If you want to know how much the manufactured “crisis” over whether Congress will raise the debt ceiling or allow the US to default for the first time in history has already cost this country in jobs and economic activity, you only have to reflect on the slowdown in the economy for the first quarter, growing by an anemic 0.8%, when 1.9% was expected, and casting doubt whether the forecasts for GDP growth for 2011 of 2.5%- 3% are achievable.
The United States was clearly on a trajectory away from the 2008 implosion of the economy, and on track to add jobs, with each month in 2011 bringing down the unemployment rate (it was even below 9%, to 8.8% in March). People were beginning to feel better, businesses, actually flush with cash, were beginning to invest and hire.
And then the Tea Party went to town, and for the first time in American history, cast doubt on whether the debt ceiling would be raised, meaning that for all time, the phrase “full faith and credit of the United States,” would become meaningless.
And from April, May and June, the unemployment rates ticked up.
Remember, that in December, Obama acceded to the last hostage-taking, and let all the Bush tax cuts continue, including the tax cuts for the wealthiest 1% of Americans who have reaped a windfall over the past decade, while middle class working families have seen their incomes and wealth slip away.
The Bush tax cuts have added $1 trillion to the budget deficit, fueling the frenzy by Tea Party extremists to refuse to allow the debt ceiling to rise – in order to pay for the obligations that Congress (not Obama) have already incurred – without Draconian cuts in spending that will affect everyone – from seniors, to children, and anyone who breathes air, drinks water, drives over a bridge, goes to school or has a hope of going to college.
The continuation of the tax cuts – indeed, tax cuts generally – were supposed to spur the economy and jobs creation.
But that didn’t happen.
In fact, after months of improvement in jobs creation and the economy, finally bringing hope to businesses and consumers alike that we had come out of recession, the brakes went on again in the first quarter.
So much for the “stimulus” effect of tax cuts, which were supposed to eliminate the “uncertainty” for businesses.
Remember how the Republicans railed that “uncertainty” was keeping businesses from investing? Well, the “uncertainty” over whether the wealthiest 1% would have yet another windfall – pocketing an extra $200,000 – by having the lowest tax rates in generations, has been replaced with a panic over whether Republicans will actually do it: cause the the American economy to crash in such a way that will make the failure of Lehman Brothers, the bankruptcy of GM and Chrysler, the distress at AIG and Fannie Mae look like blips in the road.
Every economist in the world has forecast the nearest thing to doomsday – 10% of the US economy just sucked out to oblivion. IRAs, pensions falling apart. rising interest rates on credit, if you could get credit at all, causing a repeat of the housing market collapse. Hundreds of thousands of jobs lost or not created – especially among government workers, and all the private contractors who deal with the government. And consumer demand, which is responsible for 80% of the economy, will simply evaporate.
And that’s not the worst of it. The Tea Party Republican Hardliners will also have eviscerated the “social safety net,” leaving millions of people to suffer and struggle.
In the past 10 years, we have seen the greatest disparity between rich and poor since 1928 – before the Great Depression.
The median wealth of white households is 20 times that of black households and 18 times that of Hispanic households, according to a Pew Research Center analysis of newly available government data from 2009.
“These lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession that ended in 2009.
“The Pew Research analysis finds that, in percentage terms, the bursting of the housing market bubble in 2006 and the recession that followed from late 2007 to mid-2009 took a far greater toll on the wealth of minorities than whites. From 2005 to 2009, inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households.
“As a result of these declines, the typical black household had just $5,677 in wealth (assets minus debts) in 2009; the typical Hispanic household had $6,325 in wealth; and the typical white household had $113,149.”
If you say to yourself, “well I’m not Black or Hispanic or a Minority, so why do I care?” consider that even though the numbers for the “typical white household” seems pretty gosh darn good, middle class and working poor have seen their real incomes slip to what they earned in 1962. The top 400 Americans have as much wealth as the bottom 150 million.
But Republicans dismiss inconvenient “facts”, they don’t actually care what “experts” and “academics” and Nobel laureates have to say. To the contrary, any pronouncement from any expert is immediately discounted.
