Stumbling on The Path To Prosperity

Call Paul Ryan’s budget the Path To Prosperity, The Roadmap for America’s Future, or whatever you want to.  Just don’t call it a plan that accomplishes anything, because it doesn’t, so far.

Studying his Roadmap, and his Path as I have, I am now armed with the facts I need to make an educated statement about his budget.  To use a pop-phrase, it’s wealth-redistribution.  It’s a plan that eliminates none of our debt, and none of our deficit, for the first ten years while cutting services for the Middle Class and giving the Upper Class another ten percent tax cut.  I call that wealth redistribution.  What do you call it?

The national media is calling his plan a serious attack on the deficit; yet his plan doesn’t balance the budget for twenty-nine years, according to Ryan’s beloved and non-partisan CBO.  Doesn’t any plan require that you actually balance the budget within a few years time before it gets the praise “serious!”?  And why is no one within the Republican party outraged that it takes so long to balance said budget?  Weren’t these the same people who won their elections in November on the strength of their “plans” to balance the budget and fix America’s fiscal mess?

There are several points of note within Ryan’s plan.  The first is the privatization of Medicare; yes, that same Medicare that Ryan and Republicans accused President Obama and Democrats of trying to cut or destroy two years ago.  Remember when they had Grandma’s and Grandpa’s go on TV and radio commercials?  Remember when Grandma’s and Grandpa’s went to Townhall meetings and begged Democrats to not touch their Medicare?  Remember how Republicans played upon our Senior’s fears?  Death Panels, anyone?  I don’t think ANYONE can forget that.  Yet here it is; Paul Ryan is going to privatize Medicare, literally change it from the Medicare that Seniors know…but not for ten years.  Anyone under 55 will not see Medicare as your elders knew it.  But you’ll get to pay for it as if you did; yours and theirs.  Instead, Ryan will give you under-55′s a “premium voucher”, so you can go out and get some of that great private health care insurance that Seniors love so much.  It’ll be great, because at a time of your life when you shouldn’t have to worry about your medical bills, that’s exactly what you’ll get to do under Ryan’s plan.  Private insurance companies are for-profit, and their bottom line contradicts yours.  That means whatever they can make you pay for, they will, and if they can’t, they are going to try anyway.  Seniors all over America are going to get busy answering claims letters, filling out claims forms, and making sure to send every form requested in on time in order to have their medical service paid.

The second major point is Ryan’s spending cuts.  He claims his budget will cut $6 Trillion in spending over the next ten years…from Obama’s proposed budget.  What that means is, his budget will be $600 Billion less than Obama’s budget, which is $1.6 Trillion more than the revenue we take in taxes.  In other words, Ryan’s serious budget, that seriously attacks the deficit, will leave us another $10 Trillion in debt after the first ten years.  But wait, that’s not all.

The third major point is Ryan’s 10% tax cut for the upper class, and Corporate America.  He aims to cap our top tax rate at twenty-five percent.  But he insists that revenues will be higher, because he will be eliminating “certain” tax loopholes.  To date, no specifics on which loopholes he will eliminate, but if Ryan’s history is any indication, he will be eliminating the standard deduction that every American who earns less than $100,ooo a year gets.  Okay, that was a joke, but considering his budget, is it possible that Ryan could propose just that?

With “certain” loopholes being cut, Ryan’s budget is at best Revenue neutral.  That means no new revenues will be gained to offset the massive tax cut for Corporate America and the Upper Class.  Not only that, but I expect his tax cut will actually add to the deficit, making Ryan’s overall budget neutral in eliminating any deficit whatsoever.  That’s the best case scenario for Ryan’s plan.

Here’s the worst case.

Let’s say his budgeted tax cuts pass, as well as his RyanCare plan.  But what happens if Republicans buck his “plan” to close loopholes?  What happens to our deficit then?  You can imagine, as can I.  America’s budget deficit would skyrocket completely out of control.  Can you envision a circumstance where Republicans and even some Democrats would fight against closing certain tax loopholes?

How can you not?  These loopholes exist because Corporate America is good at what it does.  They are good at making their case, and our Elected officials are just crooked enough to trade a few loopholes for a fistful of campaign dollars.  That’s how we got here, remember?  Indeed, in what universe would you have to live in order to not see both Parties fighting tooth and nail against closing those tax loopholes for their Sugardaddies?

