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TechnoratiThe Whiner's Recession
Senator McCain and his friends no doubt still believe that the economy's fundamentals are strong, but Friday's jobs numbers clearly show how bad things have gotten. The 6.1 percent unemployment rate reported for August is almost as high as the worst levels from the last recession. A broader measure of labor market weakness, that includes people who can only find part-time work or who have given up looking for jobs, is higher than at any point in the last recession.
When the labor market weakens, workers have less bargaining power with their employers. As a result, wages are trailing more than 2 percentage points behind inflation over the last year.
Wages are virtually the entire income for most workers. If the purchasing power of their wages falls by 2 percent, this is the equivalent of a 2 percentage point increase in their tax rate.
This is worth thinking about. Most workers in the country have just seen the equivalent of a 2 percentage point increase in their tax rate, and it has gotten almost no attention. By contrast, Senator McCain is claiming that the economy will collapse if we increase the tax rate by 3.6 percentage points for people who can't remember how many homes they own.
It is easy to understand how a typical family experiences real hardship when their wages don't keep up with the price of food, gas, and heating oil. It's a bit harder to understand how the folks who can't keep track of their homes will suffer by restoring tax rates to the Clinton-era levels.
This brings us to the other important point about the Friday jobs numbers. The economy is in bad shape and getting worse. This disaster is happening while we are experimenting with the tax policies advocated by Senator McCain. We have an economy that is now shedding jobs at the rate of almost 100,000 a month. There is no prospect of turnaround in sight. We could have half a million fewer jobs by the time the next president is sworn into office than we do today.
This is the Bush-McCain economy. Senator McCain may have forgotten, but President Bush already tried his economic policies and the results are not good. We have just been through a business cycle in which the wage of the typical worker and the typical working family fell. This is the first time that has ever happened.
As bad as the situation is, it will surely get worse as the recession deepens. Wages and incomes will fall further behind inflation as the unemployment rate continues to rise. By contrast, the Clinton-era tax rates were associated with the most prosperous period since the early seventies.
As I have written many times, Clinton's policies do not deserve all the credit for the prosperity of the late 90s, and President Bush's polices do not deserve all the blame for the economy's poor performance in the current decade.
However, it strains credulity to argue that the Clinton-era tax rates are a recipe for stagnation, while the Bush-McCain tax cuts for the rich are the road to prosperity. When he pushes his tax cuts as a remedy for the economy's ills, Senator McCain is effectively imitating Groucho Marx's famous line: "what are you going to believe, me or your lying eyes?"
At this point, McCain should be embarrassed to even say that tax cuts for the rich help the economy. Tax cuts for the rich help the rich, they don't help the economy. It's that simple.
This economic catastrophe was many years in the making. There is no painless way to recover from the collapse of the housing bubble and the correction from an over-valued dollar. We do know that Senator McCain's plan to keep giving the rich more money is not a road to prosperity because that is exactly what we have been doing.
We can't know exactly how Senator Obama will address the economy's problems if he takes office in January in part because we don't know exactly where the economy will be. However, a plan that focuses on supporting ordinary workers and promoting clean technologies, is likely to produce much better results than policies that are focused on redistributing even more income to the wealthy.
24 Comments so far
Show AllOnly 6.1%??
What about all of those who are unemployed, want a job, but haven't been able to get one and have exhausted their claim for Unemployment Insurance? Such as yours truly. We're assumed to be employed.
I'd put the actual unemployment rate at 12-15%. In my county alone, I'd put it closer to 20%, which has traditionally been much more economically depressed than the rest of the country. Despite being a supposed "progressive" area.
As Henry Kissinger once said.. "The easist way to transfer wealth is by raising the price of commodities". Inflation.
That man is the real elite American. God's chosen genius; a man to rule the world. He has been calling the shots from behind the scenes for decades. he tells Cheney and Bush what to do and say and when and how to say and do it.
And by the way, K-man loves McCain. He tapped him as a truly (breakable puppet) great American leader 30 years ago. Gee, word is they still keep in touch.
What we need is a real measure of the 'health' of our country. Not stocks and bonds or GNP.
We need to include the jobless, the homeless, the uninsured, the suicides, the families that are broken up by their jobs (with both parents having to work), what is the main industry involved in (guns and bullets, toaster oven, books, cluster bombs etc).
Every time a corporation lays of 100 employees, its stock goes up. Good for the economy, who cares about the 100 households that are effected.
PS - Bill Clinton sold out the middle class (and the lower class), while he makes millions of dollars now. Is there a cause and effect here? What would Groucho Marx say about this situation?
Obama should plagiarize this piece and work it into a speech. Committing to real change would also help.
Magoo & Bullwinklette want more trickle down, voo-doo Bush economics.
I'm still waiting for my trickle down from Reagan!
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Senator John McCain is a Demented Old Fool, who is living in the 1970's.
Worse yet, Gov. Sarah Palin is a narrow-minded, inexperienced piece of "eye-candy".
The Republican Party is going down to total defeat in November.
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Oh, Mordecheai Shiblikov stop. Your killing me. Next you'll report that the
North Pole is melting. On ebay!! enough is always enough.
Prepare for a crashing economy. It's not all bad though- it will stop the warmongers in their tracks.
I only wish...
The war machine is the practically the only real industry in the US anymore. Look at the thriving recesion proof areas of the US -the SF Bay Area, S. California, the DC area, Atlanta, Seattle, Denver; practically every living wage job there is "defense" related.
