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MCCAIN-ONOMICS -- MORE SUPPLY SIDE

 
 
Reply Tue 16 Sep, 2008 01:13 pm
McCain-onomics

Sen. John McCain (R-AZ) has spent much of his general election campaign for president trying to distance himself from President Bush's failed policies -- even though the policies he has outlined and would pursue as president mirror those of the last eight years. McCain's strategy so far has been to make the public forget he is offering Bush's policies. During the Republican National Convention earlier this month, McCain and his fellow conservatives seemingly refused to acknowledge that the current administration even exists: Bush's name was mentioned once while Vice President Dick Cheney's name was not mentioned at all. Convention speakers also ignored many key issues that face Americans today, such as health care, environment, and the economy. Yet at times, McCain's surrogates will let the truth slip out. In June, Sen. Lindsey Graham (R-SC) admitted that McCain's economic policies would "absolutely" be an "enhancement" of Bush's. He's right. McCain's economic policies are rooted in the same supply-side economic theories that give huge tax cuts to the rich and the most profitable corporations, which will ultimately expand the already ballooning federal deficit. Indeed, as New York Times columnist and Princeton University economics professor Paul Krugman noted, McCain's economic proposals are "Bush made permanent" and "would leave the federal government with far too little revenue to cover its expenses."

THE WEALTHY WILL CASH IN: If elected president, McCain plans to double down on Bush's corporate and individual tax cuts. His plan calls for reducing the corporate tax rate from 35 percent to 25 percent, a plan that would save corporations $175 billion per year, with $45 billion going to America's 200 largest companies as identified by Fortune Magazine. The five largest U.S. oil companies would save a grand total of $3.8 billion per year. The wealthiest Americans would also cash in. McCain's tax plan will increase after-tax income of the richest 3.4 percent by more than twice the average for all households -- and offer no benefit to the poorest taxpayers and minimal savings for the middle class. At the same time, McCain has not offered any specifics on how he would pay for these massive cuts. In fact, McCain's plan would produce the highest federal deficit in 25 years. After inheriting Bush's $407 billion deficit, yearly deficits under McCain would increase sharply, beginning with at least $505 billion in FY2009.

THE FLAWS OF SUPPLY-SIDE ECONOMICS: Like Bush -- and President Reagan before him -- McCain is fully embracing supply-side economics, lowering tax rates to promote economic activity which, in theory, lead to additional government revenue. But a new report from the Center for American Progress and the Economic Policy Institute has analyzed the two "supply-side eras" in U.S. history -- 1981 to 1993 and 2001 to present -- and concluded that "the results have been meager." The report found that after tax increases in 1993, real investment growth was much higher than after the tax cuts of 1981 and 2001 and "economic growth as measured by real U.S. gross domestic product was stronger following the tax increases of 1993 than in the two supply-side eras." Real median household income "was greatest after the 1993 tax increases, at 2.0 percent annually compared to 1.4 percent after 1981 and 0.3 percent after 2001." Wages and employment also rose higher after 1993 as compared to the two supply-side eras. And in contrast to record deficits that resulted from the two supply-side eras, between 1993 and 1999, the United States"went from a federal deficit of 3.9 percent of GDP to a surplus of 1.4 percent." Even Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have said that tax cuts do not offset revenue losses.

GREENSPAN WEIGHS IN: Former Fed Chairman Alan Greenspan said that the current downturn in the economy is "probably a once in a century type of event," one that is the worst he has seen in his career "by far." Indeed, just yesterday, Merrill Lynch agreed to sell itself to Bank of America "for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, filed for bankruptcy protection and hurtled toward liquidation after it failed to find a buyer." But Greenspan also addressed McCain's $3.3 trillion tax cuts, telling Bloomberg news last week that the country cannot afford the cuts "unless we cut spending." "I'm not in favor of financing tax cuts with borrowed money," Greenspan said. Perhaps McCain will take Greenspan's advice. While McCain has acknowledged that "issue of economics is not something I've understood as well as I should," he has also added the caveat: "I've got Greenspan's book."

