Category Archives: Economy

FAA Back in Business!

Democrats held firm against the Republicans’ desire to kill unions and a 1-month deal to extend the FAA authorization was finally made.

Unfortunately, restarting the projects which were stopped by the Republican’s refusal to re-authorize the FAA is going to cost us taxpayers extra.  And we lost  $400,000,000 in FAA tax revenues.

Another great move by the Republicans who say they want to lower the deficit but are actually doing everything possible to torpedo the economy and cost the taxpayers extra money.

Cutting Gov’t Spending Will INCREASE the Deficit in the Long Run

Excerpted from How to Run Up a Deficit, Without Fear By ROBERT H. FRANK
Published: December 5, 2009
(Emphasis added by MauiDemocrats.org)

When total spending falls well below the level required for full employment, the economy won’t recover quickly on its own. Consumers won’t lead the way, because even those who still have jobs are fearful they might lose them. And most businesses won’t invest, since they already have more capacity than they need. Only government, Mr. Keynes concluded, has both the motive and opportunity to increase spending significantly during deep downturns.

Of course, if the government borrows to do so, the debt must eventually be repaid (or the interest on it must be paid forever). That fact has provoked strident protests about government “bankrupting our grandchildren.”

It’s an absurd complaint. Failure to stimulate the economy would mean a longer downturn. That, in turn, would mean longer stretches of reduced tax receipts, increased unemployment insurance payouts, and depressed private investment. The net result? Higher total public borrowing and a permanent decline in productivity compared with what we would have had under effective economic stimulus.

Once the economy is back on its feet, deficit logic changes. At full employment, extra borrowing often compromises future prosperity, just as critics say. On President George W. Bush’s watch, for example, the national debt rose from $5 trillion to $10 trillion. Some of that borrowing paid for an expansion of Medicare prescription coverage and a financial bailout a year ago, but most went for a war in Iraq and tax cuts that largely just allowed for additional consumption. Our grandchildren will be forever poorer as a result.

But the reverse would be true if government borrowing were used for productive investments. After decades of neglect of the nation’s infrastructure, attractive public investment opportunities abound. It’s been estimated, for example, that eliminating bottlenecks on the Northeast rail corridor would generate $12 billion in benefits at a cost of only $6 billion. These are present value estimates. When government undertakes such investments, our grandchildren become richer, not poorer.

But they’d be richer in the long run if we paid for those investments with our own savings rather than with borrowed money, for that would allow our grandchildren to benefit from the miracle of compound interest. Many fiscal hawks insist that the only way to eliminate deficits and pay for additional investment is by cutting government spending. But as California’s experience suggests, that approach often backfires. Government programs have constituents. Those that get the ax are often not the least valuable ones, but those whose supporters have the least influence. California’s schools, once among the nation’s best, are now among the worst.

To eliminate deficits, we need additional revenue. The encouraging news is that we could raise more than enough to balance government budgets by replacing our existing tax system with one that taxes activities that cause harm to others. Called Pigovian taxes by economists — after the English economist Arthur Cecil Pigou — such levies create a burden that is more than offset by the reductions they cause in costly side effects of everyday activities.

When producers emit sulfur dioxide into the atmosphere, for example, the resulting acid rain harms others. As the 1990 amendments to the Clean Air Act demonstrated, the most efficient and least intrusive remedy was to tax sulfur dioxide emissions. Doing so entailed no net sacrifice, because solving the same problem by prescriptive regulation would have been much more costly.

Similarly, when motorists enter congested roadways, they impose additional delays on others. Here, too, taxation is the best remedy. The time that congestion fees save is more valuable than the fees are burdensome.

When the transactions of financial speculators fuel asset bubbles, they increase the risk of financial meltdowns. A small tax on those transactions would reduce this risk.

When drivers buy heavier vehicles, they increase others’ risk of dying in accidents. This risk would be lower if we taxed vehicles by weight. Carbon dioxide emissions contribute to global warming. Here as well, taxation offers the most efficient and least intrusive remedy.

Anti-tax zealots denounce all taxation as theft, as depriving citizens of their right to spend their hard-earned incomes as they see fit. Yet nowhere does the Constitution grant us the right not to be taxed. Nor does it grant us the right to harm others with impunity. No one is permitted to steal our cars or vandalize our homes. Why should opponents of taxation be allowed to harm us in less direct ways?

Taxes on harmful activities would be justified quite apart from any need to balance government budgets. But such taxes would also generate ample revenue for the public services we demand, quieting the ill-considered commentary about deficits.

In the meantime, however, such commentary continues to render intelligent political decisions about deficits less likely. For example, 58 percent of respondents in a recent NBC News-Wall Street Journal poll said the president and Congress should worry less about bolstering the economy than keeping the deficit down, while only 35 percent said economic recovery was a higher priority.

If we really want to bankrupt our grandchildren, that poll charts a promising course.

Robert H. Frank, an economist at Cornell University, is also co-director of the Paduano Seminar in Business Ethics at the Stern School of Business at New York University.

Republicans Brag – Stock Market Drops 500 Points

Republican Speaker of the House, Boehner,  bragged he “got 98% of what [he] wanted” in the debt ceiling vote by holding the U.S. economy and credit hostage.

The Dow promptly dropped 500 points, while international newspapers ridiculed Boehner and expressed concern that the cuts Boehner wanted to jobs programs would set the American economy back.

