Why the economy doesn’t work for the 99%

EGTRRA signing

Today’s New York Times has a really good picture of what’s happened to America’s economy over the past 50 years.

Please take a few minutes to look at it, and pay particular attention to what’s happened since the Bush tax cuts started going into effect in 2001.

  • Corporate profits are at their highest level ever.  After-tax corporate profits were 5% when the Bush tax cuts started taking effect — now they’re at 9.7%.
  • Wages are at their lowest level level ever.  When the Bush tax cuts started taking effect, 46.7% of the gross domestic product was paid to workers as wages — now it’s 42.6%.
  • Corporate taxes are at almost-record lows.  Corporations paid 30% of their profits as taxes, when the Bush tax cuts started taking effect — now they pay 21.6%.
  • Personal taxes have also dropped.  Taking all taxpayers together (the 1% as well as the rest of us), individuals paid 17.8% of their incomes as taxes when the Bush tax cuts started taking effect — now, it’s 14.1%.

Remember, the Bush tax cuts were supposed to be temporary.  They were supposed to “stimulate the economy” and then expire in 2011.

Instead, the Republicans in Congress have used one fiscal crisis after another to keep most of those tax cuts in place.

Top Tax Rates 1952-2008And now they’re talking as if those Bush-era tax rates are a ceiling, not a floor.  (Read “Corporate Tax Cuts are almost twice the Sequester cuts” here.  Read about the $161 billion annual cost of the dividend and capital gains tax cuts here.)

Republicans in Congress keep agitating about the federal debt — but they’re not willing to raise revenues by returning to historical tax levels.  No, the GOP keeps insisting that the only way to address the debt is by cutting “entitlements”.

Let’s use real words, here, so everyone knows what the choice comes down to.  Translated from GOP-speak, “entitlements” are Social Security, Medicare and Medicaid.  (Remember, you have paid into the Social Security and Medicare trust funds with every paycheck, for as long as you’ve been working.)

So here’s the choice:

  1. Congress can continue to let the federal debt grow.
  2. Congress can return taxes to historical levels.
  3. Congress can cut Social Security, Medicare and Medicaid.

Congress is going to be making this choice over the next two and a half months.  The current federal budget expires on September 30th — about the same time that the federal government will hit the debt limit (again).

Go back and look at those New York Times “what happened to the economy” charts again.

Don’t you think it’s time to finally end the Bush tax cuts?

 

Another thing that went wrong in the Bush Economy

AZ Correctional Industries

Watch this employer-recruitment video produced back in 2004 by the National Corrections Industry Association in partnership with the US Department of Justice:

Yep, if you’re a business, that’s certainly one way to “control labor costs”.  You don’t have to pay health benefits; you don’t have to pay overtime; you don’t even have to pay minimum wage.

If you’ve been watching the American Legislative Exchange Council (ALEC) closely, this probably isn’t a big surprise.  ALEC has been pushing “prison industry enhancement” (PIE) laws at the state level for about 20 years.   Read “The Hidden History of ALEC and Prison Labor” in The Nation here.

Industry spokesmen describe the program as a “win-win” – but that’s from their perspective.

“I asked an NCIA spokesperson how private companies can get away with what could reasonably be described as forced labor. He explained that the PIE program classifies certain work functions as a ‘service’ rather than an actual ‘job’, and therefore is not subject to [restrictions in a 1979 federal law]. Conveniently, then, the backbreaking work of picking crops in the blistering sun counts as a ‘service’, so prisoners can be paid even less than the immigrants who have traditionally performed this work.”

(Yes, of course there’s a Wal-Mart connection.  Read about it in the British newspaper The Guardian, here.)

Here’s how the prison labor system works in Arizona: 

  • State law requires all able-bodied prisoners to work.
  • “Arizona statute requires that all inmates that are making $2 per hour will have deductions of 30% to offset the cost of their incarceration. In addition, thirty percent of the prisoner’s wages will be deducted for court ordered restitution.”  (Are you doing the math here?  Sounds like the inmates actually receive 80 cents an hour for their work.)
  • Nevermind the recession, the prison labor business is growing.  The number of inmate hours worked during FY12 was up 8.5% over FY11.  Room and board “contributions” were up by 9.8%.  Sales were up.  Profits were up.  Arizona Correctional Industries added new products and new customers, and “are currently working on finalizing contracts that will help grow our telemarketing and service business.”  (ACI helpfully explainsHow we do it: We provide a positive learning experience for all of our workers.  We balance our home and business life.  We continually strive to improve our quality focusing on Lean Continuous improvement.  We are passionately involved in making the customer happy.”)
  • Arizona is now leading the nation in efforts to crack down on those same immigrants who used to pick crops.  Read National Public Radio’s “Prison Economics Help Drive Arizona Immigration Law” here.

Think about that employer-recruitment video that was funded by the Bush Administration in 2004:

“I have a workforce that doesn’t have car problems, or baby sitter problems et cetera.  They’re always here, and they’re always willing to come to work.”

“The situation here allows us to be able to control costs far more than we could in the past.”

“Partnerships between correctional industries and private business are a rapidly growing segment of a multi-billion dollar industry in America.”

“Bring us your business challenge.  Chances are, there’s a nearby correctional facility that can supply dependable labor, enhance your competitiveness, and increase your profitability.”

Now, think about the growth in the non-violent inmate population.

  • As of 2008, non-violent offenders made up over 60 percent of the prison and jail population.
  • If incarceration rates had tracked violent crime rates, the incarceration rate would have fallen to less than one third of the actual 2008 level.

Don’t you think something went terribly, terribly wrong?


Related Article

New Hampshire is considering privatizing the NH correctional facilities. We cannot let that happen.