They Said It: The American Economy: This Far and No Further

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The American Economy

"...George W. Bush must have an especially heartfelt affinity for the poor because he keeps creating more of them. -- Eric Alterman and Mark Green

"The apportionment of taxes on the various descriptions of property is an act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice. Every shilling with which they overburden the inferior number is a shilling saved to their own pockets." -- James Madison, Federalist #10

"A progressive income tax is the only fair form of taxation known to man. Of course we need to redistribute income in this country from the wealthy to the poor. And right now those Republicans are redistributing it from you to me."
-- millionaire financier and philanthropist Bernard Rapaport

"By the year 2002 we can have a federal government with a balanced budget, or we can continue down the present path towards fiscal catastrophe." -- Tom DeLay, 1996, as part of conservatives' call for a Constitutional amendment requiring a balanced budget

"I often ask successful conservative businessmen friends if they would let George W. Bush run their private businesses. They almost always smile and admit they wouldn't. And yet they voted for him to run the most powerful nation on the planet." -- Denis Hamill

"A government that robs Peter to pay Paul can always depend upon the support of Paul."
-- George Bernard Shaw

"Although the ideal of equal opportunity enjoys wide support among Americans, all the evidence suggests that even by this standard, the nation is a grossly unjust society. After all, a nation with a particularly high percentage of its children living in relative poverty will have great difficulty providing every child with 'an equal place at the starting line.' Some children have nutritious food, a warm place to sleep in the winter, and air-conditioning in summer. From their early years of schooling, they have their own room, desk, and Internet-linked computer. Others have none of these advantages. How can children living in such different circumstances have an equal start in life?" -- Peter Singer

"A new aristocracy is taking over not just the United States of America but also the world. It's based on influences from a modern synthesis of old-time laissez-faire 'free market' economics and modern libertarian thought that derives mostly from a cult formed in the 1950s by Ayn Rand. The proponents of this economic system, such as Thomas Friedman, Milton Friedman, John Stossel, George W. Bush, and the editorial page of the Wall Street Journal, put forward the myth of the 'free market' and suggest that government should not play any sort of regulatory part in this mythical free market. The result, they say, is that people's natural greed will motivate them to make decisions that will ultimately be the best for themselves as well as for all of society.

"A key piece of this plan is that the elite need not pay the price of admission to a free society, to paraphrase FDR's statement about taxes.

There are two main problems with this way of looking at business. First is the obvious fallacy of believing that corporations will always work in the public interest. One has only to look at the laundry list of environmental and social disasters perpetrated by corporations to see how naive an idea that is. The second is the core notion of a free market that exists independent of government. The fundamental problem with the concept is that there is no such thing as a free market without government." --Thom Hartmann

Democratic Economic Growth and Republican Destruction of the US Economy

"As custodian of the national economy and decisive actor in the management of the Budget of the United States, George W. Bush has compiled a fiscal record of startling recklessness.

By 2004, the last Clinton surplus of $236 billion had disappeared into a projected $521 billion deficit, and Bush had not vetoed a single bill.
The federal government is borrowing almost 5 percent of our national economy just to pay its bills.
From 2002 to 2004, Bush added $1.3 trillion to the national debt.
In 2003, federal spending reached $20,300 per household, the first time it exceeded $20,000 since the height of World War II.
By 2004, US deficits had grown so large the IMF, monitor of Third World wastrels, was warning the United States that its enormous appetite for foreign borrowing was imperiling the world's economy.

Critics blame the deficits on the Bush tax cuts, noting that federal revenues in 2003 fell to 16.5 percent of GDP, the lowest level since 1959. ...The Grand Old Party has become a big-government party. Tax cuts are no longer accompanied by spending cuts. The Beltway Right has entered into a civil union with Big Brother." -- Pat Buchanan

In contrast, the Clinton administration ran the economy from a somewhat conservative, fiscally hawkish position, bringing together Republicans and Democrats alike to build a powerful, steadily growing economy. He balanced the federal budget, and even presided over the generation of a budget surplus. Because of the dwindling federal deficit, interest rates plummeted. Income that once went to interest payments instead went into Americans' pockets. Debt became cheap. Equities markets surged, lifted on a combination of productivity gains from technological innovation and a historically low cost of capital. The economy grew an average of 3.8% a year between 1996 and 2000. The lesson, according to incoming Bush treasury secretary Paul O'Neill, is that fiscal prudence works. A balanced budget means the federal government isn't going out borrowing billions and driving up interest rates as a result. Long-term rates, under Clinton, began drawing downward towards short-term rates, ensuring that the value of the dollar would not drop. "In a nation with so much household and corporate debt," writes O'Neill biographer Ron Suskind, "where children grow up fluent in the lexicon of interest versus principal[,] low rates have been embraced as an American virtue." All of this would change for the worse almost from the day Bush took office in January 2001. -- Ron Suskind

"One can predict Bush's support for a program fairly well by measuring the median income of its beneficiaries. Welfare? Poor beneficiaries = strong opposition. The mortgage-interest deduction? Middle-class beneficiaries = steady if unenthusiastic support. Top-rate tax cuts? Wealthy beneficiaries = passionate, unswerving advocacy." -- Paul Waldman

"We're the only nation in the world where all our poor people are fat." -- GOP senator Phil Gramm, quoted by Al Franken

"The poor of this country are the biggest piglets at the mother pig and her nipples. The poor feed off the largesse of the government and give nothing back. ...We need to stop giving them coupons so they can go buy lots of junk. We just don't have the money. They're taking out, they're putting nothing in. And I'm sick and tired of playing the one phony game I've had to play and that is this so-called compassion for the poor. I don't have compassion for the poor." -- Rush Limbaugh, who on his May 10, 1995 broadcast admitted to having lived off unemployment benefits for an extended period of time

"At home, the budget surpluses of the 1990s have vanished as the cost of the Afghan and Iraq wars has soared beyond the projections of the most pessimistic of the president's economic advisers. The US budget deficit is above 4 percent of GDP. With a trade deficit in goods nearing 6 percent of GDP, the dollar has lost a third of its value against the euro in three years. One in six manufacturing jobs has disappeared since President Bush took the oath. By mid-2004, the president had failed to abolish a single significant agency, program, or department of a Leviathan government that consumes a fifth of our economy. Nor had he vetoed a single bill. ...The Republican Party, which had presided over America's rise to manufacturing preeminence, has acquiesced in the deindustrialization of the nation to gratify transnational corporations whose oligarchs are the party financiers. US corporations are shutting factories here, opening them in China, 'outsourcing' back-office work to India, importing Asians to take white-collar jobs from Americans, and hired illegal aliens for their service jobs. The Republican Party has signed off on economic treason." -- Pat Buchanan

"Among the right's most cherished dogmas is that when it comes to economics, conservatives alone understand 'how the world works' -- and are thus uniquely qualified to run the world efficiently. Adhering to this simple romantic creed, they are capable of deflecting unwelcome intrusions of reality as blithely as any cult member. And much like a cult, they tend to prescribe the same set of true-believer solutions for almost any human problem: big tax cuts for the top brackets and the abolition of almost all government regulation. Their rigid creed leads them into complicated rhetorical contortions. Depending on what they're trying to argue at any given moment, they may claim that Ronald Reagan's tax cuts were the engine of economic growth in the eighties, but that his deficits had nothing to do with the recession that followed; that those same tax cuts were the engine of growth during the nineties as well, even though Reagan, George H.W. Bush, and Bill Clinton all raised taxes later; that Clinton could claim no credit for the growth that occurred during the nineties but is responsible for the recession that opened the new century; that federal budget deficits are terrible, when Democrats can be blamed; and that deficits are fine, when Republicans can't escape blame." -- Joe Conason

"Conservatives are fond of claiming that 'rich people pay more taxes.' Actually, they don't. The conservatives are counting only our increasingly unprogressive 'progressive' income tax." According to an expansive survey by the Labor Department, when all taxes are counted -- income, excise, sales, property, and payroll -- "the majority of Americans pay more in payroll taxes than they do in income tax. The poorest quintile has a cumulative tax rate of 18 percent.... The middle quintiles pay 14, 16, and 17 percent respectively, while the top fifth pays 19 percent. The big winners in our cash-and-carry system of government are corporate special interests. ...[F]or a mere$48.9 million in political campaign contributions, from 1989 to the present, the managed health-care and health-insurance companies got protection from lawsuits by patients who have been denied medical care, defeat of proposed laws that would make it easier for patients to choose their own doctors and to get emergency-room visits reimbursed. We pay with over 41 million Americans lacking health insurance, billions in wasted premiums spent on advertising, duplicative paperwork, and insurance-company bureaucracies, including multimillion-dollar salaries for executives -- and with unnecessary death and suffering when HMOs overrule doctors." -- Molly Ivins and Lou Dubose

"In 1994, the last year for which figures were available [as of the author's publication in May 2004], a student aged 18-24 from a family in the top quarter of the population was ten times more likely to gain a degree by the age of twenty-four than a student from the bottom quarter. Worse still, this ten-to-one ratio had climbed sharply since 1979, when it was only four-to-one. [Thanks to twelve years of Reaganomics -- ed.] America must yield to countries like Canada, Germany, the Netherlands, Sweden, and the United Kingdom in terms of the likelihood of a poor person rising out of poverty in any given year. Moreover those members of the poor in America who do manage to escape poverty are more likely to fall back into it within five years than their counterparts in these countries." -- Peter Singer

