http://www.cnn.com/2011/POLITICS/10/11/congress.problems/index.html

In the article, the big failure of the bill shot down by Republicans is that an increase in tax for the wealthiest 2% of the population. The argument about what will create jobs swings freely back and forth like a pendulum. The hyper-partisanship displayed by Republicans keeps good bills and good ideas from passing. Arguments ensue. In the meantime, the economic growth of the country stalls and people continue to lose unemployment benefits, necessary wages that will keep them from starving, failure to make ends meet, foreclosure looms, bankruptcy beckons, and protesters protest. The revolving door of “no”, coined by the article calling Republicans the Party of No, remains stalled as Democrats break up the bill into tinier ones that they will propose in bits and pieces. All the while, the failure of the government to serve its people remains a loss of hope for many. Why?

Corporations have, since President Bush, enjoy enormous tax cuts that sometimes result in no due taxes to be paid to the federal government. For decades, once a certain amount of money is made by one person, the social security tax is no longer taken out of their pay. At the head of these corporations are CEOs that drive every day business of the corporation. In most contracts, a clause is added called the “Golden Parachute” which arranges for a payment to be made to the CEO should the body of the company, such as a board of directors, elect to release him from employment or in essence fire him or her. The “Golden Parachute” can be millions of dollars, and usually is, that is paid to the former CEO. The success of the CEO is attractive as contractual agreements often afford bonus pay also in the millions of dollars. In all rightful and logical effect, the CEO enjoys a win-win relationship with the company or corporation. The effect the tax cuts were supposed to have was, in Bush’s opinion, to pay workers more money or allow the corporation to hire more employees. This, obviously, is not happening and more and more people are finding themselves out of gainful employment, struggling to make ends meet with the “McJobs” available that pay minimum wage. Often, medical benefits through these corporations is unattainable or not affordable. The economy stalls.

Now that corporations have extra money, bonuses go to other high ranking executives or get placed with representatives who support the corporations for campaign funds, lobbyist favors, or garnering support in order to pass the legislation they want passed. Those representatives who accept such lucrative funding often ignore the constituents in favor for the supportive elite rich and the corporations. While seemingly a very negative side effect of capitalism, this kind of lucrative relationship has been going on for decades and decades which is exactly how capitalism works. This type of behavior has angered the average 99% of the population not enjoying the benefits of being elite rich. This is the underbelly of the Occupy Wall Street protests, a sort of American spring, because the economy is sour and seemingly unfair business arrangements occur in the capitol building in Washington, DC. This is also the effective wrench in the workings of a positive and prosperous economy that benefits everyone as it did in prior years. Instead, the economy has become controlled and manipulated by the government, so we are going to have yet another economy lesson just to clear things up.

The base of the economy is making items for trade, export, and consumer consumption, as I have said in an earlier post (Economy 101 For the Real World). When a gross product of the country exports outweighs the gross product of imports, an economy can flourish. When the gross product of a country is imports, and excels the amount of exports, the economy does not flourish but bottoms out. The only way to encourage the growth of the economy is to create a flourish of companies in America, not overseas. The tax cuts for corporations instituted by the Bush reign was supposed to do that, but instead turned to greed that corporations now hoard money and resources to make themselves rich. The “trickle down” effect of the Reagan reign also failed to flourish the economy. The money simply isn’t trickling down and the hunger for cheap items exceeds the hunger for more expensive native items, thus prompting imports to flourish. The act of a stimulation package, instituted first by Bush not Obama, was to put yet even more money into the failing economy. This only served to line corporate pockets further. Then the rescue of failing banks and native car manufactures by the Obama administration for the consumption of the loan consumer failed. Why?

