheck, and both are insurance policies. Social Security protects the individual against disability, as well as providing a retirement safety net for the elderly. Medicare is an insurance program for the elderly that we all pay into and will hopefully collect on when we reach the qualifying age. One can argue the merits of either program, but cutting funding for either and then appropriating those funds for different uses would be a bastardization of the specific taxes we pay for this insurance.
An Effective Tax Hike:
What Republicans, and unfortunately, President Obama, are currently proposing by cutting government workers and social services, amounts to a massive, across-the-board tax hike. Note that no one is proposing to lower taxes in a rate commensurate with the lower level of services we can expect from local, state, and federal government after they’ve dumped public employees. Our tax rate will remain the same. When this basic logic is applied, the conservative argument is completely nonsensical. They argue, as one idiot named Kay Bridges did in her letter to the Oregonian, that when the state hires fewer public employees, or lowers their rate of pay, she, as a business owner, can then invest more in the economy. But Kay, taxes haven’t been lowered! You still pay the same rate that you did before dummy! It’s just that now your kids get to go to school with average class sizes of 40, instead of 35 (that classes are now as large as 35 should be an outrage in and of itself). Now you get to put your own fires out instead of relying on the fire department. Now you get to wait to collect Social Security until you’re 70. I mean, it is almost crazy right? You have all these conservatives effectively shouting, “I want less services and insurance for the same amount—we want less! I don’t want a $5 footlong—I want a $5 half foot!
Thus, in sum, when government cuts services and pay for its employees, without lowering taxes at the same time, your tax equity (what you expect to receive from the government for your taxes) is lowered substantially. In other words, it is a tax hike. And this escapes the minds of most Americans because they simply believe that we’re “tightening our belts,” and “being more fiscally responsible.” This may be a wise strategy for a family of four, or a young worker, but it simply does not apply to government economic policy. So the next time someone says, “I’m glad government is tightening its belt,” correct them—don’t you mean you’re glad that the government is raising taxes?
Wednesday, April 6, 2011
Economic Nihilism
I don’t even know what to think anymore. I don’t really even know what the point of it is. I mean, why work or try to better yourself when you’re underpaid, overworked, scorned by society, and any money and progress that you do make in life is threatened constantly? It’s untenable. It’s miserable. And the fact is it’s the state of the average American worker. Scrambling to keep our heads above water, to improve our lives, to seek stable economic ground, and yet, to have that effort constantly undermined by the comfortable minority, the callous corporation, the cowardly media, and the corrupt politician.
The United States exists in a state of economic and governmental nihilism. Some don’t realize it. Some don’t care. Many are mistaken. But the fact remains that our government is essentially functioning without a purpose, and in doing so, it is purposefully heading toward its own destruction. On the one hand, we have Republicans that basically want to dismantle government completely and turn its faculties over to private business, and on the other, we have Democrats that refuse to take a hard line stance in opposition, preferring instead to wag their finger at them and compromise with people that are clearly wrong about almost everything.
The practiced meme is to say that both parties are too extreme and that they need to compromise. That talking heads on both sides are lying. That both philosophies have rational arguments to make. This is a plain, outright lie. When was the last time you heard a Republican say something that actually made any sense when examined from an intellectual (read: correct and justified) perspective?
Let’s take it issue by issue. The budget: just yesterday, Republican Paul Ryan came out with a proposal that would shift Medicare (administrative cost overhead between 2—6%) into the hands of private insurance (administrative cost overhead between 25—30%). He also proposed to extend income tax cuts for those making more than $250,000 indefinitely (I thought we had a serious deficit problem—every two years we have these tax cuts we have to borrow $700 billion from China), and on top of that, expand subsidies and tax breaks for corporations. The idea that this would somehow decrease the deficit, or improve the economy would be laughable if it wasn’t their serious proposal for the 2012 budget. On top of this, Republicans refuse to cut funding for the military, which is the single largest expense in our federal budget. They refuse to close loopholes in the tax code that allow huge corporations like GE and Big Oil to pay less than I did last year in taxes.
Science and climate change: last week Republicans held hearings on climate change that included only 2 scientists—one of whom testified that his findings “were very similar to that reported by prior groups (meaning the mainstream scientific community, which overwhelmingly believes human activities contribute to climate change).” This was despite the fact that his group, Berkely Earth Surfact Temperature Project, had been partially funded by the Koch foundation (so conservative that they would support fascism if it were socially palatable). You can read the Krugman article yourself if you’d like (1), but we should all know by now where Republicans stand when it comes to science: they don’t like it. If you need more evidence, one needs only look at state in the South or Midwest, several of whom are considering laws that would force teachers to openly call evolution into question, and to teach creationism in its place.
