January 7, 2008

What We're In For?

I’ve not been doing too much political blogging lately, mostly because I’m scared spitless about this country, and I don’t have the economic chops to write about it with any authority.

I’m particularly worried that, as soon as the primaries end, there will be a concerted effort by the Republicans to launch a new round of fear to sweep the nation, and hopefully sweep them beck into the presidency. And I don’t just mean the Rudy Giuliani “Bush-Lite” 9/11 Touretts-style fear.

As the ‘08 elections approach, I have little doubt that the economy is going to become worse and worse. Bush has barely held things together, and it’s seemed to me that most of what has been touted as economic stability has only been for investors and not in the jobs department. People aren’t spending, so there is already fear out there. And the people who hire aren’t hiring because, what’s the point if people aren’t spending?

At the moment, the housing market effects and the lending crisis have not really sunk in. On HGTV you see people who have overbought their homes, looking to sell, and are shocked when they can’t get the half-a-million plus dollars they expected. Have you looked at your comparables, folks?

Robert Reich has a suggestion about how to avoid or slow the recession. Basically, cut taxes to lower income people and make those taxes up at the higher income end to avoid it contributing to the national debt. Of course, part of this whole Bush mess is that he cut taxes to the rich (and a little bit to you, too, so you wouldn’t complain about the windfall that the wealthiest Americans socked away for their McMansions and grandkids). The poorest Americans spend the most of their income, percentage-wise, and so shifting that tax burden back to the rich who benefit the most from our economic system is a stimulus.

Maybe the rich like it the way things are. Stock market relatively OK (for now). Jobs in the crapper and economic instability for the middle and lower classes. Huge war-generated deficit to tie the hands of the next president, be he conservative or liberal1.

But, I wonder what people are going to do in November when the recession is looming even larger in our minds, when the crisis sinks in.

The larger Republican plan, I’m convinced, is to continue to teach America a lesson; if you give the government money, it’s going to waste that money. Turns out, if you give the Republicans money, they’re going to waste it as fast as possible because they’re scared spitless someone might fix health care. Because they see health care as some sort of high end car. If you can’t afford a Mercedes-Benz, you shouldn’t get to ride in anything like a Mercedes-Benz. There is, seriously, an attitude of “what’s the point of being rich if there aren’t people who can’t afford health care?”

Even though we’ve got this huge debt, that’s not enough for the Republicans. They thought they were safe last time, and then the Clinton proved them wrong with a booming economy. If we’d had a president following him and willing to build on that legacy, it would have been a long term disaster for the Republicans, as a generation of Americans might have gotten used to government actually solving problems amid economic prosperity.

But now we have a situation reversed. An environment cultivated for running campaigns on fear. We have terrorists on the one hand, and your financial security on the other. And you’ll be asked to vote your fears in November.

As Paul Krugman puts it:

…there’s a powerful political faction in this country that understands very well that any real change will create losers as well as winners. In particular, any serious progressive reform of health care, let alone a broader attempt to reduce middle-class insecurity and inequality, will have to mean higher taxes on the affluent. And members of that faction will do whatever it takes to scare people into believing that change means disaster for the economy.

He worries that the Democrats running might not be ready for the attacks that are coming, playing on fear. I bet Hillary is ready, but since I’m predicting Obama will go the distance, I hope Obama is ready for it, too. Reich has predicted McCain will be the Republican nominee. If that’s the case, I think that is aligned with the idea that the Republicans will fall back to a campaign based on fear. McCain’s got that covered even better than Giuliani, and I think Huckabee’s is this year’s Howard Dean.

But I guess we’ll have to waint and see.

1 This was always the plan. A huge deficit meant that the government can’t help you. Clinton’s surplus (the surplus you paid for) presented a real problem for Bush and his cronies. If Gore had gotten in, it might have been secured and used to do good for Americans. And like the recent attempts by Democrats to extend health care to poor children, Republicans hate it when there is a chance that people might be given an example of government helping people. It makes the poor “uppity.” So, we had to waste that money somehow. And 9/11 opened the door to the huge Iraqi boondoggle. Why can Bush joke about not finding WMD’s? Because he never really cared about WMDs. Economic Mission Accomplished, for real.

Posted by James at January 7, 2008 11:51 AM
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Today, the Standard-Times posted recent property transfers for New Bedford. I was amazed at how many of the transfers were from people to banks. I knew there were a lot of foreclosures, and I knew NB was getting hit pretty hard; but to see all those names and addresses in black and white was still a shock. (The story popped up in my Google reader, but the link already seems to have gone bad... or maybe the bank seized it.)

I assume most of these houses will be auctioned, which means my own house's competition is just getting cheaper and cheaper.

Posted by: Julie at January 7, 2008 6:10 PM

You can rest assured that the current powers that be are really concerned about bailing out banks when they get in trouble, but not so concerned about those people losing their houses.

I'm guessing that most people will figure out halfway into the Barack Obama administration how screwed they were by Bush. Well, of the ones who can possibly figure it out.

Posted by: James at January 7, 2008 8:43 PM

Somebody's taxes need to go up at this point. I suppose mine would be a good target since we make a good chunk of change. It would go down easier if they'd increase corporate taxes (or decrease corporate/oil/agricultural subsidies) in the process.

I am REALLY looking forward to the end of the NH primary. I need the peace and quiet.

Posted by: Kitten Herder at January 7, 2008 9:11 PM

Maybe just reversing the tax cuts? Call me crazy.

Posted by: James at January 7, 2008 10:57 PM

Just reversing the tax cuts is not going to be enough. The fact is for the last three decades we've been increasingly sold on promises of a free lunch offered by both Republicans and Republican-lite Democrats - the idea that we could have all the benefits of civilization but no one has to pay much for it - if we only demonize the poor enough and "let the market work".

The two options we have if we want government to actually work are a) raise a lot more in tax revenue or b) spend a lot less on the military. I don't just mean Iraq-war less, I mean less-less.

Putting the marginal tax rate back to 36% or whatever won't solve the problem. We have to go back to pre-Reagan levels, the type of government that build the postwar infrastructure of this country and created a huge and vibrant middle class along with it.

Posted by: David grenier at January 8, 2008 12:03 PM

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