A Closer Look At Who’s Really To Blame For Out-Of-Control Spending

Bushes Carlyle Group

[credit provider=”Wikimedia Commons”]

The cover story in the 23 July 2012 Newsweek was bannered “18-35? You Are Generation Screwed!” and, online at The Daily Beast, on July 16th, it was headlined “Are Millennials the Screwed Generation?”This featured news report, by Joel Kotkin, opened by clearly stating its central theme: “Today’s youth, both here and abroad, have been screwed by their parents,” specifically by their parents’ supposed “fiscal profligacy and economic mismanagement.” That’s what had caused the 2008 crash, and the exploding federal debt from Bush’s wars and his tax cuts and his-and-Obama’s bailout of Wall Street.

Really? Was this true?

In other words, Kotkin was saying (subtly, and without naming any names, but just the same regardless): Occupy Wall Street and other progressive groups had grossly misunderstood these things – it wasn’t Wall Street and conservatives’ federal de-regulatory policies that had caused the 2008 crash, it wasn’t caused by coddling and bailing-out banksters to the tune of trillions of taxpayer dollars, and it also wasn’t caused by the Bush tax cuts, which had placed our government even more deeply into debt after Ronald Reagan had previously ballooned the debt during the 1980s. Conservative Republican deregulatory policies since 1980 weren’t at all to blame for that uncontrolled Wall Street corruption, and for the resulting crash, and for the explosion of federal debt from bailing out all these things, which today’s young will have to bear and pay for as America’s future taxpayers.

The cause was instead “their parents’ fiscal profligacy and economic mismanagement.” mum and dad had done it.

So, what must be the conclusion from this? Kotkin didn’t say, but the conclusion was obvious from his analysis of the cause and of the blame: slash the parents’ Social Security and Medicare! Perhaps “their parents” had done it while they were unemployed and looking for work after their previous jobs had been “downsized” or sent to Mexico; but, since they’re the ones who did it: Let the oldsters pay. Let the parents pay, for what the banksters actually did! This is now the conservatives’ battle-cry.

Of course, that battle-cry is all a big lie; in reality, those “parents” were instead themselves victims of conservatives, and of conservatives’ policies, and of the resultant bum mortgages and the resultant fraudulent mortgage-backed securities, which almost tanked the entire world’s economy. These parents weren’t necessarily “profligate” at all. These parents hadn’t necessarily been guilty of any “economic mismanagement” at all. They hadn’t been the people who had committed the frauds that brought everything down except the banksters’ bonuses and executive pay.

In a different and decidedly non-mainstream (online-only) place, Geoff Price headlined, on 22 February 2011, at his rationalrevolution.net,“Redistribution vs. Redistribution,” and he documented there the key lie that the Koch-Murdoch bankster operatives and other conservatives (now including Newsweek) had sold to the American people: Geoff Price documented that, instead of the middle class being bankrupted by the government funelling wealth to the poor, as Koch, Murdoch, Newsweek, etc., have propagandized (just work harder – that’s the solution, and even Republican Presidential candidate Mitt Romney ran on that same theme), the middle class have actually been bankrupted by the government’s funelling wealth to the very few richest Americans.

Starting at around 1980, “real median family income” went flat in the U.S., while productivity (which feeds added income to stockholders) continued its steady post-WWII rise, and this wealth-transfer from the bottom to the top occurred because since 1980, the percentage of U.S. income that has been going to “capital income and capital gains” (i.e., to the owners of stocks and bonds; i.e, to the top 5%) soared, from about 15% of national income, increasing up to about 25% of the total, and the percentage of U.S. income that went to “wages and salaries” went down, from about 65% declining to only about 55% of the total, during that time. During this same time-period, the percentage of national income that went to the poorest 5% of Americans actually plunged. So, the siphoning, to the richest 5% of Americans, was steep from the middle class, but was extremelysteep from the poor. Whereas Koch, Murdoch, major-media, & Co., had angered Americans – and especially America’s conservatives – against the masses of poor, as being the people to blame, the actual leeches here were instead America’s few aristocrats. “In other words, the tax on labour to support the rich is at least 5 or 6 times higher than the tax on labour to support the poor, and this doesn’t even take into consideration the burden of side-effects of wealth concentration, like the ways in which the wealthy are able to use their power to undermine the voting interests of the middle class,” such as Newsweek was here doing, by propagandizing that the parents of the young are the cause of the impoverishment of their very own children.