The economy: Republicans have called into question the usefulness of the federal stimulus plan, which according to several different studies, created or saved between 1 and 2 million jobs. They oppose any kind of stimulus in fact, unless it comes in the form of tax cuts. So I guess FDR just got lucky to get out of the depression, because according to Republicans, public works projects are worthless. Worse, they continue to subscribe to a theory of trickle down economics, which has been proven over time to be a horrible policy—it has contributed to the greatest shift of wealth in the history of America, from the masses to the very few. Last year, in 2010, the most profitable year for corporations in recent history, 50% of our country’s growth went to the top 1% richest households. Even more horrifying: 33% of our overall growth went to the top 0.1% richest households. But Republicans don’t care. They just want more of the same—tax cuts for the rich, tax breaks and loopholes for corporations.
Education: I don’t even know that Republicans have made any recent statements about their beliefs on education, but their actions speak plenty. Their current budget proposals cut funding for Pell grants and other student loans, as well as extra money to supplement state and federal education programs. Additionally, teachers are facing an unprecedented across the board effort by Republican governors to cut salaries, benefits, and the right to collectively bargain. Talking heads on the right, such as Rush Limbaugh (who never even graduated college), have spent hours on the airwaves demonizing teachers as, “fat, lazy, greedy, free loaders.”
I could keep going here with foreign policy (Iraq), energy policy (drill baby drill), health care (no plan to reduce costs, except to had it over to the private market—never mind that premiums have gone up 50% in the last ten years and overall cost is approaching 20% of the GDP), etc. But I’d like to get back to the main point.
Nihilism (or maybe hedonism) is basically the belief that nothing matters, that there is no point in being rational, and that because of this we should simply destroy everything we can including ourselves. I can’t think of a better way to summarize the Republican approach to government, and I can’t understand why Democrats continue to compromise and lend legitimacy to policies born out of this philosophy.
What makes our direction as a country nihilistic you ask? It’s really pretty simple: if we continue to funnel money to the richest 1% in this country, we continue to eliminate middle class jobs, and we continue to defund education, where are the consumers going to come from? If no one has any money left, how is our consumer driven economy (responsible for more than 60% of the GDP) going to survive?
The answer is, it’s not. And if that happens (and currently, no one is anxious to stop it) we’re done. When consumers have no money left and the entire middle class is bled dry, the whole line of dominos falls—the whole economy collapses. And then who knows? War, chaos, revolution, anarchy? Maybe all four. I can assure you this: capitalism, in all its splendor and glory will be done, because it needs the rule of law, as well as a stable government to function.
Unbelievably, we are no where close to recognizing our plight. Consider the recent editorial by the Oregonian: “This GOP spending plan should prod real compromise.” In the article, they make a typical statement that indicates how wrong traditional economic viewpoints have become: “We agree, however, that the economic fortunes of individuals and businesses will find improvement with lower taxes.” I thought we had a revenue problem in this country? I thought we were just terrified about our debt? How the hell are lower taxes going to solve this problem?
By becoming so focused on short term, selfish political aims (specifically, lowering taxes at all costs), our society is missing the big picture: if we don’t have a good infrastructure, business suffers. If we don’t educate our citizens, business suffers. If we don’t allow individuals to have access to things like health care and loans for higher education, business suffers.
Bottom line: until we figure it out as a society, and until our politicians get on board, we are practicing economic nihilism, and it is going to lead to the self destruction and death of the U.S. economy.
(1) http://www.nytimes.com/2011/04/04/opinion/04krugman.html?_r=1&partner=rssnyt&emc=rss
The United States exists in a state of economic and governmental nihilism. Some don’t realize it. Some don’t care. Many are mistaken. But the fact remains that our government is essentially functioning without a purpose, and in doing so, it is purposefully heading toward its own destruction. On the one hand, we have Republicans that basically want to dismantle government completely and turn its faculties over to private business, and on the other, we have Democrats that refuse to take a hard line stance in opposition, preferring instead to wag their finger at them and compromise with people that are clearly wrong about almost everything.
The practiced meme is to say that both parties are too extreme and that they need to compromise. That talking heads on both sides are lying. That both philosophies have rational arguments to make. This is a plain, outright lie. When was the last time you heard a Republican say something that actually made any sense when examined from an intellectual (read: correct and justified) perspective?