--americanprogressaction.org
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Type: Discussion • Score: 1 • Views: 1,891 • Replies: 20

 
Ramafuchs
 
  0  
Reply Tue 16 Sep, 2008 01:52 pm
@Advocate,
An intellectual diversion in A2k forum.
I read this twice( once before you post and now)
the problem I see in American managment is this.
Like the grand old person( I am a communist but a decent observer) who had
opined
"Former Fed Chairman Alan Greenspan said that the current downturn in the economy is "probably a once in a century type of event," one that is the worst he has seen in his career "by far."
I mean your countries DREAM is shattered beyond redeption.
But the innocent people are there
to help the citizens of USA
to taste the sweet smelling less consuming outer world.
I am with U
R u with US?
0 Replies
 
farmerman
 
  1  
Reply Tue 16 Sep, 2008 02:27 pm
David STockmns book was replete with all the "oops, this **** dont work at all", yet the GOP makes it a mantra hnded down from the alzheimer afflicted mind of ST Ronnie.
Ramafuchs
 
  -1  
Reply Tue 16 Sep, 2008 03:49 pm
@farmerman,
As a human with critial views
i wish that USA uphold decency, decorum.
I hope that USA will be a world leader with morality.
Let me await till my death.( for those who seek shelter in usa0 my regrets)
0 Replies
 
Advocate
 
  1  
Reply Wed 17 Sep, 2008 08:48 am
It is so amazing to me that the Reps never learn that supply-side is a disaster. Also, deregulation leads to disasters such as we are in now. McCain is known is Mr. Deregulation, and his actions and inactions are large responsible for the financial mess we are now in. Moreover, there is an excellent chance he will be our next president. Incidentally, it was the Keating Five, founded and led by McCain, that deregulated the S&L industry, costing the taxpayer about half a trillion dollars.
cicerone imposter
 
  0  
Reply Wed 17 Sep, 2008 12:29 pm
McCain never understood middle American economics even though he may mouth words in conflict with all of his perceptions about it. He continues to say things today that are in direct conflict to how he has voted during the past eight years; that 90% support of the Bush initiatives should be the clue. What he's saying today are mostly lies to win votes. He's really no "maverick" except for the fact that he has spoken out against some of Bush's policy, but that 90% just won't go away.

Just remember that 90% vote with Bush, and you will realize what he's saying today is BS.
0 Replies
 
talk72000
 
  1  
Reply Sun 21 Sep, 2008 12:27 am
@Advocate,
'Supply side' is 'push economics' while 'tax increase' is 'pull economics'. By that I mean the corporations are given money by virtue of tax cuts. What executives do with the money is usually giving themselves bonuses and buying expensive toys and huge mansions. Wealth is concentrated in banks, real estate and stocks. It is like using a horse to push a cart. The effect on the economy would be a cottage industry for high-end products and luxurious goods. It doesn't employ many people and there is very little small multiplier effect.

By taxing the rich much of the wealth is spread as many people are employed. The huge numbers of employees create huge markets. Corporations look at the huge demand and market and invest equipment and tools and bump up production. Corporations are pulled by the demand of employed people.
0 Replies
 
talk72000
 
  1  
Reply Sun 21 Sep, 2008 12:30 am
@Advocate,
Why Republicans keep on flogging the dead horse? The executive like their bonuses, expensive toys and huge mansions and contribute huge sums to the coffers of the Republican Party.
0 Replies
 
OmSigDAVID
 
  3  
Reply Sun 21 Sep, 2008 12:50 am
Liberals like to pretend
that the Law of Supply n Demand is only a myth.
Advocate
 
  1  
Reply Sun 21 Sep, 2008 10:23 am
As a side note, it was reported that McCain invented the BlackBerry device. He was honest enough to admit that, being an old guy, he had actually invented the fruit.
0 Replies
 
parados
 
  1  
Reply Sun 21 Sep, 2008 04:21 pm
@OmSigDAVID,
OmSigDAVID wrote:

Liberals like to pretend
that the Law of Supply n Demand is only a myth.

