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Report from the Front

Art criticism, sometimes with context, occasional politics. New shows: "events;" how to support the online edition: "works."



I will begin by saying that the economy is not doing well. Although the private sector added some jobs in June, the number was smaller than expected, and the public sector laid off people (reflecting the cuts in government spending that the Republicans want to continue with, and increase). Also, more people were out hunting for jobs (although whether this is because they figure the job market is improving, or whether it’s because their savings are running out, and they’re getting desperate, is unknown). At any rate, these factors combined to boost the unemployment rate to 9.2 percent in June. Moreover, as David Leonhardt, in a lengthy analysis for the NY Times on July 17 pointed out, consumer spending–which accounts for roughly two-thirds of the gross domestic product--- is not recovering from the Great Recession.

You can’t very well expect businesses to add more employees when they doubt they’ll be able to sell more goods, can you now? Why are consumers not buying? Well, you can’t very well expect people to buy when they are worried about keeping their jobs, or when the wages they do get are barely keeping pace with inflation. Steven Greenhouse, in a NY Times blog for June 30, reported on a study conducted by economists at Northeastern University which found that “the current economic recovery in the United States has been unusually skewed in favor of corporate profits and against increased wages for workers....’corporate profits captured 88 percent of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1 percent of that growth.” The stock market is up because corporate profits are up, but Wall Street is obviously not as representative of Main Street as it was.

Despite this situation, the Republicans in Congress, led by John Boehner, Speaker of the House, and Eric Cantor, House majority leader, have been stonewalling about the need to raise the federal debt limit, and allow the federal government to ease the pinch by whatever means it finds necessary. In decades past, Congress has passed legislation to increase the federal debt limit without any problems, and it’s important to do this because otherwise the U.S. might be forced to default on its outstanding debt, a move that might conceivably even spark the kind of inflation that plagued Germany in the 1920s, and at the very least, could throw the money markets into confusion, and force the government to stop sending out Social Security checks.

However, the Republicans don’t seem to care about this, so they are insisting that any increase in the debt limit must be tied to legislation that slashes trillions out of the budget, but ignores the possibility of lessening the federal debt by closing tax loopholes in a way that would cost only the biggest and richest corporations and individuals in the country. They would rather penalize the poor, the elderly, and the even disadvantaged children by crippling Medicare, Medicaid and altering legislation that provides federal funds for disadvantaged children so that these moneys can go instead to the more prosperous (and influential) areas of the country as opposed to the poorer ones.

Boehner & Co. have a mantra: “taxes are a job killer.” This is wrong, wrong, wrong. What really kills jobs is budget-slashing. This is true in two ways, moreover, the primary effect and the secondary one. The primary effect is that government workers are laid off. The secondary effect is that, since this diminishes buying power, private businesses are unable to increase their sales, so they don’t hire on new workers, and may even lay off the ones they already have.

Back in the 1950s, people knew better than to try and run the government without expecting the wealthier members of the community to do their fair share. During that decade, the country was never more prosperous, and unemployment was at historic lows. A Republican President, Eisenhower, was in office, yet he endorsed a corporate income tax rate of 52 percent (far more than it is today, and zealously observed, unlike today, when corporations make careers out of avoiding taxes). I was in the business news section at Time in those days, and I well remember how Standard & Poor’s and Moody’s, the two companies that published detailed reports on the nation’s publicly owned corporations, would list “pre-tax earnings” and “net earnings” after taxes, the latter always 48 percent of the former. In the 1950s, moreover the top personal income rate was 92 percent (far, far more than today). Yet very few wealthy Americans left the country to avoid taxes (I doubt they even would today).

The Republicans are trying to tie an agreement on the debt limit to a balanced budget amendment. This is not only stupid but incredibly destructive. It would ensure that the governmental spending would move in the same direction as the rest of the economy, instead of acting as a counter-cyclical counterbalance. With a balanced budget amendment, the government would have to cut spending when the nation headed into a recession because tax revenues would decline, thereby accentuating the decline in employment still more. Besides, how would the government be able to conduct wars? Where would the U.S. have been in 1941, if the federal government had had a balanced budget amendment? It couldn’t have fought World War II: the Nazis and/or the Japanese might still be running the country.

Where would the Republicans have been, in the early 21st century, when George W. Bush was squandering the surpluses that Bill Clinton had achieved, in order to enact tax cuts, further defense spending, and that unnecessarily expensive Medicare prescription benefit? Where would Boehner & Cantor have been, as recently as October 2008, when both voted for the $700 billion bank bailout, endorsing Bush’s Secretary of the Treasury, Henry Paulson? And did either of them have any complaints when Paulson took over Fannie Mae and Freddie Mac, those two big housing mortgage guarantors, at the additional cost of another $200 billion? Not that I know about. Compared to the trillions represented by those eight years of Republican-conceived programs, Barack Obama’s $700 billion stimulus bill was relatively modest (too modest, in fact, say those commentators on the left who keep complaining that Obama isn’t doing as much as he can to end the recession).

