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I respect and admire Professor Bill Black, which is why I am pleased by his recent column which parallels much of November 12th’s article: The one, very simple reason why Hillary lost.
Unfortunately, Black’s column misses one important point.
Here are some excerpts:
Hillary Clinton, during the closing 40 days of her campaign, showcased repeatedly her promise to assault the working class with continuous austerity.
The assault on the working class via austerity was such a core belief of the New Democrats that their candidate highlighted that assault even as the polls showed massive, intense rejection of her candidacy by the white working class.
These were the people who enthusiastically crowded Trump’s speeches. As we said on November 12,
“They were the Democratic base, though they didn’t realize it, and Trump was telling them what they wanted to hear.”
It is morally wrong, economically illiterate, and politically suicidal for the New Democrats to continue to assault the working class via austerity, “free trade” (sic) deals, and financial deregulation.
The only thing worse is to then insult the working class for reacting “badly” to being pummeled for decades by the Party that once defined itself as the party of working people.
We’ll never know how differently the politics would have played if Obama, instead of systematically echoing and giving credibility to all the arguments of the people who want to destroy him, had actually stood up for a different economic philosophy.
But we do know how his actual strategy has worked, and it hasn’t been a success.
We had said:
“The new Democrats forgot about their base. The Bill Clinton, Barack Obama, Hillary Clinton Democrats were not Democrats at all. They were Republicans in Democratic clothing.
“They were conservatives.
“They were the Bill Clinton who ran a federal surplus, thereby guaranteeing a recession that cost his base their jobs, and afterward asked for, and received $200,000 per speech.
“They were the Barack Obama who wanted a “Grand Bargain,” which included cuts to Social Security and Medicare and cuts to the overall budget, all of which would impact the working class far more than the idle rich, thereby widening the Gap between the rich and the rest.
“They were the Barack Obama who refused to prosecute, and still refuses to prosecute, any of the wealthy banksters who caused the Great Recession that took the homes, jobs, and savings from the Democratic base.”
The Democratic liberal base, composed of ordinary, working class, compassionate Americans, is far, far larger than is the Republican conservative base of the rich, the bigots, and the religious extremists.
This massive majority would have voted for an “LBJ” Hillary, but instead were offered an “Obama” Hillary
Bill Black said:
Ever since the birth of the New Democrats, their adherents have embraced austerity.
This act of mutual economic and political self-destruction has become so core to their identity that Hillary unhesitatingly made it one her most important closing pitches during the last 40 days of her campaign against Trump.
At the very moment when her pollsters were warning her that she could lose due to working class hostility, she chose to showcase her hostility to the working class by promising to inflict eight more years of austerity on them.
Despite intense criticism from progressives of her austerity threats, Paul Krugman never urged her publicly to promise to end austerity’s assault on the working class.
Similarly, no one on her official campaign team had the courage and strength to tell her to stop and reverse her position.
A November 14, 2016 Krugman column revealed the hold his past dogmas still had on him.
Eight years ago, as the world was plunging into financial crisis, I argued that we’d entered an economic realm in which “virtue is vice, caution is risky, and prudence is folly.”
Specifically, we’d stumbled into a situation in which bigger deficits and higher inflation were good things, not bad. And we’re still in that situation — not as strongly as we were, but we could still very much use more deficit spending.
Many economists have known this all along. But they have been ignored, partly because much of the political establishment has been obsessed with the evils of debt, partly because Republicans have been against anything the Obama administration proposes.
Krugman still does not understand sovereign money. A budget deficit for a government with a sovereign currency is not a moral issue. Budget surpluses are not a “virtue” and deficits are not a “vice.”
The economic issue is strictly pragmatic – what size budget deficit or surplus is best for the overall economy?
Bernie Sanders’ economic stimulus proposals were far superior to (Clinton’s) proposals.
The 2009 fiscal stimulus was far too small; the federal government had made a dire mistake in moving toward austerity in 2010 rather than increasing substantially the size of the stimulus package.
Krugman was out to defeat Bernie’s candidacy for the nomination. Had Bernie won that nomination he would now be President-elect.
Sanders was the one candidate for the nomination that embodied what Krugman said the Democratic Party desperately needed – ending the hold of “the political establishment obsessed with the evils of debt.”
Krugman has been unable yet to summon the integrity and courage to admit how badly he served the Nation and the millions of Americans that rejected that “political establishment.”
Except . . . Except, let’s not be too naive about Sanders. He didn’t tell the truth, either. In fact, he broadcast The Big Lie.
His signature “Medicare for All” proposal was to be “paid for” by taxes. He campaigned on the “the success of the Affordable Care Act,” that Rube Goldbergian plan that forces some Americans to pay the medical bills of other Americans.
Despite having Professor Stephanie Kelton on his team, and therefore understanding the truth, Sanders did not have the courage to explain why federal deficits are absolutely necessary for economic growth.
Nor did he have the courage to explain why federal taxes do not fund federal spending. He said:
GETTING HEALTH CARE SPENDING UNDER CONTROL
We outspend all other countries on the planet and our medical spending continues to grow faster than the rate of inflation. Creating a single, public insurance system will go a long way towards getting health care spending under control.
Bernie tacitly claimed that spending was a problem, that need to get “under control,” when in fact, more federal deficit spending benefits the entire economy.
When dollars are pumped into the economy (by paying doctors, hospitals and pharmaceutical companies) the economy is stimulated. Businesses that serve doctors, hospitals, and pharmaceutical companies prosper and hire more employees, whose increased income and spending benefits other businesses and employees.
That is how economies grow.
Sanders did not have the courage to say it. Instead, he perpetuated the myth of “unsustainable” deficits just as much as the Republicans did.
See for yourself. This was what Sanders said about his Medicare for All plan:
- A 6.2 percent income-based health care premium paid by employers.
- A 2.2 percent income-based premium paid by households.
- Progressive income tax rates.
- Taxing capital gains and dividends the same as income from work.
- Limit tax deductions for rich.
- The Responsible Estate Tax.
- Savings from health tax expenditures.
No, Bernie. The plan would not be “paid for” by taxes. Federal taxes do not fund federal spending. Stephanie Kelton knows that. And you know that, because Stephanie surely must have told you.
So despite Bill Black’s kind words, Sanders did not “end the hold of ‘the political establishment obsessed with the evils of debt.’” Sanders didn’t even try.
In fact, he strengthened that “hold” by incorporating it into his own plan.
Oh, somewhere in this favoured land the sun is shining bright,
The band is playing somewhere, and somewhere hearts are light;
And somewhere men are laughing, and somewhere children
But there is no joy in the middle class; mighty Sanders has struck out.
Rodger Malcolm Mitchell
The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.