Next Revolution: The Second American Revolution

Congress has just passed another mammoth 1.5 Trillion Dollar so-called "stimulus" package.  Don't be fooled. This is not an economic stimulus. This is nothing more than another giant bailout for Congress' corporate sponsors. This bill is basically one giant earmark.

 

This bailout package is now totalling somewhere approaching 900 billion dollars, and rising, as the Senate is padding it even further under the tremendous pressure of the combined buisness and elite union lobbyists.

 

Since all of the money used for this bailout is to be borrowed, you can tack on another 345 billion dollars or so of interest costs onto the final tab. I figure this boondoogle will actually cost about 1.5 Trillion Dollars when it's final special-interest bloated form is sent to the President.

 

The bill's final numbers are not etched in stone yet, but it appears that less than a quarter of the total expenditures will go directly into the hands of the middle-class, who would spend this money and immediatly stimulate the economy. The other three-quarters of this so-called "stimulus" goes to the suppliers, rather than to purchasers, and will do nothing to stimulate the economy.

 

Here's the "stimulus" breakdown, best I can tell at this point in time: a total of 350 bilion or so is dedicated to various tax cuts. It appears that  only 150 billion or so of this will go to individuals and families with incomes below $100,000. The other 130 billion will go into buisness tax scams, such as limiting capital gains, and even actually having the government reimburse buisness for tax losses.

Realize that reducing capitol gains taxes allowed our corporations to be drained of profits as quickly as they made profits. This is what fed the constant pressue on CEO's to continually boost quarterly earning statements. If we have learned nothing from this meldown, we should have learned that keeping large cap wealth in the markets is vital to market stability. 

The other 72 billion will go to end the Alternative Minimum Tax for household incomes between $100.000-$500,000. These middle-class tax breaks are insignificant and will be completely insufficient to to shore up citizen spending enough to stimulate the economy.

 

The other $604 billion will be split between the states and their construction company contractors, with two-thirds, or 400 billion of the State funds earmarked for the Construction Companies. The other 200 billion is to be divided between the States as a  direct Federal bail-out of our banckrupted State governments.

This $200 billion State govenment bailout is a pathetically insufficient  attempt to cover for the State's desperate inability to pay their debts or maintain public services. The bailout of the States will not have any significant stimulative effect, nor will it save the State's financial bacon, or even maintain State spending at last year's spending levels.

Most significantly, no part of this bailout boondogle attempts to identify or reform the political or economic policy corruptions that created the conditions for our nation's financial and economic meltdowns, nor does it address the structural flaws inherent in the State's "Supply Side" tax policies that created the states deficits in the first place.

The rest of the $400 billion bail-out directed towards the States is earmarked to be split up between large construction companies and their elite unions in every state in the nation. 

If the first Dem $700 billion bailout fund had been directed towards completely removing the tax burden from the middle-class, as I suggested  in July of 2008, this massive amount of direct stimulation would have given the middle-class sufficient purchasing power to enter the housing market in strength.

At that time a direct stimulation of purchasers would have been big enough, and timely enough, to established a level of housing prices and sales sufficient to stop the price slide and establish a solid value for housing prices. This in turn would have stabilized mortgage security values and that in its turn would have stabilized credit markets. Instead, the Dems gave Wall Street 700 billion, and the housing, mortgage securities, and credit markets all tanked, along with the banks.

Now the bottom, as expressed by housing and security prices, has slid so far down that even if the current Trillion Dollar Bailout was put directly into the hands of our middle-class it would not be sufficient for establishing a housing price of sufficient value to save the mortgage securities or the banks that hold them.

The housing market is going down to the price and sales level that the earning and purchasing power of the middle-class can support. This will be very low. The value of mortgage securities and the avaiability of credit will ultimately stabalize at a point far below the level of value required for many banks and businesses to survive. Like housing price levels, security values and credit avaiability are unwinding, and independent of the Dems massive political giveaways, both mortgage securities and credit values will eventually be priced to reflect the level of economic activity that the earning and purchasing power of the middle-class is able to support.

But this Democrat boondogle bill will do almost nothing to support middle-class purchasing power. This Dem bailout will do little more than briefly delay our economy from plunging to the level that middle-class earnings can support, and the Dems have done nothing to bring that level up by reinforcing middle-class incomes.  