As I have said before, the insertion of money into a hurting economy that is fundamentally import products sends that money overseas to the countries sending us imports. So, since the money did not land in the hands of the every day 99% of the country, the consumption of loans is obviously not marketable. Therefore, since one cannot afford a loan payment monthly, the charge of money into that stimulation package never reached consumers. What does that mean? Banks work like this: when you open a checking account, you are depositing money into the bank for you to use. The bank then uses a percentage of that money to loan to people, so they can make money that will exceed the deposited amount on a regular basis. They also use fees on checking and savings accounts to make money. These fees, such as balance fees, overdraft fees, and ATM fees also make the bank money. They give some account bearers a small percentage of interest on savings, checking, and certificates of deposit (CDs) to encourage people to give them care of their money. For a bank to operate, the amount of loan payments, fees, and other income must exceed or equal the amount of money the bank is spending. When that fails, such as when unreasonable ballooning of mortgage loan payments made consumers unable to pay and give income to the bank, the bank cannot operate. This is why so many failed, but it was not the only reason.

Wall Street, which controls the majority of stock and bond interests of companies in America, is kind of like a carousel. When a company or bank makes money and is listed with New York Stock Exchange, the price of stock or company interest by investors goes up. People make money on their investments with companies and banks. When a company or bank loses money and is listed with the New York Stock Exchange, the price of stock or company interest by investors goes down. People lose money. The stock exchange goes up and down like horses on a carousel. When more and more American corporations send product manufacturing plants outside the country, the investments still go up and go down sometimes causing what is called a delay in revenue. While they are making more money by hiring overseas for less pay and often no benefits, the company makes money on rather reactive scale. However, when the loss of employment happens and the availability of money is weakened, the company does lose money as no one is buying their products like they used to. So the actual reduction of employment in America which fuels the consumer spending necessary to make banks and companies make money reduces the amount of revenue. Stocks go down. A lot.

Considering this, and the mortgage debacle that caused so many consumers to be unable to pay the banks monthly, the circulation of wealth came to a sudden halt. The banks, now failing to maintain money coming in to equal money going out, began to fail. The foreclosures of homes, which should have added revenue to banks, happened at such a high rate of speed that the amount of homes now for sale far exceeded the demand to buy them. Real estate values plummeted, those who could afford their mortgages now find themselves paying expensive prices for a house that is no longer worth as much when they bought it. Further, the stimulation money handed to banks was absorbed immediately into the fund to forward revenue and failed to do so. Then, due to poor employment opportunities, more and more people became unable to pay for other loan products and defaulted. The glut caused the stock market to plummet. The worth of companies and banks sharply declined going from a recession status (where the economy is merely in the carousel down position) to being a depression (the economy horse never rose again except in small increments) which resulted in the closure of small businesses and some big businesses who could no longer maintain revenue. Thus, the entire situation did not improve, it only got worse. The only difference between this depression and the one in the late twenties early thirties was that a rush of people when to banks to close accounts as all trust in the financial institutions was lost.

With this in mind understand two things that still need to happen in order for the economy to recover: 1) The US needs to export the same amount or more than it imports resulting in jobs and 2) The attraction for bringing back companies to the US needs to be substantial. The government, while also complicating matters by being partisan along party lines and loyal to big spender lobbyists and corporate/company sponsors, could easily make the economy better by giving those that have moved manufacturing overseas an incentive to bring it back while at the same time creating jobs in the US and to make moving or already moved companies pay a higher tax for importing products back to the US thus creatively levying items to make yet more money. The tax cuts for the middle class slowly dissolving into lower class incomes needs to happen once the employment is up in the US and we are exporting more than importing. This will cause proper circulation of monetary funds that benefit the US and not other countries. The resolution is relatively simple if not for some holding the country hostage for lobbyist and corporate funding that makes some fat and the rest of us skinny.

Also, the disproportionate size of representatives’ incomes often in the $400,000s needs to come down to a level we can actually afford to pay with our hard earned tax money. The reality of someone who makes $400,000 a year is much different than the reality of the majority of Americans making $26,000 to $40,000 per year. This reduction is necessary to further the action of the government which would greatly benefit the average American and not the 2% who seem to be driving our country forward into bankruptcy. The immediate withdrawal of forces of our military fighting in foreign places that we do not belong for trillions of dollars needs to happen too and that money could be easily used to fund a sparking economy instead the sputtering one we have now. The failure of the government to serve the majority of the people who elected them are no longer exempt from responsibility in acting to make the country prosper and should be held accountable for failing to serve their constituents in a manner that is humane and fair.

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