"More or less in the 'duh' category, we found that government no longer works for most of the people of this country. It works for big corporations, it works for big campaign donors, but it works less and less for 'average' Americans. While talk of Christian compassion wafts through Washington, people are not only getting screwed -- losing their life savings, their pensions, their health insurance, their jobs, and unemployment comp -- they're also getting sick, getting hurt, and even dying because the people's interest now takes second place to that of big-money corporations. A government of big corporations, by big corporations, and for big corporations has thousands of ramifications for the people, few of them good. As the acolytes of large corporations increasingly take over the various regulatory agencies that are supposed to keep corporate power in check -- a process now so far advanced it's faintly comical -- the results veer between infuriating and frightening. After more than two years of George W. Bush's administration, it is becoming clearer that we are looking at people with an agenda driven by ideology. They believe the free market can solve all problems, that government is generally bad, that we should privatize everything we possibly can, that there is no such thing as global warming, that the environment is unimportant, and that worker safety will be protected by benign employers. We have seen a serious degradation of civil liberties matched by an equally remarkable increase in property rights. ...All this abstract, ideological. the-free-market-is-God, Ayn Rand piffle is doing cruel things to real people." -- Molly Ivins and Lou Dubose

"Populists, as opposed to liberals, do not get particularly excited about culture wars. We do not believe the important differences in this country are about smokers versus nonsmokers or about wine versus beer drinkers. This fight is not about yoga and vegetarianism. It is not about lifestyles. It is not about religion. Keep your eye on the shell with the pea under it. It is about who's getting screwed, and who's doing the screwing. And anyone who tells you different is lying for money." -- Molly Ivins and Lou Dubose

"Right-wing populism is an illusion that hides a fundamental fact of American politics. With very few exceptions, conservative Republicans promote the narrow interests of a tiny minority of our wealthiest citizens. Liberal Democrats, again with certain exceptions, defend the broad interests of working and middle-class Americans. Over the past three decades, as economic inequality has intensified, that partisan and ideological divide has become ever more polarized. While conservatives may demur, the empirical evidence is beyond serious dispute. The stratification of America's political economy in recent decades has been mapped by three distinguished political scientists: Princeton's Nolan McCarty and Howard Rosenthal, and their colleague Keith T. Poole of the University of Houston (who holds a chair endowed in the name of former Enron chairman Kenneth L. Lay). Among the organizations that have published research papers by these three nonpartisan academics is the very conservative American Enterprise Institute. Their studies and others have established that growing class polarization between the two major parties has coincided with increasing income stratification in American society. Using a complex computerized map graphing congressional voting patterns over the past century, the three professors have found precisely the same polarization between the parties on Capital Hill.

"With increasing consistency, Democrats support legislation that helps the middle class and the poor, while Republicans protect their affluent constituents. In other words, that little Monopoly plutocrat in the top hat is back with a vengeance, grasping bags marked with dollar signs. He's still a Republican, he has a lot more money now, and he has probably become a patron of the Heritage Foundation or the American Enterprise Institute -- like 'Kenny Boy' Lay.... He is likely to be a Fortune 500 CEO or a Forbes 400 heir as well as a major Bush fund-raiser -- like Maurice 'Hank' Greenberg (American International Group insurance), Robert Wood 'Woody' Johnson IV (Johnson & Johnson heir) or Lee Bass (Bass family oil interests). He may have flown Bush around the country on a corporate jet during the 2000 primaries -- like Heinz Prechter (American Sunroof) or Alex Spanos (A.G. Spanos real estate). He would surely take a call from Tom DeLay or Bill Frist when they need to funnel money to a candidate or sponsor negative advertising -- like Carl Lindner (American Financial Group, Chiquita Brands) and Sam Wyly (Maverick Capital, Green Mountain Power). His priorities are faithfully reflected by conservative think tanks and Republican politicians, and he is assuredly not one of the little guys." -- Joe Conason

"One of the most successful themes of conservative propaganda is the notion that the right, not the left, represents everyday working Americans. Conservatives claim to speak for the silent majority, and depict liberals as silly, affluent elitists who despise the work ethic. Promoting envy and resentment of 'limousine liberals' is the right-wing version of class warfare. It's an updated, socially acceptable subsitutute for the traditional prejudices used by the most unsavory right-wingers to distract people from voting in their own interest. There is no point in denying that limousine liberals exist or that they can be obnoxious -- but any trouble they cause is far outweighed by the depredations of another remote and arrogant elite: corporate-jet conservatives. Recent revelations of that set's incomprehensible greed and callousness make the limo liberals seem like saints. And unlike any clique of left-wing movie stars, they're a real problem. At the turn of the last century, Theodore Roosevelt denounced such people as 'malefactors of great wealth.' A hundred years later, there are two very important differences: the rich have indeed gotten far richer -- and the President of the United States is not their foe but their front man. For that job, George W. Bush possesses excellent qualifications of personality and temperament. He's a rich guy who enjoys masquerading as a regular guy, and he honestly hates the clever types from New York, Washington, and Los Angeles who consider him dumb and vulgar. Ignorant but certainly not stupid, he's an unusually talented politician. He shmoozes and chats at county fairs and fat-cat feasts with an ease that always eluded his father. Moreover, although most voters realize that he will first take care of the wealthy -- the oilmen and the corporate lobbyists -- they like him anyway. He seems charming, approachable, caring, and playful. His drawling gaffes sound unpretentious and real. And he can perform for hours at a time, in front of perfect strangers whose background is entirely different from his own. Bush is a modern master of pseudopopulist style. What that style blurs is the profound Republican cynicism toward the same people he embraces and cajoles." -- Joe Conason

"For the guys down at the country club, all these inverted forms of class war worked spectacularly well. That is not to say the right-wing culture warriors ever outsmarted the liberal college professors or shut down the Hollywood studios or repealed rock 'n' roll. Shout though they might, they never quite got cultural history to stop. But what they did win was far more important: political power, a free hand to turn back the clock on such non-glamorous issues as welfare, taxes, OSHA, even the bankruptcy laws, for chrissake. Assuring their millionaire clients that culture war got the deregulatory job done, they simply averted their eyes as bizarre backlash variants flowered in the burned-over districts of conservatism: Posses Comitatus, backyard Confederacies mounting mini-secessions, crusades against Darwin." -- Thomas Frank, quoted by Molly Ivins and Lou Dubose

Lessons from the New Deal and Modern-Day Crony Capitalism

"What Americans have forgotten was how crooked businessmen operating under the banner of laissez-faire drove the nation into depression repeatedly during the late nineteenth and early twentieth century. They have forgotten, too, the lesson their parents and grandparents learned during the New Deal, when Franklin Roosevelt fashioned modern democratic capitalism: the economy functions most efficiently and fairly when business is well regulated and workers are well compensated. Every time corporations have accumulated excessive wealth and power, the inevitable result has been abuse of citizens, investors, consumers, employees, and the environment. ...[M]any business journalists have observed that the most serious threat to free enterprise arises not from government regulation but from the destructive effects of 'crony capitalism.'" Joe Conason traces the term back to the unbelievably corrupt regime of the Phillippines' Ferdinand Marcos and a number of equally corrupt Communist regimes. The term defines a national economy that focuses on a ruling elite dispensing economic privileges to friends, family, and corporate allies; "where self-serving abuses, frauds, law-breaking, and regulatory violations by the elite go unpunished; where the savings and investments of ordinary citizens are vulnerable to legalized plunder; where public treasuries are private piggybanks; and where the best possible business partners are the President's offspring or siblings." The term aptly describes the economic policies and practices of the current Bush administration. -- Joe Conason

"For the Bush dynasty, crony capitalism is rite of passage, way of life, and family business. The President, his father, his three brothers, and sundry other relatives all have joined (and sometimes hastily abandoned) enterprises where their chief contribution was the perception of political influence at home and abroad. It would be possible -- although grim and morally exhausting -- to write an entire book about nothing but ethically dingy Bush business deals." -- Joe Conason

"Historically, Republicans have been the party of the conservative virtues -- of balanced budgets, of a healthy skepticism towards foreign wars, of a commitment to traditional values and fierce resistance to the growth of government power and world empire. No more. To win and hold high office, many have sold their souls to the very devil they were baptized to do battle with." -- Pat Buchanan

Tax Cuts: Great For the Wealthy, Destructive for the Economy

Conservatives "have misled the public about the intentions and effects of Republican tax policy for more than twenty years, dating back to the first months of the Reagan administration. Advertised as broad tax relief that would lead to reduced deficits and a supply-side miracle of growth and opportunity, the Reagan scheme didn't work out that way. Only years after the disaster had taken shape did Reagan's budget director David Stockman reveal its true causes and hidden purpose. In a candid interview with the Atlantic magazine and later in his own disillusioned memoir, Stockman described Reagan's broad tax cuts as a 'Trojan Horse' to reduce the top income tax raid paid by the wealthiest families. Working families saw their tax burden continue to rise, while the rich enjoyed tax breaks on capital gains, personal investments, estates, depreciation, and profits. Under Reagan's plan, a family earning $30,000 a year would suffer a slight increase in taxes, while a family with an annual income of $200,000 would enjoy a tax cut of 10 percent. There were even some special tax breaks for the owners of oil leases. Stockman admitted that the White House had cooperated with business lobbyists to affix all manner of corporate tax indulgences to the Reagan supply-side tax legislation. 'The hogs were really feeding,' he recalled pungently. 'The greed level, the level of opportunism, just got out of control.' (The same herd of swine returned to gorge themselves repeatedly after George W. Bush entered office, with consequences that the nation will endure for at least a decade.) Stockman confessed that supply-side economics was nothing more but the old 'trickle-down theory' dressed up as a revolutionary new idea.'"

