The problem is that rising-tide-lifts-all-boats thing doesn’t work. The rich got richer, alright. But everyone else got nada. Then the wealthy gamblers on Wall Street crashed the economy, swamping everyone else’s little skiff in a whirlpool of underwater mortgages, lost jobs and dashed hope. Now, a Democratic president has proposed a different economic path. Barack Obama said in a speech last week that America should invest in itself and build out from the middle class. In his economic model, government directly serves the vast majority of Americans in the middle while giving a hand to the poor so they can pull themselves out of the drink.
The cliché is alluring: A rising tide lifts all boats. Former Republican presidents Ronald Reagan and George W. Bush promised it would be true as they cut taxes on the rich.
If the rich got richer, Reagan and Bush contended, some of their extra cash would trickle down and float everyone else’s boat. The gist of this economic theory is that the mission of government is to serve big business and the wealthy, who then, occasionally, bequeath to the middle class and poor hand-me-down benefits.
The problem is that it doesn’t work. The rich got richer, alright. But everyone else got nada. Then the wealthy gamblers on Wall Street crashed the economy, swamping everyone else’s little skiff in a whirlpool of underwater mortgages, lost jobs and dashed hope. Now, a Democratic president has proposed a different economic path. Barack Obama said in a speech last week that America should invest in itself and build out from the middle class. In his economic model, government directly serves the vast majority of Americans in the middle while offering a hand to the poor so they can pull themselves up out of the drink.
His ideas so frighten Republicans that they’re threatening to wreck the U.S. economy –and possibly provoke another financial crisis worldwide – by refusing, once again, to raise the debt ceiling so Congress can pay the bills it already has incurred. If President Obama doesn’t agree to GOP demands to repeal Obamacare, which helps 50 million Americans who need health insurance, Republicans say they’ll kill the U.S. economy.
While President Obama is promoting government investment in infrastructure, jobs, education, home ownership, and retirement and health care security, Republicans are writing legislation to slash and burn services to middle class Americans. They’d make good on Republican presidential candidate Mitt Romney’s promise to execute Big Bird. They’d cut education grants for poor students by 16 percent; funding for the Department of Labor by 13 percent; funding for the Environmental Protection Agency by 34 percent; funding for the Fish and Wildlife Service by 27 percent. They’d cut 18 percent from the Securities and Exchange Commission, which is indicting hedge fund managers for insider trading and other illegal schemes.
The New York Times described the GOP chopping as “some of the most serious cuts to domestic spending since the Republicans in 1995 tried to shutter the departments of Energy, Education and Commerce – and ended up shutting the government down for 28 days.”
U.S. Rep. Harold Rogers, R-Ky., said of President Obama: “His priorities are going nowhere” because the GOP intends to destroy Obamacare and thwart the President’s proposals to invest in America.
Republicans lost the White House. They lost an opportunity to control the Senate. They lost seats in the House, though they remain the majority there. Yet it is their plan, from that minority position, to sustain their sink-middle-class-boats economic policies and scuttle all attempts to change course.
Obama acknowledged their intransigence during his speech Wednesday. But it won’t deter him from pressing for what is right. He said, “We need a long-term American strategy based on steady, persistent effort to reverse the forces that have conspired against the middle class for decades.”
Between 1979, just before Reagan took office, and 2007, when the economy collapsed under Bush, the income of the top 1 percent nearly quadrupled. But the income of the typical American family barely increased. Now the average American earns less than he or she did in 1999.
Middle class boats are sinking.
Instead of cut and kill, Obama proposes invest and build. His plan is to invest in infrastructure to create jobs, to invest in people through education, to invest in the middle to build it up and extend it out by enabling the poor to join its ranks.
The vast majority, the 99 percent, want a simple, straightforward relationship with their government. They’re not seeking guarantees or handouts. But they do believe their government should facilitate opportunity.
Opportunity requires a good educational system, from pre-K for all children to affordable technical schooling or college for all who want to go. Opportunity requires access to affordable health care so that an illness or accident doesn’t cause bankruptcy or death. Opportunity requires assurance that Social Security and Medicare will serve every generation so that old age isn’t utterly feared. Opportunity requires good jobs with good benefits, and with the economy still sluggish, the best way to spur job creation is investment in renewable energy sources and in the nation’s deteriorating roads and bridges and public transit.
This idea, the concept of investing in the future to promote growth, is gaining strength worldwide. The top financial officials of the world’s largest economies – the finance ministers and central bank governors for the G-20 countries – issued a joint statement earlier this month endorsing government spending to strengthen the global economy.
It is working in Japan, a victim of stagnation for nearly two decades before the Great Recession. Analysts attribute the significant first-quarter growth in the world’s third largest economy to the aggressive monetary easing and massive public spending by Prime Minister Shinzo Abe, who took office in December. His party won a huge victory in elections this month, giving him a mandate to continue what’s called “Abenomics” – investing in his country to spur recovery.
Similarly, China is launching additional initiatives, including railroad construction, to jump start its economy, though smaller than the massive spending – $586 billion – by the government in 2008 that fairly successfully prevented the world’s financial crisis from damaging the Asian giant’s flourishing economy.
Republicans insist all that’s required to bail those inundated middle class boats is more tax cuts for the rich and more service cuts for the middle class. It’ll never work. What it takes to float a middle class boat is government investment in America, government growing the economy from the middle out and direct government attention to average Americans.