Fix income inequality, fix the economy

[hvactec]

11/04/11

Until we reverse the trend toward inequality, the economy can’t be revived

The biggest question in America these days is how to revive the economy.

The biggest question among activists now occupying Wall Street and dozens of other cities is how to strike back against the nation’s almost unprecedented concentration of income, wealth, and political power in the top 1 percent.

The two questions are related. With so much income and wealth concentrated at the top, the vast middle class no longer has the purchasing power to buy what the economy is capable of producing. (People could pretend otherwise as long as they could treat their homes as ATMs, but those days are now gone.) The result is prolonged stagnation and high unemployment as far as the eye can see.

RELATED: Six reasons why America can't create jobs

Until we reverse the trend toward inequality, the economy can’t be revived.

But the biggest question in our nation’s capital right now has nothing to do with any of this. It’s whether Congress’s so-called “Supercommittee” – six Democrats and six Republicans charged with coming up with $1.2 trillion in budget savings — will reach agreement in time for the Congressional Budget Office to score its proposal, which must then be approved by Congress before Christmas recess in order to avoid an automatic $1.5 trillion in budget savings requiring major across-the-board cuts starting in 2013.

Have your eyes already glazed over?

Diffident Democrats on the Supercommittee have already signaled a willingness to cut Medicare, Social Security, and much else that Americans depend on. The deal is being held up by Regressive Republicans who won’t raise taxes on the rich – not even a tiny bit.

President Obama, meanwhile, is out on the stump trying to sell his “jobs bill” – which would, by the White House’s own estimate, create fewer than 2 million jobs. Yet 14 million people are out of work, and another 10 million are working part-time who’d rather have full-time jobs.

Republicans have already voted down his jobs bill anyway.

The disconnect between Washington and the rest of the nation hasn’t been this wide since the late 1960s.

read more Fix income inequality, fix the economy - CSMonitor.com

 

[waltky]

Obama gonna raise our taxes!...

Obama Presses Supercommittee to Do The 'Responsible Thing' -- Raise Taxes
November 14, 2011 WASHINGTON (AP) — Despite prodding from President Barack Obama, members of Congress' supercommittee concede no deal is in sight to meet their goal of $1.2 trillion or more in deficit savings over the next decade.

Instead, with only 10 days remaining until a Nov. 23 deadline, the panel is divided along partisan lines and Rep. James Clyburn, D-S.C., said Sunday the six committee members of his own party "have not coalesced around a plan." Despite the difficulties, Clyburn and Republicans on the deficit panel all said they haven't given up hope of a deal by the deadline. "But if this was easy, the president of the United States and the speaker of the House would have gotten it done themselves," said Rep Jeb Hensarling of Texas, the Republican chairman of the committee.

Obama mentioned his own unsuccessful negotiations with Speaker John Boehner in passing at a news conference in Hawaii on Sunday where he urged the members of the committee to show more flexibility. "It feels as if people continue to try to stick with their rigid positions rather than solve the problem," he said. "There's no magic formula. There are no magic beans that you can toss on the ground and suddenly a bunch of money grows on trees," Obama added. "We got to just go ahead and do the responsible thing." Despite some concessions, the two sides remain divided over the same basic issues that thwarted earlier deficit reduction efforts — finding a mutually agreeable blend of tax increases and cuts in the largest government benefit programs.

Democrats on the supercommittee say they are willing to make significant reductions in programs such as Social Security, Medicare and Medicaid only after Republicans agree to higher tax revenue, including a larger bite out of the income of the wealthy. Republicans say that the soaring deficits result from too much spending, and not from a shortage of revenue to the Treasury, and tax increases would crimp efforts to create jobs.

In an offer they said marked a significant concession, GOP members on the panel offered last week to raise taxes by $250 billion over a decade as part of an overhaul of the tax code that simultaneously would cut the top rate from 35 percent to 28 percent. Democrats swiftly rejected that as a tax cut for the wealthy in disguise, and separately jettisoned an earlier proposal that would have slowed the growth in cost of living increases under Social Security. There has been little, if any, indication of progress in the talks since then. Instead, officials in both parties seem to be positioning for political advantage in case the talks falter.

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See also:

Balanced Budget Amendment Without Spending Cap Will Lose GOP Senate Votes, Says Sen. Lee
November 14, 2011 - Sen. Mike Lee of Utah, who is the sponsor of a balanced budget amendment that caps spending at 18 percent of Gross Domestic Product and requires two-thirds majorities in both houses of Congress to increase taxes, says he believes that a balanced budget amendment that does not include those two provisions would lose Republican votes in the Senate.