Supply and demand is different from supply side economics.

I think the point is that supply side economics doesn't work in the supply and demand model.
0 Replies
 
cicerone imposter
 
  2  
Reply Sun 21 Sep, 2008 11:58 pm
@OmSigDAVID,
That's very funny coming from a conservative; haven't been keeping up with the news, I see! The republican administration has created the biggest federal deficit in history, and added $700 billion dollars to bail out banks and finance companies without anything backing up that money except the printing press. It's called "supply side money."
BumbleBeeBoogie
 
  0  
Reply Mon 22 Sep, 2008 09:40 am
@cicerone imposter,
http://able2know.org/topic/122904-1
0 Replies
 
Advocate
 
  2  
Reply Mon 22 Sep, 2008 12:45 pm
I see the buyout cost escalating tremendously. Buying bad debt, which is worthless, only helps the wealthy. When this doesn't work, the big cost is going to hit the taxpayers. We are Argentina, thanks to the Republicans.
cicerone imposter
 
  1  
Reply Mon 22 Sep, 2008 03:48 pm
@cicerone imposter,
Correction; actually it's called "funny money."

The conservatives now think they can spend money from the game of Monopoly.
0 Replies
 
cicerone imposter
 
  2  
Reply Mon 22 Sep, 2008 03:53 pm
@Advocate,
Just received from a friend in Australia:

Quote:
A remarkable article by J.S. Kim, "The Undisclosed Costs of the U.S. Government Bailouts" in Seeking Alpha, 22 September 2008
http://seekingalpha.com/article/96758-the-undisclosed-costs-of-the-u-s-government-bailouts


Since I know this story will be spun into a positive news story on Monday, I thought it imperative to really tell you the honest headline of this massive government planned $700 billion bailout before the press releases their version. According to MarketWatch: “The plan allows the government to buy the bad debt of U.S. financial institutions for the next two years, according to a draft of the proposed legislation. It gives the Treasury secretary the authority to buy $700 billion in mortgage-related assets, in a bid to address the root cause of the turmoil that swept through markets this past week and resulted in the filing for bankruptcy by and government takeovers of some of the biggest U.S. financial companies.” However, Senator Schumer of New York noted that the plan “includes no visible protection for taxpayers.”

Of course not, because given the actions of the past several weeks, I can only guess that the American taxpayer is the designated sucker in this bailout plan as well. Because the American taxpayer has already been the designated sucker for the bankruptcies of Bear Stearns (BSC), Fannie Mae (FNM), Freddie Mac (FRE), and AIG (AIG), why change things now? By keeping the American taxpayer as the sucker, this allows all banking executives and Wall Street executives to keep the hundreds of millions of dollars in salaries, stock options, and bonuses that they have taken over the past several years. In fact, this reported news cements in my mind that the American taxpayer has already been targeted as the sucker in this new bailout plan: “Treasury Secretary Henry Paulson sent the plan to Capitol Hill on Friday night, a Treasury spokesman said. Lawmakers have pledged rapid action. On Friday, some said they were optimistic it would be approved next week.”

The biggest bailout in economic history, a plan so important to the future of every American, should have as a prerequisite for passage a carefully and intelligent moderated public debate for at least one week at a minimum. Instead, there is a sense of desperation to pass this legislation as quickly as possible, an urgency that I can only interpret to mean that there is something very unpalatable about this plan. Of course, the mainstream media will spin the urgency to pass this legislation quickly with an absence of debate as necessary due to the inability of blue-chip corporations to roll-over short-term commercial paper and a near meltdown last week. But this is just political spin. I am quite sure that the architects of this plan have been discussing this plan for months on end now. If you really believe that Hank Paulson and friends must pass the plan to save the U.S. and global financial system with no real debate due to its “urgency” as it is being painted, then you need to return to the Land of Oz where delusions predominate. It is being painted as a frantic plan put together in the wee hours of the night, just as the bailout of Bear Stearns was, so that zero debate can occur in regard to the most unpalatable elements of this plan that are the most destructive to every American citizen.