Mr Ryan’s Path stumbles right out of the gate.  It is shortsighted, and gives way too much credit to our elected Party officials for making things harder on their largest campaign contributors.  Remember that this is a group of politicians that, even as the vast majority of Americans suffered and sacrificed time and again in this latest Great Recession, refused to even approach the subject of cutting their own wages and benefits in a show of solidarity with average Americans.  Not even Ryan’s Path to Prosperity suggests that our Lawmakers ought to share in the pain…even a little bit.  Since they have shown themselves to be above the rest of us, I see no redeeming hopes within them that they’ll actually do the right things in order to make Ryan’s plan “work”, however ineffectual that plan has proven to be.

Am I being too hard on our elected Party officials?  You be the judge.  America has a real fiscal nightmare.  We have an ever-growing debt problem.  In the course of the last thirty years, we have gone from being a lender nation to a debtor nation.  Thirty years has been enough time for both political parties to place their fingerprints all over our troubles.  And now Ryan wants Americans to believe he is serious about eliminating the deficit?  With this plan?

Is this the same Paul Ryan who voted for Medicare Part D, the largest unfunded entitlement in the last twenty years?  Is this the same Paul Ryan who scoffed at President Obama’s health care plan as destroying Medicare as we know it, and as being filled with smoke and mirrors?  (okay, he was right about the smoke and mirrors, but even a blind squirrel finds a nut every now and then)

Here’s your chance, Mr. Ryan.  I’m mailing this article to you.  You can respond as you see fit, but be wise and respond to it at all.  If you don’t, your lack of response will be all over the internet before you can say “achoo!”.

How would I and the rest of America like you to respond?

We want details.  We want you to name names.  We want you to literally name the loopholes you’ll be closing; each and every one of them.  We want details about how your plan will bring manufacturing jobs back to America.  We want details about how your plan will overcome the massive tax , wage, and regulatory advantages that American companies have overseas as opposed to here.  We want details about how your plan will increase tax revenue by cutting tax rates.  Then, we want to sign your name to it, and stand by it.

The election is over.  Broad strokes got us into this mess.  So far, all you’ve offered is more broad strokes.  America needs that kind of plan like we need another 9/11.  Name the loopholes you have promises from all of your colleagues to close, and have the CBO score that.  We don’t just want details, we want written promises from your colleageus that they will help you close every loophole.  It’s the only chance your plan has; and even then, you’re still deficit neutral, unless you break records in job-creation.  And the only way to do that is to bring all of our jobs back home.

Thank you.   Ω

“There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.” Henry Ford

“There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.” Henry Ford

On January 5, 1914, Henry Ford introduced a minimum wage of $5 per day and Profit Sharing at his factories.  In all, some $10,000,000 in profit was distributed to 26,000 employees, or, an average of nearly $400 per employee.  Considering that the average wage in 1914 was approximately $592, that’s a hell of a bonus.  But the minimum wage actually doubled the average wage, sending it from $2.32 per day to $5.

The rest is history, or is it?

Why did Henry Ford make this change, and what impact did it have on the local economy, as well as the national economy?  One of the reasons Ford decided to increase wages substantially was an effort to reduce the high rate of turnover his plants were experiencing.  But another, less obvious and more mythical, but not less important reason, was to create a new market for the very product his employees were making.  If his workers wages increased, they might be able to afford to buy what they make, increasing the local economy substantially.

Republicans would say “poppycock” to this idea, and would cite rising inflation as a reason to keep wages artificially low.  They believe that when wages are increased, inflation increases, and thus, the economy is hurt.  But what if we had an actual historical example of a major, national increase in wages to guide us by?  Does such a moment exist?  Take a look at the following average wages:

1912:  $592

1914: $627

1916:  $708

Wages grew by 5% from 1912 to 1914, but by nearly 13% from 1914 to 1916.  What impact did this have on the national economy?  In short, it revived the American economy from a state of deep recession to that of a booming growth, and Fordism was born.  But let’s not forget the facts.  Henry Ford was called a socialist for paying his workers higher wages.  Sound familiar?

It should, especially if we recall what happens every time we try to raise the minimum wage in America.  The Republican argument is that rising wages is bad for the economy, because it causes inflation.  2/3 of our economy is consumer driven; in other words, the more consumers there are that are buying goods, the more the economy flows.  Historically, when the “masses” have more money to spend, America produces more.  Republicans argue that rising wages are a direct cause of inflation, and thus, a direct cause of economic retraction.

