GOATMILK: An intellectual playground edited by Wajahat Ali

Click here for President Obama’s Full Speech - http://www.guardian.co.uk/world/2011/dec/07/full-text-barack-obama-speech

Now, a commentary from author and journalist Terin Miller:

“The original Democratic party economics closely followed those of John Maynard Keynes. It worked pretty well, until Republican president Richard Nixon, on advice from a young guy named Alan Greenspan, took the U.S. currency off a bi-metal standard (backed by both silver and gold, in other words, more than just “the full faith and credit of the United States Government,”) and imposed price controls on commodities.

As almost always happens, the lifting of price controls, the cost of the never-declared war in Vietnam, and followed by a manufactured “energy crisis” as middle eastern oil countries realized they could control, and increase at will, the cost of the price of oil extracted from their lands, propelled the economy to double-digit inflation.

Now, if all things stayed constant–if wages kept pace with inflation–inflatiin is relative. But they didn’t. Next, Ronald Reagan and the Chicago School of supply-side economics most clearly advocated by Milton Friedman swept into power, comparing the U.S. budget to a personal checking account and insisted on balancing the budget while cutting taxes (revenue) on “enterpreneurs” and removing regulation actually set the groundworkfor the recent collapse (arguably). Paul Volker, not Ronald Reagan, nor Milton Friedman, nor Alan Greenspan,.actually saved the country, by slamming the breaks on inflation with high interest rates and trying to enforce existing (remaining) financial regulations.

Volker was replaced by–yes, Greenspan–as Reagan, who had created more government, rather than less, and spent more money than either Nixon or Carter, despute complainingand campaigning against “tax and spend” Democrats, actually began increasing deficits with his borrow-and-spend policies. Note: you can’t really balance your checkbook by borrowing money to pay your bills Ultimately, you go bankrupt, not able to default like a country.

Glass-Steagal was removed under Bill Clinton, the first “centerist” Democrat after Reagan and GHW Bush convinced some that Reaganomics–called rightly “voodoo” economics by GHW Bush before becoming Reagan’s VP, and admittedly so when he had to go back on his word to not raise taxes, Clinton’s removal of Glass-Steagal, which prevented insurance companies and others from entering banking, also helped lead to the current problems in the U.S. economy. But, despite that, with tax rates on the wealthy near 50 percent, under Clinton’s economic policies–tax, but not spend as much–we actually had a budget surplus. That surplus nearly immediately evaporated when GW Bush returned supply side economics to the country, pushing for still more cuts in taxes on the wealthy, and more deregulation.

It was not Obama who brought Treasury Secretary Henry Paulson to tell people about the original Troubled Asset Relief Program, essentially declaring “Give me $750 billion and ask no questions or the economy gets it…” The “Great Recession” did not begin in 2008. It began, economically speaking, with two consecutive quarters of negative growth–contraction. Beginning in the last quarter of 2007. Imagine winning a vote to go to the bottom of a pit.

That’s essentially the economy the Democrat Barack Obama inherited. How do you get out? Keep policies as they are, making the whole deeper? Or ask people to take dirt originally in the hole from the surface–borrowing cash you don’t have–and drop a bit at a time bavk in so you can eventually climb out? The Democratic Party ,Keynsean economic policies of borrowing to “prime the pump” by putting cash in peoples’ hands to spend.

Our economy, in case Black Friday didn’t convince you, only runs when people spend money. You can’t spend money if you’re out of work. The desire for greater and greater profit had killed the very part of the economy it depends on–consumers. Also known as the happily, gainfully and more than subsistance earning employed. It’s not the Dmocrats whose economic policies have proven wrong.”