Subject: [big campaign] New Huff Post from Creamer-Two Contrasting Econ Values at Stake in Mid-Terms
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Date: Mon, 20 Sep 2010 21:43:21 EDT
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Two Contrasting Sets of Economic Values at Stake in  Mid-Terms 
There are those who  believe that there’s not a dime’s worth of difference 
between Democrats and  Republicans – that everyone in Congress is beholden 
to the same economic  interests – that it really doesn’t matter who is 
elected. 
Those people are  wrong. 
Certainly there are  conservative Democrats – and Democrats that do the 
will of major corporate  interests.  But at their core, there  is a fundamental 
difference between the economic philosophy and underlying  values of the 
Republican and Democratic Parties. Which party’s world view sets  the course 
for American economic policy will have a profound effect on the lives  and 
livelihoods of everyday Americans. 
Perhaps  the  sharpest contrasts is that  Republicans and the Right believe 
that economic growth is driven from the top  down, while Democrats and 
Progressives believe that growth is driven from the  bottom up. 
Progressives do not  believe that the engine of economic growth is supply. 
It is demand.  Productive investment in innovation  responds to the presence 
of demand, not the other way around.  “Trickle-down” – or “supply side”  
economics has never worked to stimulate long-term economic growth, and it 
never  will.  It only works to legitimate  the insatiable appetite of the very 
rich. 
For almost a decade,  the American Right conducted a massive experiment in “
trickledown”  economics.  The results are in. It  was an abject failure. It 
resulted in a reduction of the real incomes of average  Americans and it 
ultimately lead to the collapse of the economy, and cost eight  million 
Americans their jobs.  
In her fascinating  recent book Third World America, Arriana Huffington 
documents many of the disastrous consequences of  right-wing economic policy – 
in particular, the destruction of the American  middle class.  
And just last week, a  Census Bureau report showed the toll the Great 
Recession took on the 1 in 7  Americans now in poverty – the highest level in 
half a century.  
Of course the central  flaw in the Right Wing economic vision is that the 
concentration of more and  more wealth in a tiny number of wealthy people 
ultimately undercuts the ability  of everyday people to buy the products 
produced by the economy.  As much as the rich wish it were not  true, consumer 
demand is necessary for companies to make products and  profits.  That consumer 
demand  requires that economic growth be shared widely in the society. 
Republican economic  policy – cutting taxes for the wealthy and cutting the 
rules that make big  corporations accountable – just exacerbate the natural 
tendency of the rich and  powerful to concentrate more wealth into the 
hands of a few.  That, in turn, creates the inevitable  conditions for economic 
stagnation and collapse. Throughout the entire period of  Republican rule, 
all of the economic  growth was siphoned off to the top two percent.  Real 
wages stagnated, and continued  growth in the Gross Domestic Product was 
fueled – for a time -- by an expanding  credit bubble that ultimately burst.  
To  put it another way, Republicans believe in a low wage economy, and 
Democrats  believe in a high wage economy.  
Fundamentally,  economic growth is about the development of processes and 
technologies that  increase productivity.  But these do  not occur when labor 
prices are cheap.  They occur when wages are high. 
A high-wage  economy leads to major long-term economic dividends because: 
·       It incentivizes  companies to invest in higher-productivity 
technologies that increase overall  productivity and provide real economic growth. 
·       It creates customers  with spending power to drive economic growth. 
 There is a natural tendency of market  economies to use low-cost labor and 
increase profits.  That’s good for each company’s bottom  line, but it 
kills off the goose that lays the golden egg by reducing the buying  power of 
its ultimate customers – the people who work for all the companies in  the 
economy combined. 
Progressives believe  in Government policies that encourage unionization 
and a living minimum wage  that fuel economic growth over the long haul. These 
provide a brake on the  natural tendency of market economies to concentrate 
income and wealth among the  owners of corporations. 
While low-wage  economies may be good for specific companies, high-wage 
economies are good for  everyone – by incentivizing innovation that increases 
productivity and by  turbocharging economic demand. 
In Wealth and  Democracy: A Political History of the American Rich, Kevin 
Phillips  summarizes the case against “trickle-down economics.” 
He argues that the economic history of the 20th century  demonstrates that 
economic growth happens from the bottom up, not the top  down.  He points 
out  that: 
·       From 1933 to the early  1970s, real disposable income increased by 
over 130% for average Americans.  Gross domestic product grew virtually  
continuously.  That growth occurred  on the strength of a broader and broader 
distribution of wealth and income –  more consumers who could buy products.  
This was the same time when hundreds of new protections for average  
Americans were passed by our Congress – Social Security, Medicare, the Wagner  Act 
that allowed serious labor organizing, and the minimum wage.  1968 marked 
the century’s peak of  purchasing power for the federal minimum wage. 
·       During the same period,  the percentage of wealth concentrated in 
