We have our gross domestic product, which measures total domestic production. We have stock prices, which measure the value of large firms. We have earnings reports, the unemployment rate, consumer confidence, interest rates and a whole list of other economic indicators. What we don't have is an indicator that measures quality of life for the middle class.
In terms of production, unemployment and consumer confidence, the economy is doing quite well. So it came as no surprise that President Bush this week touting those impressive statistics.
But that is only one part of the equation. Here is the other half that you might not hear the mainstream media bring up:
The Commerce Department this week that personal savings are at the lowest level since the Great Depression. The personal savings rate is negative 1%.
People making minimum wage have the of any other time since 1955.
Personal debt is 21.5% than personal income. Although it is down slightly from 2005, the number is still very high by historical comparison.
This is the since in more than sixty years that has not featured a prolonged increase in real wages (the term "real wages" means wages adjusted for inflation). Also, the median hourly wage has fallen by 2% since 2003, when factoring in inflation.
Plus, we have rising education costs, already high energy costs and out of control health care expenses.
This is not a doom and gloom scenario. The economy is growing. We are in the middle of an economic expansion on Wall Street. But when it comes to the overall cost of living on main street, many Americans are in quite a long-term predicament. As a society, we are saving less and borrowing more. This will help certain industries. It will probably not help most Americans, especially the younger generation. You'd think this would be of at least some concern to those who talk a lot about moral values.
A look at the numbers, and my own thought about why economic diversification leads to stability.
When you simplify what has been happening in Afghanistan, the problem is the following: the druglords have helped strengthened the insurgency, and the insurgency has strengthened the influence of the druglords. latest numbers about the opium drug trade in Afghanistan are not encouraging:
In addition to a 26 percent production increase over past year -- for atotal of 5,644 metric tons -- the amount of land under cultivation inopium poppies grew by 61 percent. Cultivation in the two mainproduction provinces, Helmand in the southwest and Oruzgan in centralAfghanistan, was up by 132 percent.
Afghanistan will continue to face this problem until trade agreements can be reached with the goal of diversifying their economy. We see this sort of thing happen all over the third world. When a country is dependent on a small number of resources for its economic well-being, whoever has access to that wealth has all the power -- and that invites corruption. Now you know why I have always been less optimistic about the prospect for democracy in the Middle East. What is true in Afghanistan with opium is true in the Middle East with oil. Whatever group or institution controls the resource will do anything to protect it, even if it means suppressing basic democratic freedoms. We see it in Iran, Saudi Arabia and all over the Middle East. It isn't an accident why none of those states are democracies. Whoever controls that resource controls the government.
I am pro-energy independence not just because it will help the United States, but because a decrease in the demand for oil would force the OPEC nations to start diversifying their economies. That way, less power would be invested in a small group of dictators, and more opportunity would be given to the people of those countries for free enterprise, ultimately help leading to stability. Only then would the Middle East be ready for democracy.
As is the case in Afghanistan, economic diversification is needed in various parts of the world. Afghanistan will turn into a full-fledged narco state unless the United States acts to assist president Hamid Karzai in diversifying the Afghan economy, which would help take power out of the hands of the druglords who help fund the insurgency.
Until now, this had been a conspiracy theory that I didn't believe. But according to a White House , oil prices will be "jacked up" after the election by the Saudis and U.S. oil companies:
A former White House spokesman warns that oil prices may be "jackedup" by the Saudis and U.S. oil company executives after the election, RAW STORY has learned.
In an op-ed published in Thursday's Seattle Post-Intelligencer,Democratic strategist Robert Weiner writes, "Enjoy the price ofgasoline now, because when the Saudis lower production, we could goright back to the $3 nightmare of three months ago."
The story went on to add that the decline of the price of oil before the election was no accident:
Weiner and Bangs base their conclusion in part on comments that Washington Post investigative reporter Bob Woodward made on CBS's60 Minutes two years ago while promoting his book, Plan of Attack.They state in their op-ed, "Something Washington Post journalist BobWoodward said two years ago while prices were going higher sendschills: 'They could go down very quickly. That's the Saudis' pledge.'According to Woodward, Prince Bandar bin Sultan, Saudi Arabia'sambassador to the United States, 'told President Bush that the Saudiswould cut oil prices to ensure a strong economy for Election Day.'"
"This prediction has come to fruition," Weiner and Bangs conclude.
According to the strategists, U.S. oil company CEOs "possess thepower to allow the price drops we've seen that may be timed for theelection.
The only reason this is allowed to happen in the first place is because an oil man is in the White House.
