Mar 2009
GOP Wrong About Government Spending
An interesting story appeared on NPR today regarding the new Obama administration budget and the Republican response that has been generated. The full article can be read here: http://www.npr.org/templates/story/story.php?storyId=102410826
Here are some excerpts from the article that I would like to comment on:
“While President Obama's proposed budget rolls through the House and Senate, Wisconsin Republican Rep. Paul Ryan is one of the key lawmakers putting together an alternative plan.
As the top Republican on the House Budget Committee, he will be the one to deliver that plan to the House floor next week. On Thursday, House Republicans released an 18-page pamphlet, "The Republican Road to Recovery," which outlines their break with the president's budget goals.
"We don't think it's right to impose a $1.9 trillion tax increase on our economy during a recession, so we're not going to raise taxes," Ryan tells NPR's Renee Montagne. "No. 2, we don't think it's right to have a huge slew of borrowing — they're doubling our national debt in five and half years, tripling it in just over 10 years. So we think we need to focus on controlling spending and reforming government...
Ryan has referred to the budget plan as "the third and great final wave of government expansion, building on the Great Society and the New Deal." He says there's "probably truth" to the idea that some Americans might think comparisons to the New Deal are good thing — "because that's what President Obama is saying about his budget — that's what the administration is saying is that this is the most sweeping and transformative budget since the New Deal. They probably believe that that's what people want."
But Ryan says unemployment during the New Deal ranged from 12 to 25 percent. "Henry Morgenthau, FDR's Treasury secretary, came to the Ways and Means Committee at the end of that period and said, 'This was a disaster.' It didn't work. We borrowed so much money; we ran up the debt. We didn't get out of the Depression until World War II came along."...”
First of all, I commend the Republican Congressman for at least taking the time to come up with a proposal for consideration as opposed to just objecting and not offering anything in return. This is how government is supposed to work. We can all agree that we don't always agree, but if you are going to be in opposition to the majority then offer a viable plan that offers a different solution. The majority must also be willing to allow the minority to speak and to hear their ideas. If they do not, then that is just as bad.
That said, however, the information Mr. Ryan presents regarding the Great Depression is not completely accurate. Based upon my own research of the subject here is what I've learned.
Unemployment hit a high of 25% before the New Deal was implemented by the FDR administration. Looking at the historical economic data of the period, right after the implementation of the New Deal, unemployment rates began to fall and the Gross National Product of the Country immediately went from a steep downward trend to spiking upward. Unemployment was reduced down to around 12%, or was cut in half. While 12% is still very high, how can anyone say that cutting unemployment in half is not successful? How can growth in GDP not be considered successful? Unemployment leveled up to around 12% at the start of World War II and by the end of the war the country was out of the depression and unemployment was around 3%.
I always laugh when I hear fiscal conservatives like Ryan dismiss the idea of the government spending money during hard economic times as "not necessary" and that it "doesn't work" and then proceed to try and use the example of the New Deal program and the start of the war as proof. Both instances prove the exact opposite. Whether you are talking about the New Deal program or whether you are talking about the onset of World War II, the net result of both of these events was INCREASED government spending and that's what ended the depression. Whether the government is spending money building dams, roads or buildings to put people to work, or whether they are building tanks, airplanes and munitions and training millions of soldiers to fight a war, is completely irrelevant; it is still government spending and that is what ended the Great Depression. So, there is absolutely no logic to the argument to say the New Deal didn't end the depression - World War II did. What's the difference?
Also, most economists agree that the New Deal would've been even more successful if not for one interesting point. FDR's treasury secretary would not allow the funding for the New Deal programs in the regular budget. Instead, the spending came out of an emergency spending budget and during the entire implementation of the New Deal the FDR administration was attempting to also balance the budget at the behest of the Treasury Secretary. Instead of focusing 100% on the current need, others were forcing pressure that helped negate some of the effects of the programs. Morgenthau was opposed to the New Deal from the very beginning and so it is not surprising that he would say negative things about it, even in the light of the economic data that showed something entirely different. Had Morgenthau not been involved, it is possible the New Deal might have ended the Depression before the start of the war.