Let’s take it issue by issue. The budget: just yesterday, Republican Paul Ryan came out with a proposal that would shift Medicare (administrative cost overhead between 2—6%) into the hands of private insurance (administrative cost overhead between 25—30%). He also proposed to extend income tax cuts for those making more than $250,000 indefinitely (I thought we had a serious deficit problem—every two years we have these tax cuts we have to borrow $700 billion from China), and on top of that, expand subsidies and tax breaks for corporations. The idea that this would somehow decrease the deficit, or improve the economy would be laughable if it wasn’t their serious proposal for the 2012 budget. On top of this, Republicans refuse to cut funding for the military, which is the single largest expense in our federal budget. They refuse to close loopholes in the tax code that allow huge corporations like GE and Big Oil to pay less than I did last year in taxes.
Science and climate change: last week Republicans held hearings on climate change that included only 2 scientists—one of whom testified that his findings “were very similar to that reported by prior groups (meaning the mainstream scientific community, which overwhelmingly believes human activities contribute to climate change).” This was despite the fact that his group, Berkely Earth Surfact Temperature Project, had been partially funded by the Koch foundation (so conservative that they would support fascism if it were socially palatable). You can read the Krugman article yourself if you’d like (1), but we should all know by now where Republicans stand when it comes to science: they don’t like it. If you need more evidence, one needs only look at state in the South or Midwest, several of whom are considering laws that would force teachers to openly call evolution into question, and to teach creationism in its place.
The economy: Republicans have called into question the usefulness of the federal stimulus plan, which according to several different studies, created or saved between 1 and 2 million jobs. They oppose any kind of stimulus in fact, unless it comes in the form of tax cuts. So I guess FDR just got lucky to get out of the depression, because according to Republicans, public works projects are worthless. Worse, they continue to subscribe to a theory of trickle down economics, which has been proven over time to be a horrible policy—it has contributed to the greatest shift of wealth in the history of America, from the masses to the very few. Last year, in 2010, the most profitable year for corporations in recent history, 50% of our country’s growth went to the top 1% richest households. Even more horrifying: 33% of our overall growth went to the top 0.1% richest households. But Republicans don’t care. They just want more of the same—tax cuts for the rich, tax breaks and loopholes for corporations.
Education: I don’t even know that Republicans have made any recent statements about their beliefs on education, but their actions speak plenty. Their current budget proposals cut funding for Pell grants and other student loans, as well as extra money to supplement state and federal education programs. Additionally, teachers are facing an unprecedented across the board effort by Republican governors to cut salaries, benefits, and the right to collectively bargain. Talking heads on the right, such as Rush Limbaugh (who never even graduated college), have spent hours on the airwaves demonizing teachers as, “fat, lazy, greedy, free loaders.”
I could keep going here with foreign policy (Iraq), energy policy (drill baby drill), health care (no plan to reduce costs, except to had it over to the private market—never mind that premiums have gone up 50% in the last ten years and overall cost is approaching 20% of the GDP), etc. But I’d like to get back to the main point.
Nihilism (or maybe hedonism) is basically the belief that nothing matters, that there is no point in being rational, and that because of this we should simply destroy everything we can including ourselves. I can’t think of a better way to summarize the Republican approach to government, and I can’t understand why Democrats continue to compromise and lend legitimacy to policies born out of this philosophy.
What makes our direction as a country nihilistic you ask? It’s really pretty simple: if we continue to funnel money to the richest 1% in this country, we continue to eliminate middle class jobs, and we continue to defund education, where are the consumers going to come from? If no one has any money left, how is our consumer driven economy (responsible for more than 60% of the GDP) going to survive?
The answer is, it’s not. And if that happens (and currently, no one is anxious to stop it) we’re done. When consumers have no money left and the entire middle class is bled dry, the whole line of dominos falls—the whole economy collapses. And then who knows? War, chaos, revolution, anarchy? Maybe all four. I can assure you this: capitalism, in all its splendor and glory will be done, because it needs the rule of law, as well as a stable government to function.
Unbelievably, we are no where close to recognizing our plight. Consider the recent editorial by the Oregonian: “This GOP spending plan should prod real compromise.” In the article, they make a typical statement that indicates how wrong traditional economic viewpoints have become: “We agree, however, that the economic fortunes of individuals and businesses will find improvement with lower taxes.” I thought we had a revenue problem in this country? I thought we were just terrified about our debt? How the hell are lower taxes going to solve this problem?
By becoming so focused on short term, selfish political aims (specifically, lowering taxes at all costs), our society is missing the big picture: if we don’t have a good infrastructure, business suffers. If we don’t educate our citizens, business suffers. If we don’t allow individuals to have access to things like health care and loans for higher education, business suffers.
Bottom line: until we figure it out as a society, and until our politicians get on board, we are practicing economic nihilism, and it is going to lead to the self destruction and death of the U.S. economy.
(1) http://www.nytimes.com/2011/04/04/opinion/04krugman.html?_r=1&partner=rssnyt&emc=rss
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