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The austerity-based economic policies of the Obama administration and obstructionist Republicans have led to an economic recovery where “only the rich got richer; the poor got poorer,” write Kevin Zeese and Margaret Flowers in “The Grand Bargain Returns: The Leeches are Back and are Urging the Wrong Prescription,” at CounterPunch.org.Critiquing a report by Alan Simpson and Erskine Bowles calling for deeper austerity, the authors argue that more budget cuts built into any proposed grand bargain threaten a double-dip recession that neither party, in their service to corporate interests and the banks, have any interest in avoiding. The U.S. economy is stagnant and trading partners across the world, most notably Europe, are close to or in recession as well. And another economic collapse could cost the United States more than a year’s GDP, just as the 2008 financial crisis did. Zeese and Flowers close with an example of a tangible alternative to austerity policies: Ecuador, which is growing in the midst of a world economic slump. Regulatory reforms in Ecuador, including government control of banks and increased taxation of the financial sector, led to economic growth, increased government revenue and a decrease in unemployment and poverty.
Austerity comes at a time when new census analysis shows that during the Obama “recovery,” only the rich got richer; the poorer got poorer. According to a new analysis by Emanuel Saez, perhaps the leading economist on incomes in the world, from 2007 – 2009 the “average real income for the bottom 99%…fell sharply by 11.6 percent…by far the largest two-year decline since the Great Depression.” And new data covering 2009 – 2011 indicate that “top 1% incomes grew by 11.2 percent while bottom 99% incomes shrunk by 0.4 percent. Hence, the top 1% captured 121 percent of the income gains in the first two years of the recovery.” We got a glimpse into the rigged system this week when it was reported that Facebook, which made $1 billion in profits and will be paying no income taxes, indeed will receive a $429 million refund. Why? Tax deductions allowed for executive pay in stock options.
And don’t believe that the rich getting richer will create jobs. The claim that the wealthiest are job creators has been proven to be a myth. Another myth exploded in this week’s news was that it was important to pay CEOs exorbitant pay to prevent their unique talents from being lured away. Both myths are not consistent with the facts.