The Political Junkies

archived: 25 - 31 May, 2008 Back Next

UPDATED: MAY 28, 2008

HOW HIGH

Gasoline at the pump approaches $4.00 a gallon. To be precise, “[t]he average national price of a gallon of regular gas rose only 0.1 cent overnight to a record $3.937, according to a survey of stations by AAA and the Oil Price Information Service.”

Gasoline consumption is starting to fall in the United States; offering hope that oil and gasoline prices will retreat from these highs. If history is any indicator, the price will retreat to a new base certainly higher than the previous base price and move higher again as consumption rises, international events overtake the markets or production levels are jeopardized.

There is an overarching reality – Americans are losing their individual economic security to Bush’s recession. Sage investor Warren Buffett warns:

The United States is already in a recession and it will be longer as well as deeper than many people expect, U.S. investor Warren Buffett said in an interview published in German magazine Der Spiegel on Saturday. . .

"But the people are already feeling the effects," said Buffett, the world's richest man. "It will be deeper and last longer than many think."

Americans understand the consequences and their confidence in the economy falls to the lowest point level in 16 years:

Republicans have made a disaster of the American economy.

It is time to bring in the Democratic team. This November it is critical that every Democrat “Make It Straight,” – a straight vote for the Democratic Party.

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UPDATED: MAY 25, 2008

Democrats in the US House enacted legislation to stop foreclosures by insuring some $300 Billion Dollars in mortgages. Bush, who supported the Federal Reserve’s bailout of Bear Stearns Co, threatens to veto the legislation:

The U.S. House of Representatives passed legislation to let a federal agency insure up to $300 billion in mortgages to help homeowners avert foreclosure, a day after the White House threatened to veto the measure.

The House voted 266-154 yesterday to approve the housing package offered by Massachusetts Democrat Barney Frank. The plan would allow the Federal Housing Administration to insure refinanced mortgages after loan holders agree to cut principal to make payments affordable.

The contrast between Bear Stearns and American homeowners exemplifies the heart of Republican economic policy – representing the interests of the powerful few rather than the interests of the many citizens.

Despite the increased cost and inconvenience of declaring personal bankruptcy as a result of legislation passed three years ago, filings have jumped substantially in the last few months. More than 4,000 bankruptcy petitions were filed per day in March and April, on average . . . . That's up more than 30 percent from a year earlier and the highest number since the law went into effect. "There's a real sense of financial panic out there," says John Colwell, a bankruptcy attorney in San Diego who has seen his business increase 50 percent in the last year. "And I don't see it abating anytime soon."

What's happening? In some cases struggling homeowners are filing to prevent foreclosure. (A record high 243,353 homes went into foreclosure in April . . . . ) Squeezed by rising costs for everyday necessities like gas and groceries and unable to tap into their homes for temporary relief—declining values have left some people owing more than their homes are worth; it's also more difficult to get home equity lines of credit or loans—many people have turned to their credit cards "as a last resort," says Robert Lawless, a professor of law at the University of Illinois who follows bankruptcy trends.

Democrats are focused on the remaining three Democratic primaries and the final push for super delegates. Pundits, both professional and non-professional, are writing volumes as Sen. Clinton presses on and Sen. Obama attempts to project the image of the Party’s nominee.

While Democrats focus on the closing of the primaries, they should also keep an eye on the stakes at the end of this race. The ultimate fight is to defeat the philosophy that is the heart and soul of the Republican Party.

At the close of 2007, Paul Krugman authored a compelling reminder (emphasis added) of the stakes involved in the 2008 election:

On one side, the Democrats are all promising to get out of Iraq and offering strongly progressive policies on taxes, health care and the environment. That’s understandable: the public hates the war, and public opinion seems to be running in a progressive direction.

What seems harder to understand is what’s happening on the other side — the degree to which almost all the Republicans have chosen to align themselves closely with the unpopular policies of an unpopular president. And I’m not just talking about their continuing enthusiasm for the Iraq war. The G.O.P. candidates are equally supportive of Bush economic policies.

Why would politicians support Bushonomics? After all, the public is very unhappy with the state of the economy, for good reason. The “Bush boom,” such as it was, bypassed most Americans — median family income, adjusted for inflation, has stagnated in the Bush years, and so have the real earnings of the typical worker. Meanwhile, insecurity has increased, with a declining fraction of Americans receiving health insurance from their employers.

All in all, it’s an economic and political environment in which you’d expect Republican politicians, as a sheer matter of calculation, to look for ways to distance themselves from the current administration’s economic policies and record — say, by expressing some concern about rising income gaps and the fraying social safety net.

