There is a major debate going on now about whether Obama should continue with economic stimulus or if he should impose austerity measures on the country. Obama recognizes that we have to deal with the debt, but thinks the economy should recover its health a bit before imposing fiscal discipline.
The same argument is going on all over the world, and Britain has begun an experiment on the austerity side.
http://video.ft.com/v/129159354001/The-s...Another debate that is going on in the country, is whether the stimulus efforts that we have already tried were successful. Those on the right claim that Obama's stimulus didn't work, so it doesn't make any sense to consider another stimulus. On the other side some noted economists have just completed a study indicating that the stimulus was a success, and they say this can be proven empirically.
http://www.nytimes.com/2010/07/28/busine...The reason this debate is still raging is that most of the country is still suffering and most people have not benefited by the stimulus.
The problem is that part of the country has recovered and part has not. As former Fed Chair Alan Greenspan said on Meet the Press: "Our problem, basically, is that we have a very distorted economy in the sense that there has been a significant recovery in a limited area of the economy amongst high-income individuals who have just had $800 billion added to their 401(k)s and are spending it and are carrying what consumption there is. Large banks, who are doing much better, and large corporations, whom you point out and the–and everyone's pointing out, are in excellent shape.
The rest of the economy, small business, small banks, and a very significant amount of the labor force, which is in tragic unemployment, long-term unemployment, that is pulling the economy apart. The average of those two is what we are looking at, but they are fundamentally two separate types of economy."
So there is not a single America, there are two Americas. An America of the rich, the powerful, and the big corporations who are doing very well, and an America of the rest of us who are having a tough time and can't get a job.
Bush's Tarp funds bailed out some of the banks while others collapsed. This allowed the big banks to consolidate their power, and by investing the free money, they were able to make a much better return than they would have, if they just did their jobs and lent the money out so people could refinance their homes and so small businesses could recover and start hiring again. The Tarp helped the haves, but it didn't help the majority who were loosing their homes.
Obama's stimulus plan included one third tax breaks for the middle class and two thirds were "shovel ready" construction projects and other things like energy research, which helped the middle class and small businesses.
The Stimulus or Austerity debate assumes that we have to do one or the other, but if we have two Americas, perhaps we should have two different answers to the debate?
The answer seem pretty obvious to me. The part of the country that has recovered should receive the Austerity Measures, and the part of America that is still mired in recession needs further Stimulus. Why not let one, finance the other?
The major corporations are making record profits, and are sitting on $1.8 trillion in cash, but are refusing to hire.
http://www.washingtonpost.com/wp-dyn/con...What is even worse is that the government is still giving massive amounts of corporate welfare to corporations that are making record profits. The oil companies are making record profits yet they still receive $70 billion in government subsidies.
We should apply austerity measures, as Britain is doing, to the half of the country that is doing well. We should cut off their corporate welfare and we should enact taxes on harmful behavior to pay for stimulus projects for the half of the country that is not doing so well.
The two political parties have chosen sides. The Republicans have continuously sided with the rich haves, and against the suffering majority. The Democrats have tried to help those that need the most help.
The Republicans sided with the Insurance industry and against the consumers in the Health Care debate.
The Republicans sided with the bankers and against the consumers by opposing the Financial Regulation Bill. Initially the Financial Regulatory bill would have included a transaction tax on derivative trading, but that was scrapped because of the millions spent by lobbyists.
The Republicans defeated a $30 billion bill that would have helped small businesses create jobs.
http://www.washingtonpost.com/wp-dyn/con...The Republicans filibustered continuation of unemployment insurance for three days and have recently defeated a bill that would have removed half of the oil company subsidies.
http://planetgreen.discovery.com/work-co...The Republicans are opposing the energy bill for this year which would have placed a carbon tax on fossil fuels, but Obama and the Democrats are still trying to help the consumers, and generate green jobs.
http://latimesblogs.latimes.com/dcnow/20...At the end of this year Bush's Tax Cuts are scheduled to end unless Congress extends them. Obama and the Democrats want the tax cuts extended for 98% of the people, but not to those who make over $250,000. They want to stimulate the economy of the part of America that is suffering.
The Republicans want the tax cuts for the richest 2% to be extended, so the part of America that has already recovered and is doing well financially can get even richer.
The Republicans talk about deficit concerns, but they are willing to add $700 billion to the deficit to further enrich the billionaires.
Every time the Republicans change the tax codes, they shift the burden of taxes further onto the middle class and they give more of a break to the rich, until now the richest are only paying 16.6% in taxes.
http://www.cbpp.org/cms/index.cfm?fa=vie...