Republicans were outraged when Bill Clinton reversed the trend and raised the top tax rate a few percentage points; their outrage continued unabated throughout his administration. Their outrage was further fueled by Clinton's raising of the minimum wage, against their desire to eliminate it entirely. And though Reagan himself had supported the earned income tax credit, designed to help poor working-class families, Republicans wanted to restrict it or abolish it. Instead, to Republicans' fury, Clinton nearly doubled the EITC. Clinton's tax policies relieved some of the tax burden shifted onto the backs of the working classes, reducing the federal tax burden on moderate-income families to its lowest level in over thirty years. For his pains, Clinton had to fight off, or compromise with, relentless attacks on his economic policies, led by the newly energized neoconservative wing of the Republican party under the leadership of House Speaker Newt Gingrich and financed by the likes of neocon billionaire Richard Mellon Scaife and New York stockholder Richard Gilder, an owner of the Texas Rangers and close friend of the Bush family. Eight years later, Republicans were rewarded when newly selected president George W. Bush rammed through the most regressive tax legislation in a century through a lackadaisical Congress. The insanity of the Bush tax plan can be seen in a Wall Street Journal editorial from November 2002 that labels families making under $12,000 a year as 'lucky duckies' because they pay 'only' 4% of their income as federal taxes, and actually suggests raising their tax rates. The editorial fails to note that these 'lucky duckies' pay far more, proportionally, in regressive payroll and sales taxes than higher-income families.

"As the nation's most ardent advocates of supply-side economics, the Wall Street Journal's editorial writers myst have noticed that public enthusiasm for tax cuts is disappearing. According to them, families that are barely feeding their children should be soaked -- if only so that they, too, will rebel against high taxes. These conservatives respect the work ethic so much that they want to drive the lowest-paid workers even deeper into poverty." While the early benefits of Bush's tax cuts went primarily into the pockets, and the Swiss bank accounts, of the richest of Americans, the real benefits will manifest themselves farther on down the line, when over 50% of the tax cuts will go to the top 1%. In addition, Bush's "repeal of the estate tax likewise promises to create a new aristocracy of wealth." The Bush family itself will benefit from the repeal of the estate tax (wrongly labeled as the 'death tax' by Bush supporters, and falsely touted as protection for family farms) to the tune of hundreds of millions of dollars. (Note that in the mid-1990s, then-Speaker Gingrich required any staffer who used the term "estate tax" instead of "death tax" to contribute to a fund as punishment.)

If that wasn't enough, the Bush economic policies provided huge, retroactive tax refunds for the largest corporations such as General Electric and IBM. These corporations were already paying, in many cases, little or no federal taxes; after the Bush 'economic stimulus' legislation took effect, these corporations received up to $7 billion in tax giveaways, including $250 million for Bush's pals at Enron. These tax giveaways, sometimes labeled 'corporate welfare,' did nothing to stimulate the American economy, but provided huge boosts for corporate revenues, much of which went into offshore bank accounts (and out of the US economy entirely) or into gaming the stock market. Under Bush, the IRS allowed corporations to write off billions of dollars without even gaining the approval of Congress. Bush's first Treasury Secretary, Paul O'Neill, whose biggest contribution was fighting European efforts to regulate offshore tax havens, was replaced by former CSX chief executive John Snow, whose company managed to avoid paying a dime of corporate income taxes on nearly a billion dollars of revenue between 1998 and 2001. Under Snow, CSX not only continued to avoid paying federal taxes, it received $164 million in "rebates" from the US Treasury. Conason notes that "[w]hile everyone screams at the Hollywood limousines the corporate jets depart on schedule for those tax havens in the Caribbean." -- Joe Conason

Since 2001, the Bush tax cuts have cost the American economy nearly $1 trillion. As of 2006, the Bush deficit is at $8 billion and rising -- the largest deficit in global history. The personal savings of the average American, as of 2006, sat at a negative 7%. Credit and mortgage debt is higher in America than at any time in fifty years. The hourly wage, adjusted for inflation, has dropped by 3% since Bush took office. -- Mike Papantonio

The Much-Maligned "Death Tax" -- Government Welfare for the Wealthiest

"While we may not be able to ensure that all children start their lives on a level playing field, that is something we should strive for and the estate tax keeps us closer to that ideal." -- Microsoft billionaire Bill Gates, quoted by Peter Singer

Paul Waldman notes that the term "death tax" is inherently misleading, implying that it's a tax on death, and since everyone dies, everyone is taxed. In actuality, it is a tax on inheritance, and only on the inheritances of the wealthiest 2%. -- Paul Waldman

Former Bush official John DiIulio, who directed the White House Office of Faith-Based and Community Initiatives, said bluntly, "Repeal [of the estate tax] could undercut another administration priority: encouraging private contributions to charities, religious and nonreligious alike, that help the poor." -- quoted by Peter Singer

"Real equality of opportunity is extraordinarily difficult to achieve in any society with sharp inequalities of wealth, because rich, well-educated, well-connected parents can always give their children advantages that the children of poor, uneducated parents will lack. Nevertheless, if we want to enhance equality of opportunity, it is hard to think of a better way to start than a tax on inherited wealth. Such a tax makes society fairer because it taxes people who are receiving a benefit that they have done nothing to deserve. An inheritance is a windfall, something that is just as likely to come to the idle as the hardworking. Conservatives who worry about the disincentive effects of welfare on the poor should have no difficulty in accepting that a similar effect can follow from receiving what [billionaire] Warren Buffett has called 'a lifetime of food stamps based on coming out of the right womb.' Several studies suggest that people who grow up knowing that they will never need to earn their own living consume more and work less -- in plain old-fashioned language, they are more idle and wasteful -- than those who do not have such an assurance. But even if that is not the case, as long as people can pass great wealth on to their children, there can never be real equality of opportunity." -- Peter Singer

Repealing the estate tax would be the equivalent of "choosing the 2020 Olympic team by picking the eldest sons of the gold medal winners of the 2000 Olympics." -- billionaire Warren Buffett, quoted by Peter Singer

The Republican fight to repeal the estate tax is a shining example of how their tax policies have benefited the wealthy few at the expense of everyone else. After relabeling the estate tax, which was written specifically to keep extraordinarily wealthy families from accumulating truly astonishing amounts of inherited wealth over the generations, the "death tax" and pretending that they opposed it on the grounds that poor farming families were threatened by the tax (no farm family has ever been found who was hurt by the estate tax), the tax, which was written specifically to apply to families with more than $2.5 million in cash and assets, in in the process of being repealed, and a $7 million exemption is on the books. "The repeal of the estate tax is a lovely example of just how much political clout the very rich have in this country. Some rich people in Southern California hired a lobbyist, who in turn hired the well-wired Patton Boggs law firm. The group was backed by the Mars family and the Gallo wine folks. Another group of rich folks in Alabama joined the fray and the nexus of right-wing think tanks and interrelated lobbying groups took it up. Combine repeal of the estate tax with the flat tax, also popular on the Republican right, and we're back to the McKinley era." -- Molly Ivins and Lou Dubose

"Bush's tax package was far more of a straight transfer of wealth than an economic stimulus." -- Eric Alterman and Mark Green

"The available data show consistently that Democrats are more capable, productive economic stewards than Republicans. (That's why they always play 'Happy Days Are Here Again' at those donkey conventions.) Consider the history of the stock market, where plummeting values since 2001 have caused wider distress than ever -- ironically thanks to the vastly expanded ownership of equities, either directly or indirectly, during the Clinton era. When Slate magazine analyzed the average returns on the Standard & Poor 500 in October 2002, its researchers found that Democratic presidents posted vastly better numbers than Republicans. Over the past century, in fact, Democratic presidencies produced annual returns of 12.3 percent, while the Republicans produced 8 percent. Moreover, stock valuations during Democratic control of Congress also beat the Republican record in both the Senate and the House by considerable margins, averaging 10.7 percent returns for the donkeys against 8.7 percent for the elephants. ...Not long ago, Northwestern Mutual, the insurance and financial services giant, published a survey of presidential administrations and S&P 500 performance between 1929 and 1999 that showed the Democratic advantage quite starkly. Even when the company's analysts massaged those numbers to remove two of the worst Republican periods -- the Hoover administration and Nixon's second term -- the outcome still favored Democrats by 16.9 percent to 14.2. The largest gains occurred under FDR, Truman, Johnson, and Clinton."