The current Dem boondogle bill is completely incapable of stopping our economic slide, supporting housing prices, or restore credit avaiability to the level we experienced before 2006. Not only is the bulk of the Dem bailout money misdirected towards supporting "suppliers", rather than purchasers, but even if the whole Trillion dollars was put directly into citizen's hands, it would be insufficient to stabalize our economy or our markets at this time. The Dems waited too long, and now the markets have dropped below the level that government stimulus can restore.

This means that we are going to experience a Greater Depression than the one that followed the 1929 market crash.

Despite the Dem's misguided intentions to respark our financial bubble, none of the Dem's "stimulus" moves are capable of reinflating the bubble, nor are they even capable of putting a stop to our economic slide. Even worse, although we are approaching a complete economic meltdown (to go along with our complete financial meltdown), this package does not make the slightest attempt to address any of the economic or political corruptions, the financial/tax structural problems, or the corrupt buisness practices that brought on the irresponsible growth, fed the destruction of our middle-class, and allowed our stolen wealth to be formed into the largest  financial bubble in the very heart of  Wall Street that the world has ever seen.

That's because our politicians live off the profits of this corruption.

The unstated fact that no one mentions is that the deed is already done, the bubble has already popped, and it has already taken all of the money Wall Street stole from us with it.  Stocks, retirement funds, 401ks, housing values, and the expectations of  the current generation of retirees have dissappeared. The economy is resetting on its own, responding to real market and economic conditions, which the politicians seem incapable of percieving or responding to. All of the politician's attempts to put our corporate humpty-dumpty back together again with their massive bailouts are not just unproductive, they are deepening the damage to our economy and will prolong the duration of the downturn.

The Dem's pouring money into the top levels of our economy will not spark consumption. Nor would attempting to restore the purchasing power of the middle-class, which the Dems have not yet considered, work to stop the plunge at this point in time. The Dem's bailouts will not spark consumption because they are specifically designed to minimize the losses of the biggest players at the top of our economy. The Dem bailout does nothing substantial to support the real victims of this great rip-off, The Middle-Class.

The Dems are merely protecting their biggest political players and contribuitors with massive cash infusions. In the meantime, The Dems have let the people lose their jobs and houses as they pour trillions into the accounts of their biggest bribers; Wall Street and the Construction industry. The real effect on the economy from the Dem's bailout will be to only slightly prolong the amount of time it will take for the economy to bottom out.

The Dem's plan does not have a chance in hell of reinflating our financial bubble, let alone repairing our broken economy or stimulating a recovery. The reason is simple. Printing this huge amount of money while we hold such a vast debt, while we have such a low interest rate, and while a huge share of our domestic corporate profits are dependent on  large trade imbalances, will eventually crush the dollar. The Dem bailout will ultimately have the effect of sparking inflation, which will deepen and prolong this depression. All that we can reasonably expect from this bailout is that it will delay and mask the severity of the crisis for a short period of time.

  

Although this "stimulus" package is no more than a one-time give-away doomed to failure, this package is still much superior to the Democrat's last bailout, which just up and gave Wall Street a One Trillion Dollar,  no-strings attached gift. In that package only 700 billion actually went to Wall Street, and the other 300 billion was consumed by Congress themselves, through Earmarks. The same process of earmarking also evicerated Congress' so-called housing bailout. This current bailout bill is no better. The current bailout is one grand earmark, with the Congressional politicians of each state basically just dividing up hundreds of billions of our dollars between themselves.

 

The first Dem bailout give-away went to the richest people on Earth, the Wall Street Investment Bankers. This new give away is somewhat better, as it is focused on giving money to virtually everyone who calls themselves a Big Boss, rather than exclusively to our Biggest Bosses on Wall Street.

Rather than just bailing out the richest of the rich in our country, our corporate parties are now moving slightly down our economic heiarchy to bail out the next richest interests in our country below Wall Street.

