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Some Modest Proposals to Spur the Economy (And Create Jobs) September 13, 2010

Posted by Kate Ryan in Barack Obama, Democrats, Economic Stimulus, Economy, National Politics, Politics.
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Some very sobering and alarming statistics were published this weekend.  The number of Americans living in poverty has jumped from 13.4% to 15% – and while a 1.6% increase doesn’t seem so high, remember that it represents almost 5 million Americans.  FIVE MILLION.

These are levels that have been unseen in this country since before Lyndon Johnson’s “War on Poverty” was declared in the 1960’s.  The increase is the single largest yearly increase since the government began keeping poverty statistics in 1959.  Roughly one in seven of our fellow citizens is now poor.

We can point to so many reasons for this.  Of course, the immediate effects of unemployment and the housing crisis are primary.  There are also underlying structural problems with the economy that cannot be cured by simply putting more people to work.  This government erred terribly by trying to fix the economy by fixing Wall Street.  Wall Street doesn’t buy school supplies, and washing machines, and new cars – people do.  And until we can get people buying things – creating demand – nobody out there will be creating jobs.  As a business owner – why would I hire people to make things that nobody will buy?  To serve meals that nobody can afford to eat? 

There are some fundamental steps that the government can take to increase demand.  The first thing is to stop worrying about the federal budget deficit. It is axiomatic that if we can get people working and paying taxes, there will be less stress on the budget.  Though the Republicans will tell you that you can’t raise taxes in a recession, most Keynesian economist will tell you that you MUST deficit spend your way out of a recession.  It’s kind of like the rising tide lifting all boats.  Or that you have to spend money to make money.

Second, you must end the Bush-era tax cuts.  Economically speaking, we should end them for everyone – including the middle class – but allowing them to expire for the top 2% of wage earners in this country would go a long way towards plugging some leaks.   For a taxpayer making $250 K, the increase amounts to about $5,000 per year.  The wealthier the taxpayer, however, the more likely it is that he or she will have high mortgage interest deductions or other income tax credits that are unavailable to those who don’t itemize.  So, the impact of these would be even less.

Third, you must cut taxes that will spur demand in the lower third of workers in this economy.  This would be through a payroll tax holiday where the federal deductions for Social Security and Medicare are totally eliminated for six months, then gradually reintroduced over a period of six months.  For many working Americans, this would be about a 9% raise in pay.  For a guy making $10 an hour, this would be an increase of $36 per week or over $140 per month.  The gradual reintroduction (say 3%, 6%, 9%) would be so that people who were got used to having that extra money wouldn’t suffer the shock of suddenly losing it.  Employers would still have to pay their full share to the government during this entire time. 

Fourth – allow Americans to refinance their mortgages directly through the government at extremely low interest rates.  Right now, the Fed is lending money to banks at or near zero percent.   The government should allow ANY American homeowner – whether they are underwater or threat of foreclosure or just doing fine – to refinance a primary residence at 2% for a 15-year loan, or 3% for a 30-year loan.  The loan would have to have been issued before September 2008 to qualify.  A homeowner carrying a $250,000 mortgage at 7% for 30 years is now paying about $1665 per month in principal and interest.  If this was refinanced for 30 years at 3%, the P & I payment would go to $1055, an extra $600 per month that the homeowner is now free to spend on something else.  If the homeowners mortgage was $1 million, the refinance would save him or her almost $2,500 per month.   As a bonus, if the homeowner’s mortgage is owned by a bank that was bailed out through the TARP legislation, the government would reduce the banks repayment obligation by that amount – rather than pay off the homeowner’s mortgage.  So, for example, if the homeowner’s loan was owned by Citibank, the government will just reduce Citi’s TARP debt by $250,000.  If the homeowner is underwater – that is – paying on a house that is no longer worth what it was purchased for, the government will similarly refinance the REAL cost of the home, and the original lender will write off the total amount against its TARP windfall.  The government would completely pay off mortgages held by local lenders. 

Finally, there are plenty of people out there who don’t have mortgages, but are drowning in consumer debt that the credit card companies have made it ever harder to afford to pay off.  In 2009, the average credit card debt per household with debt was about $16,000.  About 14% of Americans have revolving debt that is more than 40% of their net incomes.  The government could directly issue loans at 3% to individuals for credit card debt up to a maximum of $25,000 for a period of up to 5 years.  For the consumer with $16K in debt, this would result in a payment of about $288 per month.   The consumer would agree that a notation would be placed in his or her credit report that would prohibit he or she from getting any NEW credit until the government was paid in full.

