(continued from
Pt. 1: "Context")
The economy today's a tough thing to quantify. So here are a few indicators:
JOBS
The number of American jobs just finally passed the level it was when Obama first took office in 2009, effectively stating based on one measure that he has gotten us through the worst of the employment downturn that resulted from the disastrous presidential policies preceding him and is now bringing us back up. Even more, the economy has added jobs for the last 30 months in a row. Unemployment is at 8.1%, down from its high of 10% in October 2009.
On the other hand, his total jobs added, that is since the rock bottom lagging the previous failures, is 5.1 million private sector jobs (in the last 30 months). He promised 7 million, almost 1.5 times the numbers he actually hit. And as for the drop of unemployment, that doesn't count all the people
just giving up on job searches, which would probably put it back closer
to 10%, which is actually more than the unemployment rate when he took
office. So basically the job market is improving but not very fast and certainly not at the rate he'd promised.
GDP
It rose to $15.2 trillion in 2011 from a low of $13.9 in 2009 and a previous high of $14.4 in 2008. So technically our gross national income as a nation is at an all-time high. And, after a steady drop in growth rate since 2004, hitting rock bottom in 2009 with -3.53% (that would be a GDP contraction), growth for 2010 was a whopping 3.4%, though 2011 was an anemic 1.7% and the
estimate for 2012 is 1.3%, another drop in our nation's percentage growth. At the same time, inflation has been about 1.7% per year since 2009. Since the GDP gains are measured in dollars, and a $1.07 today is worth $1 in 2009, our current GDP is actually $14.02 T in 2009 dollars - still a gain but
just barely.
Broken down even more, GDP per capita in 2012 dollars is $37,700, up from the 2009 low of $36,500 but only barely and when corrected for inflation it's hardly anything.
So it's going up, though, right?
Still, consumption of goods, US exports, employment, all of these indicators are up.
But only by a little. Some people are attributing these to the cyclical nature of markets but that's fraudulent. Most other recessions or depressions righted themselves with either a populist regime change geared towards "punishing" the top earners (Republican Teddy Roosevelt comes to mind, though his was also a bit in response to William Jennings Bryan who was all but calling for public execution of rich folk; the New Deal era FDR also comes to mind) or war. And normally war spoils are taken from the losers who have money or growth is based on an elevated military industrial complex bankrolled by the wealthy (see WWII US taxes).
But for this let's interpret economics as simply a combination of such factors as how much money we're all making individually and how much money the country is making. For all intents and purposes these numbers are going up, just not as fast as we would like.And, in fact, hardly keeping pace with inflation.
US Debt
But wait, no, there's one big concern, frightening, something which will certainly lead to our crumbling - namely, our annual budget deficit and massive national debt; seen another way, it's frightening all the money we "owe" to people who aren't the US including our current world superpower rival China (Romney keeps on trying to make our rival Russia but let's be honest, Russia's more our frenemy than anything - if nothing else, I feel like at least we're on the same team and though we may constantly argue with each other we know that we'll never get anywhere fighting; China, on the other hand, hasn't necessarily learned this lesson - and, even more, they're rising in power and money as well as they've secured their place as the manufacturing arm of America, making everything from dog food and iPod components to almost every Staples brand product).
Every year we hear about the deficit, which is how much our country has spent versus how much it has made in the year - that is, if we spent more than we brought in we have a deficit, which seems to have been the pattern recently. If we spent more than we made, then we have to borrow to fill that gap in the deficit. That annual deficit then builds on itself to make up the accumulative US national debt - at this moment, about $16 trillion.
The deficit for 2009 was $1.42 trillion, nearly a trillion dollars less than the deficit for 2008 thanks to Bush and Obama's costly bailouts of the financial sector and the auto industry (though the American auto industry, as evidenced by their current solvency and national resurgence, was saved by these expenditures - even more, these TARP bailouts essentially allowed the government to buy partial ownership and enhanced controls over these companies which are all now operating much more efficiently - essentially the US government didn't just throw money into a black hole but made an investment, like most people do when they buy US debt - they're investing in the US).
2010 and 2011 it was $1.3 trillion, which is about 9% of our nation's GDP, meaning we spent about 10% more than we brought in. Interestingly enough, one culprit pointed to was all the money lost on tax breaks for small businesses enacted in 2010, including most notably increased deductions for depreciation. Because doing simple math, if you collect less taxes, the government has less money. The idea of the tax cuts was to convince small businesses to hire more people and it worked since unemployment payments fell by 24% in 2011 so you can look at this as an investment in small business as well as in rising US employment. But still, that investment takes money which the government gets by borrowing money as well as selling securities, or stock, in the country.