I know, it's freakish. I was looking over manuals and part numbers for a vintage Dolby Surround movie sound system... knobs, potentiometers, circuits, ect. Figured I was looking at entertainment industry stuff, right? Wrong... every little electronics piece has a military part number. Judging by the age and tech specs (showing thermal temperature operating ranges and such) it became obvious that all of this stuff came directly from the Cold War Space/ Arms race. Makes me think there is no business besides war in this country.
There is no historical perspective or precedent for the times in which we are living, or will be living. Overuse has nearly rendered the term "perfect storm" into a cliche; however, it seems so aptly, and frighteningly, appropriate.
It is no longer a matter of if there will be a collapse but how soon, when. Corporatism (or to use Mussolini's terminology, fascism) has very nearly milked us dry and is in the process of wringing the neck of the golden goose. There is nothing in the pipeline to save us. We cannot rely on our government(s) to save us, or even prepare us. This does not mean that we discontinue our efforts to to make our government work better for its citizenry; it means that we need to work even harder. We must prepare for ourselves. We will adjust, one way or another; but we are entering an entirely different period than that with which most of us are familiar, or for which we are prepared.
The inflation and unemployment numbers have already passed the "tipping point" at which they begin to feed off of themselves. The higher cost of living results in working people having less money to spend which results in an increase in unemployment, which results in a further decline in spending which results in further job losses, with the cycle continually repeating itself.
Oh, and "trickle down" goes with "peon.
There is no historical perspective or precedent for the times in which we are living, or will be living. Overuse has nearly rendered the term "perfect storm" into a cliche; however, it seems so aptly, and frighteningly, appropriate.
It is no longer a matter of if there will be a collapse but how soon, when. Corporatism (or to use Mussolini's terminology, fascism) has very nearly milked us dry and is in the process of wringing the neck of the golden goose. There is nothing in the pipeline to save us. We cannot rely on our government(s) to save us, or even prepare us. This does not mean that we discontinue our efforts to to make our government work better for its citizenry; it means that we need to work even harder. We must prepare for ourselves. We will adjust, one way or another; but we are entering an entirely different period than that with which most of us are familiar, or for which we are prepared.
The inflation and unemployment numbers have already passed the "tipping point" at which they begin to feed off of themselves. The higher cost of living results in working people having less money to spend which results in an increase in unemployment, which results in a further decline in spending which results in further job losses, with the cycle continually repeating itself.
Oh, and "trickle down" goes with "peon.
America is borrowing from China to fund the tax cuts for the wealthy and the Iraq war. China had better just flip the FORECLOSURE SWITCH sooner than later and get this madness the hell over with it !
McCain and Disabled, the new religious parable of our times. McCain, the son of George Wanker Bush and his union with a rattlesnake, and his half brother Disabled, the younger son, the good son, who unquestioningly and obediently gave his father and older brother everything he had, including his own wife and innocent little children until now he stands naked before God, bereft even of a single pair of underpants. Woe unto him! Possesionless, Disabled now serves no further purpose in the acquisitive plans of McCain who sends his mother, the rattlesnake, into Disabled's bed in the dead of night to dispatch him. Disabled's body is unceremoniously dumped in the wilderness, not even enveloped in a shroud, to be eaten by buzzards. A few months later, McCain dispatches his sister-in-law and little nephews and sells Disabled's possessions on eBay.
OK, trickle down doesn't work. It wont trickle down from the middle class either. All I hear is focus on the middle class, what about the bottom 50%. Is poor a four letter word?!? Lets hear about a living wage.
If I remember, Clinton won in 92 at least in part on the economy, and he made alot of pitches to the middle class, non of which materialized as paying down national debt became the priority.
My grandma used to say that the great falicy of capitalism is that money doesn't trickle down, it trickles up.
Just remember that the establishment relishes in rhetorical reversal of the facts.
desertdreamer September 9th, 2008 2:06 pm
"If I remember, Clinton won in 92 at least in part on the economy, and he made alot of pitches to the middle class, non of which materialized as paying down national debt became the priority."
Clinton did give the middle class a tax cut. As he engaged in trade agreements and policies which encouraged the movement of their jobs to low wage areas of the world they became the new poor and paid less in taxes.
Lobo Gris
Absolutely correct, both times. The middle class is getting killed and its in three areas. Taxes, mortgages and medical.
TM,
Read Lobo's remark again...
Yep...I missed the middle class became the new poor! Thats the advantage of maturity, you can blame mistakes on senility.
Still getting killed by the same three things. Thats the top three of course.
desertdreamer September 9th, 2008 2:06 pm
"OK, trickle down doesn't work. It wont trickle down from the middle class either"
The middle class, being on the losing end of the economy, don't have anything to trickle down to the poor.
Lobo Gris
i always thought that the definition of insane was " doing something the same way over and over again , expecting a different result"...
so.. mccain and palin , or obama and biden will continue this mad dance, and the world will watch entranced as the behemoth of greed colapses under its own gross corpulence.
how long can you tread water ?
Twice in my lifetime, I have seen Republicans cut taxes, and watch deficits EXPLODE. First under Reagan (Stockman KNEW it was a scam), and now under the Smirking Chimp Bush. The sad thing is that neither Obama nor Surge McBomb will do anything to rein in deficit spending. McBomb's attack on "earmarks" will yield only a saving of about $18-20 Billion. Not much to balance the books with when the Smirker leaves a $480 Billion deficit. How long do you think the profligate deficit spending can continue without a total collapse of the standard of living in America?? But, we can borrow a Billion dollars and give it to the dummies in Georgia because the Israelis want more control of the oil and natural gas in the Caspian Sea region.