Entry 1064 of 1104
By Blue Prevails On June 28 at 8:14 PM

In his most recent op-ed in the New York Times, Nobel Prize winning economist Paul Krugman warns that the US could be on the verge of a third Great Depression. The first two occurred in the 1870s and 1930s respectively. His concern is that at a time when economic conditions dictate a robust involvement by the Federal Government in stimulating the economy, the Obama Administration and Democratic Congress are listening too much to right wingers who say we must focus on the deficit and curtail efforts to help the unemployed and small business. This is precisely what happened in the two previous Great Depressions and the results were a continued economic downturn and general misery throughout the country.

The problem is that it is impossible to have intelligent debate around the stimulus issue. The Keynesian Model has been our fiscal and monetary policy since the New Deal with both Democratic and Republican Presidents using the Treasury and the Federal Reserve to keep us on track for growth and balance the economic ship when necessary. But, because President Obama and Congressional leadership have been committed to stimulating the economy through Federal involvement, Republicans and their media mouthpieces accuse them of being “socialists”. What nonsense! The question is this: Will the progressives blink and let great minds (snark) like Sarah Palin and Glen Beck and their Tea Party supporters set the economic agenda for the future? All they need is to put Herbert Hoover on the same pedestal as the “sainted” Ronald Reagan.

The truth is that the stimulus has worked, but it must continue if we are to bring down unemployment and refocus our industrial efforts. The “right baggers” say that they are angry because General Motors and the large financial institutions were “bailed out”. Thirty thousand jobs were saved at GM, and the company is now profitable and has begun to pay back taxpayer money. While big banks and Wall Street firms could use a dose of trust busting, Obama averted a financial meltdown of horrific proportions. Unfortunately, private industry, large and small, is not ready yet to stand alone in the market place. The recent tax incentives for home buyers was a huge success, but last month, when the subsidies ended, home sales dropped by 34%. This shows the necessity for continued aggressive Federal action. 

Cuts can also be made but not where the Right wants them. We continue to pour billions of dollars into two endless wars without questioning the cost, and we allow our most advantaged citizens to avoid paying their fair share of taxes. We need to end the Bush tax cuts that are largely responsible for our deficit, and we need to have a fair inheritance tax policy that would protect small business people and farmers, but make the likes of Paris Hilton meet their obligations. Additionally, we need to make the well-off assume their rightful share of Social Security payroll taxes. A system that exempts income above about $108,000 is an anathema to the ideal of progressive taxation that is a cornerstone of our revenue system. 

George Santayana, the philosopher and essayist, is credited with the popular quote: “Those who do not learn the lessons of history are doomed to repeated them.” Our leaders must resist the political pressure and truly study the two “Great Depressions” so as not to make the same mistakes. There is an army of unemployed and their families who are counting on a helping hand. We know that right wingers would prefer to give them the backs of their hands, but progressives must demand that our leaders stand strong and keep us from the Third Great Depression.