Fool Me Once. Fool Me Twice. Fool Me Three Times, etc.

In regard to who will likely ultimately pay for this new bailout plan, recall this Congressional hearing between Senator Jim Bunning and U.S. Secretary of Treasury Hank Paulson regarding the Fannie Mae and Freddie Mac bailout plan earlier this month:

Senator Jim Bunning: “Where will the money come from if in fact we have to use the backstop?”

Secretary Paulson: “As, as, as, as, I said to you, that, uh, that, it is my very strong belief that the way we can minimize the cost to the taxpayer, the way to minimize that cost in all likelihood is to be unspecified and to enhance confidence in, in, in the market. So that’s my answer. It continues to be my answer.”

Senator Bunning: “But it doesn’t answer the question. Where is the money going to come from if you have to put it up?”

Secretary of Treasury Paulson: “Well obviously it will come from the government.”

Senator Bunning: “And who is the government?”

Secretary Paulson: “The taxpayer.”

Note that during that previous Congressional hearing, Secretary Paulson argues that costs of the Fannie Mae and Freddie Mac bailout to all Americans can be minimized by approving an “unspecified” line of credit, in essence a blank check, to bail them out. Excuse me, but Secretary Paulson you just received an an “F” for logic. The way to minimize the cost to the taxpayer would have been to cap the bailout number for Fannie Mae and Freddie Mac, instead of leaving it unspecified and unlimited.

Again, it is imperative to understand that whatever positive story is spun from this bailout, that all of these bailouts are literally taking tens, if not hundreds of thousands of dollars out of the pocket of every working American (over generations). Again, as a basis for whether you should trust this new bailout plan, one only need recall the Congressional testimony of one of its top architects, Hank Paulson, when he was questioned by U.S. Senator Jon Tester. In response to the health of Fannie Mae and Freddie Mac just weeks before their collapse, Secretary Paulson stated: “We have no intent to nationalize [Fannie Mae and Freddie Mac]”, and “I don’t buy into the proposition that these institutions [Fannie Mae and Freddie Mac] are not viable.” So when Hank Paulson will undoubtedly tell us this week that this new bailout plan will only cost $700 billion and that it is what is best for every American, do you really want to blindly trust his proclamation?

Where Does the Money Come From?

Given that these cumulative bailouts are now in the range of trillions of dollars, what happens if American taxpayers can’t come up with this money? Again, official government numbers for this bailout are not credible. For example, the “official” cost to the U.S. taxpayer of $200 billion for the bailout of Fannie Mae and Freddie Mac of $200 billion is highly delusional and grossly underestimated. The final cost is much more likely to be north of $1 trillion. And oh, by the way, the U.S. government, by making U.S. taxpayers responsible for covering the losses of Fannie Mae and Freddie Mac, has also implicitly stated in this action, that they have zero problem with having Americans subsidize the losses of China, Japan, Belgium, Luxembourg and the Cayman Islands. Since those five countries were the largest holders of Fannie Mae and Freddie Mac debt, American taxpayer money is being used to bailout the debt of those countries as well.

