Economy

The Problem 

Our economy has fallen on hard times. The economic good times of the 1990s quickly disappeared under the current Bush Administration. We now face credit, housing, and financial crises. And all of these are made worse by the war in Iraq, which will likely to cost us $3 trillion when all is said and done. As of April 1^st, the national debt is over $9.4 trillion. That amounts to $30,994.92 each for every man, woman, and child living in the U.S. The debt continues to climb by $1.65 billion per day, as it has every day since September 29, 2006.  

The underlying philosophy behind Bush economics has been described as, “You’re on your own” or YOYO. This hyper-individualism says “whatever the challenges we face as a nation, the best way to solve them is for people to fend for themselves.”[i]  

The Bush Administration sees itself as continuing the trickle-down policies of the “Reagan Revolution,” which sought to limit government activity in the economy, chiefly through deregulation and tax breaks for the wealthiest Americans. The Republican presidential candidates this year all claimed the Reagan mantle. But none admitted the truth that Reaganomics resulted in “an explosion in government debt, higher poverty rates, and sharply increasing inequality….”[ii]

And the Bush Administration has certainly succeeded in continuing that “revolution.” The Congressional Budget Office has determined that President Bush’s tax cuts, targeted for the very wealthiest Americans, were the “largest single factor” in “the sharpest reversal from surplus to deficit in the history of government accounts….”[iii] We now have the same “explosion in government debt, higher poverty rates, and sharply increasing inequality…” that we had during the Reagan years, only worse.

The wealthy are wealthier. The poor are poorer. The middle class is struggling more than ever before: “The income of a man in his 30s is now 12 percent below that of a man his age three decades ago. Most of what’s been earned in America since then has gone to the richest 5 percent.”[iv]

The price tag for the current financial crises will be staggering. Former banker Charles Morris, in his new study, estimates the cost at a trillion dollars. His diagnosis of how we reached this point is damning: “The current conservative, free-market cycle that commenced with the Reagan presidency, with all its achievements, seems to have long since foundered in the oily seas of gross excess.”[v] 

Pseudo-Solutions

When the subprime mortgage crisis hit, Congress’ first response was to throw money at it in the form of a so-called “economic stimulus package.” I wrote a letter to the editor at the time. Here is part of what I wrote: 

While I always support giving taxpayers some of their money back, let’s be honest: this proposal will do nothing to fix our economy. At $600 a person, the package will be as effective as, say, giving a cup of coffee to someone who is seriously sleep-deprived…. To pay for the rebates, the federal government will borrow more money from China, give it to consumers, and recommend they go buy something – something probably made in China. This sounds more like a

stimulus to the Chinese economy than our own! [vi] 

At the beginning of March, my opponent in this race sent a mailing to voters (at taxpayer expense) touting his vote for the economic stimulus package. This is status quo politics – billing taxpayers for an ad that brags about giving them $600 borrowed from China. This from the same congressman who voted for $14.5 billion in tax breaks for oil and gas companies at a time when those companies posted record profits.  

Now the Bush Administration – the same Administration that wanted to shift risk from the population as a whole to individuals by privatizing Social Security, health insurance, and unemployment benefits – is bailing out Bear Stearns. This transfers corporate losses to the general public in a kind of bizarre, reverse socialism. 

__________________________

The Congressional Budget Office
has determined that President Bush’s tax cuts, targeted for the very wealthiest Americans, were the “largest single factor” in “the sharpest reversal
from surplus to deficit in the history
of government accounts….”
__________________________

The Right Solutions: We’re in This Together 

If I am privileged to represent our district in Congress, I will be only one of 435 members of the House of Representatives. I won’t pretend that I can single-handedly solve the problems of our economy. But I can tell you some of the principles that would guide my voting. Let me begin by repeating what I wrote to the editor of The Des Moines Register in February.  

We need serious structural changes in our economy. We need fair trade practices, not so-called ‘free trade’ agreements such as NAFTA that continue to move American jobs overseas. We need to improve wages. We need economic development that diversifies agriculture, invests in renewable energy, and promotes energy efficiency. 

We need incentives to support downtowns, Main Streets, and locally-owned businesses that will stay in Iowa. More than anything, government needs to end the practice of doling out billions of dollars in tax breaks and subsidies to big business.[vii]

I have a strong libertarian streak in me. I think government should stay out of our private lives and personal decisions. But sometimes government can play a vital role in helping us meet large-scale challenges. This isn’t about bigger government – it’s about smarter, more effective government, about accomplishing collectively what we can’t do alone.

When it comes to complex problems such as the economy, even a free-market economy, there is a role for government to play, and Americans of both parties have recognized that for at least a century. For almost a hundred years, the dominant theme of the role of government in the economy has not been “You’re on your own” but instead “We’re in this together.”  

I support the following measures: 

·         More Effective Oversight: America learned a hard lesson in the Wall Street Crash of 1929 and the Great Depression that followed in its wake. Beginning in the 1980s, we forgot that lesson, and we could soon pay a heavy price for it. As Morris suggests, “The very first priority will be to restore oversight over the finance industry.”

·         Eliminate President Bush’s Tax Cuts for the Wealthy

·         Renegotiate trade agreements to make them fair: We need fair trade that won’t offshore American jobs, with minimum wage thresholds, worker safety standards, and stringent laws to protect the environment. My opponent in this race voted for “free trade” agreements with Peru, Chile, Singapore, and China, agreements that I would have opposed.

·         No NAFTA Superhighway: I oppose the construction of a ‘NAFTA superhighway’ that would aggravate the harms of the free trade agreement and would destroy thousands of acres of farm land through eminent domain.

·         No more bailouts: I don’t like government bailouts, but if the government has to help bailout a corporation such as Bear Sterns to prevent further harm to the economy, then we need some assurances in return. If the government puts taxpayers’ money at risk for a corporation that may fail, taxpayers should also get some of the benefit if the bailout is successful.

My fundamental belief is that we need a fair economy, one that puts people and small businesses first. To achieve a fair economy, we need to raise the income of those who aren’t wealthy – the bottom two-thirds. In order to achieve that goal, I support the following steps:

·         Stronger unions: I support the Employee Free Choice Act that makes organizing a union easier. Right now, forming a union takes a long time and affords employers many opportunities to harass workers who want to organize. And, when employers who fire workers for organizing get caught, they only have to pay workers back pay and interest. We need to implement stiff fines to protect workers.

·         Better schools: We need better schools for children from families with low or moderate incomes. This is key to raising incomes and providing a competitive workforce.

·         Universal health care: This would lift incomes and reduce costs. Please see my paper on health care reform. 

·         A larger earned-income tax credit: I like former Labor Secretary Robert Reich’s proposal: “A larger earned-income tax credit, financed by a higher marginal income tax on top earners, is required. The tax credit functions like a reverse income tax. Enlarging it would mean giving workers at the bottom a bigger wage supplement, as well as phasing it out at a higher wage. The current supplement for a worker with two children who earns up to $16,000 a year is about $5,000. That amount declines as earnings increase and is eliminated at about $38,000. It should be increased to, say, $6,000 at the low end and phased out at an income of $46,000.”[viii]

·         Targeted incentives to small businesses, green jobs, small towns that are struggling, and Main Street businesses. I oppose tax breaks for big companies.

As your congressman, I will work for a fair economy that puts people first.