No wonder, then, that America’s 400 billionaires controlled this country – including major media such as Newsweek. On 7 March 2011, Robert Frank headlined at his “The Wealth Report” blog, “Billionaires Own as Much as the Bottom Half of Americans?” and he questioned, and then confirmed, this allegation, which had recently been made by film-maker Michael Moore: Frank found that it was either close to exactly correct, or else exactly correct, based upon estimates that the Republican magazine Forbes had made of the Forbes 400 richest Americans: They actually did own as much as the poorer 50% of Americans combined.

Businessinsider.com bannered, on 25 July 2011, “BROKE: 10 Facts About the Financial Condition Of American Families That Will Blow Your Mind,” and Michael Snyder wrote: “Only 58 per cent of Americans have a job right now.” “Only 56 per cent of Americans are currently covered by employer-provided health insurance [and everyone else was either uninsured or else paying hefty premiums for coverage as a lone individual].” “The median yearly wage in the United States is $26,261.” “The average American household is carrying $75,600 in debt.” “At this point, American families are approximately 7.7 trillion dollars poorer than they were back in 2007.” “The poorest 50% of all Americans now own just 2.5% of all the wealth in the United States.” Etcetera. Was this impoverishment of the public due to the parents of today’s young people having been “profligate,” as Newsweekpropagandized”?

On 26 July 2011, the Pew Research centre bannered “Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics,” and reported that, “The median wealth of white households is 20 times that of black households and 18 times that of Hispanic households,” record-high ratios, because “the bursting of the housing market bubble in 2006 and the recession that followed it … took a far greater toll on the wealth of minorities than whites,” because the wealthiest Whites owned virtually all of the stocks and bonds, and those had risen in value even during this “recession,” and also because those were also the people who owned cash (which didn’t lose value during the “recession”); whereas minorities did not, but possessed only what equity they possessed in their house (if any). Minorities – who overwhelmingly were Democrats – bore the brunt of the policies of Reagan through Obama, primarily of Bush II and of Obama. The people whom Reaganite policies (to cut spending on the poor, cut taxes on the rich, and raise spending to invade and occupy foreign countries) impoverished were Democrats; the people whom Reaganite policies enriched (the nation’s white majority, and especially the few billionaires among them) were mainly Republicans. Obama had provided Republicans an opportunity to blame on “Democrats” the problems that the poor were facing worst of all, and Republicans were now crying all the way to the bank.

The previous Pew Research poll, dated July 22nd, was headlined “GOP Makes Big Gains Among White Voters,” and reported that from 2008 to 2011, there was a 10% net increase of Republicans among Whites aged 18-29, and also among Whites who made less than $30,000 per year (who were predominantly those same young Whites). New white voters were being persuaded that whatever problems they and other poor people faced, were due to “Democrats” – especially because Obama wasn’t merely a “Democrat”; he was also a “Black,” which was exactly the line that Fox “News” and talk-radio had been trumpeting – even that he was a “racist” Black.

So: when President Obama had told Wall Street’s elite, inside the White House, as reported in April 2009, “My administration … is the only thing between you and the pitchforks,” he turned out to be right in more ways than just one: He shielded aristocrats, and their Republican Party, from what might otherwise have become an angry white mob. Young and poor Whites, the people who were between the ages of 18 and 29, and who were making less than $30,000 per year, didn’t like the bad economy that they were struggling and competing in; and these people – the very people whom Joel Kotkin wrote about in Newsweek – could blame the Black President, Obama, and thus by (false) extension “the Democrats,” for their problems. But instead, the “liberal” Newsweek blamed their parents! This was protecting not just Obama, but other Republican politicians (Obama is probably the most conservative “Democratic” President since James Buchanan, just like Lincoln was certainly the most progressive Republican President after Buchanan).Newsweek was protecting conservatism.

