Letter 2 America for December 18, 2012

Dear America,

Throughout the discussion of the fiscal issues pending before our congress today, there are two that, in my opinion, have made the discussion into a crisis...one by escaping notice, and the other by the primacy it has assumed when in reality, it is the last thing on anyone's mind.

The first is that every dollar cut from the federal budget is a dollar not spent in our economy.  The significance of those dollars can be felt in the numbers on which politicians fixate and in the real world, which seems to be a planet far, far away to most of the Republican Party in particular.  As to the numbers, the gross domestic product (GDP) is the total spent on goods and services in this country, and it is the measure of all kinds of things: the amount of debt the nation can absorb, whether we are in a recession or the economy is growing, the prospect for greater job creation, whether we are succeeding as a nation, whether growth will generate more revenue in a given year and thus, how much the federal government will have to borrow to finance its operation...whether we are heading in the right direction fiscally and thus, for whom we should vote.  So if fewer dollars are spent by, say, Social Security recipients, the GDP is reduced commensurately.  Similarly, if Medicare premiums are increased or benefits are taken from people, the money that they would otherwise have spent on goods and other services have to be spent on those premiums or the medical care they would have paid for, which may not diminish GDP because that number includes both goods and services, but it is a reallocation of the dollars in the GDP that may well result in fewer jobs because medical care is so costly and the profits from providing it go into the pockets of so few.

As part of the natural progression of events then, reducing spending reduces GDP, which causes shrinkage in the job market, which results in reduced consumer demand (70% of national GDP is consumer demand), which leads to fewer jobs...the whole downward spiral.  And the evidence that such is the case is all over the world and in the news every day.  Spain is now reporting unemployment at the rate of 25%.  Greece's economy is even worse.  And the thing that those two countries have in common...almost the only thing other than being part of the European Common Market...is that they have both embarked on onerous austerity programs within which government spending has been drastically reduced.  Great Britain has also suffered such effects, though not so dire in their scope, as a consequence of austerity cuts in government spending there.  And in the United States, cost cutting has led to job losses at the municipal and state levels as federal contributions to state and local government have diminished with federal austerity in numbers equal to nearly half the jobs created in the private sector over the same period of time.  As a consequence here as elsewhere, our unemployment remains high...near 8%.  And the fact that these austerity measures are the primary cause of such consequences is inescapable.  Business and industry, the supply side of our economy, continue to prosper in terms of profit though they wring more and more out of every employee and hire fewer and fewer while investing up to fourteen times as much on automation as they spend on hiring new workers.  And they continue to send jobs abroad while paring down union rights as best they can and keeping their workers working for wages that have been constant for the past thirty years in terms of their inflation adjusted value.  Thus, the owners of capital in this country continue proving that prosperity in business is unrelated to the prosperity of the American people, just as the availability of petroleum, which is now abundant in this country and getting more so every day, has no bearing on the cost of petroleum products, which continues to rise.  So with all this in mind, there is a nexus between the arduousness of government austerity and the welfare of the American people--an inverse relationship comprising both the diminution of help received by those in need and the prosperity of those in the middle class who don't--and the discussion of how much austerity is good for us in lieu of raising taxes on those who can afford to pay should be informed by all this evidence, taking that inverse relationship into account, but it is not.  The reactionary impetus toward social and economic Darwinism is undiminished, and the zeal for cost cutting reflected in slogans like, "we don't have a revenue problem; we have a spending problem" and "job killing tax increases" is unabated.  The fact that the majority of the American people don't see it that way seems to make no difference to them.

And in that vein there is the second issue: who is offering compromise and who isn't.  In that context, the Republicans continue to claim that The President isn't offering any spending cuts when in fact, he has made more than one proposal for cuts to counterbalance the tax increases on the rich that are a sine qua not for his signature.  But the Republicans have offered no indication that even if Mr. Obama did proffer a budget plan with more spending cuts, including immaterial changes in entitlements, the Republicans would change their position one iota.  They still insist that there can be no increase in taxes on anyone, including the rich, and they continue to justify that position with captious statistics such as the fact that 50% of all small business income is earned by those in the top two percent when what is really relevant is how many jobs are created by those in the top two percent.  The fact that small businesses like cosmetic surgeons' practices, movie actors and professional athletes are small businesses under their definition elucidates my point.  In the final analysis, the Republicans have proposed nothing new, and have not diverged even a pittance from their previous position on taxes even though they claim that it is now The President's turn to make concessions.  To the Republicans fair does not mean give and get, it means get and get, and this time, President Obama has heard his outraged constituency and will not capitulate so that the Republicans will grudgingly give him a silver star for fair negotiation.  This time, President Obama will hold the Republicans feet to the fire until the American people have no choice but to see what they are doing, and that compromise is just a ploy to them as there is no such thing on their minds.  The more the Republicans call for compromise, the dirtier a word it becomes, and it is poisoning Washington, not just for the present, but for the future as well.

So, from this point on, when you hear the word compromise coming through Republican teeth with the other lies, take a large grain of salt and swallow.  When you hear talk about austerity and shared sacrifice, take another.  Neither of those things is on the Republican agenda.  What they want is more of everything for the privileged few, and that aint us, America, other than the fact that we live in a country that in the end, will never accept an oligarchy of the rich.  It is not they who made this country what it is.  We can only hope that they will not be able to make it what they want it to be.

Your friend,

Mike