[Vision2020] Memo to McCain: The Economy Tanked Long Ago

[nickgier at roadrunner.com]

Greetings:

This is my radio commentary and column for this week.  The complete version can be read at www.home.roadrunner.com/~nickgier/McCainEcon.htm.

Nick Gier

MEMO TO MCCAIN: THE ECONOMY TANKED LONG AGO

All year long John McCain has repeated, at least 17 times, George Bush's mantra: "The fundamentals of the American economy are strong." The last time he said it was September 15, right after Lehman Brothers folded, Merrill Lynch was bought by Bank of America, and American International Group, the world's largest financial insurer, was on the edge of collapse.  

McCain once said that there has been "great economic progress" under Bush, but, less than 24 hours later, he stated that "Americans are not better off than they were eight years ago."  As far as America's working people are concerned, the economy tanked long ago.

•	Since the election of Ronald Reagan in 1980 real wages, primarily because of GOP anti-union policies, have risen only 1 percent vs. 78 percent from 1947-1979.  

•	American workers are the most productive in the world, but they are not receiving any of the fruits of their labor.  At least companies should reinvest their profits, but more and more of them are buying up their own stock instead.

•	Bush's job growth record is the worst since Herbert Hoover, and the economy has lost 768,000 jobs this year, 442,000 in manufacturing alone.  Unemployment may reach 8 percent by the end of the year.  

•	The number of those in deep poverty—$7,800 for a family of three—is the highest since 1975, when such surveys began. 

•	28 million Americans now use food stamps, the highest number since the program's inception.

•	The Nation reports that Ohio's governor "has commissioned a task force to look into why a full third of Ohioans are unable to afford basic necessities."

With no real pay raises, many people turned to their houses to finance their expenses. Doug Henwood, editor of Left Business Observer, describes what happened: "Between 2001 and 2007, homeowners withdrew almost $5 trillion in cash from their houses [which] accounted for 30 percent of the growth of consumption over that six-year period," and which brought the country out of the 2001 recession. 

With regard to social security, McCain said that "without privatization, I don't see how you can possibly, over time, make sure that young Americans are able to receive social security benefits."  That was 2004, but on June 12 of this year he said that "I'm not for privatizing social security, I never have been, I never will be." Given the fact that the Dow Jones has fallen 4,000 points and decimated pension funds, this is another flip flop that went the right way.

McCain and Palin are now preaching the Gospel of Government Regulation, but McCain has a long history as a champion of deregulation. On August 4th Politicor reminded us that in the 1980s "McCain supported deregulation of the savings and loan industry, all the while accepting lavish gifts and trips on private jets from [loan magnate] Charles Keating. . . . The savings and loan industry then crashed, costing the American taxpayers $30 billion."

One of the reasons McCain opposed this year's farm bill was that it contained a provision that would close what is called the "Enron Loophole," which would leave energy traders unregulated.  The loophole was engineered by former Senator Phil Gramm, McCain's "economic brain" and once touted as his future Secretary of the Treasury. Jason Leopold of the "Baltimore Chronicle and Sentinel" reported (5-19-08) that "Enron – with Gramm’s wife Wendy serving on its board of directors – worked to create false electricity shortages in California, bilking consumers out of an estimated $40 billion."

Europe's economy is much more regulated, and European workers have universal health care and generous unemployment benefits.  European leaders are now calling for an end to America's "casino capitalism." Our sub-prime mortgages were hidden in bundled securities, which were then sold throughout the world.  

German lawmaker Martin Schulz declared that the U.S. financial crisis "shows the bankruptcy of 'law of the jungle' capitalism that no longer invests in companies or job creation, but instead makes money out of money in a totally uncontrolled way." 

Since the early 1980s profits from the financial service industry rose from 10 percent of total corporate profits to 40 percent today.  It's high time to close America's financial casinos, and I for one would not trust a McCain/Palin administration, recent converts to regulation, to stop this disastrous game of making money out of money without sufficient regulation.