Tag Archives: economy

A Breath of Fresh Air

It some ways it was certainly unusual. But mostly its normalcy made it a breath of fresh air. For more than an hour President Joe Biden delivered a report to Congress, the nation, and the world on the state of the state one hundred days into his administration. He laid out the achievements already accomplished, the programs now under way, and the proposals he is sending to Congress for enactment into law.

One way the speech was unusual was that there were two women behind the president. Presiding over the joint session of Congress were Vice-President Kamala Harris, who is President of the Senate, and Nancy Pelosi, the Speaker of the House of Representatives. That was a historic first. Another way was that the chamber, which normally holds 1,600 people for these events, was limited to 200 by pandemic protocols. The audience members were socially distanced and most were masked.

But the speech itself was “normal” in that it was upbeat and forward looking. You can read it and judge for yourself here. I heard a president speak without pointing fingers and naming names. I heard a president applaud all Americans and political leaders of both parties for their work in achieving the successes already accomplished. And I heard a president call on us all to work out our differences and reach compromises to solve the problems we face.

This was a far cry from the presidential speeches of the last four years. Donald Trump never missed an opportunity to pat himself on the back, denigrate those who differed with his opinions by name and in threatening terms, and try to scare us by insisting our nation was threatened by his political opponents and only he could protect us.

From President Biden:

There is not a single thing, nothing, nothing beyond our capacity. We can do whatever we set our minds to if we do it together. 

Senator Tim Scott, Republican of South Carolina, delivered the opposition response. He had an opportunity to strike a consolatory note. He did not. Once again I urge you read the text yourself. After a propitious start, I heard Scott fall back on the same old same old in terms of the Republican line. His first grievance is that President Biden is not “bipartisan.” That complaint ignores several realities. First, that the Democrats did win the election. Second, that the various proposals the Democrats have proposed are popular. Even with Republican voters and in a Fox poll. And finally, that for all their bluster and blunder, Republicans have not put forth any proposals of their own with enough Republican cosponsors to be passed into law.

Another Republican complaint is that the Democrats are moving beyond the “traditional” definition of infrastructure, whatever that means. I’ve discussed this before. As I see it anything that contributes to the long-term benefit of Americans qualifies as infrastructure and is a worthwhile investment.

And finally, Republicans complain about the cost and the impact of President Biden’s proposals on the deficit. As anyone who remembers their high school math can see for themselves, if they are willing to do a little research, it is Republican presidents starting with Reagan who have increased the deficit. They’ve done it mostly by lowering taxes on companies and the richest Americans, claiming everyone will benefit. But most of us have not, as President Biden noted:

My fellow Americans, trickle down — trickle down economics has never worked, and it’s time to grow the economy from the bottom and the middle out.

In 1952 and 1954 the highest marginal tax rate for individuals in the United States was 92 percent, the highest ever. For tax year 2020, including a charge for the Affordable Care Act, the maximum federal income tax rate was 40.8 percent. President Biden:

So, how do we pay for my jobs and family plan? I made it clear, we can do without increasing the deficit. Let’s start with what I will not do. I will not impose any tax increase on people making less than $400,000. But it is time for corporate America and the wealthiest 1% of Americans to just begin to pay their fair share. Just their fair share.

He could not be more clear. His proposal calls for tax increases on individual taxpayers only on earnings above $400,000. That’s the one percent of Americans who have enjoyed almost all the benefit of decades of Republican tax cuts. Still Senator Scott and other Republicans have been hitting the airwaves complaining of what they call “massive,” “deficit increasing,” and “job killing” tax increases. These are simply lies.

There will be increases in taxes on America’s largest and most profitable companies. Republicans argue that raising the marginal corporate tax rate to a level greater than the rate in most other industrialized countries will be drive these companies overseas. But marginal tax rates are not what matters. What matters is the amount companies actually pay.

These companies give huge campaign contributions to lawmakers and have lobbied for and then used every tax preference, read “loophole,” available to reduce their tax liability. At least 55 of the largest corporations in America paid no federal corporate income taxes in their most recent fiscal year despite enjoying substantial pretax profits in the United States. These companies all benefit from the infrastructure spending of the federal government. President Biden:

Look, the big tax cut of 2017, you remember it was supposed to pay for itself. That was how it was sold. And generate vast economic growth. Instead, it added $2 trillion to the deficit. It was a huge windfall for corporate America and those at the very top.

Instead of using the tax saving to raise wages and invest in research and development, it poured billions of dollars into the pockets of CEOs. In fact, the pay gap between CEOs and their workers is now among the largest in history. According to one study, CEOs make 320 times what the average worker in their corporation makes, it used to be in the — below 100. The pandemic has only made things worse. 20 million Americans lost their job in the pandemic, working and middle class Americans.

There is one complaint the Republicans put forward that is at least based on fact. The massive programs President Biden has proposed do increase the role of the federal government in our lives. So what? These programs have succeeded many times in our history and improved the lives of average Americans. You can’t deny that we face problems that have to be solved, competition that needs to be addressed, inequities that must be alleviated if social tensions are to be managed. President Biden:

I like to meet with those who have ideas that are different, that they think are better. I welcome those ideas. But the rest of the world is not waiting for us. I just want to be clear, from my perspective, doing nothing is not an option.

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Infrastructure for the 21st century

I long for the days when I could have a rational discussion with someone I disagree on the serious issues of the day without that person spouting a stream of totally unsubstantiated falsehoods. In other words lies. I’m pointing my finger at you, Republicans, almost without exception.