Among the interesting facts that were reported in the 26 July 2011 Pew article was that between 2005 and 2009, Whites lost 16% in “Median Net Worth of Households”; Hispanics lost 66%; and Blacks lost 53%. (Fox “News” and other Republicans were arguing that the 2008 crash was due to the poor, and to bleeding-heart-liberals who catered to the poor, but the poor were instead its victims, and conservatives were actually their victimizers.) However, Blacks still remained poorer than Hispanics – just not by nearly as big a margin as before. In 2009, after the crash, the average White had a net worth of $113,149; the average Hispanic, $6,325; and the average Black, $5,677. Obama had pumped up the White number, by pumping up Wall Street and the aristocracy; and thus he minimized the real-estate crash’s harm to Whites, by bailing out Wall Street and so keeping plenty of money pouring into the stock market’s casinos, where a large proportion of the wealth of Whites remained – especially after the 2008 real-estate crash. The reason why even most Whites had lost in wealth since the crash is that the value of the millions of their homes had gone down far enough so that the rise in the values of the aristocrats’ stock portfolios was being more than offset by the nation’s real estate losses; but even the poor Whites had actually suffered enormous declines in their wealth as a result of Bush – after all, their homes were now often worth less than the value of their mortgage.

Without a doubt, George W. Bush had overseen and administered the biggest transfer of wealth from the poor to the rich in U.S. history; this Pew poll proved it by providing solid and concrete numbers on the actual scale of this massive wealth-transfer. The conservative pro-Wall-Street policies of Obama had continued George W. Bush’s Republican bailout of banksters. Obama thus acted more like a closeted Republican, than like a real Democrat. He certainly was no progressive. He was out to protect banksters from the “pitchforks” – the public.

On 2 September 2011, Liz Goodwin at Yahoo News bannered “Recent College Grads’ Hourly Wages Down by a Dollar,” and she reported that though non-degreed Americans were doing even worse, recent college graduates were “facing lower salaries than they would be earning if they had graduated a few years ago.” On 13 September 2011, the AP headlined “Census: US Poverty Rate Swells to Nearly 1 in 6,” and reported that, “The 46 million now living in poverty is the largest on record,” and “The U.S. poverty rate from 2007-2010 has now risen faster than any three-year period since the early 1980s.” Moreover, “The median – or midpoint – household income was … down 2.3 per cent from 2009,” in 2010. Furthermore, the situation in 2011 would be even worse, because of the “staggeringly high” numbers of “those unemployed for more than 26 weeks.” On this very same day, the Wall Street Journal bannered “As Middle Class Shrinks, P&G Aims High and Low,” and Ellyn Byron reported that because “many of its former middle-market shoppers are trading down to lower-priced goods,” Proctor & Gamble was re-targeting its brands to appeal to the masses of poor, and to the few rich. The middle class was almost gone. “Citigroup calls the phenomenon ‘Consumer Hourglass Theory’,” and the bank was recommending that “investors … focus on companies best positioned to cater to the highest-income and lowest-income consumers.” It was already happening. “Food giant H.J. Heinz, for example, is developing more products at lower price ranges,” while “Luxury retailer Saks Inc. is bolstering its high-end.” The middle-class, yeoman, economy, which had been the basis for the nation ever since it broke away from Britain’s aristocracy in the late 1700’s, was now clearly over. America had become just a very big banana republic. “To monitor the evolving consumer market, P&G executives study the Gini index, a widely accepted measure of income inequality.” That process had started in 2009, after disappointing earnings-reports resulted from this hollowing-out of America’s economic middle.

Robert Reich headlined in The New York Times, on 3 September 2011, “The Limping Middle Class,” and he opened: “The 5 per cent of Americans with the highest incomes now account for 37 per cent of all consumer purchases.” At the same time, the U.S. Census “Table 693: Share of Aggregate Income Received,” indicated that the “Top 5 per cent” received approximately 22% of all income. So, the bottom 95% received 78% of all income, but spent only 63% of all the nation’s consumption. This was the reason why manufacturers were now targeting a disproportionately larger share of their production to the top 5%: this small percentage of the population – only one in 20 Americans – were now accounting for more than one out of three consumer dollars spent on purchases. That was a big enough percentage to be attractive to even mass-market production-line manufacturers, not just to one-at-a-time handworkers or couturiers. Mass marketers now needed to appeal to the wealthy, because those people had almost all of the disposable income. Consequently, goods prepared to meet the needs of the poor would be fewer, and – since this new economy of the hollowed-out middle was reducing the middle class the most – the formerly mid-range-focused mass-production manufacturers were gravitating especially to the high-end trade.