By dumping 400 billion dollars in "infrastructure spending" into the construction industry across every state, the Dems are bailing out the biggest and most politically powerful construction companies in our country

But this construction bailout will do nothing to prop up housing prices or stimulate sales. This boondogle for the nation's biggest contractors will do nothing to stop the massive wave of layoffs we are experiencing, nor will it stimulate significant employment when these projects finally get off the ground. Although this infrastructure spending is not going to significantly stimulate the economy, it certainly is a fine payoff for the nearly 80 million dollars the Construction Industry has bribed the parties with during the past two years.  Anyone would consider 400 billion for 80 million a great deal.

 

These two massive Democratic bailouts clearly demonstrate that the Democrat's philosophy of government differs little from the "Supply-Side" position that Ronald Regan established in 1982.

 

The one difference between Regan and the Dems is that the Dems have not just participated in the Reganomic de-taxation and de-regulation of buisness, they have added a new innovation: The Supply-Side Economic Bailout Program. The Dems have designed, and are about to execute, their second supply-side bailout program. The first was for the richest people on earth on Wall Street, and the majority of the money contained in this second bailout  is mostly targeted towards the biggest construction companies in our country.

 

The first Dem bailout of Wall Street is generally acknowledged as an abject failure. This second bailout has a good chance of becoming the straw that broke our economic camel's back.

 

The reason these bailouts will both  fail is they are based on a flawed concept. Both of these bailouts are based on the recently discredited notion that giving all of our nation's wealth to the richest people, "Supply-Side" Economics, would make us all richer. Despite the recent death on the markets of the theory of "Supply-Side" Economics, the corporate political power and corporate political bribes continue to fund these discredited politicians and their failed policies. The corporate adherents behind this theory have been growing steadly in wealth, power, and influence since the Regan Administration, as our middle-class has been drained of their wealth and rights.

During Clinton's Administration the "Supply-Siders" achieved complete victory when Clinton and the Democrats were captured by the "Supply-Siders,"

From the Clinton Admin on,"Supply-Side" economics became the shared foundation of both parties'"economic" policies. From that time forward both of our political parties have been more dependent on corporate contributions than the support of their local constituients for their political success or failure. Our citizen's interests and rights became secondary to the accumulation of power and profits by our corporations after Clinto exchanged the Democrats soul for corporate contributions.

This shift in the philosophy and funding of the Democrat Party was paralled by a Democrat policy shift which complimented and accelerated the Republican de-taxation, de-regulation, and the unlimited "globalization" of American Industry. At that point this economic meltdown became enevitable.

The acceptance of "Supply-Side" economics and "free trade globalism" by the Clinton's Corporate Democrats marked the moment which doomed our economy to collapse. From that point on our corporate elite was able to concentrate the greatest amount of wealth into the hands of smallest number of people in our country's whole history. Although this was good for the rich, this has proved economically and politically problamatic for the rest of us.

 

First, "Supply-Side Economics" is not a real economic theory. "Supply Side Economics"  is a political philosophy masquarding as an economic theory. "Supply-Side Economics" is little more than a fancy way of using economics to hide the  real core and the soul of "Supply-Side Economics."  "Supply-Side Economics" is no more that the economic translation of the philosophy that the rich and powerful should rule our nation."Supply-Side" economics has been the capitalist's constitution, and has been used by our corporations and the corporate politicians to displace our Citizen's Constitution for the last 25 years. "Supply-Side" Economics only does one thing: it justifies political rule by our industrial elite in quasi-economic terms.

 

In actuallity, "Supply-Side Economics" is a political theory, a modern justification of the ancient principal of rule by the rich and powerful. Supply-Side economics is nothing more than the philisophical basis and justification that our corporate aristocracy has used to establish and justify their control of our nation's wealth and political power.

Despite the failure of this system in the market, and its repugnance to our Constitutionally mandated democratic republic, the Democrats have somehow managed to carve a final monument to "Supply-Side" economics in their latest bailout, as the "Supply-Side" economic system itself collapses around them. 

 

Politically, a "supply-side" nation is tuned to serve the rich, not the citizen. "Supply-Side" economics has put the interest of the citizen into second place, behind the "suppliers." The adoption of "Supply-Side" theory and practices by the Dems effectively announced our country's transformation into a corporate state. Despite the failure of the "Supply-Side" theory and practices, the Dems bailout is tuned to feed the greed of our corporate elite, rather than really stimulating the economy by substantially increasing the earning and purchasing power of the middle-class.

