Still Waiting for Bold Action

Cross-posted at PoliTits.

Oy. I hate economics. I went out googling something after I had a conversation with a friend. She made some blanket statement about "You know what will happen if we get a Democrat for President."
"No."(long awkward pause as she assessed what I might say) "What?"
"Oh, don't get mad."
"What? What will happen."
"Interest rates will go up. They always go up when we get a Democrat after a Republican."

Now there's a clear statement.
I wish I'd used the old blogger/commenter line. "Cite, please." But I didn't. Instead I said "
If so, it's an effect of having to pay down deficits run up by Republicans?"

Huh. Well.

I hate these kinds of conversations when someone makes a broad generalization that's likely pulled from their ass or from the ass of some rightwing radio blowfuck. So a'googlin' I went.

Well, I'm still looking for the answer to my query "Do interest rates rise when we have a Democratic President?" But the googlin' and searchin' took me to some interesting places. Here are some gems.

From the
Washington Post. What, exactly, is the problem?

In testimony yesterday, there were almost as many answers as experts. But they cited some common themes, ranging from stagnant wages to rising costs for college and health care.

As President Bush traveled to New York to tout a robust economy with a low jobless rate, low interest rates and low inflation, "this is not what's generally felt out there in America," said Rep. Charles B. Rangel (D-N.Y.), chairman of the House Ways and Means Committee, which yesterday wrapped up a four-part inquiry into economic conditions with a hearing on "economic challenges of the middle class."

"To me, even though you got more compassion for the poor, you've got to pay attention to the middle class. Because they vote," Rangel said. And right now, "the middle class are scared to death they could become poor."

Okay, so the problem is estabished. But have we reached the nub of it?

Rising inequality -- the growing gap between the rich and everyone else -- is often cited as a primary cause of middle-class angst. Republicans yesterday disputed the notion that income inequality has widened during President Bush's years in office, citing Census statistics that show it has been relatively static since 2001.

So is income inequality the problem? According to this guy, that's the wrong measure.

In testimony before the Joint Economic Committee, Richard Vedder, a visiting cholar at the American Enterprise Institute, argued that income, at any rate, is the wrong measure. Spending is far more important to economic well-being, Vedder said, and "we know that, in any given year, consumer spending is far more equally distributed than income."


Now that's an interesting concept except for one thing. Hello! Americans are spending more than they're taking in. Give me a D! Give me an E! Give me a B! Give me a T! What's that
spell? What a preposterous statement. Spending is a better measure of economic well-being? Are you fucking kidding me? Credit is easier to get. People run up huge debt with their spending. But their income isn't rising to cover that debt and its subsequent late fees, overlimit fees, doubling minimum payments, increasing interest rates. Middle class and working class people are spending themselves into indentured servititude until death. They may be spending like they have money, but it's a big, fat lie.

The wealthy may be spending, too, but as a percentage of their income, their spending is smaller than the average middle class family. Workingclass and middle class people, pay a large percentage of their income for housing, for example.

This isn't a measure - it's a mess!

And let's not forget, in many families, it's taking two full-time workers to keep up that spending.

10 Reasons America's Two-Income Families Aren't What You Think
(According to Harvard Law professor and bankruptcy expert Elizabeth Warren)

1. Two-income families today make 75% more in inflation-adjusted dollars, but have less money to spend than one-income families did 30 years ago.
2. Two-income families today spend: 21% less on clothing, 22% less on food,and 44% less on appliances compared to one-income families a generation ago.
3. Every 15 seconds an American family files for bankruptcy.
4. This year, more kids will live through their parents' bankruptcy, than through their parents' divorce.
5. 1.6 million families will file for bankruptcy this year, 9 million more are already in credit counseling.
6. Home mortgage foreclosures are up more than three-fold over the last generation and car foreclosures have hit record levels.
7. More than 62% of families say that they worry about making ends meet.
8. The average family spends 69% more in inflation-adjusted dollars on their home mortgage than their parents spent a generation ago.
9. The average family spends 61% more on health insurance, than their parents spent a generation ago.
10. Credit card default rates are at a record high.

In this piece from the Huffington Post, Jeff Madrick writes of wage stagnation:

But at least they're up, not down, we are told. The trivial gains are disappointing enough in a nation where expectations of a rising standard of living have been built into the national promise. But stagnating income means families cannot afford to keep up with the rapidly rising costs of education, healthcare, drugs, public transit, and other key services--costs that rise much faster than for other goods and services. Education and healthcare costs are up twice as fast or even faster than family incomes, not to mention men's wages.

