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Politics : The Donkey's Inn -- Ignore unavailable to you. Want to Upgrade?

To: Karen Lawrence who wrote (2045)	1/14/2002 7:06:13 PM
From: Karen Lawrence	Respond to of 15516

Dems should slam Bush economics By Mark Weisbrot The 2002 election campaign has begun, and all too predictably: It's the economy, and it's going to be stupid. On one side are Republicans who pretend that changing the tax code to slather even more money on rich people and corporations is the best way to stimulate the economy. On the other side are Democrats who maintain that the cuts already passed have made government powerless in the face of the recession. "The tax cut has taken away our flexibility and left us with only two choices, both of them bad," said Tom Daschle, Senate majority leader and Democratic presidential hopeful, in the opening speech of campaign 2002. "We can shortchange critical needs, such as homeland defense, or we can raid the Social Security surplus and even run deficits to pay for those critical needs." Well, I'm all for repealing the $500 billion cut that went to the richest 1 percent of Americans - households with an average income of more than $1 million. But let's not exaggerate the state of our government's finances. The federal deficit for this year is running well under 1 percent of our national income. Anyone who worries about this level of borrowing should never consider a mortgage loan to buy a home. As for "raiding the Social Security surplus," any accountant can tell Daschle this is a purely fictional concept. Social Security's finances are not affected one way or the other if its surplus revenues are used to pay for unemployment compensation, or to pay down the national debt. We do not have a budget problem. We have a recession problem. The private sector has lost over a million jobs in just the last three months. The federal government ran a budget deficit amounting to 4.7 percent of our economy (or GDP) coming out of the last recession. In 1983, at the end of a more serious downturn, the deficit was 6 percent of GDP. This year's projected deficit, at less than 1 percent of GDP, is really very small. But the Democrats' pollsters insist that the way to take Congress in 2002 is to play on the public's fear of debt, and portray themselves as the party of fiscal responsibility. Not a very clever strategy a year or two ago, this is even dumber during a recession. Daschle carries this theme further still, arguing that the "dwindling budget surplus" over the next decade is keeping long-term interest rates higher than they would otherwise be. This "leads to less investment, less consumption, more job loss, and bigger deficits," he says, and so the tax cut " probably made the recession worse." This is not a believable story, on economic grounds. Businesses have cut back on investment because they had overinvested during the 1990s bubble, and consumers are holding record levels of debt. It is very unlikely that any effect of budget policy on interest rates is having a significant influence. Why not tell the truth? We're losing jobs at the fastest rate in 20 years, and the House Republicans in October passed an "economic stimulus" bill that contained very little to boost the economy. Instead, they loaded it with more tax breaks for the rich and tens of billions of dollars in refunds for America's largest corporations. To take advantage of Sept. 11 and the recession with such callousness and greed was bound to cost them politically. The Democrats would be wise to continue this line of attack and go after the tax cuts on the grounds of fairness. For nearly three decades we have lived through one of the most massive, un-equalizing redistributions of income in American history. The majority of the labor force has literally been excluded from the gains produced through economic growth. Now that the economy has ground to a halt, the public's tolerance for increasing inequality may finally reach its limits. Why not ask them: Do you want to go without health insurance or prescription drugs so the rich can get even richer? Simpler - and a lot more honest and believable than the phony fiscal conservatism the Democratic leadership has chosen to embrace.