 

Despite the failure of "Supply-Side" economics in the October crash and rapidly deepening depression we are now experiencing, nothing has changed in who or how things run in Washington or any of our State Capitols. Yet.  The special interests run the creation of law and policy through bribery. The political and social repercussions of this system of bribery are profound.

Concentrating our wealth into the very few hands of  "the suppliers," marks the de facto repudiation of our political democracy and the practical end of social equality. In one generation the nature and character of our country has been transformed. Although the "Supply-Side" system has failed both economically and politically, both parties are continuing to serve-up our final pennies to their corporate masters. 

Ironically, although "Supply Side Economics" reached its goal of constructing an all-powerful political and economic corporate elite, it's fatal flaw is that it does not even deliver on its original promise, that it would make us all richer. Although "Supply-Side" Economics was successful at making our corporate elite as rich as Nazis, it destroyed the very system that made them rich.

 

The "Supply-Side" economic policies both parties have pursued for the last 25 years have destroyed our schools, drained our environment, smashed our infrastructure, mortally wounded our democracy, and, last but not least, has finally bancrupted our country.

Let's just admit it: "Supply-Side" economics did not make our nation richer. "Supply-Side" economics did not pay any of the costs of doing buisness. It either leaves the costs of buisness on the public or unpaid. Both parties have been expanding our economy and demography without paying any of the costs of their expansion of buisness. Both parties have been content to defer our overhead expenses, and  rather than paying the costs of doing buisness, they pocketed  as profits the money that should have paid for the roads, schools, and hospitals their massive expansion required. While our "Supply-Side" politicians, of both parties and independent of which party controlled the presidency and congress, were looting our country while assuring us that their irresponsibility would bring us greater wealth. It did not.

Once Clinton led the Dems over the Rubicon, to join the Repugs in Corporate Servitiude, it was only a matter of time before these bribed tools pushed enough of our wealth to the top to completely unbalance, and eventually topple, our economy. We have reached and passed that point, and our politicians go on as if they were blind to their actions that led us into this disaster. 

Now that our nation's "Supply-Side" economic policy has brought a cascading collapse down on our heads, our corporate politicians are wearing themselves out shoveling the last bit of our money, well, our credit really, into this failed system of bribery and payoffs. It appears that our politicians are incapable of committing an honest act, even when the fundamental security of our country is at stake.

Thus I named this economic meltdown "the corruption crash of 2008," as its source lay directly in the corrputed laws and policies of our corrupted corporate politicians.

 

But we did not just sacrifice our middle-class and our economic rights when we swallowed the "Supply-Sider's" hollow promises of great wealth, if only we would give all of our money to the rich. We sacrificed our democracy. We traded our democracy and our most fundamental rights at  this alter of greed for false promises of great wealth. We exchanged our ethics for material wealth, and now the wealth has just up and dissappeared. I enjoy material wealth as much as the next person, but the character of my country is more important than my bankbook balance.

 Would the rest of us held to this simple standard

The Dem's new "bailout the bosses" give away is based on exactly the same "supply-Side" principals of concentrating wealth at the top that got us into this economic crash in the first place. The Democrats are incapable of identifying the political and economic corruptions that caused this problem, they are only capable of feeding the crisis.

 

What we are really seeing in the Dem's latest give away is that the Dems are continuing to subscribe to exactly the same "Supply-Side" economic and social theories as the repugs: Wealth and Power are concentrated and held at the top.

 

 Rather that stregthen the purchasing power and economic position of the middle and lower classes, the Dems have decided to move the bailout down one notch from Wall Street to the state level, and reward the biggest state industries that contribute to the Dems: huge contractors and elite unions. The Dems are also putting a band-aid on the vast debts that are collasping state government budgets across the country.

 

The States are having real problems. Three decades of "Supply-Side" economics has almost completely detaxed and deregulated the rich in every State in the Union. The State level consequence of "Supply-Side" tax policies is that the physical infrastructures of every state in our nation have been sacrificed to pad the profits of our biggest and richest state and national corporations.