You know whose expertise the Republicans who pooh-pooh, and say “you lie” rely on? Sarah Palin. Florida Governor Rick Scott (who by all rights should be in prison for the biggest Medicare fraud in history). Michele Bachmann, who seems to believe that if “experts” say one thing, that automatically means she will believe the opposite, and trust in Jesus to make it all, all right.
Those who would “starve the beast” of government, who kowtow to that other great economist, Grover Norquist, should consider the cost – economically, in national security, and in health and qualityof life – of failing to invest in our country’s infrastructure.
We’ve already seen the impact of the federal government failing to pay to maintain the levees in New Orleans – most of the 1500 people who died after Hurricane Katrina died well after the storm, because of the flooding caused when the levees failed; the nail in the coffin came from the complete ineptitude of rescuing people by Bush’s FEMA, headed by a crony whose expertise in emergency management came from managing an association for owners of Arabian Stallions.
It isn’t just the protest against federal taxes. At every level of government, people have been protesting paying any amount of tax, so for the past 30 years, since the Reagan Administration, officials have put off repairs, maintenance and investment in infrastructure
Just this week, a 100-year old water main broke in the Bronx, flooding streets to the height of a car; last year, it was a DC-suburb in Maryland, where residents had to be rescued from a roadway that is used for everyday commuting, when it turned into a rushing river.
President Obama laid out a plan to cut $4.7 trillion from the national debt, but have enough money to invest in infrastructure – which would restore jobs, and therefore revenue to the government – as well as restore the competitiveness of the American economy.
But Republicans refuse to invest in renewable energy and energy independence – they even moved to repeal the law, passed under Bush in 2007, to establish new energy efficiency standards for light bulbs.
Costs of Failing to Invest in Infrastructure.
But there is an economic as well as a human cost to allowing our infrastructure crumble, not to mention that the United States will rapidly sink back to the back of the pack in any global competition.
The nation’s deteriorating surface transportation infrastructure will cost the American economy more than 870,000 jobs, and suppress the growth of the country’s Gross Domestic Product by $3.1 trillion by 2020, according to a new report released this week by the American Society of Civil Engineers.
The report, conducted by the Economic Development Research Group of Boston, showed that in 2010, deficiencies in America’s roads, bridges, and transit systems cost American households and businesses more than $129 billion, including approximately $97 billion in vehicle operating costs, $32 billion in delays in travel time, $1.2 billion in safety costs, and $590 million in environmental costs.
If investments in surface transportation infrastructure are not made soon, those costs are expected to grow exponentially. Within 10 years, U.S. businesses would pay an added $430 billion in transportation costs, household incomes would fall by more than $7,000, and U.S. exports will fall by $28 billion.
“Clearly, failing to invest in our roads, bridges and transit systems has a dramatic negative impact on America’s economy,” said Kathy J. Caldwell, P.E., F.ASCE, president of ASCE. “The link between a nation’s infrastructure and its economic competitiveness has always been understood. But today, for the first time, we have data showing how much failing to invest in our surface transportation system can negatively impact job growth and family budgets. This report is a wake-up call for policymakers because it shows that investing in infrastructure contributes to creating jobs, while failing to do so hurts main street America.”
American businesses and workers will suffer
The report shows that failing infrastructure will drive the cost of doing business up by adding $430 billion to transportation costs in the next decade. It will cost firms more to ship goods, and the raw materials they buy will cost more due to increased transportation costs.
Productivity across the business sector will also tumble. Those increased costs will cause businesses to underperform by $240 billion over the next decade, which will drive the prices of goods up. As a result, U.S. exports will fall by $28 billion, including 79 of 93 tradable commodities. Ten sectors of the U.S. economy account for more than half of this unprecedented loss in export value – among them key technology sectors like machinery, medical devices, communications equipment, which produces much of this country’s innovations.
America would also lose jobs in high-value sectors as business income goes down. Almost 877,000 jobs would be lost by 2020, primarily in the high-value, professional, business and medical sectors which are vital to America’s knowledge-based service economy.
“Today’s report from the American Society of Civil Engineers further reinforces that the U.S. is missing a huge opportunity to ignite economic growth, improve our global competitiveness, and create jobs. This is not just transportation for transportation’s sake. Without more robust economic growth, the U.S. will not create the 20 million jobs needed in the next decade to replace those lost during the recession and to keep up with a growing workforce, will not have the revenue to get the deficit under control, will not have the ability to keep pace with global competitors, and will not be able to provide our children and grandchildren with a better future,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce.
