One can’t paint recent job figures as anything but dismal. However, anyone who says the economy is grim across the board isn’t paying attention.
“Board” is an apropos word. Boards — as in “chairmen of the” — have been doing spectacularly of late. In the last year, annualized corporate profits rose 42 percent. In the last quarter of 2010 they were a record $1.68 trillion.
Yes, profits — the sweet elixir by which all boats are raised. Do you feel it?
Except — hold your boat. If you didn’t have a job a year ago, those profits have done absolutely nothing for you, or anyone else needing employment.
Simply put, Nobel laureate Michael Spence tells Time magazine, “Companies are hoarding cash.” It bespeaks a “fundamental disconnect,” in Time’s phrasing, “between the fortunes of America’s firms and those of its employees.”
Though this appears to present the matter as something new or astounding about how the American system works. That's the way things have always worked.
In the political context, this is “Fool me once. Fool me twice. Fool me as many times as you wish.” The Republican Party gets the message, and will fool you as soon as authorized to again.
It was true fool’s gold for the economy when George W. Bush managed to cut taxes for all, and particularly America’s wealthiest, back in 2001. And it was the same brand of pyrite a few months ago when the newly empowered Republicans in Washington said, “Deficit be damned; keep those tax cuts for America’s wealthiest in place.”
Then they railed against the deficit.
Maybe if those tax cuts really were the way we could mend a broken economy we could justify the $700 billion they cost to continue them. However, we now have 10 years to guide us as to the efficacy of the Bush tax cuts. To call them a costly failure is something you can only dispute unless you drip with wealth and are that much wealthier because of them.
Where do we start? The National Priorities Project points out that the government has spent more than $400 billion over the last decade in higher interest payments to finance the debt deepened by the Bush tax cuts.
Meanwhile, economics writer David Cay Johnston, who won a Pulitzer Prize for the New York Times, asserts “overwhelming evidence” that the Bush tax cuts "did not spur investment." He points out that job growth in the George W. Bush years was one-seventh that of the Clinton years. Wages also fell.
Interesting: Republicans have seized on the new job figures to say that President Obama’s policies have failed. Actually, Obama’s much-reviled stimulus package is the only thing we can point to that, in fact, worked.
A bipartisan panel of economists in December pointed out the stimulus legislation had created 2.7 million jobs and saved millions more. The analysis literally credited the stimulus package for averting a second Great Depression.
If you recall, the stimulus bill also contained tax breaks. But they were a different kind, a targeted kind that achieved a lot more than the Bush kind. Moody’s Analytics chief economist Mark Zandi, who advised John McCain's presidential campaign, estimated that the Bush tax cuts generated only 35 cents in economic activity for every dollar committed. The targeted cuts in the stimulus bill stimulated three times as much. Why? Because they went to people who needed the help.
How long, how long, will Americans swallow the trickle-down fiction that rewarding the wealthy will make us all better off? Or that cutting taxes, regardless of our deficit situation, is good for us? That last time the economy was doing swimmingly it was on the heels of the Clinton tax increases, a move Republicans said would be disastrous.
George H.W. Bush was the one who coined “voodoo economics” for what the tax-cut, deficit-by-design party has been doing for three decades. Somewhere along the line we should have learned something. We know America’s moneyed class has.
Longtime Texas newspaperman John Young lives in Colorado. Email: firstname.lastname@example.org.