Right now, when it comes to foreign nations, China owns the most US Treasury securities at $1.12 trillion, down from $1.13T in 2011 and . Japan is next with $1.1T, up from $885B. Then oil exporters and Brazil and Caribbean nations around $200B, then Russia around $150B, and so on. So China and Japan own combined 2/5ths of our foreign T bills but they both own less T-bills than our Treasury does and, even more, when taken into account with all the other people who own these structured debts it's not much. Plus, like a stock, owning 1/16th of securities in a company won't allow you to take over that company like fear-mongers have been telling us. And let us not forget that our nation won its freedom using foreign debt (our Revolutionary war was almost completely bankrolled by the Dutch as their international status faded into the rise of British wealth).
What to Cut?
Still, today FY 2012 ended with, yet again, another $1.3T deficit ($1.2T after adjusting for inflation). And this worries everybody because they believe that the more we spend, the worse our nation will be. They constantly yell out we need to rein in spending. So what are our top
expenditures?
In 2012 it was defense, at 902B, up from 878B in 2011. Can't cut that.
Next is health care, $858B, down from $846 B in 2011, about $8B in savings. This includes Medicare, actually in big part covers Medicare so what, you wanna kick gramma and granpa out in the cold next time they have a cold?
Then we have pensions, yes, those funds promised to our hardworking grandparents and, in some cases, parents raising from $776B in 2011 to 820B, or $45B. And this will only continue rising as predatorily shitty investments (thanks Wall Street) increasingly force us to fulfill pension fund needs. So, what do we do here? Start cutting people's pensions?
So, what if we cut those, say, in half. Fuck our civil servants and other federal pensioneers, your fault the financiers shit the bed by betting on unemployed crackhead mortgages and used fancy swaps and obligations to rip off Johnny Pension Manager in Des Moines, IA since he couldn't understand them. But we're gonna need you to live on $1200 a month instead of $2400. And you, guy, dying from cancer? Well, shoulda gotten insurance with your $7.50 an hour wages. Wait, it woulda taken a week of your current pay to buy your own insurance, not to mention any possible dependents? Tough luck, just grin and bear it. We can't help you. Even then we $833B in savings - still need another $500B.
Next is Welfare. It was $473B in 2011, down to $452B in 2012. So even if we completely got rid of welfare, left all those layabouts to starve in the streets, we'll still have a $50B dollar debt. Let's ignore the fact that about a quarter of that is for family and children, children being responsible for being born in a shitty situation and women being responsible for having those children in a country where people aren't constantly encouraged to get married and have children. And another quarter's for unemployment (raise your hand if you've never collected unemployment - congratulations, you're either one of the lucky people who has never been fired or you're independently wealthy - or your parents are and they provide you with an aristocratic unemployment insurance because, hell, they couldn't expect their baby to starvey-warvey). So if your job's been downsized to China, fuck you.
So we've cut medicare and pensions in half and erased walfare, essentially fucking over millions of American citizens, many of whom are from or a result of the supposed Great Generation, and we still have a deficit.
Next, "Other spending" is up from $96B to $199.6B thanks in large part to an increase in general funding of commerce and labor (a spending increase of $34B) and another raise of $57B in economic affairs, essentially spending to try and encourage economic growth.
But what comes next? Education, which is up $40B, to $153B dollars. Cut that down and there. Sure, considering the dearth of American blue collar jobs thanks to the proliferation of computers and automation education has never been more necessary to get those welfare layabouts off their asses. But fuck them, right?
So there we have it. What to cut? Seemingly, nothing will be easy to cut as is, we can try to adopt austerity policies but if we look at the mass protests
setting ablaze parts of Europe at a rapid pace, there doesn't seem to be much hope at significantly cutting that. We need to raise income and certainly revoking the Bush tax cuts will help but should these numbers continue, we're still looking at $1T annual deficits. The best solution would be to somehow increase American commerce which should, in turn, increase American tax revenues which would allow us to pay down the debt. Should we kick our top tax % to 75% like the French we'd be in the clear in half a decade. In fact, if you consider the fact that
half of America owns only 1% of its wealth, then raising taxes on that half won't be much help. Say we doubled the taxes on people already struggling to pay bills. What's 20% of 1%? .2%. Not much help.
Cuts Are Tough, So Instead How do We Build?