Market historian Jeff Hirsch, editor of the Stock Trader's Almanac, concludes, "I don't know why people are convinced Republicans are good for the stock market." "Rising stock indices are not necessarily the best means, however, to measure national economic progress from a liberal perspective," Joe Conason writes. "What about gross domestic product, job creation, unemployment, disposable income, deficit reduction, federal spending, and inflation? By every one of those yardsticks, Democratic Presidents achieved a superior record on average, their administrations fostered more growth, higher wages, lower deficits, lower government spending, and lower inflation than Republican regimes. If voters understood how poorly the GOP has operated the nation's business -- and the gaping differences between promises and results -- they would file the electoral equivalent of a shareholder lawsuit." -- Joe Conason

"When US companies go global, they shed their loyalty to America." -- Pat Buchanan

Corporations have enjoyed a steady decrease in taxes paid to the federal government, taxes that have had to be made up by the individual American taxpayer. During Eisenhower's time, corporations paid an average of 25% of the federal tax bill. That number shrank to 10% in 2000, and to a mere 7% in 2001. In 1960, corporations paid on average 45% of their income in taxes; in 2003 that figure is less than 35%. And many of the largest corporations pay no taxes whatsoever. Some even work their earnings around to the point where the US "owes" them money. Corporate tax shelters in offshore tax havens such as the Cayman Islands cost the US over $70 billion in tax revenue a year; the huge loopholes that allow mega-corporations to pay little or no taxes costs the country an additional $40 billion a year; those two figures are growing each year. In 1995, 84 American millionaires filed tax returns showing that they owed no taxes, or were owed enormous refunds. And the IRS is finding it more and more difficult to collect the taxes the US is legally owed by these corporations, as a succession of Republican Congresses has systematically defanged the IRS's ability to investigate suspicious corporate tax structures. After a 1995 tax law revision shepherded through Congress by Newt Gingrich, the IRS has focused far more of its collection efforts on the nickel-and-dime transgressions of the working poor -- far easier targets than giant corporations with dozens or hundreds of lawyers on retainer. Poor people filing for the Earned Income Tax Credit are especially targeted for audits. "We've been directed by Congress to examine the devil out of such returns," former Treasury Secretary Paul O'Neill told a Congressional committee. "You think I like that? I hate it."

The late Supreme Court justice Louis Brandeis once wrote: "We can have democracy in this country or we can have great concentrated wealth in the hands of a few. We cannot have both." It is clear on which side of the question George W. Bush and his Republican cronies have landed. Meanwhile, since Bush became president in 2001, the stock markets have lost more than $6.5 trillion in value, unemployment is up more than 40%, and the Clinton-era surplus has disappeared under a tsunami of deficits. And how does second-term Bush plan on fixing the economic hemorraghing? By eliminating taxes on stock dividends (unearned income), a tactic that will directly benefit his wealthy friends and gut even more revenue from the already-depleted coffers of the US government. Forty years ago America was, indeed, a solidly middle-class country, with the majority of the nation's wealth spread among the millions of middle-income working families. No more. Forty years of largely Republican economic policies have seen America's wealth redistributed upward: now America is largely divided into the rich, who control the majority of America's wealth and are getting their hands on more of it every day, and everyone else, who are collectively working harder and harder to maintain their steadily eroding economic status. -- Molly Ivins and Lou Dubose

"All the rights enjoyed by people in a free society -- particularly those valued so much by libertarians -- have practical meaning only because government is there to protect them. Taxes are therefore not an affront to freedom, but the means by which freedom is sustained. Your right to own property, for instance, depends on the government's willingness and ability to put out the fire burning in a house down the block, the contract under which you gave money to the previous owner in the exchange (evicting him if he refuses to leave), pay for the police and courts who deter burglars from stealing your television or your neighbor from driving his car through your front window when your daughter's music gets too loud, and prevent foreign armies from bivouacking in your front room and cleaning out your refrigerator. Since the electrical wires installed in the house have to conform to safety standards set by the government, your house is unlikely to burst into flames when you turn on a lamp. The value of your property is further enhanced by the fact that you can drive to it on a road built by the government and obtain water and dispose of sewage through pipes laid by the government. We all share in the cost of providing these protections and services by paying taxes." --Paul Waldman, borrowing from Stephen Holmes and Cass Sunstein's The Cost of Rights

"About two out of every five of us [American citizens] believes that Americans pay more taxes than Western Europeans do, when in fact tax rates in Western Europe are significantly higher. Among the thirty industrialized countries of the Organization for Economic Cooperation and Development, twenty-seven had taxes making up a larger proportion of GDP than the United States in 2001, before the Bush tax cut took effect. Only Korea, Japan, and Mexico had lower taxes than the United States. ...[F]or every dollar Bush has given in tax cuts, he has added $3.60 to the national debt -- money we'll all have to pay back." -- Paul Waldman, borrowing from Citizens for Tax Justice and David Cay Johnston

"In 2002, the United States ran a merchandise trade deficit of $484 billion. In 2003, it hit $550 billion. Every month of the first thirty-eight of George W. Bush's presidency, manufacturing jobs disappeared. One in six have vanished since he took his oath, 2.6 million in all. In 1950, a third of our labor force was in manufacturing, and ours was the most self-sufficient republic the world has ever seen. Now only 11 percent of US workers are in manufacturing, which is in a death spiral, and it is not a natural death. Globalists and corporatists plotted the evisceration of American manufacturing with the collusion of free-trade fundamentalists who cannot see that the theories they were fed by economics professors in college are killing the country they profess to love. Or they do not care. ...In 2002, the US trade deficit with China was $103 billion. In 2003 it hit $124 billion, the largest trade deficit between two nations in history. By mid-2004, that deficit was approaching $150 billion a year. It is false to say President Bush presided over a 'jobless recovery.' His trade deficits have created many millions of jobs in China." -- Pat Buchanan

"After a decade of Democratic prosperity, the Republican record of failure was largely forgotten. For a dozen years under Reagan and Bush, the US government had experimented with 'supply-side' nostrums, producing the largest deficits in the history of the world, severe unemployment, falling family incomes, declining industries, and rising federal and household indebtedness. An amazing episode of conservative stupidity at its most costly was the now-forgotten savings and loan fiasco, which bled the Treasury of hundreds of billions and imposed unknown costs on the national economy. Young taxpayers who have never heard the S&L scandal mentioned on cable TV don't realize that they're paying for its cleanup, hidden under the category of interest expenses. Reagan and his advisors believed that in every sector government was the problem, and that if they simply deregulated the financial industry, a bonanza of growth and investment would soon follow. (As usual, the worst Republican ideas attracted a number of foolish Democrats as well.) When he signed the bill to deregulate the thrift industries in October 1982, the Gipper quipped, 'All in all, I think we've hit the jackpot.' How big a booby prize America actually won wasn't discovered until after Reagan left office -- but with bond interest and disposition costs, the final tab came to over a trillion dollars. The unregulated looting of the thrifts by insiders helped to finance the speculative junk bond mania of the Reagan years, which concluded in Wall Street perp walks and national recession."

Reagan's successor, George H.W. Bush, appointed heavy financial players such as the Bass family and Ronald Perelman to manage the remaining assets of the gutted S&L industry; along with astoundingly large tax breaks and sweetheart deals, these heavy hitters profited handsomely by presiding over the death of the S&Ls, profits paid directly by the US taxpayers. "The hidden history of the S&L crisis and the Reagan deficits is relevant not only because we are still paying for them, but because the same philosophy has returned to power in Washington [in the form of the George W. Bush administration]: deregulate, spend, cut taxes for the wealthy, and let someone else pay for it all someday. According to Reagan's former budget director David Stockman, those eighties deficits represented a long-term right-wing strategy for government retrenchment in education, environmental protection, health care, public infrastructure, and community development. The flood of red ink would 'give you an argument for cutting back the programs that weren't desired.' Stockman admitted there was one problem with this diabolical strategy: 'It got out of hand.' It got way out of hand, despite later efforts under both Reagan and Bush to undo the worst budgetary excesses of the eighties with substantial tax increases." -- Joe Conason

"After observing his first few years in the Oval Office, we have a clearer understanding of what [George W. Bush] meant [by declaring himself a 'fiscal conservative and a family conservative'.] Being a 'fiscal conservative' meant passing lopsided tax cuts for the wealthy few, and leaving the federal budget in deficit for the foreseeable future. Being a 'family conservative' meant looking after certain families, particularly if their annual incomes are higher than $200,000 and their estates are valued at more than $2 million. And so far, being a 'compassionate conservative' appears to mean nothing very different from being a hard-hearted, stingy, old-fashioned conservative. It always helps to smile, though." -- Joe Conason

The record of George W. Bush on economics has been dismal, to say the least; worse, the Bush administration has consciously and systematically lied to the country about the effects of their tax cuts and policies. Even conservative commentator Andrew Sullivan acknowledges the shell game perpetuated on the American people: "The fact that Bush has to obfuscate his real goals of reducing spending with the smoke screen of 'compassionate conservatism' shows how uphill the struggle is. Yes, some of the time he is full of it on his economic policies. But a certain amount of [bullsh*t] is necessary for any vaguely successful retrenchment of government power in an insatiable entitlement state.... Bush and Karl Rove are no dummies. They have rightly judged that, in a culture of ineluctable government expansion, where every new plateau of public spending is simply the baseline for the next expansion, a rhetorical smoke screen is sometimes necessary." Joe Conason retorts, "Translation: Lying is fine, as long as it's about something like a trillion-dollar deficit and not the oral endearments of an intern." Sullivan also refuses to acknowledge the fact that, under the previous administration of Bill Clinton, government programs and spending actually declined in dramatic fashion. Only when Bush took office in January 2001 did government spending and government programs begin expanding again. -- Andrew Sullivan/Joe Conason

