Image via Wikipedia Here's my latest column for The Huffington Post, titled: The Welfare Queens of Wall Street.
Gather round kiddies, its story time:
Once upon a time, Ronald Reagan rallied Republicans with his tale of the big bad “welfare queen” who cruised around the kingdom in her pumpkin colored Cadillac stealing all the peoples gold. His story was a fabrication of course, but did much to solidify the convictions of the “pull yourself up by your own bootstraps” crowd. Now we have welfare queens on Wall Street begging for a bail out while spending all our money at the spa. Oh how the tables do turn.
The plight of these poor little rich men started when the wicked witch of Deregulation came to town. George Bush was a believer in the fairy tale of the “ownership society.” The premise; capitalism is king, free markets are the Holy Grail, and the big bad monster of government must be completely crushed like a little bug under the cowboy boot of consumerism. Wealth and prosperity will trickle down to those who deserve it, and away from those who don’t. (Excuse me for saying so, but I am not overly fond of being “trickled on” by a bunch of Monopoly men.)
What we are talking about here is supply side economics. (I know, I know, economics is a tough subject, and not much fun, but bear with me, and I shall try to provide a little stimulus in the package.)
Here’s a quick background: Regan believed spending creates wealth. So the idea is, spend more than you have, and riches will abound. It’s kind of like saying instead of saving your money in the bank, just max out your credit cards to say, a trillion dollars or so while waving your magic wand saying “there’s no place like home.”
But to put it in folksy Sarah Palin slang, “By-golly, that sure didn’t work worth a diddly now did it.” (Wink)
Bill Clinton did not believe in such magic, and refused to drink the kool-aid, so when he took office, he created a plan called “Pay as You Go.” Bill balanced his budget, and left us with a nice fat national savings account. (Thanks Bill!) But George Bush did not like Bill. He liked Ron’s idea better. So George and his pals in the GOP decided to spend every last dime in that ol’ savings account, and then spend more and more and more!
The problem is, George and his buddies did not read the entire memo on Keynesian economics, which basically says deficit spending is O.K. in the short term. In other words; be fiscally responsible, but if your car breaks down, go ahead and use the credit card to fix it, cause keeping the ol’ engine running in order to get to work is better than losing your job. They just sort of skipped over that “in the short term” part, and just ran with the shop till you drop plan like Brittany Spears on a bender.
The politicians of the GOP were living high on the hog in this fairy tale world and bringing home the bacon big time. Yes sir’ee Jim Bob, it was a grand old party. They could campaign to the home crowd on the ever popular “no new taxes” mantra while lining their districts with endless payouts of pork pulled from your pockets. (Just ask The Welfare Queen of Wasilla: Alaska got the biggest helping of all.) But even that was not enough. These supply-siders, or “voo-doo economists” as Bush Senior once called them, wanted to deregulate everything. No Rules! No oversight! No government! Let the free market take care of itself! Which is exactly what they did. The busy little beavers of the GOP worked their noses to the ground making new laws to unmake old laws, and set the wild markets free.
Once the markets were deregulated, lots and lots of bad (subprime) loans were made, with No Bank Left behind. It pretty much burst everybody’s bubble.
Now, the GOP will tell you the poor are to blame, (because everybody knows they don’t know how to handle money.) They will say these “irresponsible” borrowers messed up their whole plan and caused the housing bubble to burst. (“Bad poor people!”, “Bad!”)
It’s convenient for the GOP to blame the poor, because this is the one group that is least able to fight back, and the group least likely to vote for them anyway. But the numbers don’t lie folks. While the poor did in fact get caught in this web, and did default on a number of loans, the total percentage of those loans is nowhere near big enough to cause a world market collapse. Look around. This mortgage crisis is not restricted to urban low income neighborhoods here at home. (If this was just a problem in the projects, I guarantee it would never have made the front page.) No, we are talking about world market collapse. We are talking about the foreclosure of McMansions, ocean front estates, and banking failures on a global scale. (As if the poor could pull that off.) This crisis did not occur because the poor abused the free market principle of deregulation to rip off Wall Street, this crisis occurred because the greedy ghost of Gordon Gecko is the acting grand wizard behind the curtain of deregulation policies.
The time has come where conservatives can no longer laugh at progressives with snide remarks of seething fiscal and moral superiority. Their “guy” was wrong. Their plan did not work, and their addiction to the fear mongering politics of imperialistic saber rattling for oil has torn their precious little family values plank into a million little pieces.
There is a price to pay for this folly, of that you can be sure. Judgment is coming, and it commeth right soon. We are facing job losses, business failures, a freeze up in the financial markets, and a very long, severe recession. Change is on the way my friends. Ya, you betcha.
No matter what Congress does now, it’s too late to stop that. The best they can do is minimize the damage, and I would not put too much hope on that because as anyone in Washington will tell you, if you ask two economists their opinion, you will get six different answers. The good news is, in this case, for the first time in world history, all the economists are in agreement on one thing: we are in some really deep doo-doo.
Here is what the American people need to understand, and what they are never, ever going to hear from a politician: You are going to have to pay for this mess, and it is going to cost each and every one of us dearly. We are in a very, very deep debt. We have two wars going on that we can no longer pay for. Our infrastructure is crumbling. Our jobs are going overseas, and our addiction to oil is killing us. It is time to tighten our belts and circle the wagons. As Nancy Pelosi said in a press conference yesterday, “We have a huge budget deficit which we could get relief from if we end the war in Iraq. We have a huge trade deficit which has an impact on the fiscal budget health of our country which would be greatly relieved if we reduced our dependence on foreign oil and did so soon.”
Pelosi took the stage, surrounded by a dozen economists including Nobel Prize winner Joseph Stieglitz, who added, we need a “comprehensive plan, not just based on trickle down economics, not just going to financial markets, but at least some of the money going directly to households and to meet infrastructure needs.” He also focused on the development of green technologies as a major component of the solution.
So climb aboard the magic school bus kiddies. We are about to embark on a wild ride, and learn a whole new way of living in the grand ol’ U.S. of A.
I know The American People are strong enough to overcome this crisis. But I worry the voters will not be smart enough to remember how it all began. I fear, as we experience the hard hitting blows of inflation, voters will retaliate against whoever is in power at the time, which means that even if we vote for Democrats this year, and bring in a fresh new group of leaders, ready and willing to turn this mess around, the Republicans will have a sweeping victory in 2012. They will approach hungry, hurting voters with that tempting poison apple of trickle down policy, dressed up in the costume of tax relief, and rule the kingdom once again.