In fact, however, . . . Republicans . . . have gone out of their way to assure voters that they will not deviate an inch from the Bush path. Why? Because the G.O.P. is still controlled by a conservative movement that does not tolerate deviations from tax-cutting, free-market, greed-is-good orthodoxy.

Krugman paints the broad picture of Republican economics that 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.

One enterprising researcher graphs the change in distribution of wealth since 1979. Those outside of the top 10% financially are getting less of the American economic pie – those in the top 10% are claiming ever larger slices of the economic pie.

This reordering of the American economy is not an accident. To a very large degree, it represents the policy decisions of Republican leaders who control their Party; the Conservative Movement that Krugman describes. A litany of Republican policies implemented over the last seven years demonstrates the point:

1. The distribution of wealth from Republican "free trade” policy, while creating some 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 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 is not keeping pace. As more people look for work than there are jobs the continued downward pressure on wages should be obvious.

2. Republican tax cuts were 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 to ensure that those few individuals at the very top of the economic ladder retain their ever greater share of the American economic pie.

3. Republicans have depreciated the US Dollar to historic lows (“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. Americans who are making less have to pay more. Gasoline is the perfect example. When Bush took office in 2001, a gallon of gasoline was $1.63. Today, it is fast approaching $4.00 a gallon. Every one cent rise in the price of gas at the pump takes One Billion Dollars out of the pockets of American families.

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” burst cruelly evaporated the aspirations of those hard working Americans. Foreclosures will continue to rise until at least next year.

But, Republicans "fixed" the Bankruptcy laws to limit protections of the Federal Bankruptcy system. 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 "$".

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 the occupation of Iraq 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 destroying three generations of Americans' progressive efforts to build an 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 fought a global war to preserve constitutional democracy.

One adroit observer notes how the Conservatives have achieved the near destruction of progressive advancements:

Starting in the 1970s, at about the time of the Lewis Powell memo, an interlocking network of right wing billionaires and theocrats began to fund the institutions whose dominance we take for granted today: The American Enterprise Institute, the Heritage Foundation, The Family Research Council, the Federalist Society, the Brookings Institute (over time), and on and on. During this period, College Republican operatives like Rove, Abramoff, and Gary Bauer became important figures in this network, as did the ex-Trotskyite neocons who broke away from the Scoop Jackson wing of the Democratic Party.

The period was also marked by the steady retreat of the press from reporting, under twin pressures from the right “working the refs”, as Eric Alterman put it, and Winger billionaire owners slashing news coverage in favor of “entertainment,” and by the steady advance of Rush Limbaugh on talk radio and, later, by Matt Drudge on the web. And if you got hooked into that network, you got the cradle-to-grave protection typical of socialism: You always had a job, whether as a “fellow” or “scholar” at the AEI, a shouting head on Crossfire, as a columnist, as a contractor, as a political appointee or staffer, or as a lobbyist, and so on and on and on. You always got funding. You were made.

Just for the sake of having an easy label for this dense network of institutions, operatives, ideologues, and Republican Party figures, let’s call it the Conservative Movement (instead of HRC’s Vast Right Wing Conspiracy, since it’s not really a conspiracy, except possibly an emergent one. The billionaires don’t — except for Scaife during the Arkansas project, or Rupert Murdoch playing editor — generally pick up the phone and give orders; rather, they manage the Conservative Movement like an investment portfolio of entertainment properties; some start-ups (Politico), some stars (FOX), some cash cows (Limbaugh), some dogs (American Spectator)).

Slowly but surely, well funded and well organized Conservatives pushed their ideas from unthinkable, to radical, to acceptable, to sensible, to popular, and finally into policy, in a process described as The Overton Window. As surely and ruthlessly, progressive ideas were marginalized, and then silenced altogether. And spending what it took, the winger billionaires used the Conservative Movement to restructure politics, and having restructured politics, economics. To their economic benefit.

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 US will be less secure as mounting Federal deficits and inflation continue to devalue the US Dollar. The occupation of Iraq will continue at enormous cost when America is least able to afford those costs.

The stakes in 2008 are huge. As divisions arise out of the Democratic Primary, loyalists of both candidates have ratcheted up the hyperbole, attacking the opposing candidate’s perceived faults and threatened to bolt the Party in November if their candidate is not the ultimate nominee. Republicans, who rightfully should have no realistic probability of winning the General Election, are performing at near parity with Democrats in the Presidential election.

We should all keep in mind what is at risk – four more years of Republican policy; four more years of destruction of the American middle class. Regardless of who ultimately obtains the Democrat nomination, Republican economic policy is an American tragedy that must be defeated.

That objective is more important than the momentary emotions of the campaign, the interests of any one candidate and the moral imperative that requires every Democrat’s loyalty to the effort.

Tumble Weed (Bush) Watch