As of now, all 47 Republican senators support Lee’s balanced budget amendment with its cap on spending and supermajority requirement for tax increases. The House Republican leadership, however, has not ruled out voting on a balanced budget amendment that does not cap spending as a percentage of GDP and does not require super majorities in both houses to increase taxes. Under the terms of the debt-limit deal negotiated in August between President Barack Obama and congressional Republican leaders, both houses of Congress must vote on a balanced budget amendment by the end of this year. However, the deal did not specify what type of balanced budget amendment Congress needed to consider.

“We’ve got 47 Republicans in the Senate,” Lee said in an interview with CNSNews.com's “Online With Terry Jeffrey.” “All 47 members of the Republican caucus in the Senate are behind a single proposal. And I’ll tell you, we could not have gotten that type of unanimity within the Republican caucus in the Senate without those provisions--without requiring a super majority to raise taxes and without a percentage-of-GDP cap. “So, I think it would be unwise, given that unanimous support that we’ve got there, for us to back away from those,” said Sen. Lee. “We don’t want as Republicans to negotiate against ourselves.”

Lee said that his version of the balanced budget amendment—with an 18-percent-of-GDP cap on federal spending and a two-thirds majority requirement for tax increases—is the only one with significant support in the Senate. “Currently, this is the only one in the senate that has garnered a significant number of votes anywhere close to 47,” said Lee. “So this needs to come up for a vote, this version of this bill. If people want to vote against that and then face their constituents, they’ll do it at their own peril.” Lee said he believes his amendment will win votes not only from the 47 Senate Republican who already support it, but also from some Senate Democrats. “I suspect we’ll get some Democrats as well because those Democrats will not want to face their constituents and say, ‘Sorry, I just can’t require Congress to spend no more than it takes in each year,’” said Lee.

Lee reiterated his belief that the balanced budget amendment would lose the support of some Senate Republicans if it was stripped of the spending cap and supermajority requirement. “I’m quite confident that we could not have gotten all 47 Republicans behind it if we had not had either of those provisions in there,” said Lee. Lee said that Senate Minority Leader Mitch McConnell (R.-Ky.) is committed to getting a vote on the type of balanced budget amendment Lee has sponsored with its spending cap and the supermajority requirement for tax increases. “Yes, and he’s committed to getting us a vote on that this year,” said Lee.

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[Katzndogz]

No one can fix that kind of envy.

 

[Wiseacre]

I don't think you can fix the economy by fixing income inequality first. If you're thinking of raising taxes that much, the economy is not going to improve and in fact is more likely to decline. You might not like it, but there it is. Fix the economy first.

 

[waltky]

Granny says Obama needs to dock their pay - den see how fast dey come to an agreement...

Panel's inability to cut debt deal reflects divide
21 Nov.`11 WASHINGTON – The failure of Congress' "supercommittee" to propose even one dollar in deficit reduction has left Capitol Hill without a strategy for tackling the nation's spiraling debt — and left several trillion-dollar spending and tax issues that must be resolved as soon as next month.

The Joint Select Committee on Deficit Reduction announced Monday it could not come up with the minimum $1.2 trillion of deficit reduction required under its mandate, much less the $4 trillion that deficit hawks said was necessary to help stabilize the finances of the U.S. government, whose debt has topped $15 trillion. The collapse of the 12-member bipartisan panel's negotiations rattled the financial markets and set the stage for mandatory cuts to defense and domestic programs that would begin in 2013 — after next year's presidential and congressional elections. It ensures that the fiscal debate that has paralyzed Washington — between Democrats who want to protect expensive social programs and increase revenue by raising taxes on the richest Americans; and Republicans who want to trim government and have steadfastly rejected tax increases — will be a fundamental choice confronting voters in 2012. For now, the panel's inability to reach a deal leaves Congress with a range of unfinished budget items that could have been part of a larger bargain over federal taxes and spending.

Social Security payroll tax cuts expire at the end of the year, meaning taxes could go up nearly $1,000 annually for someone who makes $50,000. More than 1 million unemployed workers could lose their jobless benefits beginning in January, when those benefits are scheduled to expire. Medicare reimbursement rates for doctors will be cut 27% unless Congress steps in by the end of the year, leaving many seniors without a doctor. And Congress has three weeks to pass nine spending bills to keep most of the federal government operating. The supercommittee was borne of the last legislative debt crisis in August, when Congress had to raise the federal debt limit beyond $14.3 trillion or risk default. As part of a compromise plan to cut about $1 trillion over 10 years, congressional leaders appointed the panel to come up with at least $1.2 trillion more in cuts. The plan came with a backup scenario: If the supercommittee failed to come up with those cuts, automatic across-the-board reductions would kick in, trimming $1.2 trillion over nine years starting in 2013. All areas of discretionary spending would be targeted equally.

