The State of the Economy
“The US economy is headed toward crisis, and the political leadership of the country–if it can be called leadership–is preoccupied with nonexistent weapons of mass destruction in the Middle East. The US economy is failing. The afflictions are serious. They could be fatal even if diagnosed and treated. America is losing the purchasing power of its currency and its ability to create middle class jobs.”
So writes, Paul Craig Roberts , Assistant Secretary of the Treasury in the Reagan administration and coauthor of The Tyranny of Good Intentions in an essay on the Counterpunch website. “The Last Waltz? The Coming End of the American Superpower”
He goes on to say,
The dollar’s sharp decline and projections of continuing trade and budgetary red ink are undermining the dollar’s role as reserve currency . . . Overnight those cheap goods in Wal-Mart, which are the no-think economist’s facile justification for Wal-Mart’s decimation of communities, small businesses and employment, shoot up in price.
Interest rates will escalate as the government struggles to finance its endless red ink. Heavily indebted Americans with adjustable rate mortgages will attempt to sell homes just as rising mortgage rates reduce buyers. Real estate assets, the rising value of, which have been keeping the economy going, will give back gains.
The US has lost its ability to create middle class jobs or for that matter any jobs. During the last four years the US has experienced a net loss of 760,000 private sector jobs (January 2001 – January 2005). Think what this means for graduating classes and people coming of age to enter the work force . . .
Americans unable to find jobs in export and import-competitive sectors find themselves searching for jobs in nontradable domestic services, where their inflow into those labor markets is augmented by illegal immigrants and foreigners on H-1b visas. Obviously, the pressure on wages is downward . . .
The dollars’ decline will drive up the price of all inputs except US labor which is being substituted out of production functions and replaced with foreign labor.
Oblivious to reality, the Bush administration has proposed a Social Security privatization that will cost $4.5 trillion in borrowing over the next 10 years alone! America has no domestic savings to absorb this debt, and foreigners will not lend such enormous sums to a country with a collapsing currency–especially a country mired in a Middle East war running up hundreds of billions of dollars in war debt.
A self-important Washington establishment combined with a globalized corporate mentality have brought an end to America’s rising living standards. America’s days as a superpower are rapidly coming to an end. Isolated by the nationalistic unilateralism of the neoconservatives who control the Bush administration, the US can expect no sympathy or help from former allies and rising new powers.
You may want to read the whole essay, which you can do by visiting the website.
Locally, here’s an interesting response to the Governor’s budget from John Gunyou (click on the title to read the entire commentary. Or visit his website :
Pawlenty pledge simply isn’t a core Minnesota value
Gov. Tim Pawlenty recently characterized his no-tax pledge as a core Minnesota value. That’s troubling.
The Minnesotans I know value other ideals. The no-tax pledge is not among those values.
Nobody likes taxes, but most folks understand they’re the price we have to pay for public investments that enable our state to prosper. They’re how we support the real core values that have served Minnesota so well for more than a century. Here are the five values on my list:
A quality education is the constitutional right of every Minnesotan. . .
Generations of leaders have understood that education is Minnesota’s one true competitive advantage. Yet, that key to our individual and collective futures is being starved a little more every year. We’re like the farmer who decided to save money by feeding his horse less and less each day. The plan was working, but just as he taught the horse not to eat anything at all, the darned thing died.
After several years of stagnant funding, Pawlenty’s latest budget funds our school needs at less than 50 cents on the dollar. As a result, next year’s school property taxes are projected to soar a staggering 23 percent.
Sustainable economic growth is a core value. Minnesota has long served as an economic engine for the Midwest, but our position is weakening.
One-third of our state’s roads are already classified as “too far gone,” because our gas tax has remained stagnant for 17 years. Rather than honestly provide recurring resources, Pawlenty’s transportation plan relies on borrowing — with no real way to pay off the debt. We must adequately fund the public infrastructure necessary to support economic growth and job creation.
Sustainable growth is also dependent on fair and stable taxes, but the governor is so irrationally committed to his no-tax pledge he won’t even reform our volatile tax system on a revenue-neutral basis.
Minnesotans believe in selfless commitment to community. We understand it’s about us, not just about me.
Helping people help themselves is a core Minnesota value. That’s why we enacted historic bipartisan health care and welfare reforms more than a decade ago — reforms that are now being systematically unraveled.
Pawlenty’s last budget forced 10,000 kids off child care, and his latest budget eliminates 1,000 kids a month. His previous budget also lopped 20,000 children and 18,000 adults off health care. Now he’s reneging on his promise to restore medical coverage for those kids, and also cutting another 41,000 workers, parents and others from what he cruelly labels “health care welfare.”
Cutting the legs out from under our working class simply costs us all more in the long run. We must reverse the governor’s shortsighted cuts, and restore the landmark reform we all worked so hard to enact.
Environmental stewardship is a core Minnesota value. We must carefully balance our economic and recreational needs with environmental preservation and public health to sustain our state’s rich natural resources.
Minnesota has still not implemented programs required under the Federal Clean Water Act, which was enacted in the mid-’70s. An estimated 2,000 bodies of water in the Land of 10,000 Lakes are listed as impaired.
And finally, fiscal responsibility is a core Minnesota value.
We have a long tradition of honestly balancing budgets, spending smarter and investing in the future. The Pawlenty administration is hacking away at successful programs and mortgaging our future. Debt service climbs an astounding 32 percent in his latest budget.
That’s not what Minnesota is all about. The governor’s no-tax pledge and intergenerational tax shifts are not core Minnesota values.
Education is a core value. Sustainable economic growth is a core value. Helping people help themselves is a core value. A healthy environment is a core value. Leaving our children a better Minnesota is a core value.
These are the real values that make Minnesota the special place I know and love.
On another urgent economic note I received this morning the following message from Working Families e-Activist:
Let’s stop Social Security privatization in its tracks. If enough members of Congress pledge now to oppose Social Security privatization, President Bush’s proposal will be dead on arrival when it gets to Capitol Hill. Please take one minute now to urge your members of Congress to sign the Pledge to Strengthen Social Security and to oppose privatization proposals that would:
– Cut guaranteed benefits.
– Weaken Social Security by diverting money from the Trust Fund to pay for private accounts.
– Explode the federal deficit.
– Possibly increase the retirement age.Please click the following link now to urge your members of Congress to sign the pledge.
It’s this simple: If enough members of Congress sign the pledge, President Bush’s Social Security privatization plan can’t survive. It won’t be easy, but together we can do this. Your members of Congress were elected to work for you–tell them they must protect your retirement security by opposing privatization.
Every one of us must act to stop privatization and strengthen Social Security because privatization would:
– Cut guaranteed benefits by at least 40 percent–even for people who don’t choose to have private accounts. The average retiree would lose $152,000 in guaranteed benefits.
– Leave many retirees in poverty.
– Add a whopping $4.9 trillion to federal debt in the first 20 years alone.
– Open Social Security up to political corruption and Enron-ization because politicians would choose which Wall Street firms can make billions off the accounts.
– Possibly raise the retirement age.Working Families e-Activist Network, AFL-CIO
March 2, 2005Read the Pledge to Strengthen Social Security:
I pledge to the people of my district and to the American people that I will work to strengthen retirement security, including Social Security
I will oppose Social Security privatization proposals that would:
1. Require cuts in guaranteed benefits to pay for private accounts.
2. Weaken the system by diverting money from the Social Security Trust Fund to pay for private accounts.
3. Increase the federal deficit to pay for private accounts.
4. Increase the retirement age.
Visit the Web address to tell your friends about this.
