Of Inconvenience and Truth

Robert Reich

Fmr. Secretary of Labor; Professor at Berkeley; Author, Aftershock: 'The Next Economy and America's Future'

The Republican Shakedown

You can't fight something with nothing.

You also can’t fight nothing with something. Similarly, You can’t fight everything with nothing, or something with everything. You also can’t fight Chris Cristie with anything, because that dude will Bruce Lee your ass.

But as long as Democrats refuse to talk about the almost unprecedented buildup of income, wealth, and power at the top

They refuse to not talk about it! I’ve tried to make them stop. I asked politely, then I asked forcefully, then I kidnapped Nancy Pelosi’s dog. That is, after all, the escalation process for conservative ire. The next step is tying an orphan to the railroad tracks. Does anyone else think the Democrats’ caricature of Republicans is a vaguely plagiarized synthesis of Snidely Whiplash and Bo Duke?

and the refusal of the super-rich

Maybe throw in some Gordon Gecko.

 to pay their fair share of the nation's bills --

It’s always fun to watch liberals squirm when you ask them to define “fair share.” Especially the rich ones. Sadly, the written medium is not fertile grounds for squirming.

Note to self: never use the words “fertile” and any variation of “squirm” in the same sentence ever again.

Republicans will convince people

Well that’s kind of fatalistic, coming from the opposition. Come on, buddy. Buck up.

it's all about government and unions.

Goodness, no. We believe there’s a hell of a lot more damage done than that to government viability. It’s certainly a nice place to start, though.

Republicans claim to have a mandate from voters

That’s pretty much what a 60+ seat Congressional swing means. Also, try varying sentence structures.

for the showdowns and shutdowns they're launching.

They do. As a Republican supporter, let me say that I would be dreadfully disappointed if they hadn’t started this process. I wrote a column on election defining exactly what conservatives were expecting by voting for Republicans: conservatism.

Governors say they're not against unions but voters

They make a distinction between private and public sector unions. We all should.

have told them to cut costs, and unions are in the way.

True.

House Republicans say

Republicans will… Republicans claim… Governors say… House Republicans say…

This guy desperately needs a copy editor. Or a quick refresher-course from seventh grade English.

they're not seeking a government shutdown but standing on principle.

Also true. They were elected because they stood distinct from the President.

"Republicans' goal is to cut spending and reduce the size of government," says House leader John Boehner, "not to shut it down."

Word, Speaker Boehner. Word.

But if a shutdown is necessary to achieve the goal, so be it.

He didn’t say that, but also, word. The deficit is up to about 10% of GDP; The national debt is over 100% of GDP. Short of hyperinflation or organized default, there’s no other way out. We’re in it for the country, boys and girls.

The Republican message is bloated government is responsible for the lousy economy that most people continue to experience.

True.

Cut the bloat and jobs and wages will return.

Cut the taxes that fund the bloat. Then jobs and wages will return.

Nothing could be further from the truth,

That’s a pretty audacious claim, considering that the popularity of Keynesian economics has been on the wane for years now.

but for some reason Obama and the Democrats aren't responding with the truth.

You might as well start capitalizing “Truth.” You protect it with such fervor, while claiming the Republicans to be idolaters and heretics.

Their response is: We agree but you're going too far.

This is what happens when you get absolutely crushed at the ballot box. See: Republicans circa 2008. Exception: Rush Limbaugh. Humility is an opportunity for self-reflection..or some other vaguely inspiring platitude I read on a fortune cookie once.

Government employees should give up some more wages and benefits but don't take away their bargaining rights. Private-sector unionized workers should make more concessions but don't bust the unions. Non-defense discretionary spending should be cut but don't cut so much.

At least this time when he doesn’t vary his sentence structure, there’s at least an implied cadence to it. Still, it feels ticky-tack.

More to the substance of the issue at hand, the people of Wisconsin are already with the Governor. They elected him and he campaigned on this. Democrats had the opportunity to make this case to the American people—and tried mightily—throughout the first two years of the Obama Administration that spending is good for the economy. The Democrats failed miserable, not because they didn’t make the right speeches, but because the American people strenuously disagree.

