The largest headline on page 1 of today’s (December 4, 2012) Statesboro (Georgia) Herald, here in the Bible Belt, reads “GOP Issues New ‘Fiscal Cliff’ Offer.”
The article requires about 16 column inches on page 1 and about half of page 3, the remainder of page 3 being advertisements. It summarizes some of the “negotiating” so far, with, to channel and paraphrase Republican Senator Everett Dirkson back in the 1960s, a trillion here and a trillion there being bandied about as if Boehner and Obama were dickering over buying and selling a house. The article includes photos of Boehner and Obama juxtaposed on page 1 as if they were talking to one another.
I know newspapers are having a hard time making a living these days and they have to do whatever they can to print articles their readers will and can read, but do they have to publish articles like this one? Shall we see long articles about the fiscal cliff “negotiations” on page 1 every day until we actually fall off the “fiscal cliff”?
I’m tired already hearing about negotiating the fiscal cliff, as if politicians and pundits are talking about real negotiations. The political positions have been clear for some time and most likely little or nothing is being negotiated, supposed offers being little more than hypothetical numbers mainstream media can use to titillate their audiences and make it seem politicians are doing something to earn their salaries from now until Christmas.
Obama it seems is generally determined to increase the taxes of the elite rich, not seriously cut Social Security, Medicare, Medicaid, and social and military programs, to please voters in the middle and lower classes; Boehner and his lower class tea partiers in the House it seems are generally determined to do the opposite to satisfy their rich sugar daddies in the upper class, paying them back for past campaign contributions hoping to receive new ones to get reelected.
A few insiders may already know what will happen regarding the fiscal cliff, but if they do, most likely they are not going to tell us until it suits their political purposes.
The fiscal problem of the US federal government has been growing for over 30 years, caused by neoconservative beliefs, fantasies and actions, and by Republicans and Democrats becoming more polarized through time. The problem has been exacerbated by corporate America, the elite rich, mainstream media, politicians and others feathering their own nests in Washington at the expense of we the people; and now we the people are expected to believe that two individuals, Obama and Boehner, are smart enough, wise enough and powerful enough to “negotiate” a solution all by themselves before January 1, 2013.
I have no way of knowing what will happen regarding the fiscal cliff, but I know what I think should happen. Having voted for Obama, I generally agree with his position. His approach if implemented would increase the short term cash inflow of the federal government; and I think this cash should be used to fund infrastructure jobs in the US to create aggregate demand to jumpstart the economy back to less than 4 percent unemployment ASAP, that is, as soon as possible.
There is no guarantee this would work, but it’s a better bet than doing nothing to jumpstart the economy until after overhauling the tax code and eliminating tax loopholes as Republicans recommend, requiring years of negotiating and haggling in Congress before substantial changes could be made to significantly correct budget deficit and unemployment problems.
Sooner or later more austerity is necessary, but not now given the precarious state of the US economy and the global economy. Serious austerity now would most likely put us back into recession, and could plunge us into a depression.
In my opinion, increasing the taxes of the rich or falling off the cliff in January will not seriously reduce aggregate demand from where it is now and slow growth significantly in the short run because the elite rich have so much money they can afford all the goods and services they want and need even if their taxes are increased. On the other hand, across the board budget cuts affecting all classes will cause some pain; but hopefully this pain can be dealt with quickly with new legislation after January 1.
Lowering by a miniscule amount the bank accounts of the elite rich and large corporations after January 1 to pay their higher taxes will not significantly reduce investment expenditures in the US that would have produced jobs, because sufficient aggregate demand in the US does not now exist to prompt those investments. If such demand existed the elite rich and large corporations would have already made them and enough jobs would already have been created to reduce unemployment to 4 percent. Instead the surplus funds of the elite rich and large corporations have been moved elsewhere, perhaps to the Cayman Islands.
In order to make investments in new plant and equipment in the US and creating new jobs, the elite rich and large corporations must have assurance they can sell whatever new goods and services the new investment and newly hired employees will produce. This assurance can exist only if sufficient aggregate demand exists. History has shown, during the Great Depression years of the 1930s, that significant new aggregate demand cannot be created by an unfettered unregulated capitalistic economy that has collapsed of its own volition. New aggregate demand (demand-side economics, if you will) during a depression, an economic state of affairs similar to what we have now, can only be created by governments injecting exogenous funds into an economy to create civilian and/or military infrastructure jobs that put people to work who are paid with government checks.
