February 1, 2012
by Luis R. Miranda
The Real Agenda
February 1, 2012
Often times, people want to know what exactly is the United States like. Most people have the wrong idea as it turns out. In many countries, where people believe that having it all is what life is all about, they still see the US as the bright house on the hill. “It is very different from when I used to live there,” I frequently respond. The key here is that the changes that have taken place in the United States, most if not all of them for the worst, have happened fast. The most significant to much of the population there took place in the last decade.
Most of the negative changes have to do with the loss of liberty and freedom, a consequence of the out-of-control growth of the federal government. Today even the main stream media can’t hide the reality the US is in; not even the liberal pro-Obama corporate media. (MSNBC, NBC, CNN, NYTIMES, TIME, NEWSWEEK, FOX and so on). The abhorrent situation in which the United States find itself in right now can be measured by at least 4 variables: Taxes, Unemployment, Poverty and Alcohol Sales.
The Federal Government’s Golden Egg Goose: You
Let’s start with taxes. The power to tax is the power to enslave. I don’t know how many times I’ve heard that sentence, but I doubt many people in power truly understand what it really means. Probably fewer than a handful are willing to act to correct what it means. Up until 1913, the United States Federal Government and the States were functioning pretty well without an income tax, but the monies collected through taxation were not enough to grow the government to the levels the controllers wanted. Today, the income tax eats up much of the fruit of people’s hard labor. And when the taxes are not enough to support the ever-growing bureaucracy more taxes are imposed on the population. That is how it has been for almost 100 years. But the growth of the Federal Government and its outreach to gain more power is not the only reason why it needs to tax more. If you don’t believe the government has no money to pay teachers, policemen, firefighters and other local and federal workers, you are probably aware of the infamous Comprehensive Annual Financial Reports. This is the double set of books all cities and states have. One has the accounting most people think they know, the other one has the record of the monies that were taken from the governments’ safe to do things you probably don’t know about. Meanwhile, corporations and banks get easy credit from the Federal Reserve window, in addition to being bailed-out with trillions of dollars from the tax payers. Oh the other hand, average people have had to tighten their belts if they were lucky to keep their jobs over the last 10 years. Although the economic crisis is said to have begun in 2008, the truth is that it started way before that, even before George Bush came into office.
If anyone can expect that during a republican administration taxes be lower, someone can also count on higher taxes during a democratic administration. Unfortunately, republican tax cuts are usually applied to the very rich, and democrat tax increases are applied to the middle class and the very poor. See, either way people lose. The last decade has been the worst for the people of the United States, probably since the last Great Depression. But the situation does not seem to be getting any better. Who’s fault is it? Every single president who did not have the cojones to stand up to the off-shore corporations that have controlled the central government at least since 1913. According to the Congressional Budget Office (CBO), there will be no relief for American tax payers in 2012, either. In fact, taxes will increase by at least 30 percent in the next two years. That number is valid if we leave aside the other taxing practice the Federal Government has used for 100 years, and that is currency manipulation, or the artificial devaluation of the dollar by printing money out of thin air.
Higher taxes not only mean a bigger Federal Government, but also less recovery, less jobs, less income, less liberty and freedom. This outlook will be so due “mostly because of the recent or scheduled expiration of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect,” reads the CBO’s document.
How could there be a recovery when the Federal Government eats a big chunk of the monies collected through taxes and almost none of it is put to work for the tax payers? Numbers by the CBO show that federal tax revenues reached $2.302 trillion in fiscal 2011, and will increase to $2,523 trillion in fiscal 2012, $2,988 trillion in fiscal in 2013, and $3,313 trillion in 2014. The report adds that as a percentage of the GDP, tax revenues were 15.4 percent in fiscal 2011, and will be 16.3 percent in 2012, 18.8 percent in 2013, and 20.0 percent in fiscal 2014. In other words, the Federal Government will have even more money to spend than in previous years. It is unlikely though that the government will spend the money in programs to grow the economy, create jobs and improve the debt issue. In fact, in January the Federal Government increase de debt by another trillion dollars. That is where the forecast for a sluggish economy for the next six years comes from.
More taxes, less jobs
Let’s talk unemployment. With cooked numbers, the government says the unemployment rate is at about 7 percent. The CBO has come out to say it is really 10 percent. However, it is likely that such rate has reached 20 percent by now, since it was calculated at over 17 percent in 2009. The Federal government has taken it upon itself to encourage companies to move abroad, instead of promoting the United States as the place to be, to create jobs, to produce goods and to sell their products. Higher taxes at home together with corporate greed prompted companies to move to Asia and Latin America at an accelerated pace. At the same time, higher taxes and a slow economy have ended with local entrepreneurship and opened the door to entities like Wal-mart, IKEA, and businesses alike which make their money by exploiting third world workers to produce garbage that is then sold in the United States and the rest of the world. If you are a socialist or communist and believe that consumerism is bad for the environment and humanity as a whole, check out what cheap labor and cheap products do to both.