Educated Americans see that government spending ballooned in the Great Depression, which probably prevented economic recovery before the late-30’s war-time boom. They see the effect of the stimulus package in the wake of the bubble of 2008 and see an economy whiling away in mediocrity. Meanwhile, they saw the tech bubble in 2000, in which many of the structural weaknesses of the US economy were exposed, coupled with the attacks of 9/11, and the economy recovered fairly quickly. For a laugh, go back to 2004 and read what liberals were saying about that “recession.”

In the face of showdowns and shutdowns, the "you're right but you're going too far" response doesn't hack it.

Neither does the “I know the people elected you in a sweeping landslide of an election, but I still like to pretend they agree with me” response. I guess that’s why so many Democrats are fleeing to Illinois. It’s hard to respond to a Republican if you’re out of ear shot. OH! IDEA!!! Can we get the President to go back?

If Republicans are correct on principle, they're more likely to be seen as taking a strong principled stand than as going "too far."

It’s amazing how much I agree with this guy’s analysis while knowing with certainty that his conclusions are completely wrong.

If they're basically correct that the problem is too much government spending why not go as far as possible to cut the bloat?

Agreed.

The truth that Obama and Democrats must tell is government spending has absolutely nothing to do with high unemployment, declining wages, falling home prices, and all the other horribles

Horrible is an adjective, not a noun. Horribles doesn’t exist…except in French, which isn’t a real language anyways. Is now the wrong time to start pushing the “freedom fries” agenda again? That movement kicked ass.

that continue to haunt most Americans.

If the President acknowledged that spending and economic activity are not related, then he undercuts his own justification for a) the stimulus package, b) the second stimulus package, c) cash for clunkers and d) any future legislation directed at the economy that he may want to propose. In essence, you are asking the President to completely abandon an economic philosophy that he spent the first two years of his presidency propagating. More than that, you are asking the Democratic Party, by supporting that President, to reverse an economic philosophy that has guided the party for decades.  

Indeed, too little spending will prolong the horribles

Still not a noun, no matter how cute you try to make it.

for years more because there's not enough demand in the economy without it.

Here’s a fun exercise. If government spending spurs demand, and government taxes (which fund the spending) reduce supply, what is the net effect?

Answer: Inflation!

The truth is that while the proximate cause of America's economic plunge was Wall Street's excesses leading up to the crash of 2008,

Whenever liberals start blaming Wall Street, I start giving them the Charlie Brown teacher’s trombone voice in my head.

its underlying cause -- and the reason the economy continues to be lousy for most Americans -- is so much income and wealth have been going to the very top that the vast majority no longer has the purchasing power to lift the economy out of its doldrums.

…Wait, what?

American's aren't buying cars (they bought 17 million new cars in 2005, just 12 million last year). They're not buying homes (7.5 million in 2005, 4.6 million last year). They're not going to the malls (high-end retailers are booming

That’s awfully vague, especially considering that most high-end retailers with strong international brand recognition have made a concerted effort to monetize that brand equity in emerging markets recently, whereas low-end retailers--like Dillards, for example

 but Wal-Mart's

Or Wal-Mart—have to compete based on price with entrenched local retailers and rarely achieve the level of profitability abroad as they do domestically.

sales are down).

Only the richest 5 percent of Americans are back in the stores because their stock portfolios have soared.

Yes, but after they tanked. Who did the recession hit hardest? The wealthy. That’s because the very wealthy are generally risk-tolerant people. Considering that the stock market is a high-risk, high-return vehicle, a high-wealth investor was much more likely to hold Lehman Brothers stock than to hold gold.

The Dow Jones Industrial Average has doubled from its crisis low.

Which just goes to show you, getting out of the market at the trough of a recession is fucking stupid.

Wall Street pay is up to record levels. Total compensation and benefits at the 25 major Wall St firms had been $130 billion in 2007, before the crash; now it's close to $140 billion.

For those of you without your financial calculator handy, that’s a measly 2.5% annual increase. Snore.

But a strong recovery can't be built on the purchases of the richest 5 percent.

The truth is if the super-rich paid their fair share of taxes, government wouldn't be broke.

You could confiscate 100% of what every American produced in 2011 and do nothing but pay down the debt; it still wouldn’t get us out of the hole. Meanwhile, pretty much anyone with sense understands that government revenues, regardless of income tax rates, generally average out to 18.2% of GDP.

By making taxes confiscatory, the government encourages aggressive tax avoidance (legal), tax evasion (illegal) and outright fraud (Charlie Rangle).  Concurrently, it depresses growth by increasing hurdle rates for capital budgeting. This isn’t complicated stuff.

