The most pressing issue in America today is unemployment and jobs, not debt. Yet, somehow Washington has managed to get distracted and focus on the debt. President Bush's former economic speech writer David Frum said this on Thursday.
Intimately connected with all of this is a debate on who should foot the bill: the rich or the poor. Some have called this class warfare. I don't see a war on the middle class. The rich aren't getting together behind closed doors and scheming of ways to destroy the middle class. Something else is going on.
If there is a war on the middle class it is one we are waging on ourselves by adhering to ideology.
At least one recent letter to the editor has said that we don't get our way out of debt by spending more. That's certainly true, but that is not the point of government spending - creating jobs is. One could argue that government spending hasn't worked out too well, but someone else could argue that it staved off even higher unemployment. And it could be further argued that we have a lack of jobs because the private sector isn't investing profits - they are saving their profits to themselves - which is their right but we have to understand that it doesn't stimulate economic growth and create jobs. All the while, Republicans have been chanting that public investment "crowds out" private investment. They are missing a major lesson of Macroeconomics 101: public investment doesn't crowd out private investment in the short run; it does so in the long run.
In the wake of the economic collapse of 2008, the rich walked away with million dollar homes all paid for and plenty of reserves while the middle class lost homes.
Trickle down economics is a slogan based in wishful thinking, not middle class experience. There is no way to spin it: the rich are getting richer and the middle class is getting less of a share but not for a lack of working for it.
Government spending has led to increased public debt but we are nowhere near our highest levels of public debt as a percentage of gross domestic product, which is the measure that matters since it keeps the measure of debt relative and comparable over the course of time.
U.S. Senate Minority Leader Mitch McConnell, R-Ky., and Republicans say spending is the biggest problem. Do they have amnesia? What did House Majority Leader Eric Cantor, R-Va., do in 2003? He voted for an unnecessary war in Iraq that has added trillions to our debt. Where was Speaker of the House John Boehner, R-Ohio, when Bush passed the unfunded Medicare Prescription Drug, Improvement, and Modernization Act of 2003 into law that added hundreds of billions to our deficit? He was sitting smug in the Republican victory. Where were all the Republicans when they passed the Bush tax cuts that have compromised the middle class?
This debt crisis was completely predictable. On Sept. 20, I wrote "turn left, right? the deficit grows either way," and on Dec. 9 that the "deficit will soar again" if we extend the Bush tax cuts. The budget crisis was a completely predictable situation yet no one in D.C. did anything to prevent it. Now they just point fingers.
We spend $125 billion more each month than we take in. Is this because of spending or is it revenues? I have written many times that there are ways that local and state governments spend inefficiently but also consider that federal tax rates are at post-WWII and international lows. Also consider that government spending is tapering off - the ARRA (aka, "The Stimulus") is expiring and more funds won't be appropriated. Now consider that between 2001 and 2008 we raised the debt ceiling seven times from $5.9 trillion to $11.3 trillion; a $5.4 trillion or 90 percent increase. As a percent of GDP, increasing the debt ceiling isn't a big deal or anything we can't handle.
However, there is a movement that is trying to redefine what it means to be America pushed by ideological stewards who create a history that never was. We have seen this in Michelle Bachman and Sarah Palin, two who consistently botch U.S. history.
The middle class is being eviscerated. But I don't think there is a war on the middle class. I think there is a war in the middle class.
There is perhaps nothing more un-American than doing more for one's self than for others. If this is how our Founding Fathers acted, we would still be British. If this is how America's greatest generation acted, Europe would have fallen to the Nazis. The mindset "what's in it for me?" isn't the best America has to offer.
PAUL HEROUX of Attleboro is a contributing columnist. He is a graduate of the London School of Economics and the Harvard School of Government and can be reached at PaulHeroux.MPA@gmail.com.