President Bush recently as the reason why the U.S. economy is growing. But as the following two charts from the show, the economic expansion is slower than average, and since 2001 a large portion of the tax cuts have gone to the most wealthy.
: the kind of economy the tax cuts have caused.
: which income bracket has benefited the most.
I am not trying to engage in class warfare. Someday I hope to be up there in income. But if you believe there is a difference between needs and wants, and that hard work ought to be rewarded, then you can't say that it is alright for wages and salaries to be this low.
Another thing: tax cuts are special -- there is no other way of putting it. If you want to argue for a regressive or flat tax, then fine be my guest. But tax cuts are supposed to go to the income group that is most likely to spend it so the circular economic flow can continue. This is basic macroeconomics. Any money that gets removed from the circular flow of economic activity prevents the overall economy from growing to its potential. An example of this is when money is saved instead of spent. But the more money that is spent, the more money that is out there to help businesses, especially those smaller ones.
When I say circular flow, this is what I mean:
The last time I wrote about this sort of thing, which was last spring, I was called a socialist. But quite the contrary. We are a consumption based economy. There are positives and negatives to that economic system, but that is what we are. The best way to help the economy through tax cuts is by giving tax cuts to individuals most likely to spend that money, not save it. And the tax cuts for the rich? Well, how about paying down part of the National Debt? A locked box doesn't sound like such a bad idea now, does it?
Fiscally speaking, there are two things voters need to remember heading into November: money doesn't grow on trees, and no Republican presidential administration has balanced the budget in more than 35 years.
Progressives often get labeled as big spenders. But as government reports show, federal spending is expected to , fittingly the largest increase since under Bush Sr, the last Republican administration.
But even more significant, the National Debt has grown 33%, or , since President Bush got into office. He did this with a Republican Congress that has been running on a fiscally conservative platform ever since 1980. And they're calling Democrats fiscally irresponsible?
In responding to the , Senator Kent Conrad (D-MT) took issue with the hypocrisy:
"This Republican leadership is in total gridlock -- refusing to act,refusing to compromise, and refusing to govern," said Senate Budgetranking member Kent Conrad, D-N.D.
The worst part about all this is that when today's GOP leadership finally does get exposed for their poor fiscal policies, none of them will be around to admit it. We're talking about long-term economic consequences that will impact my generation unless Congress can enact a balanced budget amendment.
It would be nice if the race that may decide the fate of the U.S. Senate actually came down to raw facts, not fear mongering supplied by the major GOP donors. Political analysts are forecasting that the Missouri Senate race will go right down to the wire. The latest puts Democratic challenger Claire McCaskill slightly ahead of Republican incumbent Jim Talent 47% to 46%. shows Talent barely in the lead. The two agreed today to square off in an that will be televised statewide.
The national mood seems to be focused almost squarely on the Iraq war. But in some Senate races such as this one, voters are paying much more attention to where the candidates stand on bread-and-butter issues. In other words, which candidate -- Claire McCaskill or Jim Talent -- is going to stick their neck out for working class Missourians? If you believe the GOP's negative ads, such as the one that , then the race should be about even. But if you look at the raw facts, then by all means it's not even a contest.
Jim Talent to permanently repeal the estate tax, which only affects the state's . In , Talent voted no on a measure that would have repealed a tax cut for companies shipping jobs overseas. In that , he also vehemently opposed legislation aimed at eliminating $11 billion worth of corporate tax loopholes, and the money saved would then go towards our childrens' education. Apparently, Talent didn't like that idea.
McCaskill, on the other hand, has unveiled a plan in recent days to that goes towards college tuition, first-time home buyers, and parents currently struggling with the alarmingly high cost of child-care expenses.
Specifically on the issues of health care, the two are complete opposites. the U.S. government to negotiate with the drug companies so we can bring down Rx prices for seniors. She also wants it to be legal for all Americans to import low-cost medication into the country if they have to. Talent, however, in , voted against negotiating with the drug companies. Just , he voted to block a measure that would have raised the Medicaid rebate for generic drugs from 11% to 17%. Two years earlier, Talent was given a by the American Public Health Association. McCaskill, as soon as she gets into the U.S. Senate, wants to lobby for . So again, the differences between the two could not be more obvious.
Both candidates believe in fiscal responsibility. However, when federal money is spent, they have completely different priorities. Talent has shown by his votes that he wants federal spending aimed at funding tax cuts for the wealthy -- such as loopholes for companies that ship American jobs oversees, and added estate tax cuts for millionaires. McCaskill would rather have the wealthy pay their fair share of taxes too, and have that money be used to help balance the budget, fully fund health care and education, and give working families tax credits to help win the war against the high cost of living.
