BRAMA, November 10, 2010, 9:00 AM ET
Op-ed
U.S. Election Outcomes 2010
By Boris Danik
In the polls in Ukraine in January 2010, the voters elected pro-Russian Viktor Yanukovych president of that country by a small margin. They voted mainly against a bad economy.
The outcome is the same bad economy and a track towards an authoritarian regime and a national self-flagellation.
In midterm Congressional elections in the USA in November 2010, Americans voted primarily against a bad economy. And they are confused no less than are voters in Ukraine. The outcome may aggravate the economic malaise in the USA. It would be absurd to expect an improvement when legislative power, as a result of the voters' choice, has backtracked toward a party that not only had been in charge during the slide into the Great Recession under the Bush regime, but also now has all the wrong ideas about how to dig the economy out of a hole.
The pundits are interpreting public mood as reflecting anger against all politicians and "standing up against Washington". Barack Obama is taking as much blame as George W. Bush did at the height of crisis in 2008.
On the other hand, exit polls on November 2 showed that 59 percent of voters (according to the CBS) think that Obama's government "is doing too much" rather than too little. Many say that he wrongly concentrated on healthcare reform instead of the economy.
Anger-driven people should be reminded that, unpopular as it was, the bailout of banks and Detroit carmakers saved the country from a second Great Depression. Was that too much or too little? Semantics aside, Obama deserves credit, not blame.
In a moment I shall get to the subject of a fundamental long-needed overhaul of America's collapsed economic paradigm. Nothing can be more futile than the on-going cut-and-paste absurdities, such as the monetizing of negative interest rates (the late Milton Friedman of the Chicago school would shudder) and re-glorification of the "opportunity society" with all of its passion for confrontational grab-bags. But, in any event, the twangs we hear lately illustrate a confused and disoriented state of the collective mind of the American voter, with sporadic splashing as a substitute for political awareness.
There is no reason to believe that in this election the voters were wiser than they were in 2004, when George W. Bush was re-elected. According to exit polls that year, nearly half the voters believed that either welfare or foreign aid are the biggest items in Federal budget – when in fact these items are among the smallest in the budget. This is scary, wrote Bob Herbert ("A Nation of Nitwits", The New York Times, March 1, 2005). It is also consistent with the cultivated ignorance in pop culture, played in commercial media to secure a status quo for the moneyed power elite..
The results of this election are catastrophic for America, according to Paul Krugman, New York Times columnist and Nobel laureate in economics. The new goal of the Republicans has nothing to do with the economy. The main objective, says Mitch McConnell, Senate Republican leader is to make certain that Barack Obama becomes a one-term president. Reversing the healthcare and banking reforms are the other objectives. Thus, obstruction and destruction of the president's initiatives is the essence of the GOP agenda.
The key to getting out of the present economic dead-end is to do something about its root cause – an excessive concentration of wealth at the very top. The best-guarded public secret is that the culprit of the current economic downturn is the existing private and public debt overload at all levels of society – except in the castles of the "investors", who sit on piles of cash, courtesy former president George Bush's tax cuts for the top bracket, which set in motion a massive transfer of wealth from the bottom to the top, on the order of a trillion dollars by year 2007.
Rather than parking that money in low-yield securities, the investors pumped it into the subprime mortgage market which promised higher returns during the Bush era. The rest is history, foreclosures and layoffs, as defaults crippled the banks and choked liquidity.
Even after bank bailouts in 2009, consumers cannot continue to borrow and spend while stumbling under the weight of existing debt. Part of it is a massive credit card debt (at usurious 24% interest rates) for daily necessities, financed by money markets that are fuelled by the same "investors".
Neither the economists nor politicians offer a solution. They and the Federal Reserve (US Central Bank) are hung up on printing more money into the hands of "investors", in exchange for bad debt certificates ("cash for trash") and US Treasury bonds. Their stated intent is to expand lending of money and devalue the dollar. It is like "pushing on a very long string", writes the Financial Times, November 5.
At the same time the Republicans are pressing for extending George Bush's tax cuts, which are due to expire at the end of 2010. Such an extension would only stretch out the present sick scenario, besides sinking the US government deeper into red ink.
The Republicans' perennial axiom – that the economy can be revived by more tax cutting which would stimulate investment and create new jobs – is an act of faith not supported by evidence of the consequences of Bush's tax cuts for top bracket. The outcome is cash pileup at the top and mountains of debt at the bottom, as the income gap between zillionaires and the rest has reached obscene proportions. Median income has risen 17% since 1980s, while the income of the richest 0.1 % has quadrupled (Paul Krugman, "Unified Theory of Bush Scandals", The New York Times, April 2, 2007).
A very different approach, one that addresses the root cause of economic sickness and is seldom mentioned in a polite society is to reverse the wealth transfer that was set in motion to the top by George Bush's tax cuts. Not only should they be allowed to expire at the end of 2010 (this would only stop the ongoing transfer), but also an additional tax should be enacted on the top bracket, to actually strip the top of some of its overweight.
This excess fat should be used for public projects to rebuild America's dilapidated infrastructure. It would generate millions of new jobs, without a corollary of fiscal stress and inflation.
Unfortunately, Republican nostrums about the virtues of tax cutting for the top club resonate with American voters. They seem to have an aversion to all taxes (mainly because of an ingrained disbelief in fairness of the system), while taking for granted tax-funded entitlements, such as Social Security, Medicare, and disability compensation.
Also, many have no problem with the USA spending trillions on semi-permanent wars and cutting taxes at the same time – as if such a combination were a natural way of balancing the budget. Perhaps it would balance if the Republicans had their way and had reduced social spending in the USA below a Third World level.
Amazingly, the average middle-class American who votes Republican ticket pays scant attention to the unyielding Republican Party agenda to privatize Social Security and Medicare, although former president George W. Bush tried to do just that. That's how, in the voters' flabby or feeble perception, the ongoing job losses and foreclosures become disconnected from the structural faults that precipitated them, such as tax policies that favor aristocracy. When "the people send a message" to a wrong address, as they did in this November election, democracy takes a hit.
The damage from semi-permanent two wars to America's fiscal sanity is never on the voters' collective mind as much as is the fear of sharing some government spending with the have-nots US war casualties and tens of thousands of civilian killings disclosed recently by Wikileaks website were shaded out by panic of American senior citizens, who favor (60 percent) repeal of Obama's healthcare law because it would, among other measures, curb some extra benefits in a Medicare option administered by private insurance companies and costing the government more than the original Medicare.
Such generational egotism would deny healthcare insurance to 50 million Americans, to protect an advantage for some. The outcome of this election looks indeed like a sprawling carpet of blatant self-interest, magnified by wrongful, reckless indictment of constructive efforts by President Obama and his historic enactment of healthcare reform.
For those who forgot history, the Republican Party's fierce opposition to Medicare legislation in 1965 and Social Security in 1935 was very similar to their rage this time. Writes the Financial Times (November 4): the Republicans have slogans, but lack coherent alternative policies to Mr. Obama's.
In the coming lame duck session of Congress, expect the extension of unemployment compensation to be held hostage to GOP demand to permanently extend George Bush's tax cuts. Obama is no FDR, who welcomed confrontation ("I love when they hate me"). Obama may wobble to placate tax-cut zombies in his own party.
Dr. Boris Danik
North Caldwell, NJ
November 10, 2010
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