"We do not doubt that some Americans have benefited from the priorities of the current presidency. It is clearly 'Morning in America' again for the superrich. After two years of declines, Forbes reported in 2003, the total net worth of America's four hundred richest people rose 10 percent to $995 billion in September 2003. With the top 1 percent receiving as much as the bottom 60 percent in Bush's tax breaks this coming decade, the gap between the rich and everyone else will only grow. But the progress that most Americans were making during the Clinton-Gore administration came to an almost immediate halt during the Bush presidency. ...Census Bureau data released in September 2003 show that under George W. Bush, the number of Americans living in poverty saw its largest increase in more than forty years, median household income declined, and the number of Americans living without health insurance spiked upward, together with unemployment. Meanwhile, the government's fiscal position, which improved every year under Bill Clinton finally reaching a record surplus, collapsed into a projected deficit approaching $500 billion, and even this astronomical figure excluded the costs of the Iraq war, already in the hundreds of billions. While a portion of these unhappy trends can be attributed to structural changes in both the United States and the global economy -- for instance, the flight of manufacturing jobs to low-wage, low-rights countries -- almost all were exacerbated by Bush administration policies." -- Eric Alterman and Mark Green

"The free-market fundamentalists and 'movement conservatives' are just as blinded by ideology as the old Communists. They worship at the altar of the free market, blind to a country where the government is redistributing resources from the poor and the middle class to the rich. This is open class warfare. This country is not working for most of the people in it. The health-care system is falling apart, the social safety net has been shredded, the Bushies want to privatize Social Security and the schools. These are the same ideological geniuses who brought you the savings-and-loan scandals, $2 trillion in deficits, the California energy crisis, Enron, WorldCom -- in fact, it's the same loser laissez-faire ideology that produced the Great Depression. The free market is a wonderful thing -- but it functions well only within a nest of law and regulation. When those who are regulated by the government buy the government, the people get screwed." -- Molly Ivins and Lou Dubose

Reaganomics and Clinton to the Rescue

"Senator Fritz Hollings once said a wonderful thing, and I...paraphrase -- he talked about running into a man who fought in World War II, went to college on the GI Bill, bought a house with FHA loan, drove back and forth to work on the interstate highways. He got an SBA loan for his business. His students got some federal student loans. His parents were happily retired on Social Security and Medicare. And he said he was voting for Ronald Reagan to get the government off his back." -- E.J. Dionne

"For all the controversy over Reaganomics, its most significant legacy was the quadrupling of the federal debt at a cost to American taxpayers of tens of billions annually in interest payments. Over the twelve years of Reagan-Bush, wages stagnated, workers' productivity stalled, investment languished, poverty rose by 6.5 million people, and income inequality steeply climbed. Average GDP growth for these years was a modest 2 percent. 'There was no supply-side revolution at all,' wrote Will Hutton in A Declaration of Interdependence, 'just a scale of enrichment at the top that beggared belief.'" Clinton, appalled at the state of the economy his administration had inherited, abandoned his early plans for a middle-class tax cut, raised taxes on those making over $250,000 a year, and slowed spending. Under his economic policies, the deficit began to shrink. Investors gained confidence in the US, interest rates declined, and growth took off. By the time Clinton left office, his economy oversaw the creation of a record 22 million new jobs, real income for median-income families rose twice as fast during his eight years as it did in the twelve years of Reagan-Bush, 7.7 million people rose out of poverty, and the formerly massive federal deficit had turned into a surplus for the first time since 1974. Liberals learned that fiscal discipline and balanced budgets could be financially productive. Al Gore planned to use that surplus during his term to secure Social Security and Medicare. Instead, George W. Bush took office. The economic cycles predicted a recession, one which Clinton and his economic advisors were prepared for; no one was prepared for the Internet-tech bubble bursting in 2000, erasing hundreds of billions of dollars in paper wealth. Foreign investments and American consumer spending were propping up an economy that was saving and spending too little. Manufacturing jobs were draining away to other countries. The economy needed some public-sector spending to recover. Instead, Bush gave the wealthiest Americans and the large corporations huge, unneeded tax cuts, and the economy staggered under the blow. -- Eric Alterman and Mark Green

In response to questioning about whether his proposals to gut Social Security would hurt people over 80, GOP senator Phil Gramm responded, "Most people don't have the luxury of living to be 80 years old, so it's hard for me to feel sorry for them." -- quoted by Al Franken

Republicans and the 2002 Stock Market Collapse

"[President Bush] is like a blind man in a roomful of deaf people. There is no discernible connection." -- former Treasury Secretary Paul O'Neill, quoted by Ron Suskind

The Republican Congresses of the nineties gutted the budget of the Securities and Exchange Commission (SEC), the only federal regulatory agency capable of ensuring oversight and compliance among America's corporations. As a result, the SEC became increasingly unable to do its job, and corporations began flagrantly profiteering in the face of the law (and the fortunes of the taxpayer, who increasingly found themselves paying for these illegal profits). In July 2002, when the Enron collapse was burning through the media and CEOs from one company after another were solemnly "restating" their companies' profits, George W. Bush fought tooth and nail to gut the SEC's budget even more. As far back as 1992, Republicans Phil and Wendy Gramm made their own contributions to the 2002 collapse. Wendy Gramm, in her last days as the chair of the Commodity Futures Trading Corporation, rammed through a federal rule exempting energy-derivatives contracts from federal regulation. Enron was just then beginning to realize the potential profit from energy derivatives -- if they didn't have to abide by pesky federal regs. Gramm's rule made Enron a giant in the energy-derivatives community. (The rule became known as the "Enron exemption" when it passed into law in 2001.) Gramm's ruling was so friendly that it not only exempted companies like Enron from federal oversight, it even protected them from regulation if their contracts were proven to have been designed to defraud or mislead buyers. Five weeks later, Gramm was rewarded with a position on Enron's board of directors. Her husband Phil, a senator from Texas, pushed through his own Banking Reform Act, which repealed legislation growing out of the 1929 market collapse that forbid banks. brokerage houses, and insurance companies to merge. Subsequently the Gingrich Republicans gutted the IRS's ability to collect corporate taxes. As a result, the market was ripe for fraud, collusion, and rampant crime -- which is exactly what happened, and what caused the market to finally collapse. Molly Ivins and Lou Dubose write, "George W. Bush didn't invent any of this. His role is to pretty much embody it. He is what people mean when they speak of 'crony capitalism.' ...Bush is not motivated by greed -- he honestly believes government should be an adjunct of corporate America and that we'll all be better off if it is." -- Molly Ivins and Lou Dubose

"During negotiations over the 2003 budget -- after years of listening to spokesmen for the Republican Study Committee complain about wasteful spending items while the group's members privately clamored for pork -- their Republican colleagues finally had enough. Breaking with institutional traditions of silence, they started talking to the press about the secrets of the budgetary process. By then, the budget-busting propensities of the Republican leadership had become a serious worry in the White House. As if they were spoiled children, the House Republicans wanted to spend without taxing, just like their idol Reagan. This has become their habit in power. Discretionary spending -- the portion of the federal budget that Congress dispenses through legislation, as differentiated from Social Security, bond interest, and other fixed expenses -- has grown by more than 50 percent since the Gingrich 'revolutionaries' took control of the House. From that day in January 1995 to the present, the number of earmarks, meaning pork projects attached to spending bills for the benefit of individual districts, has grown by several thousands. Nobody seems to know the exact number, but by 2002 it was around 8,300. Compared with these Republicans, the 'spendthrift Democrats' resemble diligent Swiss bankers."

"When the chicanery of House conservatives became intolerable in the summer of 2002, their harshest critics were fellow Republicans, trying to manage a budget that was again headed into sustained deficits. These legislators were sick of conservatives who held up passage of crucial budget bills, supposedly because of concerns about excess spending, while those very same conservatives approached them privately asking for special multimillion-dollar earmarks. Harold Rogers, the Kentucky Republican who chairs a subcommittee overseeing transportation appropriations, told a reporter for The Hill, a Capitol Hill weekly, that he was offended by the hypocrisy of hard-core right-wingers who publicly complained about federal spending -- and then asked him for extra money to build roads and bridges in their districts. 'It's the age-old agage of do as I say and not as I do,' complained Mike Castle, a respected moderate Republican from Delaware, referring to the behavior of his party's ideologues.

"This charade became so ridiculous that Jim Dyer, staff director of the House Appropriations Committee, went on the record with the kind of withering comments that are usually uttered only on background. 'Everything Chairman Rogers says is true, it's a very high number,' Dyer said of the flood of projects demanded by conservatives. 'There are hundreds and hundreds.... We've had the policy of protecting members and not exposing them, but we've taken a lot of abuse. There are members on the bandwagon of anti-spending, but they come and get their share.' In other words, these great conservative friends of the taxpayer have been rifling the Treasury with both hands. They still talk about frugality, whenever they take a breather from gorging at the pork barrel. ...Democrats and liberals glom porky projects for their districts, too, of course. But few Democrats or liberals win bogus awards from conservative front groups proclaiming them to be 'heroes of the taxpayer' while they line up at the public trough. ...[S]ince the Republicans took over Congress, they had moved 'tens of billions of dollars from Democratic to GOP districts,' [according to an exhaustive AP study]. This was accomplished by a Robin Hood-in-reverse agenda that transferred funds from food stamps and housing programs to business loans and farm subsidies. The Republicans take from the poor, give to the rich, and get themselves reelected." -- Joe Conason