In November, the choice is quite clear. If you pay attention to all the negative ads on the part of the GOP establishment you might be a little conflicted, and rightfully so. Many of these ads are by powerful drug companies and big donors with ties to Jack Abramoff. But if you look at the two candidates' individual records and their plans to stand up for Missourians in the future, then casting your vote in what will be a very close election won't be as difficult. --------------------------------------------------- Other sites blogging about the Missouri Senate race: , , , , , , , .
With the prominence of the Iraq war, gas prices and all the Congressional scandals putting economic issues on the back-burner, people tend to forget that the latest Census Bureau numbers spell trouble for the middle class. The number of uninsured is at an all-time high.
Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities, of these numbers just released two days ago:
“It is sobering that 5.4 million morepeople lacked health insurance in 2005 than in the recession year of2001, primarily because of the erosion of employer-based insurance.â€
Census data show that 46.6 millionAmericans were uninsured in 2005, an increase of 1.3 million from thenumber of uninsured in 2004 (45.3 million). The percentage who areuninsured rose from 15.6 percent in 2004 to 15.9 percent in 2005. Thenumber of children who are uninsured rose from 7.9 million in 2004 to8.3 million in 2005.
Any effort by John Kerry, John Edwards or any other Democrat to tackle this issue has been labeled as . Even though foreign policy seems to trump every other issue now, middle class families want to hear the Democrats discuss the issue of health care a lot more. This is a winning issue.
On the macro level, the Administration can tout the economy all they want. Productivity is increasing. But on the micro level, the middle class is struggling. New numbers show that real wages (inflation adjusted) are not rising at the same rate as productivity. This throws coal on the notion that productivity on the very top of the economic ladder automatically leads to higher wages for all. Since 2003, median wages have declined by 2%.
has more:
The median hourly wage for American workers has declined 2 percentsince 2003, after factoring in inflation. The drop has been especiallynotable, economists say, because productivity — the amount that anaverage worker produces in an hour and the basic wellspring of anation’s living standards — has risen steadily over the same period.
As a result, wages and salaries now make up the lowest share of thenation’s gross domestic product since the government began recordingthe data in 1947, while corporate profits have climbed to their highestshare since the 1960’s. UBS, the investment bank, recently described the current period as “the golden era of profitability.â€
In other words, American workers are getting paid less for getting more work done. The technology is there, and the effort is there. As far as the wages are concerned, families are having a much harder time coping.
The Financial Times suggests that the drop in median wages can be attributed in part to the -- or outsourcing.
On the flip-side, claim that outsourcing actually increases median wages. hmm. --------------------------------------- Other sites blogging about this issue: , , , , , , , , , .
A report by the finds that if the cost of President Bush's tax cuts for the rich were not included in the 2006 White House budget, then the budget would be balanced.
Don't get me wrong: I have never been in favor of repealing all of the Bush tax cuts -- at least as far as the portion that goes to the middle class is concerned. However, I definitely would repeal at least one-third of the Bush tax cuts, which goes to the wealthiest 1% of the country. So what else would I cut from the budget? How about most of the Iraq war costs, which turn out to be . I would also cut the . That would be more than enough to balance the budget. Oh, if only Bill Clinton were around. --------------------------------------------------------- Other sites blogging about this issue: , , , , .
Oil prices surged today to $77 a barrel following BP's announcement that its . This like Southwest Airlines Union Pacific railroad to fall sharply.
For all those supply-side economics who contend that the President has almost no control over the economy, just look at the affect that our petroleum-dependent energy policy is having on the airline industry. The is that if you have airline points, you had better cash them in now because a number of major airlines are about to declare bankruptcy.
Back to the oil pipeline malfunction. This , who think that BP and other oil companies, which just finished making last quarter, can afford to clean and maintain their oil-pumping infrastructure. Hearings may be held in the House:
"It is appalling that BP let this critical pipelinedeteriorate to the point that a major production shutdown wasnecessary," said Rep. John Dingell,the top-ranking Democrat onthe House Energy and Commerce Committee, in a statement.
"The United States Congress has an obligation to holdhearings to determine what broke down here and what laws andregulations need to be improved to ensure problem pipelineslike these are found and fixed earlier," Dingell said.
Democratic Rep. Edward Markey, who also serves on the Housecommittee, said the shutdown reflects BP's chronicmismanagement of its U.S. drilling operations and that thecompany had been earning enough money to prevent the problem.
"With oil above $70 per barrel and BP making recordprofits, it can afford to properly clean and maintain itspipelines," Markey said in a statement.
The skyrocketing energy prices contributed to the record consumer borrowing in June. During that month, . Meanwhile back in oil land, executives are celebrating their .
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