 

"Supply-Side" tax policies have also left huge structural problems in many state budgets, making them incapable of preforming the basic obligations of government even during the decades of "good times" that led to our economic collapse. The only obligation the politicians appear to respect, even in these desperate times, is their obligation to serve and reward their bribers.

 

Rather than address the economic collapse that "Supply-Side" economics has brought down on our heads, and repudiating "Supply-Side" economics in the state and federal governments, the Dems latest give away is nothing more than a doomed attempt to cover up the "Supply-Side" rip-off by hiding them under subsidies.

 

The Dem bailout is nothing more than an pathetic attempt to maintain the top-down rule that the theory of "Supply-Side" economics demands. Rather than directly addressing the economic and political imbalances "Supply-Side" created, the Dems are trying to preserve and hide the core problem by drowning it under a flood of Federal Dollars. This will not work.

 

Federally subsidizing all the State deficits that "Supply-Side" economics created does not solve the problem. Rather than repudiating "Supply-Side" economics, and directly addressing the huge social, political, and economic problems that our citizens are facing by giving our citizens back our rights and wealth,  the Dems have constructed a vast program to bail out the same suppliers who bribed them into instituting these flawed "Supply-Side" policies in the first place.

 

The Dem bailout signals that they will not address the criminal concentration of wealth and the purchase of political power and policy which brought on this crisis. The Dem bailout signals that they will work with all their might, and all of our dollars, to maintain the criminally corrupt system that brought on this economic collapse in the first place. You know, the corrupt system of corporate and special interest bribery that drained our country of its wealth.

 

In economic terms the Dems bailout signals that the will do nothing to support or enhance the purchasing power of the working class. Far from it. This 800 billion bailout signals that the Dems are willing to put our working citizens into impossible long-term national debt to assure that the "Supply-Side" dominates politics and economics in bad times as well as good. 

 

The Dem capture of the White House and Congress have brought no change to the fundamental "Supply-Side" power structure that rules our country. This bailout proves that the Dems are not going to give the working class back their money and purchasing power, let alone their democracy, If you thought the Dems would change anything, you were wrong. The basic operation of our corporate state will not be disturbed by the Dems.

The Dem's bailout of the next strata of our nation's buisness elite below Wall Street will do nothing to restore the damaged earning and purchasing power of our working class. The Dem bailout will do nothing to respark the consumer economy. The Dem bailout will do nothing to stabalize housing sales and prices. The Dem bailout will be successful at subsidizing big buisness losses while our citizens are losing their jobs, losing their savings, and losing their homes.

 

The Dem bailout should be called the "Save the Supply-Siders Bailout." The Dem bailout will fail, and it will fail with drastic consequences.

The economic affects of this depression will continue and deepen. Rising unemployment and diminishing consumption have already started a serious deflation of consumer products, such as cars, TVs, and washers and driers. These trillions of wasted bailout dollars will eventually trigger massive inflation, push interest rates through the roof, and push energy and food prices back into the stratosphere.

Consumer product deflation and unemployment will continue to grow as core inflationary pressures are building. Thanks to these irresponsible Dem bailouts, we are headed to a catastorphic combination of product deflation combined with a massive fall in the value of the dollar.

As I see the economic situation right now, we will experience five years of harsh stagflation, followed by another five years of slow, or no, economic growth.

 

Practically speaking, the top-down control of economic and politcal power does not work efficiently, and when "supply-side" does work, it only performs successfully for brief periods of time, and only works for the rich.

Even more importantly, top-down control of wealth and power are not  compatable with the character of our Constitutional System, which requires bottom-up democracy and prohibits aristocracy. 

Jan 29, 2009, References

The Whole Story:

The rotten core of the American Economy: Our Corrupted Democracy, alex wierbinski, 12-15-07

Stimulus Package

Who gets what from the stimulus package, wsj interactive chart

WSJ stimulus page

House Sends Obama’s $819 Billion Stimulus to Senate, bloomberg, 1-29-09

Business to Get Share of Relief, wsj, 1-29-09

Senate Panel Adds $70 Billion Tax Relief to Stimulus, bloomberg, 1-27-09

House Passes Massive Stimulus Package, hartford courant, 1-29-09