If Governor Scott Walker hadn't handed out tax breaks to corporations and the well-off, Wisconsin wouldn't be in a budget crisis.

The states are in an even more precarious position than the federal government. The hurdles for a business to up and move from Wisconsin to Texas are relatively minor. In fact, it’s a large part of why the south is demographically booming. Meanwhile, not too far from Madison, Chicago businesses are seeing lower tax rates across the border and a well-educated workforce in Madison. This is one reason Chicago’s population is roughly what it was in 1920.

If Washington hadn't extended the Bush tax cuts for the rich, eviscerated the estate tax, and created loopholes for private-equity and hedge-fund managers, the federal budget wouldn't look nearly as bad.

That happened about 12 weeks ago. The Bush tax cuts have had absolutely no impact on the actual debt or deficit yet, only on the projections of government revenues, which I will bet come out somewhere close to 18.2% of GDP anyways. The only difference is that by not increasing taxes in a recession, we now have a feint glimmer of hope to actually get the economy running and increase the base from which our government gets 18.2%

And if America had higher marginal tax rates and more tax brackets at the top -- for those raking in $1 million, $5 million, $15 million a year -- the budget would look even better.

No, but tax attorneys would certainly make more money.

We wouldn't be firing teachers

Why not?

or slashing Medicaid

We’re not. But I can make an excellent case for doing so without even invoking the deficit.

or hurting the most vulnerable members of our society.

Save it for denouncing child predators. A vulnerable sector of society implies a need for a paternalistic government. No thanks.

We wouldn't be in a tizzy over Social Security.

Again, no one has even mentioned Social Security, but I could make an excellent case for ending social security without even invoking the deficit.

We'd slow the rise in health care costs but we wouldn't cut Medicare.

How?

We'd cut defense spending

Why?

and lop off subsidies to giant agribusinesses

Also known as the “green economy.”

but we wouldn't view the government as our national nemesis.

So you’ll finally get serious about our foreign nemeses? Color me doubtful.

The final truth is as income and wealth have risen to the top, so has political power.

When you give politicians trillions of dollars to play with, it’s really no surprise that politics attracts money, is it? The solution? Give politicians less money to play with.

The reason all of this is proving so difficult to get across is the super-rich, such as the Koch brothers,

Name any other American billionaire, and there’s about an 80% chance he’s a Democrat. (That doesn’t even count George Soros)

have been using their billions to corrupt politics,

[Show your work]

hoodwink the public,

Seriously, show your work. This is approaching libel.

and enlarge and entrench their outsized fortunes.

What the hell is an “outsized” fortune?

They're bankrolling Republicans who are mounting showdowns and threatening shutdowns,

Just like George Soros bankrolled Democrats that mounted healthcare showdowns and are likewise threatening shutdowns.

and who want the public to believe government spending is the problem.

It is.

They are behind the Republican shakedown.

A shakedown is theft. Who is stealing the money? What money? Where is it going? Who benefits financially? It seems to me that the assumption that the rich are stealing is predicated on the notion that their income is property of the state in the first place. That assumption can only mean that you support—implicitly or explicitly—the nationalization of the accumulated wealth of the bourgeoisie. That’s not even socialism; that’s flat-out Communism.

These are the truths that Democrats must start telling, and soon.

I believe in Truth, the Father almighty, creator of utopian promise.

I believe in Innuendo, his only Son, our Lord.

He was conceived by usurped legacy of Deistic Jefferson, and born of the hippie commune.

He suffered under Ronald Reagan, was crucified, died, and was buried.

He descended to the dead. On the twelfth year, he rose again.

He ascended into heaven, and was seated in William Jefferson Clinton’s right hand (which on alternating Saturdays held the proverbial sticky cigar).

He will come again to judge the living and the dead.

I believe in the usurped legacy of Deistic Jefferson,

The Holy Church of Truthism, the communion of the Congressional Progressive Caucus,

The resurrection of the Truth,

And miserable fealty to a backwards-ass ideology everlasting

Amen.

Otherwise the Republican shakedown may well succeed.

I guess I kind of shot my wad (sorry, once I make a Clinton reference, I can’t help myself) a little early with the Apostles Creed thing. So I should probably say something even awesomer to close this one out…BOOGIDY BOOGIDY BOO!

Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.