New tax revenues are desperately needed to start the infrastructure job-creating process in the US now, if the federal budget deficit problem is not to become significantly worse than it is now, caused by borrowing and printing ever-larger sums of money. The greatest threat in the long run if large deficits are run year after year, paid for by borrowing and printing ever-larger piles of money each year, is that money will lose its value relative to goods and services, causing a condition known as inflation, a problem too complex to cover in this article. Hopefully runaway inflation will be headed off at the pass before it happens if a normal US economy is restored by jumpstarting new jobs using the process recommended here, especially if the necessary battery cables are hooked to substantial sums of new tax revenue provided by real money paid by taxpayers ASAP.
The first step in the process is to put unemployed citizens to work ASAP, putting money in their pockets they can spend with local small businesses, enabling them to eat out in local restaurants now and then and patronize local stores and shops, maybe even buy a house, causing more employees to be hired by small businesses selling these things, hopefully creating a positive multiplier effect in the entire economy.
It’s too late to make this happen by Christmas, but maybe it could start to happen by Easter. By next Christmas there might be sufficient aggregate demand that the elite rich and large corporations might start making investments in the US to create jobs at home, hopefully creating higher paying middle class jobs in manufacturing.
Since there is no such thing as a free lunch in economics, increasing the taxes of the elite rich and large corporations is ethical, fair and appropriate in the current case, especially when you consider upper class Republicans and Democrats since 1980 caused most of the current fiscal problem, undermining the normal functioning of the US economy, by simply paying lobbyists and politicians billions of dollars to enact legislation to reduce their federal taxes by trillions of dollars up to now, and start unnecessary wars costing more trillions of dollars to promote their corporate interests abroad.
A successful lobbyist currently undermining the democratic functioning of the US economy is Grover Norquist, a Harvard MBA like Bush II and Romney, who enticed and induced almost all Republican politicians in the House and Senate to sign a pledge not to raise tax rates for any reason, coercing signers of his so-called “pledge” into voting mindlessly and irresponsibly against tax increases regardless of the facts of cases and the realities of economic states of affairs. The Norquist pledge is a shameless pandering mechanism designed to garner votes for Republicans from selfish shortsighted taxpayers in a sordid quid pro quo psychological transaction.
Obama has more morality on his side than Boehner. It’s members of the upper class after all that won the class war after 1980, significantly increasing their incomes, wealth and power, while members of middle and lower classes suffered significant losses. The game was not zero-sum but for sure it was not win-win.
Consequently members of the upper class, primarily Republicans but also including Democrats, like good Christians, should now give back some of the trillions of dollars of blessings and tax savings their well-paid lobbyists and politicians legislated for them after 1980, coming to their senses, this Christmas season, like Ebenezer Scrooge in 1847, before it’s too late.
Tax rates on the incomes, dividends, capital gains, and inheritances of the elite rich and large public corporations should go back to where they were, and would have stayed, had real conservatives taken over the US government in 1980, rates considered honorable and fair by our wisest parents and grandparents—back to where they were in 1981 when the handsome charming triumphalist movie star Ronald Reagan rode into Washington from Hollywood, to act out the leading role in a new blockbuster movie, selling trickle-down supply-side economics, setting in motion the greatest redistribution of wealth and power from the relatively poor to the relatively rich in American economic history.
Richard John Stapleton is an emeritus professor of entrepreneurship and business ethics who writes on business and politics at www.effectivelearning.net. He is the author of Recommendations For Waking Up From The American Nightmare.
You and me too Mr. Stapleton, “I’m tired already hearing about negotiating the fiscal cliff, as if politicians and pundits are talking about real negotiations”.
Perhaps your essay will awaken the American people and get them involved to the point of taking action in their own behalf. It is clear that Washington doesn’t really care for their security and pensions are assured.
Well done, sir.
Thanks very much, Charles
All I can say at this point is I will need to read your ideas at least acouple of more times before commenting….. However, I have held the position for sometime that until there are more people giving of themselves than taking from the” SYSTEM” we as a country will never be as equal as so many talk about…..There are more Takers than Givers and we have gone over the cliff already so our leaders need to stop talking about going over but instead how do we get out of it……????
Thanks for your response, David.
Generally agree. Unfortunately economic history seems to me to show that after capitalistic economies have fallen off the cliff as in a depression, a condition similar to what we are in now, governments have to jumpstart economies back to some sort of normal economic functioning to get off the bottom. What is normal functioning is a serious question. I attempted to answer this question in my book Business Voyages, generally deciding there is no such thing, basically deciding, like the philosopher Ludwig Wittgenstein, that everything that happens is either accidental or inevitable. Maybe you could teach people how to get up off the bottom after having fallen off the cliff accidentally or inevitably causing them to do better using whatever it was that inevitably or accidentally caused you to believe whatever it was you taught them.
Best wishes,
Rick Stapleton