Ultimately, Americans will get paid less. While the economy would lose jobs, those who are able to find work will find their paychecks cut by nearly 30 percent.
“The cost to businesses will reduce the productivity and competitiveness of American firms relative to global competitors significantly. By 2020, American families will take a pay cut of more than $7000 because of the ripple effects that will occur throughout the economy,” said Steve Landau of the EDR Group. “Business will have to divert increasing portions of earned income to pay for transportation delays and vehicle repairs, draining money that would otherwise be invested in innovation and expansion.”
Families will have a lower standard of living
A lack of investment in transportation infrastructure would inflict a double whammy on American families who would see their household incomes fall by $60 a month by 2020, while having to spend $30 per month more for goods. The total cost to families would exact about $10,600 per family between now and 2020, equal to $1,060 per year on household budgets.
Modest investment needed
The report estimates that in order to bring the nation’s surface transportation infrastructure up to tolerable levels, policymakers would need to invest approximately $1.7 trillion between now and 2020 in the nation’s highways and transit systems. The U.S. is currently on track to spend a portion of that – $877 billion – during the same timeframe. The infrastructure funding gap equals $846 billion over 9 years or $94 billion per year.
Small investments in infrastructure, equal to about 60 percent of what Americans spend on fast food each year, would:
- Protect 1.1 million jobs;
- Save Americans 180 million hours in travel time each year;
- Deliver an average of $1,060 to each family; and
- Protect $10,000 in GDP for every man, woman and child in the U.S.
“This report confirms what we have known for some time: if we do not substantially invest in infrastructure soon, we will put our economy, American business and American working families at risk,” said Richard Trumka, president of the AFL-CIO. “This report also shows what can be done – with a modest increase in investment, we can rebuild a strong economy where business can thrive and workers can afford a place to live, raise a family, take an occasional vacation, pay for their children’s education and have a dignified retirement.”
If you want a preview, a smattering, of what default of US debt will be like, and what paralysis in government spending will cause, just look at what is happening because Congress refused to authorize funding for the Federal Aviation Administration.
Stop-work orders went out to contractors around the country.
Here in New York, some $62 million in projects – at LaGuardia Airport, for example – were locked down, causing layoffs for 2,000 people – money that would have rippled through the economy (the true “trickle down” economics).
Transportation Secretary Ray LaHood said Thursday the government will lose about $200 million a week in airline ticket taxes and $2.5 billion in airport construction projects – employing some 100,000 people.
These projects were funded not through income taxes, but through the federal tax on airline tickets (the $200 million a week) which the FAA no longer has the authority to collect.
About 4,000 FAA workers, whose jobs are funded with ticket tax revenues would be furloughed, LaHood told reporters at a news conference. The FAA employs more than 47,000 people overall.
The main obstacle is a provision sought by House Republicans and the airline industry that would make it more difficult for airline and railroad workers to unionize. House Republicans also want to eliminate government subsidies for airline service to 13 rural airports, a $16 million provision that Senate Democrats say is unacceptable. The union provision was added to a long-term FAA funding bill earlier this year, but negotiations on that bill have stalled. Without long-term legislation, an extension bill is necessary to keep the agency operating, the AP reported.
“This is no way to run the best aviation system in the world,” LaHood said. “Congress needs to do its work.”
What Republicans are doing to the aviation system, they also are doing to public education, health, transportation, and the environment and consumer product and food safety.
They are getting to eviscerate the Environmental Protection Agency, and have already blocked funding to the new Consumer Protection Agency that is supposed to be a watchdog on behalf of investors.
And like the FAA struggle, this debt-ceiling crisis that the Republicans are completely responsible for has nothing to do with bringing down the national debt – Obama had a plan to cut the debt by $4.7 trillion but Boehner simply walked out. It’s about rolling back the clock to the Gilded Age, before there was Social Security, Medicare, and Medicaid standing between the poor, elderly and disabled and destitution and death.
Remember how the federal government bailed out banks “too big to fail.”
Well, you would think it is “We the People” who are too big to fail.
Karen Rubin, Long Island Populist Examiner
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