Friday, September 24, 2010

     I was afraid of the boogey man when I was small, though I had never seen one.  I believe it because those whom I trusted told me he existed.  And despite the fact that they did not tell me how he looked or what he would do, for a while the possibility of his existence kept me quiet or in my seat.
     Obama and the Democrats are being portrayed as the bogey man by the real boogie man: Republicans.  Americans have been seeing the boogie man, and the damage he can do, for last ten years.  How could so many people not recognize him?  One reason is because they have the delusion that the boogie man must be black.  I alway pictured him as being black myself.  But if you check throughout history, bogey men have come in all shapes, colors, nationalities and genders.  Most recently, they happen to be Republican.  But the "Republican Tea Party" is saying, no, the boogey man is President Obama.
     Many Obama's supporters also are second-guessing the President on some of the decisions he has made.   Some say he should have been concentrating on the economy instead of health care and financial regulations.  
     Well, what else could he have done about  the economy and job creation?  Republicans and conservative Democrats would not approve a larger stimulus package.  Also, Republicans would have liked Obama to have been devoting all of his time on an economy and job-creation, because they were going to make sure nothing he tried worked.  He would have been criticized by Republicans for not being able to "walk and chew gum at the same time,"  and by Democrats,for acting as if he couldn't.
     Everybody knows that progress on the economy has not been made mostly because businesses are not hiring, banks are not lending and too many consumers are choosing to save more rather than spend too much.  If businesses hire, the people they hire will buy--if they stay hired.  If businesses promise to keep workers hired so long as profits increase, then workers will gradually consume more even as they save.  
     Also, if people have secure jobs, banks will be willing to lend to people with stable incomes.  If economic conditions warrant it, companies would be expected to reduce the number of workers--or reduce the hours worked--and banks would be expected to reduce the number of loans they will approve.  Renters would have an incentives to save so they can make down the kinds of payments that make them better risks.
     But there must be some degree of certainly about the job market.  That should have little to do with taxes.  When the workforce increases, increased spending increases profits that offset increased taxes.  If our economy system has degenerated to the point where uncertainty renders it no longer able to tolerate and overcome risk, then maybe its time to change the system.
      People say all the economy needs is to have the tax cuts for the wealthy extended at least two more years.,  If those cuts can do that much during the next two years, why have the cuts not done anything the past two years, or for that matter the past eight years?  What would wealthy do with their money in the next six months that they did not do the past six month?
      Barack Obama campaigned that he would retain the tax cut for people who earn less that $250 thousand per year, but allow them to expire for those earning more. Republicans didn't complain at that time.  
     Obama continued to express that intention after being elected president.  Republicans still didn't complain.  Republicans didn't argue against allowing the tax break to expire for the wealthy, even as they criticized all of the President's other attempts to end the Great Recession, and establish for the long term a stable, energy independent economy.     
      Which raised the question: If Republican really believed that Obama's plans would not cure the economy's ills, and that extending the tax cuts for the wealthy was necessary for economic recovery, why were they not mentioning that until recently?   The answer: If Republican had requested as extenuation for the wealthy too soon,  the President might have required them to support the implemention of some of his initiatives like a larger stimulus package, health-care reform, climate change legislation, financial regulations, comprehensive immigration legislation, education reform, etc.  He might have demanded passage of his legislative agenda before the November elections, and that they stop trashing the initiatives. 
     There is some hope now that some kind of compromise might be worked out between Democrats and Republicans before the November elections.  But irreparable political damage may already have been done to Democrats.  Republicans didn't help support Obama's programs despite most legislation being bipartisan in their composition.  And when they were not watering down Obama's plans, they were blocking them.   Now they want to compromise.
      Well how is this for compromise?  Make the extension of the Bush tax cuts for the wealthy contingent (1) on Democrats retaining control of the House and a filibuster proof majority in the Senate,  (2) on businesses agreeing to increase hiring prior to the November elections and on banks promising to lend if businesses hire, and (3) on three months extensions of the breaks after January 1, 2-11 producing more bank lending and business hiring, where the number of people working, the numbers hours worked, and pay rates of middle-class workers all increase.   If job and lending increase during the three-month period, extend them for three more months, and continue extending three-month periods every year for up to two years, or so long as there is significant job growth and lending accompany the extensions.
     Delaying the Bush tax cuts for those making less than $250 thousand per year until after the November elections would be an incentive to get the base of the Democratic party off their behinds and vote.  If Democrats don't win, then nobody get their taxes cuts extended.  If tax cuts are that vital to the economic recovery of the country, then Republican need to prove it by electing Democrats, who are the only party that can guarantee extension of the tax cuts since the President is a Democrat. 
      I'm still having trouble understanding how extending the tax cuts for the wealthy will help the economy recover.  But this is a chance for Democrats and Republicans to work together with banks and businesses to enhance their confidence and allow them to show that those reassurances can produce jobs.
      Middle-class Republicans who intend to vote Republican, middle-class independents who intend to vote Republican, and middle-class Democrats who had planned to not vote--and just sit back and wait for their tax-cut extensions-- need to consider changing their elections plans.

Ronald

Friday, September 3, 2010

Who is in charge during economic paralysis?

WHO MUST TAKE CHARGE, IF NOT GOVERNMENT, WHEN BANKS DON'T KNOW WHETHER, WHEN OR HOW MUCH TO LEND; BUSINESSES DON'T KNOW WHETHER, WHEN OR HOW MANY TO HIRE; AND CONSUMERS DON'T KNOW WHETHER, WHEN AND HOW MUCH TO SPEND AND SAVE?