How the Country Has Come to Find Itself in the Current Ecomomic Mess

By Leo Gerard, President of the United Steelworkers Union

As the Senate moves to consider the wholly inadequate stimulus package passed by the House -- zip for the jobless, no increase in food stamps, squat for the nation's crumbling infrastructure -- it's useful to consider how the country has come to find itself in the current economic mess.

Part of the reason we need a "fiscal stimulus package" under what President Bush continues to claim is a strong economy is the bad behavior of a government operating in cahoots with corporate America over the past 30 years. This shameless cabal has given us a reckless stock market, a sub prime mortgage crisis that is taking down homeowners while threatening banks and insurers, health care and gasoline costs flaming out of control, an endless war that violates international law and savages the budget, rising unemployment and income inequality, and the off-shoring of manufacturing jobs that is undermining real wages.

This, as New York Times financial reporter David Cay Johnston points out in his new bestseller, Free Lunch, is not the America of FDR. It is not the America that nurtured a middle class from the time of the New Deal with Social Security, employer-paid health insurance and defined benefit pensions, and, later, low-cost college educations. This is not the America of investing tax revenue in programs to benefit the majority, like the U.S. interstate highway system, and in regulation to benefit the majority, like the U.S. Consumer Product Safety Commission (a chicken coop now being "guarded" by a fox formerly employed by the corporate-dominated U.S. Chamber of Commerce).

That America is gone. Ronald Reagan got on his high horse, cracked his whip and told those little doggies to move along. Since then, income disparity in this country has grown so that in 2005, Johnston reports in Free Lunch, if you consider all income, the 300,000 wealthiest men, women and children, the top one tenth of one percent, made more money than all the other 150 million Americans put together.

This concentration of income at the top does not occur in places like Canada, Europe, Japan and Australia. It does, however, in places like Brazil, Mexico and Russia, Johnston points out.

And what makes it happen is government rules. Your government's rules. The government that is supposed to be of the people, by the people and for the people.

In Free Lunch, Johnston explains how this happens, "When an executive shortchanges the pension plan, making his company appear to be more profitable, he inflates the value of the company stock and therefore his stock options. When the pension later fails and the workers get less than what they were due, or the taxpayers have to make up the part of the shortfall guaranteed by the government's Pension Benefit Guarantee Corporation (PBGC), the executives get a free lunch. Our economy is riddled with these subsidies, many of which are intentionally subtle and hard to detect."

The book also explains how George W. Bush managed to use millions in Texans' tax dollars to make his fortune on the purchase and sale of the Rangers baseball team, and then call a white-tie audience, he referred to as " my base" at a fund raiser at a Waldorf-Astoria dinner in 2000, the "haves and have mores."

This isn't how most citizens imagine their tax dollars are going to be used -- to fatten the pockets of the wealthy. But here's the problem: The wealthy purchase the services of lobbyists and put lots of money into lawmakers' campaign coffers. By contrast, the average citizen may send the Congressman an e-mail once in a two-year term.

Under Reaganomics, money was supposed to trickle down to the workers. What trickled down was broken promises, closed factories, collapsed pension funds, withdrawn health care, and foreclosed homes. Reagan asked if we were better off than we were four years earlier.

Now, as Johnston points out, we should be asking: are we better off 30 years later? The answer is a thundering NO.

And the solution is not a piddling $150 billion fiscal stimulus package that helps those who don't need it much and provides no help at all to those who need it most.

For quick infusion of cash into the economy, a stimulus package must extend unemployment benefits and increase food stamps. In addition to being moral measures to help the most needy, these ideas were endorsed by the Congressional Budget Office as among the best ways to immediately stimulate the economy.

Beyond extending the length of time that unemployment benefits are given, the amount should be increased by at least $50 a week. Eligibility for the program should be expanded as well.

In addition, a payroll tax rebate would provide more effective relief to those most in need. This would target the very low income taxpayer. And it would provide a stark contrast -- though not a counterbalance because they'd never be large enough -- to those massive tax cuts Bush and the Republican Congress gave to the richest Americans at the outset of his Administration.

And, finally, the program needs to invest in a plan to Rebuild America, something akin to Roosevelt's WPA program. The effects of this may take longer to realize. But the damage done to this economy didn't occur overnight either. And the long-term needs of this country's infrastructure are real, as the collapse of the I-35W Bridge into the Mississippi in Minneapolis last August illustrated so horribly. Fixing the nation's bridges, roads, dams, sewers and other municipal buildings and facilities would provide jobs and enduring benefits to the great majority of Americans, not to mention radically reducing energy consumption by retrofitting the nation's publicly-owned buildings.

Better yet, commit to a decade-long investment in renewable energy development that will give meaningful work to millions while addressing the growing hazard of global warming.

If oil companies making the biggest profits in the history of the planet weren't getting "free lunches" in the form of multi-billion-dollar tax breaks, such progressive policies might provide the sort of stimulus that an all-too-timid Congress seems unwilling to consider.