For Ryan and the GOP to stand up now and oppose the idea of raising much needed revenues by modest tax increases on the wealthiest people in the country is beyond reasonable and is irresponsible. The fact is, regardless of your politics, it was the government that came to the rescue to save our stock market from this current financial meltdown. It will be the strength of our government that will continue to help pull us out and it will be the strength of our government that will formulate the much needed regulatory checks and balances to keep things in sync. We must reject as false the ideology that the markets can regulate themselves and that the government should be continually reduced and downsized. This has been the GOP plan all along and is the primary basis of their continued insistence of permanent tax cuts and the gutting of our regulatory systems. Given the current wars, the continued financial involvement needed due to the corruption on Wall Street, and the immediate need for health care reform (data now shows that 4 in 5 people without health care insurance either have jobs or in families who have jobs - yet they are still uninsured), the idea of asking the wealthiest among us to contribute more to the common good for the country and to their fellow citizen is not asking too much. People will still be wealthy and very well off even after the modest tax increases. No matter what alternative plan the GOP comes up with, I doubt that it can muster the necessary resources needed to keep this ship afloat. I think we can all agree that some spending will have to be curtailed, but we must also wake up and realize that additional monies will also need to be raised. Those are the harsh realities we need to come to understand. It is time to leave strict ideologies behind and to embrace pragmatic solutions that will keep our country and it’s people strong.
Here are some excerpts from the article that I would like to comment on:
“While President Obama's proposed budget rolls through the House and Senate, Wisconsin Republican Rep. Paul Ryan is one of the key lawmakers putting together an alternative plan.
As the top Republican on the House Budget Committee, he will be the one to deliver that plan to the House floor next week. On Thursday, House Republicans released an 18-page pamphlet, "The Republican Road to Recovery," which outlines their break with the president's budget goals.
"We don't think it's right to impose a $1.9 trillion tax increase on our economy during a recession, so we're not going to raise taxes," Ryan tells NPR's Renee Montagne. "No. 2, we don't think it's right to have a huge slew of borrowing — they're doubling our national debt in five and half years, tripling it in just over 10 years. So we think we need to focus on controlling spending and reforming government...
Ryan has referred to the budget plan as "the third and great final wave of government expansion, building on the Great Society and the New Deal." He says there's "probably truth" to the idea that some Americans might think comparisons to the New Deal are good thing — "because that's what President Obama is saying about his budget — that's what the administration is saying is that this is the most sweeping and transformative budget since the New Deal. They probably believe that that's what people want."
But Ryan says unemployment during the New Deal ranged from 12 to 25 percent. "Henry Morgenthau, FDR's Treasury secretary, came to the Ways and Means Committee at the end of that period and said, 'This was a disaster.' It didn't work. We borrowed so much money; we ran up the debt. We didn't get out of the Depression until World War II came along."...”
First of all, I commend the Republican Congressman for at least taking the time to come up with a proposal for consideration as opposed to just objecting and not offering anything in return. This is how government is supposed to work. We can all agree that we don't always agree, but if you are going to be in opposition to the majority then offer a viable plan that offers a different solution. The majority must also be willing to allow the minority to speak and to hear their ideas. If they do not, then that is just as bad.
That said, however, the information Mr. Ryan presents regarding the Great Depression is not completely accurate. Based upon my own research of the subject here is what I've learned.
Unemployment hit a high of 25% before the New Deal was implemented by the FDR administration. Looking at the historical economic data of the period, right after the implementation of the New Deal, unemployment rates began to fall and the Gross National Product of the Country immediately went from a steep downward trend to spiking upward. Unemployment was reduced down to around 12%, or was cut in half. While 12% is still very high, how can anyone say that cutting unemployment in half is not successful? How can growth in GDP not be considered successful? Unemployment leveled up to around 12% at the start of World War II and by the end of the war the country was out of the depression and unemployment was around 3%.
I always laugh when I hear fiscal conservatives like Ryan dismiss the idea of the government spending money during hard economic times as "not necessary" and that it "doesn't work" and then proceed to try and use the example of the New Deal program and the start of the war as proof. Both instances prove the exact opposite. Whether you are talking about the New Deal program or whether you are talking about the onset of World War II, the net result of both of these events was INCREASED government spending and that's what ended the depression. Whether the government is spending money building dams, roads or buildings to put people to work, or whether they are building tanks, airplanes and munitions and training millions of soldiers to fight a war, is completely irrelevant; it is still government spending and that is what ended the Great Depression. So, there is absolutely no logic to the argument to say the New Deal didn't end the depression - World War II did. What's the difference?
