Financial FAQs

Why so many doubters of the President’s record? Candidate Romney would have us believe Obama has accomplished nothing, but in fact President Obama has one of the most history making legislative records since FDR. The Washington Monthly lists just 50 of President Obama’s top accomplishments.

We could start with Obama Care, or the Affordable Care Act, which no other President was able to enact, or ARRA, the $787 Billion stimulus that funded $100B in infrastructure improvements alone and supported state public service employment (police, first, etc.), or doubling fuel efficiency of autos, or cutting nuclear weapon inventories of Russia and the U.S,, or passage of Dodd-Frank financial regulation, and so on.

In fact, he has scored successes in almost every sector of our society—universal health care, nuclear disarmament, energy conservation, education, financial regulation, consumer protection, job creation, and even housing—in spite of the record number of Senate Republican filibusters.

But more importantly, Obama has in fact reversed the Greatest Recession since the Great Depression with his economic policies and job creation programs. Yes, his so-called ‘Keynesian’ stimulus programs include recapitalizing banks, and a structured bankruptcy that brought back Chrysler and GM, thus saving 1 million jobs. And ARRA is credited with saving up to 3.5 million jobs, by the way.

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Graph: Calculated Risk

This won’t satisfy Romney-Ryan supporters, of course, who believe only way to prosperity is to reduce taxation of the wealthiest. But it has never worked. GW Bush’s tax cuts and borrowed money created just 3 million jobs in his 8 years, vs. 5 plus million plus jobs under Obama to date.

And it can’t work. Why? The wealthiest have for the most part hoarded their wealth; first paying themselves, then parking much of it overseas in tax havens, or investing in other countries. They have been increasing their share of our economic pie since the 1970s, creating the greatest inequality of income and opportunity since 1928.

Chrystia Freeland’s history of the wealthiest, Plutarchs, The Rise of the New Global Super-Rich and The Fall of Everyone Else, documents just how wealthy the wealthiest have become at the expense of everyone else, as she says. Just in the first year 2009-2010 of this economic recovery, for instance, 93 percent of income gains went to the top 1 percent while the top 0.01 percent gained an average $4.2 million per household.

And now we know inequality is bad for growth and our position in the world. A recent IMF study by Andrew Berg and Jonathan D. Ostry suggests such inequality might shorten our economic expansion by one-third in jobs lost and goods products.

“…a careful look at the varying levels of inequality in different countries demonstrates just how much societal divides in wealth really matter. Countries with high inequality are far more likely to fall into financial crisis and far less likely to sustain economic growth,” said the authors in a Foreign Affairs article.

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Graph: CBPP

We actually know more than that. British sociologist Richard Wilkinson has studied inequality and written extensively about it. Countries with the greater inequality have higher rates of poverty, violence (30,000 gun deaths per year in U.S., 1 million over the last 4 decades), prisons per capita, and lower levels of health and education.

So in fact, inequality is more a symptom of third world status than being world’s superpower. In The Spirit Level, he and Kate Pickett document the damage that inequality brings to societies.

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Graph: Spirit Level

In the case of the U.S., it will mean a decline from being the world’s only super power, as the Plutocrats garner ever more wealth for themselves, and less for the benefit of a stronger democracy. It is a sad story. Only investments in healthcare, education, Research and Development in new technologies that Obama advocates will srengthen our democracy.

Harlan Green © 2012