Stopping the Recession

Here in America, the land of the free and the home of opulence, many thousands of citizens are wondering if they will have a home next month. Many thousands of others are struggling to put dinner on the table. And millions of people cannot pay their mortgages or their heating, electric, gas, and credit card bills. What does it mean to these people that the Federal Reserve is cutting the prime rate by three-quarters of a percent? Not much.

It does not matter whether they call this calamity a recession, a downturn, a correction, or Swiss cheese. What matters is the suffering experienced every day by ordinary Americans.

In my opinion Ronald Reagan was a lousy president. On his watch the neo-conservatives implemented the theory of “Supply-Side” or “Trickle-Down” economics. Under that theory, the government cut taxes and initiated programs to benefit the prosperous elite, thereby supposedly improving the economy and benefiting everybody. Needless to say, the rich got richer. The poor, however, stayed poor. Bush W and his crew are devout worshippers at the church of Supply Side.

Republican politicians, who have thrived on fat lies about “tax-and-spend Democrats,” gave a huge tax cut to the wealthiest Americans at the start of the George W. Bush Administration. Middle-class people got pennies, and the poor got nothing. The unregulated banking industry began preying on lower-income people, luring them into deadly adjustable-rate mortgages. Wall Street moguls bought-up billions of dollars worth of these so-called “sub-prime” investments. On the strength of this, the construction industry began a building boom on the backs of illegal aliens. Now that the whole thing has exploded, Bush and his gang want to bail-out the banks, brokers, and builders. But the people who need help are the people who are losing their homes, their jobs, and their lives.

Joseph E. Stiglitz is a professor of Economics at Columbia University. He won the Nobel Prize in Economic Science in 2001. In a recent essay he said that tax cuts are not a solution to the problem. He pointed out that “middle- and lower-income Americans have been suffering for the last seven years — median family income is lower today than it was in 2000.” He suggested that direct payments from the government to the people in the form of tax rebates would stimulate the economy while helping people.

Stiglitz also recommended strengthening the unemployment system. In other words, the government should increase unemployment benefits and extend the period that people could collect benefits. Stiglitz noted that money received by the unemployed would be spent immediately, thereby stimulating the economy. He also recommended other actions which would improve the economy, including money for rebuilding infrastructure, support for education, and legislation allowing people facing foreclosure to stay in their homes.

Two other steps strike me as necessary. The first is to stop the war. Just stop it. Bring our troops home. They are heroes who have fought valiantly in a dirty, hot, arid, ugly land. Bring them home and stop this senseless sacrifice of our youth and our treasure. Second, repeal the cynical tax cuts for the wealthy which have upset our economy and which, along with the war, have created the largest deficits in American history. Everybody knows that gigantic deficits distort the economy and reduce the money supply. Because of our deficits we are debtors going hat-in-hand to Arab sheiks and Asian countries. It is pathetic.

I do not comprehend how anybody but the very rich could vote for Bush and the Republicans. In a tentative deal, Bush has succeeded in getting Democrats to drop their demands for food stamps and for improving unemployment insurance. For some time now there has been a callous indifference in the Bush Administration to the needs of the poor and lower-income Americans. This has included vetoes of bills expanding health insurance for less fortunate children. It has included refusal even to consider governmental health insurance for the 47 million uninsured. However, Bush does weep for the billionaire bankers, hedge-fund managers, and big investors. God forbid that they should have to cut down on their daily rations of caviar, filet mignon, and Dom Perignon.