Great Leap Forward


UPDATE: Don’t you just love the hypocracy of the One Percenters? Romney has railed against the auto industry bail-out, lambasting President Obama for “hand-outs” that saved American jobs. Tomorrow he’s going to be charged for hiding the fact that he got millions of dollars from that bail-out:

The Presidential candidate has just learned that tomorrow afternoonhe will charged with violating the federal Ethics in Government law by improperly concealing his multi-million dollar windfall from the auto industry bail-out. At a press conference in Toledo, Bob King, President of the United Automobile Workers, will announce that his union and Citizens for Responsibility and Ethics in Washington (CREW)  have filed a formal complaint with the US Office of Government Ethics in Washington stating that Gov. Romney improperly hid a profit of $15.3 million to $115.0 million in Ann Romney’s so-called “blind” trust.

I guess Mitt was sore that he “only” got up to $115 million as his share. And, of course, he hid his gains in his wife’s offshore trust.


Ok the Trolls let us down. Again. I’ll be the Troll today.

On Wednesday I did a radio interview with Terry D. Kester, Host of WPFW 89.3 FM – PACIFICA in Washington, DC for his show “What’s At Stake”  that runs Wednesdays at 10AM. (It is archived here, Oct 31 show, I begin 37 minutes in.)

He asked me to talk about Candidate Romney’s Economic Plan. To be honest, I had not paid much attention previous to the show. In preparation I looked over the various campaign press releases and went to his official website. I knew that he had moved to the right to court Tea Party folk, but I was not prepared for how far to the right. As I’ve said before, today’s Republicans would make Barry Goldwater blush. OK so here are the main components of his economic platform:

*Reduce taxes by 20% across the board

*Cut government spending to get it under 20% of GDP (that is a cut equal to more than 4% of GDP) and keep it there

*Cut all discretionary spending to below 2008’s level

*Cut the Federal workforce by 10%

*Extend all Bush tax cuts

*Accept all the scheduled automatic cuts (coming with the “fiscal cliff”) except those for the military

*Shift most old folks on Medicare to vouchers

*Repeal the Davis-Bacon Act (one of the last remaining protections for union workers)

*Stop doing things the US cannot afford:

Obamacare—eliminate it

Amtrak—privatize it

Arts & Humanities—eliminate them, we don’t need no stinking art or culture

Foreign Aid—let them starve

Decent wages for Federal employees—slash and burn

*Forget the bottom 47% and focus on the top tenth of 1%

OK, I added the last—which Romney only promises in private settings.

This is a recipe for making the US a second or third rate country. Our infrastructure already falls below first world standards. China’s rails are already a decade or two ahead of ours, and Romney wants to privatize ours. The capital costs required to build a decent transportation system are beyond the capacity of private firms. Throughout US history we have relied largely on public support for transportation. Remember that our national highway system—which was world-class in the 1960s, was a Federal government project, justified on the basis of National Defense (as were the student loans that put me through college with 3% fixed interest rates). Our airports as well as much of the R&D required to build modern jets came largely from public funds. If anything, the transportation system of the future will be more expensive and more technologically complex, will require much more planning and coordination, and will take much longer to complete. Romney’s radical notion that we can leave all this to the private sector is, as Keynes would say, “crazily improbable”.

His proposals for labor—more downsizing of the Federal workforce, slashing wages, and encouraging the public sector to bust unions—is just more of the same old race to the bottom policy. As we all know, he’s a champion when it comes to moving jobs offshore to low wage havens. As President he will try to ramp up the pressure to make the US, itself, a low wage haven for global corporations.

In the area of tax policy, I don’t necessarily oppose tax cuts. As readers know, taxes do not pay for government spending. I’d ramp up spending and also cut taxes. But we ought to cut taxes where it will do the most good. The worst taxes are the payroll taxes—they reduce the incentive to employ and in some cases reduce the incentive to work. They are regressive. And they tax work as if it were a sin. Let’s tax the real sins: speculation, excessive bonuses for Wall Street, and pollution. So, tax relief? Yes. But the rich don’t need more handouts.

As readers also know, I oppose Obamacare. It has nothing to do with affordability. I oppose it as one of the biggest give-aways to the FIRE sector (finance, insurance, and real estate) that we’ve ever seen. We don’t need more insurance. We need healthcare. By far the best component of the healthcare system that we’ve got is Medicare. It is no surprise that Romney wants to gut that, replacing it with vouchers that will more than compensate the insurance industry for the loss of Obamacare. Republicans hate government programs that work—because they show the lie that government cannot do anything right.

Medicare and Social Security “work”. That is why they have been under constant attack since their creation.

Arts&Humanities and Foreign Aid? What rock has Romney been living under? These account for literally nothing as a percent of Federal spending—they are zero within a small rounding error. We cannot afford these? Even on the most conventional analysis, that is just plain stupid.

And, finally, slashing government spending and holding it below 20%. Again, stupid. I was just at a conference in Berlin at which an IMF economist gave a talk arguing that no one, not a single credible economist anywhere, believes that countries like the US need to cut government spending in current conditions. Taking 4% of GDP away would ensure that we’d slip back into deep recession. Sales by firms to government would fall. Fired government workers would cut consumption.

Romney would guarantee years of painful recession if elected.

But what is more scary is the long term effects of holding government below 20% of GDP. As discussed, that means we will not be prepared for the 21st century challenges. Among those challenges is an aging population that will need more government support.

I’ll have more to say about that in coming blogs. Social Security will be under attack as soon as the ballots are counted, no matter who wins. We need to get prepared to fight the battle.




jonf34November 2nd, 2012 at 9:16 pm

I don't like Obamacare any better than you, but should we really be cheering for it to be repealed? It includes millions of people, including those with pre exisiting conditions, that otherwise would have nothing.

jonf34November 3rd, 2012 at 2:23 am

I understand that Obamacare is not anywhere near good enough. But is it not useful for the millions who do not have health care insurance or with a pre existing condition?

OutsideTheEchoChamberNovember 3rd, 2012 at 1:30 pm

if you call yourself Troll Friday, people will think is satire, or just made up.
please say clearly what is trolling, and what is true.

jonf34November 3rd, 2012 at 6:31 pm

November 6. Mark that date down. Most of this should be over then, other than the shouting and moaning. Then we move on to the real battle.

kgeakinNovember 9th, 2012 at 11:44 pm

It absolutely should be repealed. It was primarily written by healthcare industry lobbyists. It is a gift to the healthcare complex. They get millions of new customers and the taxpayer foots the bill. It will not reduce heathcare costs at all. It wasn't designed to. You gotta love our fearless leaders.