"In recent years, conservative ideologues have been humiliated by reality on every important economic issue -- from the macroeconomic effects of the minimum wage and progressive taxation to the mecessity for stricter financial market supervision and the future prospects of the stock market. The minimum wage was increased twice during the Clinton years, and contrary to right-wing dogma, a record number of jobs was created. The top tax rate was increased in 1993, and the economy boomed. Deregulation of banking and lax regulation of accounting and financial markets in recent years encouraged the corporate scandals that destroyed millions of dollars in shareholder value. As for the price of stocks, it is only necessary to recall Dow 36,000, the title of a 1999 book co-authored by conservative pundit James Glassman. Glassman was hardly alone on the right in his ultraexuberance. Before the crash, such faith in the eternal power of the 'new economy' was usually accompanied by libertarian speculation about the withering away of the welfare state. (With everyone a millionaire, why would anyone need government?) And if the state didn't wither away, the conservatives intended to tear it down anyway with a series of policy schemes, from Social Security and Medicare privatization to private school vouchers. Although Republicans waffle and flip-flop on these issues for political expedience, such plans remain at the top of their domestic agenda for the coming decade. The problem isn't that conservatives are wrong about the efficiency of markets or the creativity of enterprise. It's that they have made false idols of both, usually without acknowledging that markets work best when regulated, that private enterprise cannot meet every human need, that government has always played a critical role in our economy, and that the profit motive can be socially and encironmentally destructive as well as dynamic." -- Joe Conason

"While liberals are often mocked as naive idealists, they are in fact the true realists. Instead of turning capitalism into a pseudoreligion, they see it as a powerful system that requires government intervention to temper the business cycle, to protect individuals and communities from abuse by corporate behemoths, and to provide for complex physical, educational, and scientific infrastructure that encourages growth. Yet there are still deeper contradictions that separate conservative Republicans from their professed ideology. They claim to believe in 'free enterprise,' and many of them sincerely do. But the system that is practiced at the top -- by politicians, their families, friends, and corporate benefactors -- would be more aptly described as 'crony capitalism.' ...The quasi-communist leaders of China do business much the same crooked way, as does the ferociously anticommunist family that has ruled Singapore for decades; and similar practices distort the economies of countries as distant as Nigeria and as close as Mexico. We don't have a rotten system like that in the United States -- not yet, anyway. But we do suffer from an increasingly venal political economy, rife with scams and payoffs that reward the connected few, often at the expense of the deceived many. The pandemic of corporate scandal has exposed an American style of crony capitalism that infects boardrooms, accounting firms, congressional offices, Governor's mansions, and all sorts of important institutions, all the way up to the Oval Office." -- Joe Conason

One of the mantras of the Bush economic "vision," as with Reaganomics, is that government spending will not help in raising Americans out of poverty or bring about equal opportunity. Bush's thinking is reflected in his foreward to Marvin Olansky's Compassionate Conservatism, where he (or a staff member, probably Karen Hughes) writes that it is a mistake to think that compassion means government "spending large sums of money and building an immense bureaucracy to help the poor." The result of such spending, he says, is that "we hurt the very people we meant to help." Bush is, of course, lying. Dozens of long-term studies show that societies whose governments tax more, as a proportion of gross domestic product, are also societies with lower income inequality. Higher welfare spending does reduce inequality. Among the 23 higher-income member nations of the Organization for Economic Development and Cooperation, the more equal ones have, on average, a higher income per capita, and more downwards income redistribution indeed leads to a lower level of absolute poverty, greater income equality, and a lower rate of relative poverty. Government spending to fight poverty does not have to mean more government programs.

Philosopher and ethicist Peter Singer writes, "If fighting poverty and helping every child to get an equal start is better done by faith-based and private charities than by the government, then that is where the money should go." Much of Olansky's book profiles independently operated, private charities, many "faith-based," as well as instances where local governments help fund private charities. In almost every instance, Olansky wonders how much more good these small, beleagured charities could do if they received government monies. So why didn't Bush, who subscribes to Olansky's ideas, spend the budget surplus he inherited from the Clinton administration when he took office? Instead, he presided over the almost-immediate dissolution of the budget surplus, then, seven months later, said that the surplus's disappearance was "incredibly positive news" because it would create "a fiscal straitjacket" for Congress that would prevent the federal government from expanding. Once the budget disappeared, and Bush began deficit spending, he slashed spending for one federal program after another, choosing only those programs that were designed to help the less fortunate -- education, poverty reduction, health care -- or those that spent money to preserve the environment.

Bush says in his foreward to Olansky's book that we all must "share our resources -- both material and spiritual -- with those who need them most." Singer writes, "How much sharing of our material resources it would take to get really serious about creating a single nation of justice and opportunity is anyone's guess, but it seems reasonable to suppose that it would have taken all of the budget surplus that existed in 2000, and more. That surplus was a substantial material resource that could have been shared with those who need such resources most. It could have been used to rally Americans to the cause of compassion, and to give faith-based and other nonprofit charities the support they need to fight poverty effectively. It could have paid for initiatives sufficient to give the forgotten children in failed schools, the families from the barrios of L.A., and the men and women in America's decaying cities, reason to believe the president who told them: 'The dream is for you.' Instead, Bush chose a tax cut that only accentuated the economic inequality that had already been growing so rapidly in America since the 1970s. The number of Americans living in poverty rose in 2001 and increased again in 2002." In 2003, when the US budget deficit was ballooning, Bush rammed another tax cut, that benefited almost exclusively the wealthy, through Congress, claiming against all evidence that it would stimulate the economy and create jobs. It did neither. For the first time since Herbert Hoover, Bush has presided over an economy that has lost jobs rather than created them during his first term. Bush's response? To call for making all of his tax cuts permanent. "It is difficult," muses Singer, " to see how making them permanent will help Americans who are out of work now."

Bush could have increased government spending to stimulate the economy. "since the poor will almost certainly spend their money instead of save it, increasing the various kinds of benefits they receive is more likely to give a quick boost to the economy than tax cuts that go mostly to the rich. It would have therefore been both better and fairer than the tax cuts Bush proposed." When, two weeks after the tax cuts were proposed, Federal Reserve chairman Alan Greenspan broke ranks and called for "budget discipline" and warning that budget deficits, especially those created by enormous tax cuts for the wealthy, would harm the economy, Bush ignored both Greenspan's expert advice and the rumblings of discontent among his own party. "Running a deficit is ethically dubious because it is like one generation having a party and leaving the mess for another to clean up. Economist George Akerlof calls the Bush deficit, and deficits in general, "a form of looting" and warns that, in the future, America will have to drastically cut spending on Medicare and Social Security to pay for the present deficits.

"So either Bush's tax cuts were completely idiotic given the economic climate and projections, and lack all justification, or, as the Financial Times speculates, they are well thought out and doing exactly what they set out to do -- precipitate a fiscal crisis that justifies slashing spending on federal support programs such as Medicare, Medicaid, and Social Security. Singer writes, "If that speculation turns out to be true, 'compassionate conservatism' will have turned into its very opposite: a conservatism that increases the power and affluence of the rich, and is prepared to be utterly heartless to the poor and elderly." -- Peter Singer

The American "Oiligarchy"

"Figures don't lie but liars figure." -- Mark Twain

"The good Lord didn't see fit to put oil and gas only where there are democratic regimes friendly to the United States." -- Dick Cheney, 1998. quoted by Buzzflash

The conventional wisdom of the more sophisticated opponent of the Iraq invasion and occupation is that it really has little to do with oil, and more to do with geopolitical power plays in the Middle East, neoconservative dreams of worldwide hegemony, and perhaps even a disturbing attempt by George W. Bush to make up for some perceived psychological or physical shortcoming. The sophisticated viewpoint is undoubtedly correct -- but, unfortunately for working Americans, so is the more conventional view.

Before September 11, 2001, gasoline prices in America averaged $1.70 per gallon (all prices are national averages). Another nugget of conventional wisdom is that the terrorist attacks on Washington and New York caused gasoline prices to steadily rise. Not true. There was a short-term spike in prices after the bombings (including a reprehensible effort by some independent Citgo stations to profiteer by raising their prices to over $6 a gallon in the following hours), but six weeks later -- late October 2001 -- gas prices fell almost fifty cents below pre-9/11 prices, to $1.24 per gallon.

Prices remained relatively steady through February 2003, when they averaged $1.60 per gallon. Meanwhile, the administration was telling every self-contradictory lie it could think of to justify the upcoming invasion of Iraq, including an especially memorable whopper from September 19, 2002, told by then-economic advisor Larry Lindsey and reported by the Washington Times: "The key issue is oil, and a regime change in Iraq would facilitate an increase in world oil,' which would drive down oil prices, giving the US economy an added boost."

Instead, gasoline prices began to rise within months of the invasion, in a steady progression that began earning the oil companies unheard-of profits for one quarter after another. In late August 2003, prices for gasoline averaged over $1.60. Over that winter, prices dropped, in the traditional seasonal "slump," but soon began to rise again. The rise was slow at first, and first topped $2.00 a gallon in the summer of 2004. Americans were horrified at the broaching of the historically untouchable ceiling, and, apparently in response, gas prices dropped again, dropping below $1.80 during the winter. But the $2.00 ceiling had been breached once before, and the oil companies were eager to break it permanently. In March 2005, prices broke $2 per gallon again, and they would not drop below that number again.

After a precipitous surge in gas prices, that topped out over the previously unthinkable $3 per gallon price in August of 2005 (and caused a second predictably short period of outrage that was managed by soothing nonsense mouthed by oil company mouthpieces and administration shills), prices would drop almost as precipitously over the traditional winter drop in demand. And even this drop only saw prices go to $2.11 a gallon. By now, American consumers had been conditioned to accept (however grudgingly) $2 - plus gas prices. The summer of 2007 saw prices top $3 per gallon for a second time before the wintertime relief.

