Friday, January 28, 2011

Tax Cuts and Outsourcing: The Double Whammy

How a combination of tax cuts for the rich and the elimination of American jobs ruined the economy and brought this nation to near collapse. A brief look at how the past decade under George W. Bush has brought us to where were are today in 2011.

In 2000 at the end of President Clinton's term in office there was still a $230 billion budget surplus. The unemployment rate at that time was 4% - the same as is in China today in 2011.

Immediately after first taking office, in George W. Bush's address to the joint session of Congress in February 2001, he asked for his tax cuts.

Before this, we already had a budget surplus and low unemployment; and the DOW Jones Index was healthy and humming along at well over the 10,000 mark at the time. And the housing market was really starting to take off too. So what was Bush's reason for cutting taxes then? (See Halliburton and Hunt)

Senator Tom Daschle (D-South Dakota) had said at the time, "If you're a millionaire, you'll get a $46,000 tax cut, more than enough to pay for a Lexus. But if you're a typical working person, you'll only get $227 - about just enough to buy the muffler."

On Memorial Day in 2001 the Senate passed Bush's $1.3 trillion tax-cut plan: lowering tax rates 3 to 5 percent in all income brackets, phasing out the estate tax, reducing the marriage penalty and doubling the per-child credit to $1,000.

And then two years later on May 23, 2003 George W. Bush got his wish again in reducing taxes on capital gains and dividends as well (think of hedge fund managers, investment banks, stock options for corporate salaries, AIG, Goldman Sachs, Lehman Brothers, etc). Vice President Dick Cheney had cast the deciding vote - breaking a 50-50 tie, pushing forward a second round of cuts with the provision that they too expire at the end of 2010.

Now let's look at the layoffs during this same period of time (the Bush Tax Cut Era), from January 2001 to January 2009:

Almost a year later after the bansksters and CEOs got their tax windfall, in February 2004 Forrester Research issued a report that said: "Some 3 million private-sector jobs have been lost since the U.S. economy peaked in 2000, most of them in manufacturing. In the longer term, the latest wave of outsourcing will lead to a significant shift in the kinds of U.S. jobs, even as the total number of jobs continues to increase. Just as the loss of U.S. manufacturing jobs to overseas markets has caused layoffs and difficulties for millions of American workers, so will this latest round of offshoring cause thousands of white-collar service employees. By 2015, Forrester predicts, roughly 3.3 million service jobs will also have been moved offshore, including 1.7 million "back office" jobs such as payroll processing and accounting, and 473,000 jobs in the information technology industry."

On February 9, 2004 when President George W. Bush's chief economic adviser, N. Gregory Mankiw, released the annual White House Economic Report, he praised offshoring of U.S. service jobs as a "good thing."

"Outsourcing is just a new way of doing international trade," he told reporters.

Senator John F. Kerry of Massachusetts differed: "They [the Bush administration] have delivered a double blow to America's workers, 3 million jobs destroyed on their watch, and now they want to export more of our jobs overseas."

House Speaker J. Dennis Hastert (a fellow Republican of Bush at the time) also differed: "I understand that Mr. Mankiw is a brilliant economic theorist, but his theory fails a basic test of real economics. We can't have a healthy economy unless we have more jobs here in America."

(* For more detailed information, go to the Labor Department's Mass Layoff Statistics)

And THOSE reports came out 7 years ago in 2004! Long before the mass layoffs we saw in 2008, 2009, and 2010. Can you comprehend the ramifications of this today in 2011 when home foreclosures haven't yet peaked? (They are expected to peak this year.)

Late last year the GOP had said those very same tax cuts had been needed to create more jobs, but in 2001 (before the tax cuts and massive layouts and much of the outsourcing) we already had jobs. So what happened? Why were so many more jobs lost AFTER all the tax cuts were put in place?

The day that Obama had been elected as president in 2008 the national debt had already soared to $10,556,177,748,045.21 - now in 2011 America is over $14 trillion in debt while the Bush's tax cuts were just recently extended.

It's only because of outsourcing (less people working and spending), that we have much less revenue coming into the treasury, and with tax cuts being extended for the wealthy, that revenue further declines...and the spiral down continues. The double whammy. Outsourcing to further enrich corporate CEOs and less taxes paid by corporate CEOs...they have the best of both worlds. (And our deficit suffers another trillion dollars in lost revenue...further advancing the GOP's claim that it is "a debt that your children and their children will be burdened with.")

Re: Extending the the Bush tax cuts: "Fool me once, shame on you. Fool me twice, shame on me." But it really wasn't we who were fooled at all, it was just our congress who were (and have always been) beholden to the wealthiest of this country - corporate interests and the big banks.

After all, with an annual salary of $174,000 a year, members of congress aren't living on peanuts either! (They empathize and relate more to these big businesses and banksters than they do to "Joe Average" you.)

And all the while the "99ers" (those who are at the very bottom of this "socio-eco" system) have only been living on a prayer, because even people who receive government welfare earn more than the "99ers".

It's a shame our government leaders will allow the continued corporate outsourcing of more American jobs for dirt-cheap labor overseas, and to keep giving the very rich more tax breaks that they don't need; but yet at the same time cut unemployment benefits and other programs for the very poor and/or very desperate.

Is this still the once great America I was born in?

And here we sit stupidly in front of our TV sets and wonder why they protest in the streets of Iran, Britain, Greece, and now Egypt today. Is this what Glenn beck fears may happen in America? Now why would he think that? Hmmmmmmmmmmmm?

As for Egypt, I heard this morning on CNN that it also had something to do with the majority of the wealth being accumulated by the very few...or as Beck would say, "a redistribution of wealth."

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