The threat of the mandatory cuts wasn't strong enough to dislodge panel members from their entrenched positions. With a Wednesday deadline looming, the panel's demise appeared inevitable after a weekend of finger-pointing by both sides on Sunday talk shows. It became official in a 270-word statement from the supercommittee's co-chairs Monday afternoon. "After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline," Rep. Jeb Hensarling, R-Texas, and Sen. Patty Murray, D-Wash., said in their statement. The co-chairs spent most of the statement thanking committee members, staffers and "the American people for sharing thoughts and ideas and for providing support and good will as we worked to accomplish this difficult task."

Reactions began even before the supercommittee raised the white flag. The major stock indexes lost about 2% during Monday trading. Republican presidential candidates churned out statements blaming President Obama and reiterating their opposition to the supercommittee in the first place. Interest groups on both sides sighed with relief. Grover Norquist of the Americans for Tax Reform — the man many Democrats blame for the impasse because of his efforts to extract no-new-taxes pledges from Republican lawmakers — said no deal was "better than a tax hike or phony cuts." The American Association for Retired People called the failure "regrettable," but David Certner, the group's chief lobbyist, said no package was better one that included deep cuts to retiree health care. "We'd rather have a good package."

Obama: 'No easy off-ramps'

See also:

Dow Plunges 300 Points on U.S. Deficit Impasse, Euro Worries
11/21/11 - The major U.S. stock indices were down more than 2% Monday afternoon on the political stalemate over U.S. deficit cuts and lingering worries about European debt.

The Dow Jones Industrial Average fell 310 points, or 2.6%, at 11,487. The weakest blue-chip performers were Boeing, Caterpillar and Hewlett-Packard. The S&P 500, which dipped below 1200 for the first time since late October, was losing 28 points, or 2.3%, at 1188. Technical analysts are looking for the S&P 500 to hold the 1180 level after breaking through several key technical levels in the prior week. Industrials, energy and financial stocks were leading the index lower. The tech-heavy Nasdaq shed 61 points, or 2.4%, to 2511. "In times of great uncertainty traders tend to focus more on charts and technicals," said Lou Brien, a market strategist at DRW Trading. "The S&P has fallen under more technical support and the charts seem to suggest that 1183 is the next key level to the downside."

On top of consternation about Europe's debt crisis, the inability of U.S. lawmakers to come to a compromise on deficit cuts was also pressuring stocks. With two hours left in the session, more than 2.23 billion shares had traded on the New York Stock Exchange and more than 1.21 billion on the Nasdaq. The congressional panel tasked with cutting the U.S. deficit by more than $1 trillion over the next decade is deadlocked over taxes. The so-called super committee is widely expected to announce a failure to reach its budget-saving goal on Monday, ahead of its Nov. 23 deadline for agreeing on a plan, according to Bloomberg. "There was no great news from Europe over the weekend. The fact that the budget committee is throwing in the towel already suggests lawmakers weren't even close," said Uri Landesman, president of New York-based hedge fund Platinum Partners. Landesman added that consumer confidence and hope for possible stimulus from the Federal Reserve are some of the "last weapons" for the market.

The super committee's impasse is setting a downbeat tone for the shortened Thanksgiving week. Still, the news is hardly a surprise as many investors had low expectations that lawmakers would find a way to cooperate. Furthermore, it is unclear what immediate effect the super committee's failure will have on the U.S. heading into the election year. "The key issue for the U.S. public finances is the plunge and subsequent weak recovery in tax revenues," according to Ian Shepherdson, economist with High Frequency Economics. "Stronger growth would change that picture quite quickly regardless of what the Super Committee does or does not do."

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[editec]

I can't see any single government edict or policy that can "fix" that problem.

To do that we'd need tariffs and unions.

That is clearly not the direction this nation is headed.

 

[Wiseacre]

I can't see any single government edict or policy that can "fix" that problem.

To do that we'd need tariffs and unions.

That is clearly not the direction this nation is headed.

Tariffs and unions? God save us all, you've just listed the perfect way to economic suicide.

 

[Brutus]

With so much income and wealth concentrated at the top,

just an Marxist idiotic class warfare liberal lie. How can it be concentrated at the top when Federal local and state government spends $10 trillion a year largely on the poor?

The poor don't need or have wealth in the bank merely because the liberal government gives them 10 trillion a year in exchange for voting liberal!!

A liberal will keep telling the lie!

 

[Flopper]

There is a focus on inequity because 50 million+ are economically hurting. To rub salt into the wounds, the top 1% has had an economic recovery while the bottom 20% have sunk into an economic graveyard. As the economy improves as it will eventually, the income disparity will be less of an issue. That doesn't mean it's going away.

There is probably nothing that would do more for the economy than breaking the political stalemate. Frankly, I don't think it makes much difference whether an agreement favors the right or left. The important issue is that there be agreement.

