By Rudy Barnes, Jr.
In the wake of massive Republican tax cuts that benefit the rich, coupled with a bipartisan budget that increases defense spending and proposed investments in infrastructure that will vastly increase the deficit, both political parties have abandoned fiscal restraint and put America on a course that will likely produce dangerous deficits and increase economic disparities.
The stock market is where most money now migrates. Once a barometer of the U.S. economy, it has become more a barometer of inflation than of the nation’s wealth. Without a gold standard to govern the value of the dollar, stock has become the best measure of a dollar’s value. When the value of stock goes up, it creates inflation that reduces the value of the dollar.
The stock market is controlled by super-rich CEOs who represent Wall Street. They are accountable only to boards of directors that demand maximum profits, so they are motivated by greed. And in politics they use campaign contributions to prevent the regulations needed to protect the public from exploitation by the unrestrained greed of their mega-corporations.
The stock market represents America’s productive capacity. Real estate is another part of America’s wealth that is not controlled by Wall Street. In the past, Americans invested more in savings accounts and real estate than in the stock market, but the 401(k) plan reversed that priority. Wall Street now has a continuous supply of money with no public accountability, and the resulting inflation of stock values has given the illusion of increased wealth.
Both stock and real estate lost half their value during the financial crisis of 2008. While the Federal Reserve subsidized corporations that were too big to fail with cheap money, little was done to restore the value of real estate. The stock market has since recovered its losses and more than doubled its value, while real estate has barely recovered its losses. As a result stock has become America’s favorite investment, and that has given Wall Street enormous power.
Rising interest rates counter inflation, but since 2008 the Federal Reserve has kept interest rates low to stimulate the economy. Low interest rates have enriched Wall Street, while they have discouraged traditional savings and only marginally helped the real estate market.
Wall Street opposes higher interest rates since they mean lower stock prices and profits. If the Federal Reserve capitulates to Wall Street pressure to keep interest rates low, even as stock prices and inflation rise, it will likely cause monetary and economic dysfunctions that increase already dangerous disparities between the rich and the middle class, and lead to an economic crisis that could threaten the very fabric of American democracy.
Tax cuts and government spending supported by both radical-right Republicans and leftist Democrats feed Wall Street and starve Main Street. Fiscal conservatives no longer have a voice in politics. It is uncertain when the lack of fiscal restraint in politics will undermine public trust in the U.S. dollar and cause an economic crisis, but without major changes in economic and monetary policy, that economic crisis is a virtual certainty.
Economic stability and justice are moral priorities of the American civil religion, and they are at risk from the greed of profiteers on Wall Street who are supported by a president and a majority in Congress. They were elected by white evangelical Christians, so that religion is part of the problem and should also be part of the solution. That solution is to follow the greatest commandment to love God and to love our neighbors—all of them—as we love ourselves.
That will require the president and congress to reclaim fiscal responsibility for America’s economic destiny from the profiteers of Wall Street. Voters must hold their elected leaders accountable for a strong national defense, a sound social security system, health care for the young and old, and a safety net for the poor and powerless—all with limited budget deficits. That cannot be done with tax breaks for the rich and the deregulation of Wall Street’s power.
I’m a maverick in politics, an independent fiscal conservative more libertarian than socialist, and until recently I considered big government the greatest threat to our freedom and democracy. Now I believe big business is an even greater threat to our liberty, and that we need government to protect the public from being exploited by the unrestrained greed of Wall Street.
The dismantling of the Consumer Financial Protection Bureau by President Trump and Mick Mulvaney, who is the acting head of the CFPB and, I’m sorry to say my former congressman, is an example of how Trump and his Republican minions are protecting the profiteers of Wall Street while leaving consumers unprotected from their unrestrained greed. See https://www.washingtonpost.com/opinions/the-trump-administration-is-trying-to-undermine-the-cfpb-it-will-fail/2018/02/14/cab18f18-10d2-11e8-8ea1-c1d91fcec3fe_story.html?utm_term=.936873af0aee&wpisrc=nl_popns&wpmm=1.
