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THE NEXT CRASHSorry to deliver the news, but it’s time to worry…

THE NEXT CRASH

Sorry to deliver the news, but it’s time to worry about the next crash.

The combination of stagnant wages with most economic gains going to the top is once again endangering the economy. 

Most Americans are still living in the shadow of the Great Recession that started in December 2007 and officially ended in June 2009. More have jobs, to be sure. But they haven’t seen any rise in their wages, adjusted for inflation.

Many are worse off due to the escalating costs of housing, healthcare, and education. And the value of whatever assets they own is less than in 2007.Which suggests we’re careening toward the same sort of crash we had then, and possibly as bad as 1929.

Clear away the financial rubble from those two former crashes and you’d see they both followed upon widening imbalances between the capacity of most people to buy, and what they as workers could produce. Each of these imbalances finally tipped the economy over.

The same imbalance has been growing again. The richest 1 percent of Americans now takes home about 20 percent of total income, and owns over 40 percent of the nation’s wealth.

These are close to the peaks of 1928 and 2007.

The underlying problem isn’t that Americans have been living beyond their means. It’s that their means haven’t been keeping up with the growing economy. Most gains have gone to the top.

But the rich only spend a small fraction of what they earn. The economy depends on the spending of middle and working class families.

By the first quarter of this year, household debt was at an all-time high of $13.2 trillion. Almost 80 percent of Americans are now living paycheck to paycheck.

It was similar in the years leading up to the crash of 2007. Between 1983 and 2007, household debt soared while most economic gains went to the top. If the majority of households had taken home a larger share, they wouldn’t have needed to go so deeply into debt.

Similarly, between 1913 and 1928, the ratio of personal debt to the total national economy nearly doubled. After the 1929 crash, the government invented new ways to boost wages – Social Security, unemployment insurance, overtime pay, a minimum wage, the requirement that employers bargain with labor unions, and, finally, a full-employment program called World War II.

After the 2007 crash, the government bailed out the banks and pumped enough money into the economy to contain the slide. But apart from the Affordable Care Act, nothing was done to address the underlying problem of stagnant wages.

Trump and his Republican enablers are now reversing regulations put in place to stop Wall Street’s excessively risky lending.

But Trump’s real contributions to the next crash are his sabotage of the Affordable Care Act, rollback of overtime pay, burdens on labor organizing, tax reductions for corporations and the wealthy but not for most workers, cuts in programs for the poor, and proposed cuts in Medicare and Medicaid – all of which put more stress on the paychecks of most Americans.

Ten years after the start of the Great Recession, it’s important to understand that the real root of the collapse wasn’t a banking crisis. It was the growing imbalance between consumer spending and total output – brought on by stagnant wages and widening inequality.

That imbalance is back. Watch your wallets.

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TIME FOR MEDICARE FOR ALL In the midterm elections, most…

TIME FOR MEDICARE FOR ALL

In the midterm elections, most Democrats who were elected or reelected to the House supported Medicare for All.

As Trump and Republicans in Congress try to undermine the Affordable Care Act and raise the costs of health care, the American people continue to push back.

Over 70% of Americans–and even 52% of Republicans–now support Medicare for All, a single-payer plan that builds on Medicare and would cover everyone at far lower cost than the current system.

Here are the facts:

Medicare for All is the cheapest and best direction for the country. Private for-profit insurers spend a fortune trying to attract healthy people while avoiding sick people, filling out paperwork from hospitals and providers, paying top executives, and rewarding shareholders.

And for-profit insurers are trying to merge like mad, in order to make even more money. This is why private for-profit health insurance is becoming so expensive, and why almost every other advanced nation–including our neighbor to the north–has adopted a single-payer system at less cost per person and with better health outcomes.

Administering Medicare is only 1.1 percent of its total costs; the rest goes directly into care. Even including Medicare Advantage, which involves private plans, total administrative costs are just 7 percent.

But private insurers spend about 12 percent of total costs on administration. Or put another way, Medicare’s 2016 administrative costs came to about $156 per person compared to over $594 per person with private insurance.

Medicare saves so much money for three simple reasons:

First, it has economies of scale. The more enrollees, the lower the cost per enrollee. Medicare for All would have even larger economies of scale, presumably lowering the per-person costs further.  

Second, Medicare spends almost nothing on marketing and advertising, while for-profit insurers spend a fortune.

Third, Medicare doesn’t have to earn profits.

Most Americans support expanding access to quality, affordable care through Medicare for All. Yet Trump and the Republicans continue to try to gut the Affordable Care Act and take away care from tens of millions.

The American public has a real choice here: expensive health care for the few or quality, affordable health care for the many.

It’s time for Medicare for All.

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How Blue States Help Red StatesDonald Trump and Republicans in…

How Blue States Help Red States

Donald Trump and Republicans in Congress love to demonize government handouts, which, in fact, their own supporters depend on and are increasingly financed by taxpayers in blue states.  

The federal program Temporary Assistance for Needy Families – what we used to call “welfare” – provides cash assistance to fewer than 1 percent of Americans.

But the Trump administration is proposing to lump many social programs under a new agency with the word “welfare” in its title. 

A recent White House report on imposing work requirements, for example, put Medicaid, food assistance, and housing aid into a rebranded program called “noncash welfare.”

Defined this broadly, a large chunk of America relies on welfare. Add in disability benefits, unemployment insurance, and medical benefits, such so-called “welfare” amounts to 17 percent of the average American’s income.

Welfare has become especially unpopular in “red” states that vote Republican and support Trump. 

But these same states are often the biggest beneficiaries of government assistance.

Include price supports for agriculture, subsidies for land management and forestry, and defense contractors, and you find that a large portion of the economies of red states depend on federal dollars.

Here’s the irony. Residents of “blue” states send more tax money to Washington than they get back in federal help, while residents of “red” states send less money to Washington than they get back in federal help.

In 2015, for example, New Jersey got back only 74 cents in federal spending for  every tax dollar it sent to Washington. New York got back 81 cents, Connecticut: 82 cents, and Massachusetts: 83 cents.

But when you turn to the red states, it’s the opposite. Mississippi received $2.13 for every tax dollar it sent to Washington. West Virginia: $2.07. Kentucky: $1.90. And South Carolina: $1.71.

Taking the Trump administration’s expansive view of the meaning of welfare to its logical conclusion to include all those benefiting from federal spending, blue states are sending welfare to red states – the same red states that say they don’t like welfare.

Under Trump’s new tax law, blue states will be giving even more welfare handouts to red states. That’s because the law set new limits to the amount of state and local taxes people can deduct from their federal taxable incomes. And since people in blue states pay much more state and local taxes than people in red states, blue-staters will be paying that much more in federal taxes.

Which means an even bigger transfer from blue state residents to all those red state Republican voters, whose party despises handouts.

Now, I should add that some of us here in blue states don’t mind giving red states a bigger helping hand. The vast majority of Americans also oppose cuts to programs that aid the poor, elderly and sick. Because most Americans figure we’re all in this together, and those of us who can do so ought to help out those in need.

We don’t regard it as welfare handouts. We call it social insurance. Indeed, social insurance is needed and used by almost all of us, when you include Social Security, Medicare, and unemployment insurance.  And even programs relied upon mostly by the poor end up helping a large portion of us because roughly one-third of all Americans are poor at some point in their lives.

So remember, attacks on so-called welfare are just another means of attacking the things most of us need, and dividing the country into us and them. 

In reality, voters in red states are as dependent on the federal government as voters in blue states, and, truth be told, even more dependent.