Down with the Bah Humbug of Taxes, Surpluses, Spending, and Deficits, up with What We Need and Can Do


The flagrantly unjust and

harmful policies for taxes, governmental spending and real and imagined

surpluses in place or on their way had their beginnings in the last years of

Carter’s presidency — prodded and facilitated by what Richard Du Boff termed

“the corporate counter-attack,” against unions and decent social policies. In

the ensuing quarter century, governments at all levels have become dominated by

GOP and Democratic conservatives, a domination achieved by a public effectively

taught (in Paul Baran’s memorable phrasing) “to want what they don’t need, and

not to want what they do.”

Some of what we do need

from governmental policy was first effected late in the depression of the 1930s,

and both broadened and deepened in the Fifties and Sixties. The policies were

reformist, not radical; and/but they helped to meet some deep needs of the

people and the economy. That it took a depression, a world war and a Cold War to

make such good sense possible is a severe indictment of our Right-skewed

politics, as is the fact that the West Europeans pursued such reforms much

further, even though it has always been easier for us to do so.

The nature and importance

of those policies may be understood by the reminder of where matters stood in

the USA in 1935, as the “second” New Deal began: the USA had NO unemployment

insurance, NO provisions for the old, survivors, or the disabled, NO laws

against child labor, NO minimum wage or maximum hours, NO Medicare or Medicaid

or the social benefits (pensions, paid vacations, health care) paid wholly or

partially by employers, NO environmental laws, NO subsidization of low-cost

housing, NO educational policies to counter the problems of low-income parents

and children — none of those (among other) policies essential to a safe and

decent society, and to which we became accustomed (as we also became politically

lazy and socially indifferent: just what Dr. Capitalism wants).

What passes for economic

wisdom today is frighteningly reminiscent of the 1920s — as is, in many ways,

the behavior of the economy; then, as now, a laissez-faire set of guiding

principles which views governmental intervention for social well-being as it

would child molestation — a viewpoint joined in and propagated-propagandized by

the economics profession. As in the 1920s, mainstream econ believes that if and

when the economy moves toward and into recession, manipulation of interest rates

is not just the best but the only solution: Greenspan, as a follower of Ayn Rand

and Milton Friedman, accepts that as being right and proper, implicitly or

explicitly — as do most of those in Congress, most of whom, after all, came to

their “adulthood” in the late 1970s, as this particular Hell was breaking loose.

The general public has

reacted to this set of regressive developments with puzzlement or acquiescence

or enthusiasm or apathy, in one or another combination — either forgetting or

never knowing that the realities and economics of the 1920s carried us to

socioeconomic disasters almost unimaginable for today’s all too pervasive smug

and greedy mentalities.

But this too must be

brought back to attention: if the ongoing rightwing juggernaut is to be halted

and reversed now and in the future, what is required is what made the earlier

reforms possible: hard work by those who formed unions, and political

involvement and hard work by a significant portion of the general public.

. . . . .

To make any progress along

that path, we must know the whys and wherefores of the relevant economic

analysis and related economic policies. They are not very complicated; but they

involve unlearning as well as learning.

In an earlier ZNet

commentary on the “New Economy,” I compared the present with the 1920s, noting

both important differences and important similarities, and argued that serious

trouble lay ahead. That commentary may be worth re-reading along with this one.

Its emphasis was on the extraordinary fragility of the U.S. and the global

economy, due to mountains of consumer, business, and foreign debt, rampant

speculation, and pervasive excess productive capacities, problems all more

severe than their 1920s counterparts.

There is much debate as to

whether or not the U.S. economy is at the beginning of a recession (something

seen as totally unlikely even a few months ago). Nobody can predict economic

futures with anything like precision; but one can point to probabilities. They

are 1) there will be a recession in the USA soon; 2) in that the U.S. economy is

“the consumer of last resort” for an export-dependent world economy, the

recession here will occur soon afterward there; 3) in that this economy is

wildly over-borrowed, and all other economies also heavily debt encumbered, once

trouble begins it is likely to spread and deepen; 4) virtually every government

now takes “free market” and monetarist policies as undebatable; 5) in the near

future, as in the past that began in 1929, it will take years for good sense to

catch up with and replace today’s “common sense.” What is that good sense?

It is not monetary policy,

which is what the Greenspan and the Fed do: manipulating the rate of interest

(and the supply of money) to stimulate the economy. Its underlying creed is that

the economy never needs more than a little push: hands off, now and then a

tickle — the sort of thing a pilot delicately does by adjusting trim tabs, as

distinct from flying. Such a remedy is effective only when the problem is minor

— good for a cold, but not for the flu, let alone pneumonia.

Duplicative excess

productive capacities over the globe mean that too many factories are producing

the same things and trying to sell them to the same people or places in the face

of a broad and deep inadequacy of consumers and businesses able and willing to

buy all that supply at prices that allow profits. That is the problem whose

smoke trails now darken the horizon. It will not be resolved by “the free

market,” for that is its cause. Confronting such structural imbalance between

supply and demand with interest cuts — as the Japanese have been learning for a

decade now — is akin to “pushing on a string.”

In the face of serious

recession (to say nothing of depression) what is not only economically

necessary, but, as well, socially desirable, is to add governmentally induced

demand to private consumer and business demand; that is, for the government to

subsidize what Keynes once called “social consumption” and “social investment,”

and to run a budget deficit (increasing expenditures, but not taxes) to do so. A

moment’s reflection reveals that such policies create jobs and increase incomes

and stimulate sales for all businesses and improve the health of the entire


The U.S. economy has been

moving toward surplus budgets in the years of expansion; now, as we move toward

contraction, we should be accumulating deficits: not by reducing the already too

low taxes on the rich, but by leaving them where they are, while giving a quick

rebate to the bottom third of the population and lowering income taxes for the

next 50% or so in some reasonable progression.

More specifically (as I

argued in a Zcom on Social Security last year), the USA should cease to be

unique in its financing of social security through payroll deductions, and

finance it instead through the general tax fund based on income taxes. The

average family now pays more in payroll deductions than in income taxes; and

those with incomes $72,000 and higher pay zero tax on anything above that. It is

stupid and unjust: the poorer you are in your working years, the less you

receive in retirement; the richer you are, and thus needing nothing, the more

you get. Devilish.

On the expenditure side we

should be pushing for what is socially necessary and, in the process, move

toward the decommidification of essentials: social expenditures for housing,

education, a single-payer health care system, environmental projects to save our

air, water and soil, and expenditures of all sorts on our creaking

infrastructure (not least, in the realm of public transportation).

Sounds good, no? To you

and me, yes. But there has been no “sounding” of such notions now for a full

generation; just the opposite, with an ongoing bamboozlement of the general

public “teaching” that what sounds good for us is bad for the economy (read: big

business), and thus, bad for us.

So it is, once more, that

we must exert ourselves to build a politics that will do what will work for a

safe and sane and decent and buoyant socioeconomy. If we can do that we can then

go on to do something better than that: work toward a new and better system.

That, in this the richest

nation in all of history at its richest point, any individual or family should

be unable to meet fundamental needs is an obscenity verging on social

criminality. That the U.S. public should accept the ideological ravings of the

installed and ascendant Right is shameful. Change for the better has never

depended upon a fulsome majority acting to bring it about, but on a dedicated

minority. That’s who we are, who we could be, who we must be. 

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