Since approximately 2000, the United States has lost 6 million manufacturing jobs. Most of these jobs, as I have said, moved to Mexico, Brazil, India, China and other countries around the world at the expense of American tax payers. A study conducted by the Economic Policy Institute shows how the American trade deficit with China causes the United States to lose about half a million jobs a year. Separately, tax records indicate that up until 2008, employment offered by U.S. parent companies created 10.1 million jobs abroad through their affiliates in countries like the ones mentioned before. That is about half the number of jobs that multinational corporations cut in the United States during the same period. The total amount? 21.1 million. Manufacturing is no longer as much of a significant activity in the US as it was 50 or 60 years ago, when 28 percent of the economic output was directly related to the production of goods on US soil. Today, it is less than half; 11.5 percent.
Have you heard about the NAFTA effect? In case you don’t know what NAFTA is, it would be a great idea to ask Bill Clinton and Al Gore, the parents of this child. The North American Free Trade Agreement signed under the Clinton administration was supposed to be, according to Clinton and Gore, the best invention since the assembly line came into existence. Ironically, NAFTA is mostly responsible for killing the assembly line in the United States.
Free trade is not bad when there is a leveled field for all participants who trade, or as long as losses here can be with earnings there, if you know what I mean. However, this is not what NAFTA did for the US after it was signed by Clinton in 1994. NAFTA supporters contradict the idea that this agreement was negative for the US, because according to them the US experienced a significant increase in GDP as a result of the implementation of NAFTA. They often compare post NAFTA numbers to pre NAFTA ones to make their arguments. The positive outcomes of NAFTA are presented and described in macroeconomic terms, because it is easy to make up talking points to feed the main stream media so that they can regurgitate to the public. However, as we showed before, NAFTA is indeed responsible for the loss of manufacturing jobs. This loss did not occur immediately after NAFTA was implemented, as most companies did not move abroad right after NAFTA was adopted. The runaway loss of jobs came late in the 90′s and across the millennium into the 21st century. One single report by economist Robert Scott, from Economic Policy Institute accounts for the loss of at least 700,000 jobs due to NAFTA. Read the complete report “Heading South: U.S.-Mexico trade and job displacement after NAFTA”. Opinions about how NAFTA helped or harmed the US economy will continue to abound, but the truth is that the proof is in the pudding.
Bye, bye American Dream
Personally, I do not believe in the so-called American Dream, so forgive me if you do. But regardless of whether it was real at some point, perhaps people in the US (99 percent of them) would agree that it went poof in the last ten years. Depending on who you ask, the most important symbol of making it in the US is to own a home, even though in most cases people don’t really own their houses; the banks do. This is another aspect that changed in the United States in the last decade. Although the new millennium saw more and more Americans getting loans to buy houses, we now know it was just a planned bubble, that was supposed to explode to leave millions of people homeless all across the country.
No matter how much main stream media outlets swear by it, the downturn isn’t ending any time soon. Along with the deepening bad economic conditions, home ownership has also taken a big hit. As of today, the number of home owners in the US has fallen 66 percent. This figure comes from the US Census Bureau and it was revealed this morning. But the lack of home ownership is not new. It is a trend Americans have seen more strongly for at least the last thee years. Along with the fall in home ownership comes the fall in home prices at rates of 1.3 percent in November and 3.7 percent in October. The numbers above are reminders of conditions experienced only back in the days of the Great Depression. So when the corporate media says the country is on the rebound, you can be sure that is one of the boldest lies you’ve heard. It may be different for Wall Street insiders, of course.
The main two reasons for the fall in home ownership? Lack of available credit -not due to the lack of money- and few financing options for potential homeowners. Economist Paul Dales, says that even if people want to get a house, it is difficult to do so, because no financing for a mortgage is available. How would any financier risk to help anyone if home prices will continue to fall this years and into 2013? The number of existing homes that remain vacant remains at around 2.5 percent; quite an inventory for buyers to choose from. But are there any buyers? There certainly are a lot of homeless people who need a place to crash. The drop in home ownership has seen its worst in the West coast, where the rate reached 60.1 percent according to census data. This scenario is not surprising, because if people don’t have jobs, well paying stable jobs while being slaves of the IRS, it cannot be expected that they become potential homeowners.
A tool of last resort: Alcohol?
Desperate times call for desperate measures. What are the chances that alcohol sales increase on a yearly basis during an economic downturn? I am in no way saying that this increase is a direct consequence of the global crisis, but it wouldn’t be a surprise. “US shipments of scotch, vodka, rum and other spirits in 2011 increased 2.7 percent over the previous year — the strongest increase in five years, according to industry data,” reports Fox News. A rate of 2.7 percent doesn’t sound like much, but if this percentage is quantified, maybe we can get a better perspective. “Sales of “high-end” brands were up 5.3 percent last year, in line with the pre-recession average of 5.8 percent. At least we know what sector of the economy has the potential to grow. So divest your 401K, savings and other financial products into food, water and perhaps alcohol industry shares?