Discussions with Democrats are also often frustrating. But that is because the Democrats include a wide range of differing views and the disagreements are generally over strategy. I’m thinking of you Joe Manchin. Not over the role of government in attempting to solve problems or denying that problems even exist. And Democrats are not inclined to interrupt a serious discussion with a rude critique of your mother’s footwear. I still remember being told, “Your mother wears army boots.” I was on the first grade playground at recess at the time.

Republicans will call you every name in the book at the drop of a hat. They will insult your relatives, living and dead. And charge you with a wide variety of crimes without the slightest bit of evidence. They also live in an alternate universe where up is down, down is up, and things you can see right before your own eyes are somehow not true. They revere the framers who wrote our Constitution, except when they ignore it.

Republican hypocrisy knows no bounds:

  • Senate rules are sacrosanct unless they need to be broken to thwart a Democratic proposal.
  • Deficits are bad but only if there is a Democrat in the White House.
  • The purpose of the federal government is to “provide for the common defense,” quoting the magnificent preamble to our Constitution, ignoring the fact that the phrase is part of a list and imminently following are the words, “promote the general welfare.”
  • Infrastructure means roads. That’s it. Roads.

Let’s put the debt debate aside for now except for to state that the evidence is clear, economics is an art, not a science. We really don’t understand what it is going on. Starting with Ronald Reagan, Republican, yes, Republican presidents have greatly increased the national debt by cutting taxes and increasing defense spending. Yet the inflation that was predicted by my college economics teacher (we used Paul Samuelson’s Principles of Economics) did not really appear. Go figure. For more right now I refer you to a great piece by John Oliver.

What this means is, while we should be watchful, and Fed Chairman Jerome Powell seems to be, we do not have to be afraid of some Covid related economic stimulus. Republicans opposed the latest round of Covid economic payments even when Donald Trump asked for them. We also do not need to be afraid of a big infrastructure program. The Republicans are outraged at the infrastructure program, arguing that it will increase the debt and complaining that Democrats are extending the traditional definition of infrastructure.

Republicans don’t seem to have a problem with repairing the nation’s highways and bridges. Republican Dwight Eisenhower signed the legislation that created the Interstate Highway System in 1956 after all. But Republicans like highways that connect towns in rural America. Transportation projects that benefit urban areas do not get their approval. I take the New Jersey Transit train under the Hudson to Manhattan and always wonder if the crumbling tunnel, built in 1910, is going to cave in on the 200,000 people who use it every day. In 2012 the tunnel was inundated with millions of gallons of salt water during Super Storm Sandy. The water left behind corrosive chlorides, which continue to damage the already aged concrete and wiring. A Republican New Jersey Governor, Chris Christie, and a Republican President, Donald Trump, each killed a project to build a replacement.

But where the Republicans most throw up the roadblocks is where it comes to infrastructure they claim is outside of the “traditional” definition of the word. I disagree. But I also don’t care. We do not live in a stagnant word. We can be respectful of our traditions but should not be afraid to change them for the public good.

So I am on board with what some analysts are calling “Social Infrastructure”:

Social infrastructure can be broadly defined as the construction and maintenance of facilities that support social services. Types of social infrastructure include healthcare (hospitals), education (schools and universities), public facilities (community housing and prisons) and transportation (railways and roads).

Aberdeen Standard Investments

I do not understand why people cannot see that the nation depends on the health of its people, and the safety, and quality of its schools. We also need a 21st century power grid and high-speed rail would be nice. Child care for working parents is an economic necessity. In an information driven society, broadband connections for the entire population are essential. Faced with tremendous world-wide competition education, research and development are all that stands between America and second-class status.

The public seems to understand this even if the Republicans do not. A Quinnipiac University National Poll finds the Infrastructure Plan is popular with the public:


Q46 Do you support or oppose President Biden’s $2 trillion infrastructure plan?

—–

Support

Oppose

DK/NA

Total

44%

38

19

Republicans

14%

71

14

Democrats

81%

5

15


And even more popular if corporate taxes fund it as President Biden has proposed:

Q47 As you may know, President Biden has proposed funding his infrastructure plan by raising taxes on corporations. If it was funded by raising taxes on corporations, would you support or oppose President Biden’s $2 trillion infrastructure plan?

—–

Support

Oppose

DK/NA

Total

53%

39

9

Republicans

22%

70

8

Democrats

92%

6

2

Last but not least, expenditures on infrastructure, traditional and 21st century alike, have a large multiplier factor. Put simply, they pay off many times over. The benefits spread throughout the economy. The Eisenhower creation of the Interstate Highway System is credited with creating the long post-war expansion of the American economy. Studies show tax cuts for rich people and fiscal policies which benefit Wall Street do not have this positive effect. The proposed infrastructure projects should be seen as an investment in America’s future.

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Trump and the Employment Report, fact and fiction, Pt. 2

Numbers are funny things. Even though they appear to be absolute, a clever manipulator can twist them to make pretty much any point he wants to make. Take President Trump’s statement from February: “Ninety-four million Americans are out of the labor force.” It might seem preposterous but it is correct, as the great sage Obi-Wan-Kenobi once said, “from a certain point of view.”

It is the number you get if you take the total U.S. population 16-years of age and older and subtract the people the BLS says are in the labor force. That number includes everyone who is retired, and most high-school, college, graduate or vocational school student. It also includes the disabled, homemakers, some self-employed and those living off their investments.

My guide to reporting the employment report continues at businessjournalism.org….