I decided at the beginning of this election season that I was going to avoid the daily “he said/he said” of the campaigns. I have too much to do to spend my time analyzing every ad out of every PAC. But the furor over the “Bain Capital killed my wife” ad needs to be addressed. No, not the issue of what the Obama campaign knew and when they knew it, or the timeline of Mr. Soptic’s story, but what the ad says about Americans’ general lack of understanding of the economy.
The PAC that created the ad left out the middle of Mr. Soptic’s story, how his wife lost her job and health insurance and subsequently ignored her health issues until it was too late to save her life. The ad draws a straight line between the closure of Mr. Soptic’s factory and his wife’s death. It was, on one hand, an unfair depiction of what happened, but it highlights how those who created ad believe, and rightly so, that Americans don’t understand some very basic facts about a micro-economy.
Eleven months ago, Tropical Storm Irene destroyed the Vermont State Office Complex and State Hospital in Waterbury. The hundreds of people who worked in those two facilities were temporarily transferred to other state offices, and the patients in the hospital were transferred to other facilities. The closure of those two facilities has rippled across the town with devastating impact. Lunchrooms that served the workers have no customers. Restaurants where visitors to the state hospital would stop for a meal have fewer customers. Grocery stores where workers stopped in on their way home have fewer customers. As each business has had to cut back or lay off, there are fewer customers for other businesses, less money to be spent throughout the town.
The reverse is true as well. Vermont focused its Federal stimulus money on infrastructure projects. Roads were repaved and bridges rebuilt. The companies that do that sort of work hired people, who then had good paychecks which they spent on rent and utilities, food and clothing, school supplies and entertainment. Stores that provided those goods and services saw increases in their revenues, and were able to hire more people. The ripple effect of those stimulus dollars, and the $700 million which will be spent in rebuilding infrastructure because of Irene, has brought our unemployment down to 4.5%, just half a point above statistical full employment. Our employers are complaining that the pool of available workers is down to the unemployable, and to attract better workers they will have to raise their wages or offer benefits.
The closure of a major employer in an enclosed community causes ripples which eventually close other businesses, create more unemployment, create more hardship. That is the message missing from the Soptic ad, and it is missing because most people don’t really understand the concept.
When the Obama administration talks about saving one million jobs with the auto bailout, they are not talking about the employees of the auto companies. Those million jobs were also in the factories that make the parts that go into autos, companies that transport those parts and materials, and, the entire economy of the communities around those auto plants, from the supermarkets to the kids who babysit.
The fact that the Republicans were able to get so much traction out of President Obama’s “you didn’t build that” statement shows that they do understand how little their base comprehends about the connectedness of every portion of our economy. They knew they could find a couple of little girls with a lemonade stand to go on Fox News and say they had no help to build their business, and the Foxies would eat it up (right up to the minute the girls admitted to having “investors.”)
The debates about our economy have been rife with distractions and inaccuracies. The Republicans talk about the national debt in dollar amounts. THE SKY IS FALLING! THE SKY IS FALLING! OUR CHILDREN ARE BEING SACRIFICED! And it’s all bullshit. Of course our debt is the highest its ever been. Our population is the highest its ever been and our economy is the largest its ever been. Of course we have more people on food stamps and assistance. We have more people than ever before. Numbers are irrelevant in national economics. Only the ratios matter.
See these two graphs? They show how distorted the debate over our national debt is. The top one shows the debt in dollar amounts (adjusted to 2010 dollars) since 1940, the end of the Great Depression and beginning of World War II. The bottom one shows that same debt as a ratio to our gross domestic product.
The rise in our debt as a ratio to GDP corresponds with the start of the Reagan administration. After forty years of mostly Keynesian economics, Reagan took us back to supply side economics, the policies that had caused the Great Depression. That’s when the debt ratio starting going wonky again. The dip at year 2000 was the result of the Clinton policies, a return to Keynesian economics. Then, Bush 43 took us back to Reaganomics, back to corporate and robber baron patronage, back to not paying for what we were doing. That’s why the national debt shot up. President Obama and the Democrats want to return us to the economic policies that have historically been good for our country, but the Republicans, first through the Senate filibuster, then through control of the House and finally at the state level, have blocked everything that would have brought our economy under control.
It’s all right there, in two charts, in pure black, white and red. The amount of the national debt can be stable, as it was from 1950 to 1980 while the ratio drops, and the amount can rise and the ratio can drop as it did during the Clinton administration. The problem is when both the amount and the ratio rise, as they have during the Reagan/Bush and Bush/Cheney administrations.
The Republicans say that if we give more tax breaks to the wealthy, they will trickle down money and jobs to us. The charts say that’s a lie. Only when the middle class has grown, only when the government has encouraged the middle class through things like the GI Bill and infrastructure spending has the GDP risen and the national debt ratio fallen. Tax breaks for the rich do not trickle down.
This isn’t rocket science. It’s not even hard to understand if it’s presented properly. So why is it so impossible for the Democrats to explain?