Thursday, February 11, 2010

Cake if not Bread

New unemployment claims for last week dropped by about 8% and from the media coverage you would everything had changed overnight. It hasn’t of course and these numbers are often revised later by a significant amount. It’s more likely that states are having reporting problems from the snow storms than that there was any real change. The underlying causes of unemployment have not only not changed but continue to worsen.

The Senate Finance Committee has released a draft of the Hiring Incentives to Restore Employment Act or HIRE. With a name like that you are reminded of bills from the Bush Crime Family era like The Healthy Forests Initiative, Clear Skies Initiative and No Child Left Behind. This 80 billion dollar monster is no different as it is loaded up with tax cuts and few jobs. This should be no surprise with Senators Baucus and Grassley as co-sponsors. One is a wholly owned corporate Republican that passes himself off as a Democrat and the other is a Christian Dominionist and member of the “C Street Family” who passes himself off as hard right Republican.

Any benefit to the public in a bill these two would put their names on is just a fig leaf to conceal the corporate engorgement that Bob Dole had to take pills to achieve. The part of Britney Spears in this ad spot will be played by the middle class.

The tax cuts are touted as a boon to small business and municipalities issuing construction bonds but without fixing the real problems this won’t happen. Small business doesn’t hire people to get a tax break, they hire because there is market share to be had. Companies like Wal-Mart already get huge tax breaks and will continue to grind small business into the ground. No tax break will help you if Wal-Mart comes to your town and undercuts you until you are gone.

Cities are going into a cash flow collapse and aren’t likely to be issuing a lot of bonds either. Congress could roll back the Reagan tax cuts for the rich who would be buying the bonds. Then we could simply pay cash like they did in the good old days when all our neglected infrastructure was built. Instead of spending the four trillion it would take to fix all our infrastructure (there might be some jobs there) they want to sell it off for pennies on the dollar. Then we can pay for it all again in usage fees plus a large profit for the same rich people who got the Reagan tax cuts. Makes sense if you’re one of those rich people except for the ever diminishing returns from that sort of system. But they’ll let us eat cake if not bread.


Anonymous said...

I don't understand the part about rich people buying bonds. Is that what rich people do? Is that a good idea? And why won't cities issue more bonds?

prairie2 said...

The rich don't play the markets so they buy bonds and yes they are more or less a safe place to put money (unless they default) Cities are in too bad a shape to invest heavily in construction unless Congress intervenes. Bonds have to be repaid with interest and some cities are in danger of defaulting already. Some of the really rich own their own companies like Koch or Walmart but the Wall Street crowd like the Bush family tend own bank bonds or treasuries for the bulk of their fortunes.

Unknown said...

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Thank you sir for all your hard work.