These proposal would take significant outlays of cash by the government and it does not seem as though there is the stomach for this on Capitol Hill these days from either party.  However, failure to take bold moves such as these will needlessly prolong and deepen this recession,  We need President Obama to act more like Franklin Roosevelt and less like Bill Clinton.

Racism, Reid & Republicans…Can’t We All Just Get Along? January 11, 2010

Posted by Kate Ryan in Barack Obama, Democrats, Harry Reid, National Politics, Racism, Republicans.
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Years ago, when my daughter was 10 or 11, she was assigned to read a book about Langston Hughes – the early 20th century African-American poet and playwright – for Black History month.  She came to me one day to ask me about the terms “colored” and “colored people” that cropped up throughout the book. I explained that in the past, “colored” was a term used to refer to African-Americans.  That it was once acceptable, but now was considered perjorative, and that the correct term was African-American.  My daughter chewed on this for a while, then asked, “why isn’t everybody  a colored person?”

Surprised, I asked her what she meant.  She went on to explain that she knew lots of African-Americans and that were not one color; some were dark-skinned, some were brown, some were almost white.  That she had Indian and Hispanic friends that were brown.  That even she – a supposedly white girl – had a dark complexion (olive-skinned) as compared to me (white as a sheet).  “Can we be colored people?”, she asked.  It took a while to convince her that, no, we would not be colored people.

I was reminded of this conversation with my daughter this weekend when the flap broke over Senator Harry Reid’s comments about then-candidate Barack Obama – whom he described as a “light skinned” African-American “with no Negro dialect, unless he wanted to have one”.  Reid’s comments were revealed in the new book, “Game Change” by journalists Mark Halperin and John Heilemann, and were made to explain Obama’s acceptability to white America as an African-American candidate. 

Of course, Senator Reid’s gaffe has caused a great uproar among our friends on the right.  GOP Chairman Michael Steele said on “Meet the Press” yesterday that Reid should step down as majority leader.  Steele likened Reid’s comments to those of former Senator and majority leader Trent Lott wh was forced to resign in in 2002 when he commented that had virulent former segregationist Senator Strom Thurmond been elected president in 1948;  “…if the rest of the country had followed our lead, we wouldn’t have had all these problems over all these years, either,”  implying that the civil rights movement was a “problem”.  Not quite.  Steele also conveniently forgot that he was under fire in the same week for saying that he was an “honest Injun”, something Native Americans found a bit racist. 

The fact is that just about everyone from every background and every race and every political part of the spectrum is racist.  That is human.  There is a basic human desire to be better than someone else – especially if you’re on a lower socioeconomic rung  – hence the prevalence of racism and racist activity among the most impoverished communities of any race.  I challenge anyone out there to really examine themselves and what they have said and done over the years.  I doubt that there is anyone out there that has NEVER told a racist joke, uttered a cringing racial epithet, repeated and believed in some stereotypical characteristic, or fretted over the “advantages” that other races have over one’s own.  The 2004 film “Crash” illustrated this beautifully, showing white racist police officers, black racist thugs, hispanic racist drivers, and asian racist accident victims.  The film even showed an Iranian woman cleaning her store after it was vandalized saying, “Why do they call us Arab?  Don’t they know we are Persian?”   I find that the people I know that harbor the worst racist feelings are people who insist they’re not racist.  That’s usually because they have a black friend and never use the “N-word”.  

I know that I have worked very hard over the years to free myself from racist language and the like – and I still find that I fail at times.  But I also know that I believe in equality of opportunity for all Americans and I support politicians, policies, and programs that will help our nation succeed in that achievement.  Real racism is not found in the words that we use.  Real racism is found in how we treat each other; how we arrange our society in such a way that it fosters great success for one race but dooms another race to poverty and despair. 

People who support tax policies that obscenely benefit wealthy white people are probably racist.  People who oppose a woman’s right to control her own fertility, force her to have an uplanned or unwanted child, then abandon that child to poverty because they oppose social safety nets for single mothers are probably racists.  People that oppose equalized funding for education so that children from wealthy, usually white, communities get superior educations while children in the inner-city study from torn texbooks in crumbling school buildings are probably racist.  I could go on and on – but I’m sure you get the point.  I’m willing to bet that not all Republicans are racists, but most racists are Republicans.