archived: 30 Dec 2007 - 5 Jan, 2008         Back                 Next

UPDATED:  JAN 2, 2008

                        THE STAKES 

The eyes of all Democrats will be focused on the Iowa caucuses this Thursday. Pundits, both professional and non-professional, will fill the various media with their analysis of what any result from Iowa actually means.  

While Democrats focus on the contest as a horse race, Democrats should also keep an eye on the stakes at the end of this race. The stakes are profound.  

Paul Krugman recently authored a compelling reminder (emphasis added) of the stakes: 

Krugman paints the broad picture that Republican economics literally imperils the future of middle-class America -- a reckoning that may prove irreversible.  Krugman is detailing a fundamental shift in the distribution of America’s wealth. Bush describes it as his vision of an “ownership society.” 

The reality is that the wealth generated by the American economy is being redirected from those who labor to create that wealth to those who own the instruments of capital investment.  Middle-class wage earners, not being the “owners,” have largely been excluded from the “ownership” society club.

On enterprising researcher graphs the change in distribution of wealth since 1979.  Those outside of the top 10% financially are getting less.  

This reordering of the American economy is not an accident.  To a very large degree, it represents the policy decisions of political leaders in the Republican Party; the Conservative Movement that Krugman describes.  The litany of Republican policies implemented demonstrates the point:

1.   The distribution of wealth from Republican "free trade” policy, while creating new jobs in America, has not benefited Americans outside the top income group.  In fact, evidence continues to mount that Republican “free trade” has come with a terrible price, an erosion of wages for American laborers instead of the “new economy jobs” Republicans promised. 

Domestic employment is already falling.  The US economy has to produce roughly 150,000 new jobs every month just to keep pace with people entering the workforce.  Job creation was estimated at some 90,000 in November, 2007 and will most likely fall to around 70,000 in December.  More people will be looking for work than there are jobs -- the continued downward pressure on wages should be obvious.

2.       Republican tax cuts have been purposefully designed to augment the income of the top economic groups.  Looking at the chart above, can there be any doubt as to why Republicans are calling for a repeal of the estate tax? The objective of eliminating the estate tax is simply to ensure that those few individuals at the very top of the economic ladder retain their even greater share of the American economic pie. 

3.   Republicans have let the US Dollar depreciate in value (“weak Dollar”).  Two immediate consequences emerge.  First, the devalued Dollar has increased American exports of products, but the profits have not “trickled down” to those who labor to make those products.   

Second, prices for goods that we import are rising, and Americans who are making less have to pay more.  Gasoline is the perfect example.

4.   The Republican “ownership society” is an illusion.  Millions of Americans bought into cheap interest rates to purchase homes; the centerpiece of the "American dream."  The housing "bubble" bleeds into the economy as more Americans cannot pay their variable rate interest loans (particularly the "sub-prime").  The aspirations of hard working Americans are cruelly evaporating.   

Republicans "fixed" the Bankruptcy laws some years ago, meaning that more Americans will be strapped with more debt, less wages to work through that debt and no credit for years to come. Instead of being branded with the scarlet "A", it will be a very green "$". 

 If this forecast seems overly dire, this should reinforce the
seriousness of what is happening:

"Losses arising from America’s housing recession could triple over the next few years and they represent the greatest threat to growth in the United States, one of the world’s leading economists has told The Times.

Robert Shiller, Professor of Economics at Yale University, predicted that there was a very real possibility that the US would be plunged into a Japan-style slump, with house prices declining for years.

Professor Shiller, co-founder of the respected S&P Case/Shiller house-price index, said: “American real estate values have already lost around $1 trillion [£503 billion]. That could easily increase threefold over the next few years. This is a much bigger issue than sub-prime. We are talking trillions of dollars’ worth of losses.”

He said that US futures markets had priced in further declines in house prices in the short term, with contracts on the S&P Shiller index pointing to decreases of up to 14 per cent."

5.   Compound these problems with the fact that the Federal Government continues to run an account deficit that is being financed through international loans (China is one of our principal bankers); at the same time that we continue to pour ever increasing billions of dollars into a war that has no foreseeable end.

6.    Add to the economic pyre a system in which more Americans will not have access to health care.  As health care debts mount, more bankruptcies will take their toll, more debt for hard working Americans with less money to pay those debts.

7.    It does not stop there.  Baby boomers are coming to retirement. The Social Security system will be hard pressed to handle the economic load. 

Republicans are tearing down three generations of Americans' progressive efforts to build the American middle class based on wage earners and education for upward social/economic mobility.  The first generation broke the absolute power of the economic oligarchs of the Gilded Age, the second generation saved capitalism and the third preserved democracy. 

One adroit observer notes how the Conservatives have achieved their objectives: 

If Republicans retain power in 2008 the fall out will run through the social fabric of America like a lava flow.  Economic stratification will continue.  As more Americans lose income, there will be less education or educational opportunities for children, rising dropout rates, and more families approaching poverty. 

The stakes in 2008 are huge.   As Democrats watch the electoral horserace that is unfolding, we should all keep in mind those stakes and the larger race that must be run against Republicans in the fall -- regardless of who ultimately obtains the Democrat nomination.

                        HISTORICALLY 

December 2008 polling closed with Bush’s approval rating still mired below 35% at 33.45%.  Bush’s average monthly approval rating has not exceeded 35% since December 2007.  

Bush’s December average disapproval rating, 61.82%, is the third highest disapproval rate TPJ has recorded in three years.  With the exception of July, Americans disapproving Bush’s performance as President has remained above 60% throughout 2007.  By modern standards, Bush is setting historic low performance ratings.  

With public opinion remaining polarized for the last year, it would appear