Also, most economists agree that the New Deal would've been even more successful if not for one interesting point. FDR's treasury secretary would not allow the funding for the New Deal programs in the regular budget. Instead, the spending came out of an emergency spending budget and during the entire implementation of the New Deal the FDR administration was attempting to also balance the budget at the behest of the Treasury Secretary. Instead of focusing 100% on the current need, others were forcing pressure that helped negate some of the effects of the programs. Morgenthau was opposed to the New Deal from the very beginning and so it is not surprising that he would say negative things about it, even in the light of the economic data that showed something entirely different. Had Morgenthau not been involved, it is possible the New Deal might have ended the Depression before the start of the war.
For Ryan and the GOP to stand up now and oppose the idea of raising much needed revenues by modest tax increases on the wealthiest people in the country is beyond reasonable and is irresponsible. The fact is, regardless of your politics, it was the government that came to the rescue to save our stock market from this current financial meltdown. It will be the strength of our government that will continue to help pull us out and it will be the strength of our government that will formulate the much needed regulatory checks and balances to keep things in sync. We must reject as false the ideology that the markets can regulate themselves and that the government should be continually reduced and downsized. This has been the GOP plan all along and is the primary basis of their continued insistence of permanent tax cuts and the gutting of our regulatory systems. Given the current wars, the continued financial involvement needed due to the corruption on Wall Street, and the immediate need for health care reform (data now shows that 4 in 5 people without health care insurance either have jobs or in families who have jobs - yet they are still uninsured), the idea of asking the wealthiest among us to contribute more to the common good for the country and to their fellow citizen is not asking too much. People will still be wealthy and very well off even after the modest tax increases. No matter what alternative plan the GOP comes up with, I doubt that it can muster the necessary resources needed to keep this ship afloat. I think we can all agree that some spending will have to be curtailed, but we must also wake up and realize that additional monies will also need to be raised. Those are the harsh realities we need to come to understand. It is time to leave strict ideologies behind and to embrace pragmatic solutions that will keep our country and it’s people strong.
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My Letter To President Obama
As many of you will know, AIG announced this weekend that they were going to go ahead and payout hundreds of millions of dollars in taxpayer funds as bonuses to some of their employees. They are doing this in-spite of the tremendous outcry from the public and their demands that these bonuses not be paid. AIG has chosen to ignore the will of the people who have given this money and are continuing ahead with no regard to the outcry against this behavior. As a result, I have written to President Obama urging him to take whatever actions he may legally take to curtail this abuse of tax payer money. I encourage each of you to do the same. If you are currently doing business with AIG I would encourage you to cancel your business dealings with them. America should completely boycott this greedy, unethical and immoral corporation until it bleeds to death. We should also demand full repayment of ALL of the federal bail out money to be paid back to the US government where the money can be used to help those who are in desperate need of help. Please, do your part - this is important. You can write to President Obama at this link.
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President Obama:
I am writing to express my complete disgust and disapproval of how AIG is continuing with their plans to use the federal bailout money to pay their nefarious bonuses. I will keep this very brief and to the point. This angers me greatly and I fully expect you and Congress to do everything within your power to stop this misuse of our tax dollars. We are not idiots and we know that the funds that were given out were for the primary purpose of keeping people employed and getting the markets functioning again.
There is no way I can believe for a second the stories being proffered by AIG as the justification for this breach of trust. These are extraordinarily difficult times for millions of Americans who are struggling to survive. It is inexcusable and unconscionable for this kind of activity to be happening in front of our very eyes; not to mention what may be happening behind closed doors and unreported. Please, Mr. President, address this issue openly and publicly and do anything within your power to stop this abuse and misuse of the public funds that were given in good faith, but which are now being recklessly abused.
The change we seek will not be born easily and will not be wrested from the hands who desperately cling to the manacles of corruption. I am but one voice but I speak for tens of thousands who agree with me - please do what you can and please continue to address this issue with all other corporations and businesses who would seek to destroy the good will and the prosperity of the American people. Thank you for your time and thank you for having the courage and the decency to call these unethical actions shameful and wrong.