On 11 June 2012, McClatchy Newspapers headlined “Fed Survey Details Middle-Class Pain,” and Kevin G. Hall reported that a study of economic changes from 2007-2010 (a three-year period the Fed analysed so as to blur the blame as between Obama and Bush, there were no breakdowns within that time-period, only the 3-year changes) showed that median real incomes in the U.S. had declined 7.7%, and median net worths or wealth fell 38.9%. Mean real incomes fell even more than median: 11.1%. However, mean net worths or wealth declined by only 14.7%, which indicates that though the wealth of the country as a whole went down by about 14.7%, the wealth of the typical American went down by about 38.9%. Three days later, Robert Frank headlined at CNBC, “Why the Rich Recovered and the Rest Didn’t,” and he noted that, “The latest report from the Federal Reserve tells us that wealth of the middle class declined by more than a third between 2007 and 2010. The wealth of the top 10%, however, grew by two per cent.” In other words: the poor were burgeoning, and many middle-class families were heading into poverty. The Fed gave their study an intentionally dull name: “Changes in U.S. Family Finances from 2007 to 2010.” But the study itself contained hair-raising facts buried among its data.

On 23 August 2012, Sentier Research, a new research-firm that was dedicated to making the Census Bureau’s data meaningfully available to, and understandable by, the public, headlined “Household Income Down by 4.8 per cent Overall Since ‘Economic Recovery’ Began,” and reported that this decline since June 2009 “was larger than the 2.6 per cent decline that occurred during the officially defined recession lasting from December 2007 to June 2009.” So, the Obama recovery had largely been fake. Furthermore, “Compared to January 2000, … real median annual household income has declined by 8.1 per cent.” During the post-June-2009 period, families saw declines of 4.7%, single persons saw declines of 7.5%, and black households saw declines of 11.1%.

On 30 November 2012, Barry Ritholtz at his ritholtz.com headlined “Real Median Household Income in the 21st Century” and he presented a chart, which showed that, after having remained stable from 2000 through 2008, median household income in the U.S. plunged 10% starting in January 2009, hitting bottom in August 2011, and it was now down 8% as compared to when Obama had entered the White House in January 2009.

Consequently, many online sites have contained the basic data that exposed the lie in Newsweek’s “Generation Screwed” – the lie that “18-35? You Are Generation Screwed” and that this generation “have been screwed by their parents.”

How was Newsweek able to pull off this slick con? Kotkin focused upon such distractions as “We found ourselves incredibly educated but drowning in piles of student loans with a job market that still isn’t hiring. More maddening still, the payback for this expensive education appears to be a chimera. Over 43 per cent of recent graduates now working, according to a recent report by the Helfrich centre for Workforce Development, are at jobs that don’t require a college education.”

In other words: The Republicans’ (remember Mitt Romney’s, for example) “shipping jobs overseas” was lowering the wage-costs of U.S. corporations, and thus boosted their stockholders’ profits, but it was hollowing out the U.S. job-market so that college-educated jobs were becoming rarer and rarer. But what did this impoverishment of the masses have to do with “their parents’ fiscal profligacy”? Those jobs had been shipped to China. Their parents couldn’t afford to send them to college, so the kids went into hock for college degrees that were becoming worth less and less. That’s not a cause of the decline; if anything, it’s a result.

Blame the parents? No, blame Newsweek and similar mainstream news-media, for lying, and for deceiving both them and us, during many decades. Nothing is new about such deceptions in the mainstream press. These deceptions feed upon themselves.

On 26 July 2012, the overtly Republican Forbes headlined “Has A Privileged Generation Become The Screwed Generation?” and Victor Lipman called Newsweek’s article “a dark but thought-provoking piece,” and he concluded, optimistically, that things are not necessarily bad, because, “The University of Adversity can be a harsh but effective teacher.” Conservatives love “tough love,” so long as they’re the ones who are getting the bailouts instead of the “tough love.”

In other words: if you’re young, your parents were supposedly “profligate,” but suck it up and just flip hamburgers a lot faster. That’s the message. Forbes was publishing a conclusion that the “liberal” Newsweek would only hint at.

What a con! Regardless of whether it’s from “liberals” or from outright conservatives, it’s phony, and anyone with half a brain knows it – even the people who run NewsweekForbes, etc. They’re not as dumb as they think their readers are.

