Wednesday, October 31, 2012

Why I'm For Obama, Part 1: Economics

Yes, I support Barack Obama's re-election.  I'm doing so for quite a number of reasons.  Basically, I believe Obama has been an effective president who has done a good job in a really rotten set of circumstances.  This is particularly true given that his rotten set of circumstances were largely created by the Republican party, and the Republicans have continued to fiercely block almost all his efforts to fix them.  Mitt Romney and Paul Ryan's approach, in my view, takes George Bush's failures and puts them on steroids.  I believe having Romney as President would result in severe damage the country.

Those are broad statements.  One blog post cannot do justice to them, so I'm going to break down the subjects into several blog posts and focus on one element at a time.  Since most people consider the economy to be the #1 issue in the country today, I'll start with that one.

First and foremost, it seems necessary to remind people that Barack Obama didn't run our economy into the ground.  It was primarily the economic policies of George Bush and the Republican party over a long period of time that did.  They took the position that unfettered private enterprise is the solution to our nation's ills, and that any interference by a government, be it by taxation or regulation, is by definition a bad thing.  In practice during Bush's tenure, this meant lax or nonexistent oversight over the financial markets (among others), with a particularly hands-off attitude for Wall Street's complex financial packages as well as mortgage lending practices nationwide.  The government's failure to monitor those two areas in particular contributed to the economic crash of 2008.  This crash, I have to note, began late in President Bush's term, about seven months or so before Obama was inaugurated.

But it wasn't just Wall Street and the mortgage market that brought down the American economy.  For several decades, we have been dismantling our manufacturing base, using more automation to replace manpower, and shipping jobs of all sorts overseas.  The middle class has seen its real income gradually drop since the 80's.  In hindsight, the recession of the early 2000's should have been a wake-up call.  That one, you may remember, was a cyclical recession (a normal and periodic downturn of the economy), but gave us a very slow "jobless" recovery.  In previous cyclical recessions, the economy quickly bounced back as people were re-hired for their previous jobs.  That time, though, they weren't.  Jobs had been permanently eliminated, or shifted overseas, or employers were using temp workers.  The only ones doing well were those few who were higher on the economic ladder.

I saw this disparity first-hand.  A friend who was an officer in a local bank's wealth-management unit saw that his wealthy clients were doing extremely well.  As an artist, however, I saw that most people were stressed out, unable (or unwilling) to spend money on luxuries like art.  North Carolina lost about 40% of its manufacturing jobs during that decade, many small farms here in the mountains ceased operations (many being turned into gated communities for million-dollar homes), and way too many people with comfortable incomes were laid off and forced into lower-paying jobs.  All of this was part of a long-term trend of growing economic disparity which has disproportionately favored the wealthy.  Even The Economist, that bastion of conservative economic thought from Britain, is concerned about economic disparity and focused a recent edition on the problem, its roots, and potential corrections.

The recession of 2008 was, of course, much worse.  This time it wasn't a cyclical recession, it was brought on by severe structural failures.  These failures could have been prevented had the federal government wanted to exercise its oversight and regulatory responsibilities.  Under President Bush, it didn't.

Republicans have long downplayed the problems with economic disparity in which the wealthy gain an increasing share of the nation's wealth while the middle and lower incomes lose.  They have championed the belief that wealthy people create jobs, therefore we should give the wealthy more tax breaks.  (Remember George H.W. Bush's impassioned plea to lower the capital gains tax?)  Republicans call it "supply-side economics", but it's more accurately called "trickle-down economics", and it just doesn't work.

Our economy is largely based on consumerism.  That means it needs a lot of consumers.  The more consumers you have with more money to spend, the better your economy.  But in trickle-down economics, the money doesn't go to a lot of consumers, it goes to a few wealthy people.  The wealthy few don't put this money back into circulation.  Mitt Romney, for example, put his money into accounts in the Caymans and Switzerland, into financing corporate raids, and investing in stocks and bonds, and very little of it trickled down to others.

If you need more proof that trickle-down economics doesn't work, consider that we now have the greatest economic disparity in our country since the period of the robber barons over a century ago.  If trickle-down economics really worked, we wouldn't be having these tough times right now.

Now consider the track records of our two presidential candidates.  Mitt Romney has a history as a corporate raider, a Gordon Gekko figure.  Romney was adamantly opposed to the government assistance that was necessary for GM and Chrysler to get the financing needed to survive reorganization.   He was perfectly willing to let Chrysler and GM go completely out of business and take three million jobs with them.  But Obama wasn't.  He went ahead with the financial assistance plan (actually begun under the Bush administration) which gave the two corporations the resources needed to make it through bankruptcy proceedings and come out the other side.  Just within the past few days, Chrysler reported a profit of $383M for the recent quarter and GM reported a profit of $1.83B.  That wouldn't have happened under a Romney administration.

Romney has been attacking Obama on the jobs front, saying that there are fewer jobs now than when he assumed office.  This attack fails to recognize that a near-depression was underway when Obama took office and that jobs were already in free fall.  Obama's policies stopped the job losses and private sector jobs have actually been growing now for three years.

Furthermore, consider that Romney promises to slash government spending.  That means that he is going to slash government jobs as well, a fact that he never mentions.  These job losses will drive up the unemployment rate, another fact he doesn't mention.  But in fact, he would only be doing what Obama has already done.  There are about 1 million fewer federal workers now than there were four years ago.  Had the Obama administration not cut those jobs, the unemployment rate would be just over 7%, not bad for a post-recession period.  So Romney is attacking Obama for reducing the federal workforce and driving up unemployment, something Romney himself promises to do.  This, to me, is dishonest.

So the choice comes down to this: do you want Gordon Gekko as your President?  Or do you want a pragmatic leader who is willing to take risks to save jobs and grow the economy?  The choice is pretty clear to me.

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