the top 1% of the population shrunk  from a high in 1929 – the year of the 
stock market crash – to a low in  1976. 
·       Since then, the  percentage of wealth concentrated in the top 1% 
has once again skyrocketed to  1929 levels – all as part of the “supply side” 
philosophy that claimed that the  increased wealth of a few would “trickle 
down” to everyone else. 
·       But even before the  2008 market crash, the median income of the 
typical American family was almost  the same as it was in 1969._[i]_ 
(aoldb://mail/write/template.htm#_edn1)  
The myth that tax cuts for the rich somehow benefit the economy as a  
whole, as well as average workers, has also proven to be completely false.  
Phillips points out that during the  greatest war of the 20th century, it was 
wealthy Americans who were called upon  to pay more for the war effort – not 
given tax breaks as they were during the  war on terrorism and the war in 
Iraq.   
During World War II, the tax bite on wealthy Americans was close to  
punitive (the highest bracket was 91%).  But that didn’t hurt the economy; far 
from it.  By war’s end, Americans were rolling in  cash.  The average weekly 
pay rose  83% between 1940 and 1945.  Many  families had their first 
discretionary income. 
In contrast, the Bush tax cut/regulation cut regime of the last decade  
ultimately yielded zero growth in private sector jobs – ZERO – and a decrease 
in  real income for everyday Americans. 
The current battle over whether  to continue these tax cuts for the rich -- 
on family incomes above $250,000, at  a cost of $700 billion over ten years 
– is the best illustration of the  Republican’s failed top-down economic 
philosophy.  
Democrats want to extend the tax cuts for 96.6% of Americans for  
individuals who make less than $200,000 and couples that make less than  $250,000.   
According to the non-partisan Tax Policy  Center, the Democratic  version 
of the tax cut would provide a $3,810 per-person tax savings for  individuals 
making between $100,000 and $199,999.  It would provide a $1,180 savings 
for  people making from $50,000 to $74,999.   
But Democrats refuse to support tax cuts for the wealthiest 3.4% of the  
population on income above $200,000 per individual and $250,000 per  
household.   Why?  Remember these people would still get  the same savings as a 
person making $200,000.  But they wouldn’t get an additional $128,832 average tax 
break  that the Republicans want to hand them. 
To get a sense of the difference in top-down and bottom-up economics all  
you need to do is contemplate the fact that while the Bush tax cuts saved 
people  earning $10,000 or less only $335 total from 2004 to 2010, they saved 
people  making $7,700,000 (the average for the top .1% of the population)  
$2,326,607.  Now that’s top-down  economics. 
The difference  between top-down and bottom-up economics is also 
highlighted in positions  concerning wages. 
Progressives categorically reject the  right’s claim that wages should be 
set solely by “private” markets and that  anything else is “artificial” or “
unnatural.” 
Human beings are not “commodities” to be bought and sold.  They’re the 
purpose of the  economy, not objects to be chewed up and spit out when they’re 
no longer needed.  There is a huge population of unemployed workers in the 
developing world.  In rural China alone  there are 600 million people that 
are not necessary to produce food and must be  integrated into the 
non-agricultural economy.  If we allow the right wing to make  supply and demand the 
sole basis for wage rates and payment for labor, we will  see a continued race 
to the bottom, lower and lower wages and salaries, and in  the short term, 
higher and higher corporate profits. 
Collective bargaining, labor laws, a Federally-mandated living wage and  
trade policies that recognize the rights of labor and not just capital are  
necessary to assure that growth is widely shared and that individual workers 
are  treated as human beings not commodities.  
Finally, Progressives believe that there is  no excuse for poverty.  The 
only  solution that Republican economic policy offers to eliminate poverty is  
“education” that allows the next generation to do better than the one 
before  it. 
But so long as there are people who make beds in hotel rooms, and sweep  
floors, and empty bed pans, and pick fruit there will be “low wage” jobs 
filled  by someone – unless there are no longer any “low wage” jobs, period.   
We will  eliminate poverty when we assure that every job is paid a living 
wage and our  nation enacts an economic policy that assures that every 
American can find a  job.   
The economic policies of the  Obama Administration are based upon 
Progressive principles.  In several cases the size and  effectiveness of these 
policies has been constrained by Republican  opposition.  This is particularly  
true of the economic recovery act that should have been substantially larger 
in  order to deal adequately with the depth of the recession caused by 
Republican  policies.  But in virtually every  area, Obama’s policies are moving 
American in a Progressive  direction. 
The most profound question that will be decided in the Mid-terms is  
whether we continue to pursue a Progressive economic vision – or we return to  the 
failed right-wing policies of the past. Everyday Americans cannot afford to 
 stay home November 2nd; their economic futures are riding on the  outcome. 

____________________________________

_[i]_ (aoldb://mail/write/template.htm#_ednref1)  Kevin Phillips, Wealth 
and Democracy: A Political  History of the American Rich (New  York: Broadway, 
 2003)

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