But by now a pattern was becoming clear. The surges were becoming ever higher, and each seasonal drop going down less far than the last. In the early summer of 2007, when this item is being written, national gas prices averaged $3.12 per gallon, with the trend showing every indication of rising even farther. Americans are now girding themselves to handle the prospect of gasoline rising over $4/gallon, perhaps with no end in sight.

Oil company executives and administration apologists excuse the steady rise in oil prices since the occupation of Iraq with a series of excuses and flimsy explanations. At the moment, the two most common are a shrug of the shoulders and words along the lines of, "Supply and demand, what can you do?", and wide-eyed finger-pointing at China. These two reasons have their basis in reality (as does the "reason" that oil corporation refineries are working at near-complete capacity), but the pattern is unmistakable: since the occupation of Iraq, and accounting for seasonal fluctuations, gas prices have nearly doubled in four years, with no end to the rise in sight. As AmericaBlog John Aravosis says, "Incompetence, and the myriad of lies that led to the Iraq war, come at a cost." -- AmericaBlog [multiple sources], MSNBC/Think Progress, Gas Buddy

It doesn't take a genius to see how the economy plummets with Republicans in the White House, and how it recovers under Democrats.

Domestic Fallout from the "War on Terror"

According to socialist and author Frances Fox Piven, the Bush admininstration's war on terror, and the invasion and occupation of both Afghanistan and Iraq, have had serious effects on the American economy and domestic policies. She writes, "The current wars were promoted -- and fed -- by the powerful US military establishment and the inner networks of neoconservative intellectuals and think tanks linked to the military establishment. These wars also, at least temporarily, helped resolve political tensions between the right wing think tanks, faith-based interest groups, and other factions on the right that surround and penetrate the current federal regime. Moreover, and enormously important, from the initial announcement of a war on terror in the wake of 9/11 to the continuing occupation of Iraq, US military aggression has served to shore up voter support for the Bush administration. The rush of patriotism and jingoism that inevitably follow in the wake of war was surely anticipated, along with the electoral advantage this gave to the Republican party and to a president who took office under the cloud of a disputed election and whose popular support was falling in the polls." Piven calls it a "predatory" agenda, "not in the imperial sense of extracting wealth from foreign peoples, but in the more pedestrian sense of extracting wealth from the American people. ...[A]ttention to domestic politics helps explain a course of action that otherwise seems less than fully rational."

Piven also observes that the "war fever" generated by the administration and the American media "smoothed the way for huge advances in the domestic neoconservative agenda. " Until recently, business interests who have tried to push draconian social spending cuts, huge corporate tax breaks and tax cuts for the wealthy, and regulation rollbacks, have been influential in American politics, but have been resisted with some success, "so that progress has been slower than conservatives would prefer." Now, with the fervor for war suffusing American politics, the war has been used as an excuse and a rationale for almost every domestic revision desired by the Republicans and their corporate backers. In March 2002, Speaker of the House Dennis Hastert blocked the passage of the Corporate Patriot Enforcement Act, designed to stop US corporations from dodging taxes by incorporating themselves in offshore tax havens, by calling on House Republicans not to embarrass Bush during a time of war by passing the bill. And then-House Majority Leader Tom DeLay asserted in April 2003 during debate over the second of Bush's enormous tax cuts that "nothing is more important in the face of war than cutting taxes." Never mind that historically, no country has ever cut taxes during wartime, but generally raises them in order to pay for the war effort. During World War II, the tax rate on the wealthiest Americans rose to a staggering 90%; now, with the war in Iraq involving American servicemen and women for a longer period of time than in World War II, taxes on the rich have been slashed, shifting the federal tax burden onto the backs of the middle class and the working poor.

It is obvious that the war in Iraq is a strong element of Bush's domestic policies. The idea is not a new one, Piven observes: the Cold War allowed the American "Red Scare" and domestic purges of the 1950s, and the 1982 British invasion of Argentina's Falkland Islands was not conducted to restore Britain's imperial power, but to give Prime Minister Margaret Thatcher a critical electoral boost. -- Frances Fox Piven

Busting the Unions

Shortly after Bush took office, the new deputy secretary of labor, Stephen Law, testified before a House committee, and mentioned that his office was drafting new regulations that would stringently regulate financial reporting for unions. When one committee member asked Law if he had bothered to consult with any labor officials representing the unions that would be affected by the new regulations, Law said he had not. Shortly thereafter, several AFL-CIO officials were invited to meet with several Labor officials. One of the DOL officials at the meeting was Don Todd, the deputy assistant for the Employment Standards Administration of the department. Todd is a former director of research for the Republican National Committee, an ideologically hardline political appointee who was now the official in charge of drafting the new regulations. "I assume you've done your homework and you know who I am," Todd opened. The meeting quickly took on the menacing atmosphere of a Mafia meeting, with Todd telling the labor officials, "I know you guys aren't happy about this. I've spent a lot of my life analyzing record keeping and filings of my political enemies." The AFL-CIO's general counsel, Jon Hiatt, was floored by Todd's brazen admission. "He was wearing his DOL hat," Hiatt recalled later. "They didn't pretend to be acting in the public interest.

It is emblematic of the way the Bush administration approaches unions to have someone like Todd, whose career was built on digging up dirt on GOP opposition candidates, in charge of regulating the unions he openly despises. The idea behind the regulations, called the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA) was, in the beginning, to protect the democratic rights of union workers by mandating full disclosure of how union management was spending their dues. The law also requires unions to disclose their expenditures under the LMRDA, which Todd was rewriting. Corporations favored the LMRDA because they themselves were required by law to disclose much of their financial information. Unions have been accused in the past, with reason, of using some of their funds in shadowy, illicit accounts that went to unrestrained political and personal purposes. Perhaps the LMRDA needed a few more teeth. However, the new regulations went considerably farther.

The disclosed information is also valuable in a political sense. Labor unions are possibly the single biggest source of campaign contributions for Democrats, and their members are invaluable in get-out-the-vote efforts and other grassroots campaign activities. The underlying idea behind rewriting the regulations is to force the labor unions to disclose far more financial information than before, in order to provide Republican opponents with critical information about their resources and distribution. "This was done purely to harass us and force us to spend huge resources," said Hiatt, who believed the order to rewrite the regulations came from Karl Rove. "This was all coming from their right-wing base, who wanted a road map to what we are doing, where we are spending and what campaigns we are looking at. Management consultants for corporations were urging their clients to push for this, and they got Rove and the White House to do it." Though the proof of Rove's involvement was lacking, the line is clear: Todd came from the RNC, which was Ken Mehlman's bailiwick, and Mehlman is a creature of Rove.

The idea of using the LMRDA goes back at least as far as the elder Bush's administration, to 1992, when then-Congressman Newt Gingrich urged the Secretary of Labor, Lynn Martin, to rewrite the regulations because it "will weaken our opponents and encourage our allies." The unions fought the revisions, but they were implemented, to the distress and anger of the labor unions. Now the regulations were being rewritten again, to the detriment of the unions and the delight of the Republican campaign committees. "When [DOL] told us they were going to change the regulations..." Hiatt said, "they also said they were going to put them online to make the information public and for members to get access. We asked if they were going to do that for employees, too. The answer was, 'not initially.' They said, 'We may get to it.' But they have not. This is blatantly one-sided. The DOL has virtually stopped enforcing requirements for employers but stepped up those for labor."

The new regulations took effect in September 2005, for the first time putting the minutiae of unions' political spending in the hands of their political opponents. And not coincidentally, the cost to the labor unions to handle the new paperwork and disclosure requirements would cost, collectively, close to a billion dollars. All but around 120 of the 5,000 labor unions required to deal with the new regulations are considered national organizations; the rest are small local shops who, in many cases, cannot afford to make the changeover.

The entire process is part of Rove's longterm plan to so weaken and marginalize Democrats and their supporters that the party will be completely unable to challenge Republicans on any meaningful level, federal, state, or local. Rove's ultimate plan is to change the rules to transform America into what is essentially a one-party state. Weakening the unions, along with weakening another traditional group of Democratic supporters, trial lawyers, is a key element of Rove's strategy. Authors James Moore and Wayne Slater write, "Democrats are weakened, in Karl Rove's long-held view, when the public relies not on unions or government but on markets. In order to reach that point, however, govermnet needs a little nudge in the right direction."

The DOL has become, under Bush, so anti-labor that even the department's inspector general has criticized its policies. Gordon Heddell accused the department's Wage and Hour Division of violating its own regulations by bending over backwards to accomodate Wal-Mart when the DOL granted the huge chain of "superstores" a fifteen-day notice before it would conduct any child-labor law inspections of any of its stores, and agreed to let the company "jointly develop news releases" regarding any findings. In January 2005, the company had been found guilty of 85 child-labor law violations by allowing underage employees to operate dangerous machinery. Instead of enforcing the law and protecting the safety of its teenaged employees, Wal-Mart and the DOL changed the regulations to allow the corporation to continue endangering the lives and health of its employees without serious oversight. Heddell said the decision would damage the agency's authority to assess penalties and, by allowing Wal-Mart's PR officials to help write the news releases that the public would be exposed to, would lessen the flow of information from the DOL to the public. Heddell is still assuming that Bush's DOL has the interests of America's employees and workers at heart. It does not.