Our moment in time, where wages were significantly increased across America during a time of recession shows one result; the recession ended, economic growth ensued, and consumerism was born.  There is a myth surrounding Ford’s decision to increase wages; one that claims he foresaw what raising the wages would mean.  It isn’t true that he foresaw his wage increase allowing his workers to become his best customers, but he certainly capitalized on it once it started occurring.  So did every other business in America.  After the two World Wars, Fordism built the American Middle Class, the envy of the world.  Certainly there were times of recession, but none so deep as the Great Depression, where America was still weaning itself from the idea of an Upper Class driving the economy, as well as the current Great Recession, where yet again we find Republicans claiming that the American economy is a Supply side economy rather than a consumer driven one.

It’s hard to believe that we keep making the same mistakes.  It’s unfathomable that America would listen to a group of stodgy old men and women time after time whose sole purpose in life is to put money into the hands of the wealthy so that their economy will thrive.  Our economy is not recovering, unless you look at just one aspect of it.  Wall Street is booming, and the top 1%, as well as the top 10% are doing quite well.  Take a gander at the chart that follows:

 

 

 

 

ary, 1914…………….$627/year
average salary, 1916…………….$708/year

 

This chart shows that something disturbing was happening even before the Great Recession.  It’s even worse nowadays.  But in 2007, 87.8% of all wealth in the United States of America was owned by the top 10%, while only 12.2% was owned by the bottom 90%.  Of Financial Securities, 98.5% is owned by the top 10%, while the bottom 90% owns just 1.5%.  The next time you hear a Republican say that wealthy people pay too much in taxes, show them this chart, and ask them how it’s too much, when they own 90% of America?  In my book, if you own 90%, you should pay 90% of all taxes.  Is there a problem with my math?

A further check into statistics shows that only 1.6% of Americans will ever receive an inheritance larger than $100,000.  1.6%!  Sort of shows the so-called “death-tax” in a new light, doesn’t it?  Realistically, only 1.6% of Americans are affected by it, yet Republicans make it a major issue in every election.  Why?  Ask Paul Ryan.  Ask John Boehner.  Maybe they know.  I don’t.

The point is, Henry Ford’s instant increase of wages, and his sharing of his wealth with his employees sparked an economic growth for an entire nation during a time of deep economic retraction; a direct and lasting contradiction of Republican principles.  The economy is not now, nor has it ever been driven by the supply side.  History proves this, and Henry Ford proved it, even as his peers called him a socialist.  He became a Billionaire, not by hoarding more of his money, but by paying more.  He grew his wealth by growing that of his employees.

America needs to re-learn this lesson quickly.  If we don’t, you can expect a Depression that will make the 1930′s variety look like an economic boom.  The question is, what are you going to do about this?     Ω

 

 

 

 

 

While Americans Suffer A Depression, Political Parties Posture For Power

Is anyone else tired of this “Spending Plan” debate in Washington?  How about the tug-of-war for power between the Democrats and Republicans?

Our nation has serious financial problems, and the only ground taken over the past month by either party has been political power.  While Americans all over the land suffer from dwindling paychecks, or no paycheck at all, Republicans and Democrats posture in front of cameras.  While thousands live in Depression-like tent cities in places outside of cities like Nashville TN, and Lakewood, NJ, , the two parties grapple for position for the 2012 election.

Yes, you read that right.  Tent cities are popping up outside of many major American cities.  It’s something you won’t see on TV.  CNN won’t cover it, none of the major networks will, and you can, of course, rest assured that neither Fox News nor MSNBC will breathe a word of it.  But you can, if you are at all interested, read about it here, and here, and here.  You can read about it in a lot more places, too.  But I’ll bet you won’t really know the depth of this depression until you do.

Meanwhile, our two glorious old political parties are far more bent on positioning themselves for elections than solving real problems.  Even Paul Ryan’s “Path to Prosperity” ignores the real problems America faces, and instead cuts aid to most Americans in dire straights.  All of this, supposedly, to give the voters what they have asked for.  That’s like spoon-feeding your child poison, and telling him that yes, he really did ask to fed something deadly.

Ryan’s plan balances our budget in 29 years.  By my calculation, we now have about five years.  Will his plan save us?  You do the math.   Ω

TWENTY-NINE YEARS UNTIL THE GOP BALANCES THE BUDGET…AND…GO!

The Congressional Budget Office scored Congressman Paul Ryan’s budget plan, and came up with a date we can expect our budget to be balanced.  Are you ready for it?

2040.

That’s not a typo.

Twenty-nine years.

Seriously.   They are dead serious…super-duper-cereal.  They are going to balance the budget in twenty-nine years.

Nothing takes twenty-nine years, unless you’re simply not serious about accomplishing it.

Try again, Republicans.

Ω