Way to go, Boehner!

(Meanwhile 90,000 workers are furloughed because the Republicans won’t re-authorize the FAA unless Delta Airlines’ union-busting clause is included.  The U.S. is losing an estimated $200,000,000/week in tax revenues because of this.)

U.S. Reps Make $174,000/year and Republicans are taking a 5 week vacation

Don’t you wish you made almost $200,000 per year and could just walk away from your job for 5 weeks, leaving the American workers hanging, without jobs, without income, without health insurance?

Republicans refused to re-authorize the FAA which has put over 90,000 people out of work and risks the safety of everyone who flies.

Not only that, the Republicans (who say they are all about balancing the budget) are losing the U.S. $200,000,000 per WEEK because the FAA can’t collect the fees when it isn’t re-authorized.

We are dealing with people who claim one thing (they want a balanced budget) but take actions that are completely at odds with those supposed goals.

All because they want to destroy the unions and loot the middle class.

Debt Deal = “sugar-coated Satan sandwich”

Excerpted from The Guardian Newspaper (England)

Democratic members of Congress looked uneasy, at times shifty and some downright angry. “If I were a Republican, this is a night to party,” Emanuel Cleaver, a Democratic member of the House from Missouri, told MSNBC. Cleaver, a Methodist pastor and chairman of the Congressional Black Caucus, which met to discuss its reaction to the deal, dismissed it as a “sugar-coated Satan sandwich”.

In return for Congress raising the country’s debt ceiling, normally a routine matter, the Republicans have secured almost $3 trillion in spending cuts and forced the Democrats to do this without any tax rises. The Tea Party Republicans have not got all they wanted including no repeal of the Bush Tax Give-away to $billionaires and corporations.

Raul Grijalva,from Arizona, reflected the view of many of his party colleagues that the White House had surrendered too much to the Republicans. “This deal trades people’s livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it. This deal weakens the Democratic Party as badly as it weakens the country,” said Grijalva, co-chairman of the Congressional Progressive Caucus.

“We have given much and received nothing in return. The lesson today is that Republicans can hold their breath long enough to get what they want.”

What is galling for Democrats is that they hold the White House and the Senate while the Republicans hold only the House, the more junior of the two chambers, and yet is it the House that appears to be dictating events.

Senator Bernie Sanders expressed worry about the impact of spending cuts on social security, Medicare, Medicaid, community health centres, education and other programmes, he said he could not support a proposal that “balances the budget on the backs of struggling Americans while not requiring one penny of sacrifice from the wealthiest people in our country”.

Republican Shut Down of FAA Enters 7th Day

Nearly 4,000 FAA employees nationwide were furloughed last week after Republicans blocked approval of an extension of the agency’s operating authority unless their union-busting provision was included. Since 2007, Congress has kept the agency operating through a series of 20 short-term extension bills, the latest of which expired at midnight July 22.

The FAA shutdown has not only put 4,000 federal employees out of work, but it is having a ripple effect as contractors are furloughed.

Next time you hear a Republican tell you their measures are designed to help unemployment, ask them why they put all these workers out on the street so they could legislate their war on unions.

Republicans: “Cut Medicare or We’ll Plunge the USA into Depression”

Latest update: Republicans are still holding the country hostage. Their deal? Cut Medicare and Social Security and don’t touch our tax breaks for the wealthy or we’ll refuse to lift the debt ceiling.”

The debt ceiling has been raised under both Republican and Democratic Administrations many, many times with a simple one-sentence bill changing the debt ceiling number.

But this time, Republicans see that they can hold the economy and good credit of the U.S. hostage to push through their radical anti-middle class measures.

In a time when corporations and the very, very wealthy are seeing huge increases in their profits and income, Republicans are demanding that they get even more subsidies paid for by cutting essential services to the middle class including college grants, Medicare and Social Security.

What that does is skim off federal tax dollars to Exxon, BP, the Banks and the uber-wealthy like Murdock, while piling on even more burdens at the state level.

As Hawai’i struggles to deal with unemployment, foreclosures, uninsured citizens, the federal government’s help will be cut under the Republican “compromise”.

Republicans Shut Down FAA

Republicans refused to reauthorize the FAA unless their union-busting provision was voted into law. Democrats won’t vote in favor of union busting and want the Republicans to offer a clean FAA reauthorization bill without the Republican war against working people items included.

The Republicans claim they are in favor of bringing down the deficit but the U.S. is losing FAA fees because of the Republican’s refusal to reauthorize the FAA! Republicans put the FAA employees out of a job AND are costing the government $200,000,000 per week in lost FAA fees.

And if you are wondering why the price of your ticket didn’t go down when the fees were removed? The airlines are pocketing it.

While Republicans Fiddle…

While Republicans block raising the debt ceiling (which will mean soldiers don’t get paid, Social Security checkss don’t get issued and the U.S. rating plummets leading to higher interest rates), the Republicans of Minnesota have already thrown their state into total meltdown.

With the Minnesota Republicans letting their state go unfunded, the state has come to a complete standstill.  Little did the teapartiers know, but that means no more beer!  Yep, with no state workers to renew licenses, bars and stores are on the brink of closing and, in news that many in Maui County will find horrifying, the Coors company has been required to pull all its products off shelves in the next 3 days because they can’t get their permits renewed.