The general public, meanwhile, doesn’t seem to care about this crisis, assuming that it will be resolved somehow. This may or may not be the case. At the moment, some pollsters say that President Obama’s numbers are looking better than those of the Republicans, for the way each is handling the situation. I seem to have heard that Boehner regards his No. 1 priority to be making Obama a one-term president. If so, his present conduct indicates that he’s going the wrong way about it. Still, he may be stubborn enough not to care.

There are two very disturbing stories in the NY Times today that would encourage him to do his worst. The first, by Charles M. Blow, says that according to a report released Friday by the Pew Research Center, the Republican party has made tremendous gains in party affiliation since President Obama took office. In 2008, 46 percent of white voters were Republicans; now that number stands at 52. The largest increases are among the poor, the young and the less educated —all the white trash in the country, in other words. Since these are precisely the kind of people whom Republican fiscal policies are most likely to harm, the question is why in the world are they signing up, and it’s difficult not to suspect that what we used to call “white backlash” in the ‘60s isn’t a factor.

The other disturbing story is an interview with Cornel West, the Princeton professor & closest thing to a black activist around. In 2007, he introduced Barack Obama as his “brother, companion and comrade.” Now he is calling Obama “the black mascot of Wall Street oligarchs” and the “head of the American killing machine.” This sort of attitude, which is alas rather widespread among the left-wing community that was instrumental in electing Obama in 2008, suggests that Obama isn’t going to get the support in 2012 that he needs to be re-elected. The people who feel this way fail to appreciate the fact that Obama is being forced to compromise with Boehner because the Republicans have a large majority in the House of Representatives, and enough votes to permit fillibusters in the Senate. In their own way, those voters who consider themselves progressives are avoiding reality, too.

The notion that we might wind up with Michele Bachmann (or worse) as President in 2012 is a depressing prospect, but not, I'm sorry to say, unprecedented. In 1968, the left wing was so fed up with the war in Vietnam that they sat on their hands, and allowed Richard Nixon to beat Hubert Humphrey. Do we really need another Watergate? And can the country survive it in the form that we know it now?


Meanwhile, here is at least a bit of comic relief to cheer us: the mess that Rupert Murdoch, Pooh-Bah of the reactionary press, here and in the UK, currently finds himself in. It seems to have started when word got out that one or more reporters on the News of the World, owned by Murdoch and the UK's largest tabloid, had hacked into the phone of an abducted (and subsequently murdered) girl. Hacking into royalty’s phones, in order to pick up juicy bits of palace gossip, was apparently nothing readers ever jibbed at (and indeed ate up), but to pick on a kidnaped child offended the sensibilities of the Great British Public (feeling none too happy with the poor economic situation that the Draconian policies of Prime Minister David Cameron have done nothing to allay).

People started remembering that there had been another phone-hacking case involving the News of the World, back in 2006. And they were none too happy with the fact that Cameron had hired, as his chief PR, a News of the World editor named Andy Coulson, even though Coulson had left Cameron's employ some time ago. Subsequently discovered were 11,000 pages of handwritten notes listing nearly 4,000 celebrities, politicians, sports stars, police officials and crime victims whose phones may have been hacked by staffers at the News of the World. The trove had been hidden away in an evidence room at Scotland Yard, aka London’s Metropolitan Police, while its officials blandly insisted to all who asked that the 2006 case was an isolated incident. Another former News of the World editor, Neil Wallis, was employed as a media strategist for Scotland Yard, reporting back to another arm of Murdoch’s empire, News International, while the investigation was going on. It was also learned that five senior police investigators had been targeted by the News of the World, and most likely had their phones listened in on – presumably so that the tabloid could uncover dirt about them to use for revenge or to blackmail them out of pursuing the situation further.

There is so much more that I can’t begin to cover it. I may just conclude that Murdoch has shut down the News of the World, postponed indefinitely his $12 billion plan to take over British Sky Broadcasting, a satellite broadcast giant, and fired a handful of his top executives –many of whom have been arrested, along with Coulson. Heads have also rolled at Scotland Yard, hearings are being held in Parliament, and Her Majesty’s Loyal Opposition, the Labour Party, is making hay while the sun shines. Even Nick Klegg, leader of the Liberal Democrats, junior partner in Parliament’s governing coalition, has been making outraged statements. It would be awfully nice if he’d leave Cameron’s coalition altogether, either to align his party with Labour or to force an election, but I guess that’s too much to hope for.

Needless to say, the liberal press – The Guardian in England, and NY Times in America – are covering this story with oceans of print. Murdoch’s New York outlets – the Post and the Wall Street Journal – have been sticking their heads in the sand, but finally the Journal published a self-serving interview with Murdoch, in which he protested (as he has before Parliament) that he knows nothing. The Journal also ran an editorial which claimed that “The schadenfreude is so thick you can’t cut it with a chainsaw.” I’ll admit it: I’ve been thinking “schadenfreude” for weeks, but I still feel cheered by the situation. It’s just so nice to see a bad guy getting it in the backside–for a change.
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