We should not talk ourselves into a Depression, but in a time when factories are shutting down because consumers won’t buy their goods because people aren’t sure they’ll have a job in six months and the banks are pulling back on lines of credit, the government must be prepared to step up as the employer and lender of last resort. And those of us who still have jobs should be prepared to step up and support programs to put jobless Americans back to work, fixing streets and bridges and investing in other public works, if necessary, to get the economy moving again.
President Obama stepped up Feb. 24 in his speech to Congress. “What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more,” Obama said. “[A] day of reckoning has arrived, and the time to take charge of our future is here. Now is the time to act boldly and wisely—to not only revive this economy, but to build a new foundation for lasting prosperity.”
He outlined ambitious proposals to develop renewable energy resources to free the United States from dependence on foreign oil, to give working-class families a shot at higher education for their kids once again and to make health care available to everybody. We’ll use government to get us out of the current economic slump by proceeding with progressive initiatives.
Republicans, on the other hand, are still complaining that Herbert Hoover didn’t get a second term.
Obama has said he wants to cut the annual deficit in half by the end of his current term. He would achieve the reduction in part through withdrawal of troops from Iraq and restoring higher taxes on the wealthy.
But he should not let the conservative mantra of “pay as you go” overwhelm the need to stimulate the economy and put people back to work.
Obama inherited a deficit for 2009 of about $1.2 trillion, and his stimulus package probably will push it over $1.5 trillion, or about 10% of the nation’s gross domestic product. That would be the biggest deficit as a percentage of GDP since World War II, but it is still considered manageable. He hopes to cut the deficit to $533 billion by 2013, or about 3% of the gross domestic product, which is considered a sustainable level.
The Heritage Foundation noted last year, when it was still defending the Bush record, that the public debt as a percentage of GDP was 38%, which was below the 49% average from 1940-2008. (The Heritage Foundation figures do not include funds borrowed from the Social Security Trust Fund or other federal government accounts.) The national debt (including all federal accounts) peaked at 110% of GDP in 1947 and got as low as 32.6% in 1981 before the Reagan and Bush I administrations doubled the debt to 66.2% of GDP in 1993, according to the White House budget office. Bill Clinton got the national debt down to 57.4% of GDP in 2001 before George W. Bush turned things around again with his combination of foreign invasions and tax cuts for the wealthy. Bush pushed the national debt to $10.4 trillion, 69.3% of the GDP.
Obama proposes to let Bush’s tax cuts for the rich lapse after 2010. He also would tax income from hedge funds and private equity partners at ordinary income tax rates, which are as high as 35% for people making $250,000 or more and will return to 39.6% in 2011. Now the hedge fund managers are taxed at the capital gains rate, which is 15% and will increase to 20% in 2011.
Obama noted that the $787 billion stimulus plan provides tax cuts for 95% of working families. Republicans voted against those tax cuts.
If conservatives want to balance the budget, Congress should restore the tax rates for the rich this year, but it also should restore the maximum tax rates to the pre-Reagan levels of 70% for top incomes of $1 million or more. The government needs the money and millionaires are the best able to part with it. After all, they are the ones who profited during the Bush years.
Congress also should adopt a tax of 0.25% on stock transactions, similar to a tax that has been in effect in the United Kingdom for decades. Such a tax could raise $150 billion a year, which would help pay for the bailout of Wall Street. Economist Dean Baker also has proposed a tax of 0.02% on the purchase or sale of futures contracts, which would discourage short-term speculation.
Sen. Bernie Sanders (I-Vt.) has a good proposal for a 10% surtax on the income of individuals above $500,000 a year, or $1 million for couples. That would raise more than $300 billion in revenue.
Congress also should reinstate the Glass-Steagall Act and re-regulate the financial markets and the Obama administration should enforce anti-trust laws to protect small businesses.
Obama apparently is backing off on plans to “fix” Social Security, which is fine by us. The Village Idiots in D.C. have been calling for reductions in benefits or raising the retirement age as they seek to undermine support for the retirement program. The Social Security Trustees have projected that the system is funded at least through 2041. If any adjustments are needed, they can be accomplished by lifting the cap on taxable income, which is $106,800 in 2009.
Obama has signaled that he plans to go ahead with health care reform and is calling for Congress to make coverage universal.
Medicare is under financial pressure because of the soaring costs of health care, but broadening Medicare to cover all Americans could restore stability to the program. After all, Medicare already covers the most expensive patients—those aged 65 and older—and many of the 47 million uninsured Americans are younger and relatively healthy.
There is popular support for universal health coverage. Even a Fox News poll conducted Feb. 17-18 found that 66% said the federal government has a responsibility to make sure all Americans have health care. Unfortunately, Obama and Democratic congressional leaders appear to be focused on making private health insurance more affordable, along the lines of the Massachusetts model that mandates private insurance coverage. However, for advocates of a workable single-payer plan, there is still HR 676, the US National Health Care Act, sponsored by Rep. John Conyers (D-Mich.), which would expand and improve Medicare into a single-payer health plan that covers every American. The Leadership Conference for Guaranteed Healthcare (guaranteedhealthcare4all.org) is leading the effort to get Sen. Ted Kennedy (D-Mass.), chairman of the Health, Education, Labor and Pensions Committee, and Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, to open the health reform hearings to consider a single-payer solution.
The California Nurses Association/National Nurses Organizing Committee has reported that expanding and upgrading Medicare to cover all Americans would create 2.6 million new jobs, infuse $317 billion in new business and public revenues and inject another $100 billion in wages into the US economy.
The economic recovery bill allocates $2 billion for community health centers. It also sets aside $300 million to provide incentive for physicians and dentists to practice in underserved communities and $200 million for other health-care professionals involved in primary health care. The bill includes $19 billion to develop a system of electronic health records and another $1.1 billion for research on which treatments work best for a particular disease. The measure allots $1 billion for a “prevention and wellness fund,” including $300 million for immunizations.
Now it’s time for Congress to show it is looking out for the general population instead of the insurance companies who are lobbying to keep their grip on the health-care dollar. Contact your House member to get him or her to co-sponsor HR 676.
From The Progressive Populist, March 15, 2009
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