Weakening the unions is, as mentioned above, a key element of weakening the ability of Democrats to win elections. Rove's strategy is three-fold: have Bush issue executive orders that undercut union-organization efforts, pack the National Labor Relations Board with business-friendly administration cronies, and increase the privatization of government activities.

Bush's DOL has dramatically cut the number of people enforcing the employer standards for minimum wage payments, occupational safety, rights to organize, child labor, and overtime. The office of the DOL that audits and investigates unions, however, has enjoyed a jump in staffing levels, with 48 new officials being hired in 2005 alone. Under Bush, the DOL has increased spending on its monitoring of union activities by 60%.

The first audit under the new LRMDA regulations was held within days of its passage, and the AFL-CIO was its target. Hiatt said that union officials were told that DOL investigators would be in their offices "for months."

David Bonior, the former Congressional Democrat and a long-time advocate of labor unions, said that there is nothing secret about what Rove and the White House are doing. "There's been a strategy," he said. "It's not a conspiracy. It's very open. [Conservative Republican strategist] Grover Norquist says they want to get rid of unions, to break the labor movement."

Going along with the new LRMDA regulations are new restrictions on how unions may organize employees. Most unions use a simple method known as "card-check," where employees fill out a card and check "yes" or "no" to creating a union or allowing a chapter to be formed at the workplace. If and when a majority approves a union, collective bargaining ensues -- once the employer acknowledges that a majority has been formed. Before, the law required federal oversight of the vote. Unions prefer this method because holding the elections on a single day reduces the chance of an employer intimidating employees into voting "no." Now Bush has stopped the practice among federal employees by eliminating the federal mediators used to verify elections, thereby making it far easier for employers to resist unionization. "My God, Karl Rove is all over this," says John Ryan of the AFL-CIO. "There is a straight-out attack on unions. What Rove and Bush have told mediators is that you are not allowed to participate in the card-check process to let workers join unions even though workers want that and employers want it. This is a multilayered attempt to fight unions and workers, and it's unprecedented and stronger than we have ever seen before even under Reagan or the first Bush administration." Bush's NRLB has asserted that the card-check procedure actually takes away the worker's right to choose, because the new procedure takes away the process of voting on a single day. As Hiatt testified before Congress, the new NRLB "appears intent on narrowing even further the means through which workers can enter the increasingly distant land of representation. To do so based on an expressed concern for employee free choice would be a dishonest distortion of the statutory policy."

"It's kind of funny," said Per Bernstein of the International Labor Communications Association. "Bush and Rove are trumpeting democracy all over the workd, and they are preventing democracy in the workplace. Maybe eight years of these kinds of attacks is what the union movement needs to wake up. Let them take away our health care. Let them take our rights to negotiate. Maybe people will wake up and do something."

Bush's first actions as president were to issue four executive orders designed to drain union strength. The agenda was clear from the outset, even though the White House represented them as attempts to be "fair and open" and offer "neutrality in government contracting, effective and efficient use of tax dollars and the legal right of workers to be notified of how their dues may be used." Instead, labor representatives say, the four orders are direct shots at the heart of the unionizing process. The first, Executive Order 13201, reminded workers that, under federal law, they cannot be required to join a union or maintain membership in a union to keep their jobs. The order does not inform workers of their collective-barganing rights and of their right not to be fired if they choose to join a union. The order also requires that workers do not have to contribute the portion of their dues that are slated to go to political or organizational activities, and that unions must refund dues not spent on "collective bargaining, contract administration, or grievance adjustment." Further executive orders rescinded Clinton-era orders mandating that managers in federal agencies engage their employees on management issues and in resolving workplace disputes, even though detailed studies showed that such practices increased workplace efficiency and saved money. "Bush was so intent on punishing labor unions," wrote the American Federation of Government Employee's Joe Henderson, "that he did not care a whit for the real good that partnership brought to the government and the country. Incredibly, the first order of business for his presidency was not protecting our country from terrorist attack or adding jobs to the economy; it was eliminating labor-management partnerships from the government."

Two other orders rescinded Clinton-era orders that worked to protect federal employees, particularly low-level workers such as janitors and cafeteria employees, and their unionized job placements. Union leaders knew from the first days of the Bush presidency that he had declared all-out war on America's unions and their members. For a brief while, union leaders held out hope that Bush's new secretary of labor, Elaine Chao, would be somewhat receptive to their concerns. Chao is a former president of the United Way and had dealt with board members from international unions before. Before any of the orders were issued, she met with union leaders and promised that none of them would be issued until her department had fully discussed the implications of the orders with them. Two days later, with no further contact from Chao, the orders were issued.

Bernstein remembers meeting with Chao to discuss the new LRMDA regulations. Chao brought a book stuffed with documentation of what she called egregrious union violations of the old regulations. Bernstein was insulted. "The things she had on unions were minor and this was right at the time Enron and WorldCom were getting away with ridiculous crimes, and the Bush people are concentrating on us? Everybody in labor was just super-pissed off about it. That was a turning point." Hiatt remembers discussing another issue, changes in overtime regulations, with Tammy McCutcheon of the Wage and Hour division. McCutcheon was considered somewhat sympathetic to union concerns, and over lunch, promised Hiatt that she would meet with the general counsels of other major unions to discuss the overhaul in overtime regulations. McCutcheon agreed. Days later, the two agreed-upon meetings were canceled by her office. Hiatt called her, and she admitted that cancelling the meetings was not her idea. Hiatt assumed the orders came from Karl Rove's office. McCutcheon wouldn't confirm that. "They've just got a corporate agenda," Hiatt concludes.

Unions have suffered setbacks not caused by Bush or other administrations. Their memberships have been declining for decades, as wages increased and productivity rose in the manufacturing sector. But when Reagan illegally destroyed PATCO, the air traffic controllers' union, the increasingly hostile attitude of Republican administrations began manifesting itself in increased regulations on unions, disruptions of their ability to organize, raise money, and recruit workers. Clinton angered the unions by embracing international free-trade agreements that siphoned jobs overseas. But Bush has taken previous administrations' hostility towards unions to a new and disturbing level. Between the Bush/Rove orchestrated assaults on the labor unions and their own internecine disputes and power struggles, some union leaders wonder if labor unions will survive at all. Union expert and author John Judis says that unions may well disappear unless the country experiences "a revival of the Democrats and a good economy -- not a bad one, because a good economy puts unions in a better bargaining position. But I think again that Bush and Rove have accomplished their goals by doing things where initially they didn't even have the votes. They just did what they thought was necessary."

The unions have damaged themselves, and, Moore and Slater write, Rove is now "tracking a wounded animal." The AFL-CIO split apart over a dispute over its political activities; a third of its membership -- 57 unions and 13 million workers -- left over a dispute over how to handle labor's declining numbers. The new unions are reorganizing under new management, but, as labor activist David Swanson says, "Things are grim. The worst-case scenario is that we lose the labor movement. The best case is that people wake up and they become active and aggressive in the way that they did in the thirties and forties and we have a labor movement that becomes a real cultural force."

Meanwhile, the Bush assault on America's unions and their workers continue. The new overtime regulations made it simple for employers to avoid paying overtime wages to their workers, with approximately 53 million workers losing their right to overtime salaries. The White House held up the formation of the Department of Homeland Security -- one of the critical responses to the 9/11 attacks and the administration's vaunted war on terror -- over whether DHS employees could join unions, until a federal judge ruled in the unions' favor. The administration continues to exempt over 700,000 federal workers, including employees of the Defense Department and the Transportation Safety Administration, which handles security at the nation's airports. And the administration's emphasis on privatization further damages unions. A Bush executive order mandated that air traffic controllers were not required to be government employees, opening the door to airports' contracting out these positions to private firms. The administration wants to do the same thing to the TSA. Outsourcing of millions of American jobs overseas damages unions even more.

"I'll be honest with you that I wish we had a Rove on our side," says the AFL-CIO's John Ryan. "It's real clear that he's smart. He put together a plan to win. It's been clear to me that he pushes harder than we do. He understands the stakes, and he knows how to win. And he has a long-term strategy he talks about through his candidates. He talks about their programs in ways that people understand. He understands that labor unions and trial lawyers are his major opponents. It's a sad, terrible situation." (James Moore and Wayne Slater)

"They've [Republicans] got a president [George W. Bush] who has a dumb idea, and because he's their president, they're going through mental gymnastics to explain why they're getting rid of a history of fiscal responsibility." -- former Democratic representative Tim Penny

"We are free today substantially, but the day will come when our Republic will be an impossibility. It will be an impossibility because wealth will be concentrated in the hands of a few." -- James Madison

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THIS FAR AND NO FURTHER

A Timeline of Events Surrounding the Radical Right's Attempt to Subvert American Democracy

Written and Compiled by Black Max

They Said It:

The American Economy

The American Economy

Democratic Economic Growth and Republican Destruction of the US Economy

Lessons from the New Deal and Modern-Day Crony Capitalism

Tax Cuts: Great For the Wealthy, Destructive for the Economy

The Much-Maligned "Death Tax" -- Government Welfare for the Wealthiest

Reaganomics and Clinton to the Rescue

Republicans and the 2002 Stock Market Collapse

The American "Oiligarchy"

It doesn't take a genius to see how the economy plummets with Republicans in the White House, and how it recovers under Democrats.

Domestic Fallout from the "War on Terror"

Busting the Unions

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