Every honeymoon comes to an end, I suppose, but I was disappointed to see Obama nominate Tom Daschle for HHS secretary. It’s not so much that he didn’t pay $140000 in taxes on a driver and limo provided by a “private equity firm”, it’s that a private equity firm was providing him a limo and driver. It’s that he’s made five million bucks off special interests since he left Congress. It’s that his wife is one of most slatternly lobbyists in Washington and regularly received large sums of money from companies with legislation in front of her husband. In the words of Matt Taibbi, “In Washington there are whores and there are whores, and then there is Tom Daschle. Tom Daschle would suck off a corpse for a cheeseburger.” Fuck off and die, Tom, or at least go back to Utah or South Dakota or whatever irrelevant state you came from.
I’m not going to say that the Republicans blocking the stimulus package are traitors–I believe that conscientious dissent is an important part of democracy and who we are as a people. I’m just saying that if the Democrats had pulled this shit a few years back that’s what we’d be hearing all over Fox news right about now.
Now, I know Republicans in Congress believe that tax cuts are best in good times, and in bad times, and in the worst of times. A Republican never saw a tax cut he didn’t like, although as we’ve learned over the last eight years or so, they also never saw a spending increase they didn’t like. But here’s the thing about tax cuts: they haven’t worked, not in this crisis. Last year the richest people in America paid taxes at the lowest rate since tracking started, and it did no wonders for the economy. The stimulus checks sent out last year were essentially a tax break for poor people, and people didn’t go out and spend them, either. They saved the money or paid down debt. Next we tried the Bush Republican solution, which was to give money to
rich bankers. They did the same thing: they covered their own asses, and didn’t loan anything to anybody.
The problem is that people aren’t spending money. 70% of the US economy is consumer spending. That’s not really a nefarious figure. It just means that we spend most of our money buying things we need, or think we need, in order to live our lives. That extra 30% of the economy is basically our “profit margin”, in a sense, the excess output we produce above and beyond our collective “operating costs”. Businesses would kill for margins like that.
Now, that 70% figure needs to go down. We need to start saving some money: we’ve had a negative savings rate for the last several years, which means, on average, that we’ve been taking money our of our collective savings to spend it on houses and iPods and other stuff. That has to change. However, a 5% savings rate is pretty impressive. A 10% savings rate might be too much. If all of that comes out of consumer spending, it will drop to 60% or 65% of GDP. That’s going to be a painful adjustment to make, long term, and part of what the nation is experiencing right now is the result of that.
But Americans have gone overboard in the opposite direction: they’re not spending any money, and that’s killing the people who sell them stuff–i.e., ourselves. People don’t spend money, so AT&T and Microsoft and Sprint and GMC and all these other companies lay off the people that make and sell the goods and services that people aren’t buying any more. Those people then don’t have money to spend, so they spend less, which causes more layoffs, and it all becomes a vicious circle.
Tax cuts won’t fix this. If you give tax cuts to people with jobs, they’ll save the money, which will then go to banks, which will use it to shore up their balance sheets. If you give tax cuts to people without jobs, it will get spent, but only the once: once they’ve spent their tax cut, they’ll be broke again.
The only way to possibly get out of this cycle is to create jobs that give money to jobless people, who will have no choice but to spend it: on food, on clothing, on housing, on the necessities of life. With any luck, this increase in consumer spending will spur some recreation of jobs in the retail and service sector, and help out with the recovery. I don’t have high hopes for a huge bump or anything, but I see more bang for the buck there than anywhere else.
The Post-Bush Republican plan is to do nothing, to argue that Keynes and FDR were full of shit. I don’t believe we can afford to do nothing. We’re all going to be broke as hell for a long time if we do that, which is the worst-case scenario if none of these stimuli work anyway, so we might as well try something. Lead, follow, or get out of the way, jackasses.