But, again, let's put aside the idea of raising taxes, we have to raise commerce and specifically export while decreasing imports. As for our export numbers, sorry but there's not much either president can do about that and if either of them says he can he's lying. According to the WTO, thanks to the half-dead economies in Europe and the slowing economy in China, projected global volume of trade is projected to expand only 2.5% this year, down from 5% last year and 14% the year before. For example, all
US automakers have been cutting and gutting their European operations as the country's apocalyptic struggle to keep the Euro has resulted in car sales plummeting, dragging down US auto companies which have been finally staging comebacks with increasing American consumerism. Unless we get involved in the eurozone mess, there's nothing we can do - and seriously, America trying to get involved in that whole fiasco is like trying to break up a fight between your wife and her sister when they're both on the rag. Better to just sit back and let them square it away themselves.
So even if we build up our factories we can't depend on exports of disposable-income goods to save us. However, with an increasing development of our essential resources which can then become exports - for example, natural gas and all the oil we can get from fracking and shale, we'll be able to raise corporate profits and in industries which have large lower and middle class workforces which will ideally put more money into those classes and build from there. As it is the Fed has interest rates as low they can be to stimulate the economy. (
*TIME OUT: HERE'S A QUICK LESSON on "interest rates": the US government lends money to banks and corporations at a rate decided by the fed and with this rate currently low, the banks are to make the rate at which they lend money low as well, ideally raising home and consumer loans. This rate is usually about the same as the interest rate it pays to people who invest in Treasury Bills, considered the safest type of investment and therefore usually it's used as a benchmark from which brokers and investors assess risk.)
But either way, there's the rub - we need to put more money in our national coffers so as to cut down our debt without making excessive cuts of programs needed for the welfare of American citizenry, we need to get more people jobs and we have to do it while the rest of the world crumbles. A key to that is increasing business activity (and taxes for top wealtholders).
So, who's got a better plan for increasing productivity?
Obama's vs. Romney's Economic Plans
- So Obama's plan has at its center tax increases for Americans making over $250k a year as well as incentives for businesses to grow and hire new workers.
- His Jobs Act, which was filibustered by Republicans in Congress (that would be the congress with an American disapproval rate in the 70th percentile) will be back around this time and he's pushing it through. According to Moody's it'll add $1.9M jobs, raise the GDP by 2 points, and cost only about $200B in budget increases - the rest being supported by tax cuts for the companies. So two points added to a $15.2 trillion GDP should not only help with that pesky deficit but it'll provide jobs.
- Even conservative reporters admit that dropping the W. Bush taxes on households making over $250k is going to give the government more money and lower the national debt. But do people actually want that?
- Lower taxes on manufacturing industry while raising corporate taxes and capital gains
- Short term stimulus to get us over the next year growing pains as the parabola is slowly ticking up
- Cut spending on military as Obama is getting more done with smaller, more strategic strikes
- Romney, on the other hand, has a less particular proposal but it can be summed up as similar to supply-side economics
- He will put in place tax cuts all across the board. The idea is that with more money, everybody will simply spend it and that will heal the economy. Even more, this plan holds with the belief that small-business owners usually tie their business' finances to their own and usually make more than $250k; ipso facto, they pay more taxes, instead of taking it out of their personal profits they'll simply fire people.
- According to Ernst & Young, Obama's higher taxes will cost 710,000 small business jobs
- Cutting regulation of corporate ventures to encourage business as the current problems facing our country and the economy are the result of too much regulation
- Cut spending by 5% on all non-defense spending (which will come out to $120B or less that 10% of our national deficit)
Now you can make your own decision. As much as I want to sway you with arguments, I'm not going to. Simply read through this post and the one before and make your own decision. Because the sad thing I've learned is that nobody is 100% correct, there's no one solution and, even more, when it comes to the economy you can represent things in so many ways and manipulate numbers and timetables and whatnot that it kinda just becomes a gut feeling after a little (like those Forbes articles which called Obama the
highest and the
lowest spending president in modern history). And of course there's the idea that self-preservation is paramount and fuck everybody else, it's a tough world, social Darwinism and whatnot, though the downside to such thinking is you can end up with Mexico, home to some of the wealthiest people on the planet but surrounded by a disenfranchised lower class all too happy to join drug cartels for the chance to make 500 bucks a week and all you have to do is kill a few people.
So do your homework. Hopefully this helped. And make a smart, EDUCATED choice. Next week we'll talk a little about
tomorrow's debate - hope you bastards will be watching.
And please, if you have any comments, agreements or arguments with what I'm saying here, comment them to me. All sides. Regardless of what happens in the White House, I want to see a growth of national debate based on facts and points, not this horrible ranting across the fence that has come to define the American political system.
- Ryan
