While the bank issues have most recently taken over the public stage, it’s a good time to review the impact of Bush’s Socialism for the Rich and the huge budget deficits and debt he rolled up onto the general population as a result.
Republicans are constantly asserting they are the party of responsibility. The public now knows they are anything but. The truth is they are the Socialist Party of the Rich.
Look at the record. First, let’s consider that Bush rolled up more than $5 trillion in debt and handed it to Obama, along with the global economic crisis. A responsible President who, rightly or wrongly, decided to wage wars in Afghanistan and then Iraq, would have raised taxes in order to pay for these military operations. Bush not only didn’t do that, he decreased taxes and thus insured that a huge asset bubble in housing would emerge and then burst.
The most bankrupt aspect of America is the Republican party’s bankrupting adherence to a tax policy that has been shown conclusively not to work in any real sense. Any wealth created by avoiding the responsibility of paying for government turns out to be illusory. Smoke and mirrors leaving an unsuspecting public holding the bill.
And the damage from this irresponsibility has to be listed to understand its severity. Not only did Bush hand over to Obama an unecessary $5 trillion in debt but his tax policy amounted to Socialism for the Rich. The wealthiest Americans sucked up almost 6% more of the income produced during his 8 years in office. It wasn’t “trickle down” economics, it was “flow up” economics. As a result, the income disparity grew larger between the lower and middle income classes and the wealthy.
Not coincidentally, this income disparity eerily mirrors what happened during the 1920s as private wealth increased dramatically more than increases for labor during that decade as well. That growing disparity, many economists believe, was a main cause for the 1929 stock market crash and subsequent Great Depression of the 1930s.
In the 1920s an increasing concentration of wealth at the top was not recycled into productive investment, but instead drifted into stocks. Fast forward to today and it can be strongly argued that the same thing has happened, as an increasing concentration of wealth drifted into stock and mortgage backed securities and mortgage derivatives. In both eras the money was not invested in productive activity. In both eras the money just pumped up non-productive investments and built the inevitable bubble and an economic crash.
But there’s more. The flip side of Socialism for the Rich meant Bush didn’t address longterm infrastructure needs, nor the need for an efficient health system. How could he? He wasn’t even paying for what he did do. So he not only handed over $5 trillion in unecessary debt, he handed over a multitude of problems he neglected to address.
And that was before he handed over to Obama the world’s worst recession since the Great Depression.
Not surprisingly, the public at large sensed something had gone terribly wrong and elected a Democrat to the Presidency and also followed that up by electing large Democrat majorities in both houses of Congress. For the Democrats, the admonishment of “Be careful what you wish for,” rings very true. Now the Democrats, crippled by irresponsible debt, have to use debt to stimulate an economy flat on its back, while simultaneously starting the necessary structural improvement for the next economy.
If you want to see the scope of work that needs to be done, visit the White House website here.
What Obama first needs to do, other than what he’s already done, is to rollback Bush’s Socialism for the Rich program by restoring tax rates to pre-Bush levels. With the leverage Obama needs to use now to mitigate a global recession, restoring some sanity to the tax system is only responsible.
If socialism is going to exist, it should exist for labor, not the rich. Under Bush, socialism existed to build a moat around the wealthy. That’s a perversion of socialism. Socialism is simply a philosophy that a country has certain social obligations to its citizens. Universal Health Care is a good example of one of those social obligations. A caring nation doesn’t tolerate the routine cruelty of 40 million citizens not having health care, for example.
Another legitimate social goal of government is to enable and fund the nation’s various infrastructures. This goal helps private wealth invest in productive activities. And this productive investment employs labor, which avoids the income disparity gaps that helped create the Great Depression as well as the current problems.
It can all be done, of course. It will take time and Obama will have to present realistic expectations. He will have to be positive, but also display a determination that overcomes short term doubt. He has the problems identified accurately, something Bush never got around to doing. So that’s a big plus. You have to know where your going to get there.
The sooner he explains and unwinds Bush’s Socialism for the Rich, the closer he’ll be to success in all his endeavors.