But people can afford many of those discounted Wal-Mart products, of course, and new electronics products. Clothing and food prices have generally not risen as fast as other prices. I recently read an e-mail missive from a highly progressive Democrat warning his colleagues not to tell Americans how poorly they've done. They are happily flocking to the malls, he notes.

This is a misreading of the public. Is the ability to buy these products helping them forget how difficult it now is to pay for college tuitions, the house in the fancy neighborhood where the public schools are better and you are required to have a couple of SUVs so the kids can keep their heads held high, or for the hot new drugs.

And not everyone is out there buying big ticket items and throwaways. They're struggling to buy the necessities.

And, oh yes, some of these Wal-Mart shopper are outrageously poor. The poverty rate is high, the rate of working poor is high, the minimum wage historically low. A higher proportion of American children are raised in poverty than in any other rich nation. Britain is the only serious competitor in this regard. Thank goodness for Medicaid and some legislation passed in recent years that specifically protects child healthcare. But let's not talk about poor kids.

According to the WaPo piece, perhaps it not a growing inequality as much as it's a diminished decrease in inequality that is the problem.

"The basic story is very clear," Blinder said. "Inequality was mostly falling for 30 or 35 years or so until the late 1970s and has been mostly rising since then." He offered a vivid example: In 1979, the average taxpayer in the top one-tenth of 1 percent earned about as much as 44 average taxpayers in the bottom half. In 2001, the rich taxpayer earned as much as nearly 160 less affluent people.
So now we have Democrats with a majority on Capitol Hill. What are they doing to address the inequality and policies that make it harder for Americans to achieve the American Dream?

Band Aids.
Baby Steps. Symbols of caring. But no sweeping changes. So far, Democrats....

have offered a modest agenda for economically challenged families, pushing bills to raise the federal minimum wage, slash interest rates on college loans and reduce the price of prescription drugs for Medicare recipients.

Schumer and others are pushing for a broader response. In his book, "Positively American: Winning Back the Middle Class Majority One Family at a Time," Schumer acknowledges that he does not know "the eight words that will save the Democratic party." The book proposes to help the fictional Baileys by pursuing such goals as higher federal funding for public schools, a $15,000 tax deduction for college tuition and reduced dependence on foreign oil.

As chairman of the Joint Economic Committee, Schumer plans to look for ways to help Americans become more flexible in their work lives, in part by making it less traumatic to change jobs. Witnesses yesterday proposed making health insurance and pensions more portable, and more closely targeting job retraining programs. Summers also urged the committee to consider "wage insurance that would enable increasingly inevitable economic mobility to take place without significant and painful dislocation."

But this just isn't bold enough. If we have enough money to pour billions down the rathole that is the Iraq War, then we could certainly make an investment in our citizens through low-cost or free public higher education, for example. Or universal, single-payer health care. Or quality childcare that doesn't pay near slave wages to childcare workers. Or improved public education. Or energy innovation. Or you fill in the blank. There's much work to be done.

I ask again, Democrats, if you're going to be painted with the big government brush anyway by people like my friend, why not do something that will benefit all Americans - rich, poor, middle class?


Blogger Fredrick Schwartz said...

Historical Prime Rate figures from the Fed in St Louis

From Eisenhower to Kennedy no change 4.50%

Ford to Carter lo 6.25% 2/77 hi 20.35% 12/80

Bush 41 to Clinton lo 6.00% 2/93 hi 9.50% 12/2000

But what about the reverse when the Democratic White House is handed over to the GOP?

Truman to Eisenhower lo 3.00% 3/53 hi 5.00% 7/60

Johnson to Nixon lo 6.95% 1/69 hi 12.00% 8/74

Carter to Reagan lo 7/50% 3/87 20.50% 8/81

Clinton to Bush 43 lo 4.00% 5/2004
hi 8/25% 2/2007

What most conservatives hang their hats on are how bad things got economically from a consumer confidence angle during the Carter administration when in truth all presidents cause upticks via policy from time to time.

I hope this helps.

February 3, 2007 at 11:32 AM  
Anonymous Anonymous said...

Thanks, Fredrick: I just hate it when I don't have quick facts in my head to dispute a comment like the one my friend made.

Thanks so much for doing the research. You're fab!

February 3, 2007 at 5:59 PM  

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