Financial FAQs

It is really disgusting that there isn’t the political will to grow more jobs, both here and in Europe. And creating more jobs is the key to bringing us out of the deep hole of the Great Recession, of course. For if we don’t climb out soon, the U.S. could become just another Third World country—not only in terms of income inequality, but other indicators of national well-being, such as health care.

Why isn’t more being done, both here and in Europe? Paul Krugman’s piece on the death of the confidence fairy explains the fallacies behind the German’s belief that cutting back on government spending and benefits would cause interest rates to fall and employers to hire because they would have more confidence in the future.

“What’s wrong with the prescription of spending cuts as the remedy for Europe’s ills,” asks Krugman? “One answer is that the confidence fairy doesn’t exist — that is, claims that slashing government spending would somehow encourage consumers and businesses to spend more have been overwhelmingly refuted by the experience of the past two years. So spending cuts in a depressed economy just make the depression deeper.”

The confidence fairies in the U.S. are led by extreme right wing conservatives who continue their attempts to divert wealth to the wealthiest by reducing government spending enough "to shrink it down to the size where we can drown it in the bathtub", as Grover Norquist once famously said, architect of the no tax increase pledge signed by more than 200 Republican legislators, or Ron Paul, who wants to turn the clock back 150 years when the U.S. was a rural economy and there was less need for an effective national government that would benefit the majority of citizens.

The U.S. has done much better with the various fiscal stimulus plans, including the 2 percent payroll tax and GW Bush tax cuts, both due to expire this year. But since conservatives have not allowed additional stimulus measures, 2012 doesn’t look as favorable, says the Congressional Budget Office,  in a Bloomberg Marketwatch article.

“Since the stimulus began to wane in late 2010, real sales in the private sector have grown at a 2.8 percent annual rate, while government consumption expenditures and investment (goods and services the government buys directly) have fallen at a 2.8 percent annual rate, according to the Bureau of Economic Analysis. The other big category of government spending — transfer payments to individuals in the form of Social Security, Medicare, unemployment, food stamps and the like — has also turned negative, falling at a 0.9 percent annual rate after jumping nearly 17 percent in late 2009.”

So if Republicans succeed in preventing more stimulus spending, it could stall the U.S. recovery, not to speak of our standing among developed countries. As an example, the New York Times highlighted how far the U.S. has fallen behind in health care in a recently released World Health Organization study of premature births.  This is on top of many other studies that show the U.S. falling further behind in longevity, and even average heights, as our health care system continues to deteriorate.

It is no coincidence all developed countries have universal health care that Republicans continue to attack as too much government. That is why one of the largest casualties of the enormous diversion of wealth from the middle class to the wealthiest one percent has been affordable health care. Minnesota is just one battleground, where Republicans are attempting to block insurance exchanges that would make health insurance more affordable.

And we know why. “The exchange is the centerpiece of the new health care system envisioned by Mr. Obama,” said the New York Times article. “In the exchange, people who do not have insurance from employers will be able to get comparative information on health plans, insurers will compete on price and benefits, and the federal government will offer subsidies to lower- and middle-income people buying insurance.”

Can there be anything more important than improving the overall health of Americans? Improving their health care system is the first step taken by underdeveloped countries on their path to entering the modern world, while U.S. conservatives seem bent on returning the U.S. to a less-developed status to enhance their already wealthy supporters.

Harlan Green © 2012