They know that in order to deceive the America public into stripping Social Security and Medicare, it will be necessary to blame today’s oldsters for today’s, and the future’s, federal debt. That’s what Joel Kotkin was doing by arguing that, “Today’s youth, both here and abroad, have been screwed by their parents’ fiscal profligacy and economic mismanagement.” The brilliant independent investigative journalist pen-named Yves Smith, at her nakedcapitalism blog, headlined on 29 May 2011, “Morgenson Runs Peterson Institute Propaganda Against ‘Entitlements,’ Meaning Medicare and Social Security,” and she took The New York Times to task for fronting “the Peterson Foundation’s well-funded campaign to gut Social Security and Medicare.” Of course, that’s what John Boehner and congressional Republicans have struggled mightily to achieve.

Soon after Bush II came into office, their strategy was explained in “Bush’s Trillions,” an article by Nicholas LeMann in The New Yorker on 19 February 2001, in which a Republican insider, South Carolina Congressman (soon to be Senator) Jim DeMint, was quoted as saying, “today fewer and fewer people pay taxes, and more and more are dependent on government. … Every day, the Republican Party is losing constituents, because every day more people vote themselves more benefits without paying for it.” DeMint later explained the strategy in more detail at the far-right Heritage Foundation, which he now heads. He opened a 3 September 2002 Heritage Foundation conference on “The Future of the Subsidy State: What the Heritage Index of Dependency Shows,” and he said: “We have now forced such large blocs of Americans into the boat of dependency that it has become politically risky to even suggest that people would be better off sailing their own ship.” (Where would they get the money to buy “their own ship”? He didn’t say; he apparently didn’t even care.) “The underlying problem is that, every day, more people are receiving benefits from government and fewer are paying the taxes that fund those benefits. … Voters are increasingly electing the politicians who promise the most from government. … I am hopeful that we will begin the process of reversing the trend.” The purpose of his conference was to target the government services that must be cut. So, at the end of the conference was described the new “Heritage Index of Dependency,” which consisted of the five sub-indexes that were to be targeted by the Republican Party, for budget-cutting: 1: Housing Assistance; 2: Health and Welfare Support (Medicare and Medicaid); 3: Retirement Income (Social Security); 4: Educational Subsidies at the Post-Secondary Level (Pell grants, etc.); and, 5: Rural and Agricultural Services. This is a fight to disable government from serving the needy, and so to make broad masses of the public so angry at government as to want to cut it still further. We first got hints of this opposition to democratic government in Ronald Reagan’s First Inaugural Address, when he said: “Government is not the solution to our problem; government is the problem.” In a democracy, that statement is opposition to democracy itself. Reagan wasn’t speaking in the Third Reich, nor in the U.S.S.R. Then, Grover Norquist, whom Reagan had asked to create Americans for Tax Reform, told NPR’s “Morning Edition,” on 25 May 2001, “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” What they want to “drown” is actually services to Democratic voters. What they want to continue and expand is services to Republican voters, and especially to the ones who finance the Republican Party itself.

America’s major news-media are part of that army. But why? The reason is that in order to have the funds to bail out Wall Street and to subsidise the big oil companies, and such, or in other words to pump up the stocks that the aristocracy own and that comprise the bulk of their wealth, this is how it’s done: you fool the public into thinking that bailouts of the needy are wrong, and that bailouts of the greedy are essential. This is just how it’s done.

Governments are inevitably wealth-distributors; they exist largely in order to provide the laws that determine who owns what, and to provide the police that protect property-rights as defined by those laws. Naturally, therefore, governments protect “property,” which means, above all, that they protect the aristocrats from everyone who has little or none; and this naturally leads to crushing the poor, and to producing inter-generational grinding poverty for the children of the poor, who lack the means that aristocrats’ children are born with, and are raised with. That’s an intrinsically unfair competition. For example, George W. Bush’s father possessed the wealth and ancestry to get him into Yale and Harvard; but Joe Doakes’s father had nothing of the sort, even if Joe Doakes was far more capable. Taxes exist in order to fund government and to redistribute that wealth whenever this distribution becomes widely viewed to be sick or “unjust.” But parents, as individuals, and even as a group, didn’t cause the economic hardship of today’s young people; and propaganda that blames them for that is basically mere lies, by the people that the aristocracy has selected and hired to pump the intended deceptions that maintain their advantages against the public, so as to continue their own existing supremacy over the public. That’s what it’s really all about.

The problem isn’t conservatives like Joel Kotkin. (They can be found anywhere, and can be bought for 10 cents.) Instead, it’s the conservatives (some of whom are supposedly “liberal”) who hire and empower them.

Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.