With all my support.
-TD3k
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President Obama:
I am writing to express my complete disgust and disapproval of how AIG is continuing with their plans to use the federal bailout money to pay their nefarious bonuses. I will keep this very brief and to the point. This angers me greatly and I fully expect you and Congress to do everything within your power to stop this misuse of our tax dollars. We are not idiots and we know that the funds that were given out were for the primary purpose of keeping people employed and getting the markets functioning again.
There is no way I can believe for a second the stories being proffered by AIG as the justification for this breach of trust. These are extraordinarily difficult times for millions of Americans who are struggling to survive. It is inexcusable and unconscionable for this kind of activity to be happening in front of our very eyes; not to mention what may be happening behind closed doors and unreported. Please, Mr. President, address this issue openly and publicly and do anything within your power to stop this abuse and misuse of the public funds that were given in good faith, but which are now being recklessly abused.
The change we seek will not be born easily and will not be wrested from the hands who desperately cling to the manacles of corruption. I am but one voice but I speak for tens of thousands who agree with me - please do what you can and please continue to address this issue with all other corporations and businesses who would seek to destroy the good will and the prosperity of the American people. Thank you for your time and thank you for having the courage and the decency to call these unethical actions shameful and wrong.
With all my support.
-TD3k
Letter To The Texas Governor
Texas Governor Rick Perry announced on Thursday, March 12, 2009 that he would reject $555 million in federal stimulus money that would go to assist Texans who are unemployed and who had reached the end of their unemployment coverage. Perry said that such a move would require him to raise taxes on businesses to provide for additional funds when the stimulus money ran out. Perry is an outspoken critic of President Obama's economic recovery plan for the country and many feel that this move has more to do with political posturing than with any real threats posed to businesses. As I enter into my 17th week of unemployment, I was compelled to send an e-mail letter to Mr. Perry to share my thoughts with him and I now share with you. If you live in Texas and are as mad as I am, I encourage you to let your voice be heard. You can contact the Governor's office and leave your comments here.
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Gov. Perry:
I deeply condemn your unconscionable decision to reject the $555 million in federal stimulus money to help Texans with unemployment coverage. At such an extraordinarily difficult time for thousands of Texans who are struggling to deal with the worst economic conditions since the Great Depression, you have clearly shown that your interest in helping those who need assistance is secondary to your desire to score political points with your party and your narrow social conservative views. While I am sure you feel quite justified in your decision, I can tell you that the majority of Texans will disapprove of your selfish, uncaring actions. Given the fact that the TWC faces deficits as early as October and then possible insolvency, it is unethical and immoral for you to ignore such a pressing need for the sake of political expediency on your part. While you are trying to protect businesses from any additional expenditures, you seem to forget that the businesses have already protected themselves by letting their employees go and now no one is looking out for the working man. How convenient that the corporations and big businesses have such a champion as you to hold their hand and protect them from the threat of evil taxes. Quite honestly sir, you have no soul and no capacity for honest reasoning. Please, hear the appeal of the people and change course on this decision while you still can.
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Gov. Perry:
I deeply condemn your unconscionable decision to reject the $555 million in federal stimulus money to help Texans with unemployment coverage. At such an extraordinarily difficult time for thousands of Texans who are struggling to deal with the worst economic conditions since the Great Depression, you have clearly shown that your interest in helping those who need assistance is secondary to your desire to score political points with your party and your narrow social conservative views. While I am sure you feel quite justified in your decision, I can tell you that the majority of Texans will disapprove of your selfish, uncaring actions. Given the fact that the TWC faces deficits as early as October and then possible insolvency, it is unethical and immoral for you to ignore such a pressing need for the sake of political expediency on your part. While you are trying to protect businesses from any additional expenditures, you seem to forget that the businesses have already protected themselves by letting their employees go and now no one is looking out for the working man. How convenient that the corporations and big businesses have such a champion as you to hold their hand and protect them from the threat of evil taxes. Quite honestly sir, you have no soul and no capacity for honest reasoning. Please, hear the appeal of the people and change course on this decision while you still can.
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