We really haven’t had such a government since we became enmeshed in a recent series of wars and conflicts, most of which we either lost or simply stalemated, beginning with Vietnam. Long mired in the annals of history are the New Deal reconstruction of American infrastructure that actually created excess electrical power generation capacity that won WWII. The United States was thus able to manufacture munitions and the ships, planes and vehicles of war that eventually crushed the Axis powers. The allies were otherwise incapable of building what was necessary to win, not even the Soviets.
Gone is that ambitious National Highway Defense Act of 1957 that resulted in our magnificent Interstate highway system. Long past is our reaction to the Soviet launch of Sputnik in that same year: upgrade our public school with STEM subjects and invest in a technological fountain of job creation and scientific innovation we called the Space Race. We picked up some very, very bad habits along the way. Ronald Reagan’s belief, still stubbornly clung to as fiscal conservatives’ most basic axiom even though it has consistently been proven false, is the supply side/trickle down theory that if you cut taxes for the rich, they will immediately begin creating new high paying jobs and hiring lots of people. It never happens. Even Reagan raised taxes back up.
Or Bill Clinton’s belief that Wall Street traders could be trusted to own commercial banks, which led to trading firms borrowing from themselves to invest, many in the derivatives (like subprime mortgages), until the Big Recession hit years later in 2007. Perhaps it was George W Bush’s decision to cut taxes for the rich even as he began the most expensive and longest lasting wars in U.S. history that turned a budget surplus into the massive, interest accruing deficit we have do not seem to be able to stop. Apparently, he missed the “guns vs butter” lecture at Yale. Or maybe it was the 2017 Trump corporate tax cut, dropping the corporate rate from 35% to 21% that has generated several trillion dollars of additional deficit without really creating any new jobs (that infamous and disproven “trickle down” economics again).
According to the Institute on Taxation and Economic Policy (April 1st): “At least 55 of the largest corporations in America paid no federal corporate income taxes in their most recent fiscal year despite enjoying substantial pretax profits in the United States. This continues a decades-long trend of corporate tax avoidance by the biggest U.S. corporations, and it appears to be the product of long-standing tax breaks preserved or expanded by the 2017 Tax Cuts and Jobs Act (TCJA) as well as the CARES Act tax breaks enacted in the spring of 2020.
“The tax-avoiding companies represent various industries and collectively enjoyed almost $40.5 billion in U.S. pretax income in 2020, according to their annual financial reports. The statutory federal tax rate for corporate profits is 21 percent. The 55 corporations would have paid a collective total of $8.5 billion for the year had they paid that rate on their 2020 income. Instead, they received $3.5 billion in tax rebates.” Seriously? Yup!
We’ve managed to drop our educational system from first to thirty-eighth (according to international testing standards applied to high school scores around the world), and China is making hay by pointing to our obvious decline as our own civil engineers give our infrastructure a D minus, trillions of dollars of deferred maintenance later. We still spend 41% of the entire planet’s military expenditures and continue to watch our state and federal legislatures continue to cut taxes or support existing tax cuts for the rich. We are the only developed country in the world without universal healthcare, where embedded incumbents have created a medical system that costs double per capita than the rest of those developed nations. As upward mobility has been rendered to the history books, what exactly is that military protecting? The worst income inequality in the developed world?
When the government once invested in infrastructure, scientific research, education and human resource protection, productivity soared and new unexpected technology spun off new jobs at, you’ll pardon the expression, warp speed. And when our immigration doors were open, not only did we generate greater diversity, accessing minds from other cultures to add new ways of creating value, but we created so many more jobs than we are creating now.
Turns out immigrants create double the number of new businesses than do native born Americans. In a study based on U.S. Census data, Northwestern University (Kellogg School of Business) addressed the commonly held belief that immigrants steal jobs from U.S. citizens and proved exactly the reverse. “‘The idea is that immigrants come to your community and they take jobs,’ says Ben Jones, a professor of strategy at Kellogg. ‘That could mean that people already in the community could have more trouble finding a job or, by having to compete with immigrants for jobs, could get paid a lower wage.’
“The logic is straightforward. Yet curiously, the economic data have not generally borne this out. Previous studies have not found lower local wages after influxes of immigration. In fact, regions of the U.S. that have historically seen more immigration have actually experienced higher gains in per-capita income. ‘They seem to be the outperformers,’ says Jones… [adding] ‘the rate of founding businesses is 80 percent higher among the non-U.S.-born than among the U.S.-born.’
“The same general trend was also borne out among fortune 500 firms… Critically, the researchers also found that immigrants founded firms of all sizes at a higher rate than those born in the U.S.: small firms, large ones, and everything in between. This is important because it suggests that that the net influence of immigrants on the economy is to increase the demand for labor, ultimately pushing up overall wages.” KelloggInsight, October 5, 2020.
We pretty much had to parallel a wartime economy during the pandemic. Deficits were incurred to fend off a severe recession, if not another great depression. So now we come to the threshold of rebuilding, facing not only the ravages of the pandemic-caused recession, but the double whammy of escalating climate change devastation and the rise of artificial intelligence replacing so many higher paying jobs. We need to upgrade infrastructure, scientific research, education and human resource protection to resume our competitive edge. The proposals to address this desperate and highly “deferred maintenance” need is set forth in the President’s infrastructure proposal, which itself falls short of the recommendations of America’s civil engineers, but which is fiercely opposed by a filibuster threat from Senate Republicans who still stupidly cling to the tax cut mentality of trickle-down economics, willing to spend only a modest fraction of that proposal. Deterioration is now a national policy.
Even in blue state California, even with a budget surplus, the tendency to avoid spending money without a current dire emergency simply mirrors a national trend toward spending money in reaction to disasters rather than proactively to mitigate future inevitable disasters by prudent spending and planning. Writing for the Los Angeles Times daily coronavirus supplement (May 20th), Kiera Feldman writes: “It’s hard to imagine a situation that would highlight the value of public health agencies more than a global pandemic. At all levels of government, public health workers have been instrumental in mapping out the extent of the coronavirus crisis and formulating a strategy for overcoming it.
“So how does California Gov. Gavin Newsom express his appreciation for this hard work? By denying a request from local public health leaders to include $200 million for them in his new proposed state budget… That’s the charge from healthcare advocates who say Newsom’s budget would return the state to a dangerous, years-long pattern of underfunding local public health agencies despite the glaring inadequacies exposed by the COVID-19 pandemic…” We reap what we sow, but we most certainly aren’t sowing very much anymore. Exactly how long do you think we can sustain a competitive edge in a global economy. And why is China smiling… no, laughing… at our political distractions and unwillingness to invest in ourselves?
I’m Peter Dekom, and if America does not begin to live in the real world, we can expect to slide into history’s waste bin of former great powers.
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