Make ZERO mistake about it, the loser will not be just American taxpayers, but all Americans, American taxpayers and their children too. I know that a lot of people will state, “there is no way that the government can squeeze trillions and trillions of dollars out of the American taxpayer to socialize 100% the losses of the U.S. banking industry and Wall Street.” While this is true, they will squeeze as much as they can out of the American taxpayer until the squeezing process becomes like trying to squeeze blood from a turnip. At this point, as Senator Bunning said, “WHERE WILL THE MONEY COME FROM?” Furthermore, I’m highly skeptical of the $700 billion figure being fed to the masses. My guess is that the actual figure, when all is said and done, will be multiples of this initial estimate. The bigger question is this: Is this really how we want government to act? To systematically dismantle every piece of legislation that was specifically enacted since the 1933 Glass Steagall Act to prevent such a debacle from happening again, to respond to every Wall Street lobbying group by granting them every exploitable loophole possible to make billions and billions of dollars (if you know your legislative history, the SEC and the CFTC have been guilty of doing this for decades), and then to respond to this irresponsible behavior by passing more regulations in history to socialize all of these losses so that the burden lies not with the creators of this problem but with all American citizens?

The Answer is No Matter How These Bailouts Unfold, The Money Ultimately Will Come From the People

I can guarantee that even though I am publishing this article before the official plan is released that the media will spin the bailout plan as funded by the government money without ever addressing the question of “Where will the government get the money from?” As Secretary Paulson already established in Congressional testimony, he considers the people the government even though we have no say in the legislation that socializes these losses. But we’ve also established that once the people have no more money, that the bailout plans will likely still be short trillions and trillions of dollars. So “Where does the money come from?” The answer, again, is “the people!”. If you are confused by my answer, I’ll explain.

The money the government can’t squeeze out of the people for these massive bailouts will have to come from the printing presses of the U.S. Federal Reserve. Printing trillions of dollars can pay the balance of these losses but also guarantees erosion in the value of the dollar. Imagine that the bailout causes the dollar to erode another “X”% over the next five years. I don’t even want to take a stab at what “X” will be other than the fact that it will most likely be a huge number. If his happens, then this results in a loss of purchasing power parity for all Americans at home and abroad. In essence, it acts like an invisible tax. For all intents and purposes, if the dollar erodes by 30% over the next two years because of this near guaranteed monetary expansion, it matters not whether the government imposed a 30% tax on all American’s savings to achieve this or whether it happened because of massive monetary expansion. The end result is the same. So, WHERE DOES THE MONEY COME FROM? The answer, sadly, is not the government, but still the people.

The third President of the United States, Thomas Jefferson, once stated, “If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied.” Right now, Jefferson must be rolling over in his grave now because not only could we not figure out how to prevent what he warned us was going to happen even though we had 200 years to figure it out, but we were also so blind that we cheered the very events in the 80’s and 90’s that brought us the crisis we have today. However, the architects of this bailout must be smiling today, because they are in the process of committing the largest robbery of American wealth in history since the Great Depression. As for us, we’re still asleep at the wheel, still oblivious to this robbery, and still content to believe every word we’re told to believe instead of thinking for ourselves.

----

What we have here is another "Patriot Act", in effect a coup d'etat, but this time one that has commandeered the federal coffers and issued the contents to the banks and those that run them.

How long can it be before the American people "take up arms" to rescue their democracy? When they do, they will find it broke, but at least they will govern themselves again -- for the people, by the people, of the people.
dyslexia
 
  2  
Reply Mon 22 Sep, 2008 04:15 pm
the operation was philosophically successful, unfortunately the patient died. so it goes.
cicerone imposter
 
  1  
Reply Mon 22 Sep, 2008 04:23 pm
@dyslexia,
The patient still hasn't died; we're in for a long-term suffering before the demise.
0 Replies
 
Xenoche
 
  1  
Reply Tue 23 Sep, 2008 09:20 am
@cicerone imposter,
Let the controlled demolition of the US banking system commence.

Fascinating. I'll be watching in awe.
0 Replies
 
Advocate
 
  1  
Reply Wed 8 Oct, 2008 09:01 pm
Banks across the globe are failing. I guess the world-wide Ponzi scheme is finally collapsing.
 

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