 

[expat_panama]

There is a focus on inequity because 50 million+ are economically hurting....

No, that's not the reason for this thread's focus. Income inequality it a Marxist gimmick to blame market achievers for harm caused by Marxists.

In open markets prices are set by free people making trades, and the process leads to prosperity. Living people are diverse and that makes prices become unequal when situations are unequal. This applies to both prices for products as well as for labor. Marxists want to steal the wealth that market workers create and imagine that they can make a workers paradise where labor and other prices are equal.

It's crazy. Not every product is equal and not every worker shows up on time and works hard. People are different so incomes have to be unequal.

 

[Two Thumbs]

You would have to be dummer then billy clinton to think raising taxes during a recession is a good idea.

since even he knows you have to be dumb as dirt to do so.

 

[CrusaderFrank]

Marxism: fails every time it's tried. Guaranteed 100% fail rate

But that hasn't stopped the Democrat Party and American Left from placing themselves to the left of the ChiComs and Vietnamese

 

[editec]

I can't see any single government edict or policy that can "fix" that problem.

To do that we'd need tariffs and unions.

That is clearly not the direction this nation is headed.

Tariffs and unions? God save us all, you've just listed the perfect way to economic suicide.

You may find this surprising...

If the racheting down from our Free trade policies is done as foolishly as the FREE TRADE policies have already implemented, I am complete agreeement with you.

 

[EdwardBaiamonte]

There is probably nothing that would do more for the economy than breaking the political stalemate. Frankly, I don't think it makes much difference whether an agreement favors the right or left. The important issue is that there be agreement.

That of course is perfectly absurd! A Republican right wing economy produces vast riches for all while a left liberal socialist economy does the exact opposite. It is apparent to the whole world that the moment Red China turned sharply Republican capitalist it started producing vast, well distributed wealth. Where have you been?

 

[Flopper]

There is a focus on inequity because 50 million+ are economically hurting....

No, that's not the reason for this thread's focus. Income inequality it a Marxist gimmick to blame market achievers for harm caused by Marxists.

In open markets prices are set by free people making trades, and the process leads to prosperity. Living people are diverse and that makes prices become unequal when situations are unequal. This applies to both prices for products as well as for labor. Marxists want to steal the wealth that market workers create and imagine that they can make a workers paradise where labor and other prices are equal.

It's crazy. Not every product is equal and not every worker shows up on time and works hard. People are different so incomes have to be unequal.

The issue is not that there is an income gap. There has always been an income gap. The issue is the gap is growing and that threatens the middle class which is the backbone of our society.

 

[EdwardBaiamonte]

The issue is the gap is growing and that threatens the middle class which is the backbone of our society.

Of course the gap will be growing thanks to liberal policies:

1) liberal unions have driven 20 million jobs overseas

2) liberal open borders have taken another 10 million

3) liberal deficits mean China and Japan can buy our debt not our goods and services, etc etc.

 

[Katzndogz]

If it is the divide alone, that is causing breaking the back of the middle class, then it cannot be blamed alone on the rich getting richer. The rich are in the unenviable position of having their wealth taken from them in order to pay people to be poor. The poor are growing since it is more attractive to do nothing and have your needs met than to spend your time working to meet your own needs. Poverty must be made less attractive and that will do more to end income inequality than anything else.

 

[Flopper]

There is probably nothing that would do more for the economy than breaking the political stalemate. Frankly, I don't think it makes much difference whether an agreement favors the right or left. The important issue is that there be agreement.

That of course is perfectly absurd! A Republican right wing economy produces vast riches for all while a left liberal socialist economy does the exact opposite. It is apparent to the whole world that the moment Red China turned sharply Republican capitalist it started producing vast, well distributed wealth. Where have you been?

If Republicans captured all three houses, policy would swing right. As opposition grew, as it always does against the party in power, the pendulum would swing left.

In 30 of last 50 years, control of government has been shared by the two parties. In most of these years, the parties have found common ground and have passed meaningful legislation. The stalemate is just not acceptable. If the two parties can not work together the government will move in one direction for few years, then reverse it's course and move in the opposite direction, and 60% of the time it will accomplish nothing. History tells us that ineffective forms of government are replaced by stronger and more centralized government.

 

[EdwardBaiamonte]

Poverty must be made less attractive and that will do more to end income inequality than anything else.

Liberals complain about the wealth gap but fail to point out that you can't have much wealth to collect the $10 trillion or so the poor get each year from state local and Federal government.

Liberals make no wealth very very attractive indeed.

 

[Katzndogz]

It seems like liberals have some idea, some concept, that they can force productive people to work and provide them with everything they want. They will be able to do this through some sort of force of numbers. Some intimidation by being overwhelming. Hence the 99%.

That's pretty stupid.