Recent news provides a set of unusally illuminating numbers.
They drive home several critical messages about where America stands today: the value (and limits) of President Obam’s stimulus efforts and the preposterousness of GOP tax cut plans as an economic cure for a very fragile economy, among others. The numbers truly tell much of the story:
16%: A crucial new report How the Great Recession Was Brought to an End was just released. Written by Princeton economist Alan Blinder and Moody’s Analytics chief economist Mark Zandi, it estimates that without Obama’s stimulus, TARP, and other emergency initatives, unemployment would have reached 16% and 8.5 million fewer people would have jobs.
2015: Reflecting the limits of Obama’s stimulus, the Economic Policy Insitute noted,
Considering that even if the country were to sustain the strongest pace of job growth seen in the boom of the late 1990s (2.6% in 1998), it would still take until 2015 to return to pre-recession levels of unemployment. The much slower rate of growth seen in recent months suggests that without additional policy action, unemployment will remain high for years to come.
83%: “In 2007, of the 100 largest publicly traded U.S. corporations, 83 ran subsidiaries in offshore tax havens,” as Too Much reported.
$572 BILLION (PROFITS) VS. -$122 BILLION (WAGES):
As previously reported here and here and here, Corporate America has learned to pull off a magical trick: cut workers, reduce hours of the remaining workers, live with reduced sales, and still massively increase profits.
Andrew Sum, an economics professor and director of the Center for Labor Market Studies at Northeastern University in Boston, explained the remarkable feat:
Here’s what happened: At the end of the fourth quarter in 2008, you see corporate profits begin to really take off, and they grow by the time you get to the first quarter of 2010 by $572 billion. And over that same time period, wage and salary payments go down by $122 billion…I’ve never seen anything like this…Not only did they throw all these people off the payrolls, they also cut back on the hours of the people who stayed on the job.
$1.84 TRILLION CASH: While the Republicans — including their supposed “deep thinkers” like Wisconsin’s Paul Ryan—are calling for corporate tax cuts to supposedly re-ignite an economy sputtering because of weak consumer demand, it turns out that Corporate America is sitting on the largest trove of cash in the last 50 years.
Clearly, the last thing that major corporations need is more cash to invest in new equipment and hire new workers. “Having taken everything for themselves, the corporations are so awash in cash they don’t know what to do with it all,” as Bob Herbert recounted. The facts:
Citing a recent article from Bloomberg BusinessWeek, Professor Sum noted that in July cash at the nation’s nonfinancial corporations stood at $1.84 trillion, a 27 percent increase over early 2007. Moody’s has pointed out that as a percent of total company assets, cash has reached a level not seen in the past half-century.
9 MILLION (HIGH-VALUE JOBS LOST): Republican David Stockman is best remembered as the Reagan-era budget official who open admitted that token Reagan tax cuts for the middle class were merely a Trojan Horse” designed to secure the real aim, massive tax reductions for corporations and the rich.
But in an extraordinary analysis of Republican policy published in the NY Times, Stockman excoriated the current GOP economic philosophy:
… we have steadily sent jobs and production offshore. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12 percent, to 68 million from 77 million. …
It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent..
51 MILLIONAIRES: Sam Pizzigati, in his excellent newsletter Too Much, alertly caught this remarkable display of social responsibility from the German super-rich:
In Germany, a group of 51 millionaires who call themselves the “Club of the Wealthy” is asking chancellor Angela Merkel to up the tax bill on the nation’s wealthy by 10 percent for the next ten years — to avoid austerity cutbacks in their nation’s public services. Wealthy couples in Germany currently face a 45 percent tax rate on income over €501,460, about $650,000 plus a 5.5 percent “solidarity surcharge” …
In 2008, according to IRS figures released earlier this month, Americans who made over $1 million paid 23.3 percent of their incomes in federal tax …
It’s impossible to imagine a similar sense of moral obligation from the US ultra-rich. It’s one thing for a few billionaires like Buffett and Gates to make splashy philanthropic donations — which generally have gone mostly to universities, medical centers, and the arts—and quite another for their class to fulfill their civic duties to Ensure all Americans have decent food, housing, healthcare, and education.