The new two-year bipartisan budget spearheaded by Republicans has abandoned any effort to eliminate the deficit, and a Washington Post editorial says that the budget “denies reality.” See
https://www.washingtonpost.com/news/business/wp/2018/02/11/in-big-reversal-new-trump-budget-will-give-up-on-longtime-republican-goal-of-eliminating-deficit/?undefined=&utm_term=.1eb5bf5398a9&wpisrc=nl_headlines&wpmm=1, and https://www.washingtonpost.com/news/business/wp/2018/02/11/in-big-reversal-new-trump-budget-will-give-up-on-longtime-republican-goal-of-eliminating-deficit/?undefined=&utm_term=.1eb5bf5398a9&wpisrc=nl_headlines&wpmm=1.
Robert Samuelson explains why the budget lacks reality and is not prudent: “The bipartisan budget agreement reached last week by congressional leaders is nothing if not a huge evasion of responsibility. Neither party will make the unpopular choices necessary to pay for an aging society and essential government. Ever-larger budget deficits have become their means of making policy and practicing politics. …Altogether, we face cumulative deficits of about $14 trillion over the decade. These can’t be blamed on an economy operating at less than full capacity. Just the opposite: The economy is close to “full employment” with a 4.1 percent unemployment rate. Deficit financing has become the mother’s milk of politics. Compromise occurs by mutual forbearance. ‘Each party is giving the other its wish list with all the bells and whistles included and asking future generations to pick up the tab,’ notes the CRFB’s Maya MacGuineas. …Meanwhile, so-called entitlement programs such as Social Security and Medicare — for which people automatically qualify — were largely untouched. They represent about 70 percent of federal spending. Together, costly entitlements and expanded discretionary spending produce enormous deficits, exceeding $1 trillion a year, as far as the eye can see. That’s a huge gap — roughly 5 percent of our gross domestic product — to close or shrink. Most politicians are can kickers. They want nothing to do with the necessary tax increases or spending cuts, including possible reductions in Social Security, to curb the out-of-control deficits. Republicans congratulate themselves on new tax cuts; Democrats are always eager to increase social spending — witness the Affordable Care Act. So why should we worry about escalating debt? The answer, in a word: prudence. We don’t know how much federal debt is too much. What we do know — from previous financial crises in many countries and at many times — is that once investors, traders and speculators lose confidence in a country’s debt, the economic, social and political consequences can be devastating. Interest rates may soar; inflation may surge; governments may raise taxes sharply and cut spending deeply. But once you cross that line, it’s hard to get back to the other side. The prudent thing to do is never to get close to the line. We aren’t being prudent.” See https://www.washingtonpost.com/opinions/the-one-word-reason-congresss-debt-deal-should-worry-us/2018/02/11/505dfc02-0dcf-11e8-8b0d-891602206fb7_story.html?utm_term=.8322a0bb0cfe&wpisrc=nl_opinions&wpmm=1.
On the evils of greed, Netflix’s new six-part documentary series is an enthralling take on cons and corporate malfeasance, from money laundering for cartels to the Trump Organization. See The Epic Grift of Greed at https://www.theatlantic.com/entertainment/archive/2018/01/dirty-money-review-netflix/551819.
(1/11/15): The Greatest Commandment: A Common Word of Faith
(3/8/15): Wealth, Politics, Religion and Economic Justice
(8/9/15): Balancing Individual Rights with Collective Responsibilities
(10/18/15): God, Money and Politics
(1/30/16): The Politics of Loving Our Neighbors as Ourselves
(6/4/16): Christianity and Capitalism: Strange Bedfellows in Politics
(10/1/16): The Federal Reserve, Wall Street and Congress on Monetary Policy
(2/11/17): The Mega-Merger of Wall Street, Politics and Religion
(3/11/17): Accountability and the Stewardship of Democracy
(9/9/17): The Evolution of the American Civil Religion and Habits of the Heart http://www.religionlegitimacyandpolitics.com/2017/09/the-evolution-of-american-civil.html.
(9/16/17): The American Civil Religion and the Danger of Riches
(12/16/17): Can Democracy Survive the Trump Era?
(1/20/18): Musings of a Maverick Methodist on Morality and Religion in Politics
(1/27/18): Musings on Conflicting Concepts of Christian Morality in Politics