Tuesday, October 11, 2005

The Persistent Myth of “Harming the Economy”

We hear every time a finger is pointed at some tomfoolery such as the unfunded wars in Afghanistan and Iraq, that increasing taxes to finance those rather major military operations is impossible, because it would damage the economy. And yet, somehow we fought (and financed) the entire Second World War, Korean and Vietnamese wars, cheek to jowl with a booming economy.  We brought our boys home to heavily subsidized university degrees and had enough left to rebuild Europe and Japan.


In fact, the military today has become a major part of that sacrosanct economy that all public-spirited politicians require to boom unrelentingly.


In things monetary, raising interest rates a point is a shivery operation and much to be avoided in the event that it would irreparably harm the economy.  Alan Greenspan built an entire career out of raising or lowering his eyebrows to signal the comings and goings of various financial bogeymen.  The bank prime rate in October of 1999, when the economy was roaring, was 8.25%.  Today it’s 6.75% and everything except the housing industry is flat as a tabletop. Low rates haven't done a thing for mismanaged airline and auto industries.


Our president gave away a trillion and a half in tax breaks to the already-alarmingly-rich in this country, because to do otherwise would unnecessarily harm the economy. Yet the Dow-Jones Industrial Average of stocks stood at or around 10,000 in early 2001 and languishes there today, four years and all that dough later. I don’t know what the rich-and-famous did with that particular stocking-stuffer, but whatever it was, it didn’t raise Alan Greenspan’s eyebrow.  And now we’re told these tax breaks must be made permanent, lest we . . . you guessed it . . . harm the economy.


Gasoline costs are a perennial economy-harmer and in 1973 the country turned down its thermostats as the Saudi Royal Family became Public Enemy #1 and the Japanese marched on Detroit . . . all because of 55 cent gasoline.  Crude moved toward $40 a barrel, an outrageous price that would wreck the economy (harm was a later, kinder, gentler noun). It’s sixty-five bucks for a barrel of crude today and gasoline is at or around three dollars.  No one likes it, but everyone except the airlines is making the best of it and corporate profits across the board are surprisingly good.


Congress, your Congress and my Congress, assures us each and every year that raising the minimum wage above $5.15 an hour is just not possible and they’re sorry as they can be, but someone has to stand guard to make sure the economy is not damaged by runaway wages.  Jobs have run away, big time, under Washington’s sly thumb on the scale of tax policy.  But this most-contributed-to, entirely in-the-corporate-pocket Congress is proud of its slash-and-burn economic policies and by god, when the last job is off-shored, they won’t be criticized for letting it go at a living wage.


None of these bogeymen of economic harm, not a single one, has ever been shown to cause lasting damage to our national economy and yet there they are, continually thrown in our faces as if they were factual.  What has been shown to be damaging, is


  • Any dramatic surge in the national debt

  • Massive unexpected expenditures (wars and natural disasters), unfunded by taxes

  • Uncontrolled growth in social programs, particularly the health sector

  • Unaffordable university tuition and housing

  • Chaotic and unproductive primary schooling

  • Increased pressure on middle-class jobs, wages and security

  • A perception of government as self-serving and disinterested

Unfortunately, we are assailed by nearly all of these negative influences at a time when confidence in national leadership is below three citizens in ten.  Under 30%.


Incredibly, the Democratic party finds it opportunistic to crow about this sad state of affairs, when they are hip-deep in connivance themselves.  Harming the economy has become the cause celebre for a national legislature so thoroughly corrupted by money and power that neither party can claim moral high ground. 


If the Congress of the United States were a horse, we would be forced to shoot it.
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More about politics in America at my opinion columns web site.