THE BUSH ECONOMIC MIRACLE

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Harding, Coolidge, and Hoover were the direct antecedents of the Bush I thru Bush II (and you know who that includes) roaring turn of the century excesses. The corruption, avarice, selfishness and the triumph of the over the top excesses of predatory laissez faire capitalism nearly brought America to its knees back in the 1930s. There was a time when it looked like either a socialist/communist revolution or a fascist reaction would triumph. But FDR won the day and saved capitalism from itself. The reforms of his many administrations-- always hated by the far right-- have since been wrecked by Reagan, the Bushes... and Clinton. And the result has the country hovering on the brink of catastrophe again. We'd better hope and pray that Obama is up to an FDR-like task of saving capitalism from itself again.

Saturday's NY Times had a story about the incredible bargains now available for business class transatlantic fliers. Instead of $8,000 for the hop over the sea, it can be as low as $4,000 if you book in advance. For joy... I guess. And it fits very well with Bush being stunned when a reporter asked him what he thought about gasoline going to $4 a gallon. He looked like he didn't comprehend. He rarely does. Today's Times, you'll be happy to read, assures us that despite tough times, the ultrarich keep spending. No recession for them. 80,000 more Americans lost their jobs in March. Real unemployment is close to 13% of the workforce and inflation is probably double what the government reports. But for the few thousand families for whom the Bush years really did produce an economic miracle, it's private jets, helicopters, Hummer limousines, Ferraris, Lamborghinis...

Some businesses that cater to the superrich report that clients-- many of them traders and private equity investors whose work is tied to Wall Street-- are still splurging on multimillion-dollar Manhattan apartments, custom-built yachts, contemporary art and lavish parties.

Buyers this year have already closed on 71 Manhattan apartments that each cost more than $10 million, compared with 17 apartments in that price range during all of 2007. Last week, a New York art dealer paid a record $1.6 million for an Edward Weston photograph at Sotheby’s. And the GoldBar, a downtown lounge, reports that bankers continue to order $3,000 bottles of Rémy Martin Louis XIII Cognac.

“When times get tough, the smart spend money,” said David Monn, an event planner who is organizing a black-tie party on May 10 for dignitaries and recent purchasers of apartments at the Plaza Hotel; the average price there was $7 million. “Short of our country going on food stamps, I don’t think we’re doing anything differently.”

Some extreme spenders say they have not cut back on their impulse Bentley or apartment purchases because they have made so much money in the good times from the Internet, stock market and real estate. Some have been able to move their money into investments like private equity that are available only to those with extensive capital. Some rationalize cars and home renovations as “investments.” And some simply don’t want to skimp on the weddings and anniversary parties that they see as milestone events.

...Many economists warn that the nation’s financial troubles may spread far more widely, and could ultimately touch even the wealthiest. The financial sector could lose as many as 20,000 jobs in New York City by the end of 2009, according to the city’s Independent Budget Office. And at a March 18 policy meeting, Federal Reserve Board members raised the possibility of a “prolonged and severe economic downturn,” recently released minutes show. That threat has undoubtedly caused some affluent people to consider some degree of frugality.

Meanwhile millions of Americans who have always thought of themselves as "solidly middle class" are worrying about rapidly diminishing savings tied up in the plummeting real estate market (their homes), an unregulated mess that allowed the very rich to get very much richer. And they're worried about their parents' "golden years" and they're worried about their children's (immediate) futures. Today's Times happens to also have a story about skyrocketing medical costs, as criminal insurance and pharmaceutical companies gorge themselves on what could possibly be the end of the good times of unrestrained predatory capitalism. To me it sounds like the seeds of the French Revolution.

Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.

With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.

The system means that the burden of expensive health care can now affect insured people, too.
No one knows how many patients are affected, but hundreds of drugs are priced this new way. They are used to treat diseases that may be fairly common, including multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers. There are no cheaper equivalents for these drugs, so patients are forced to pay the price or do without.

Instead of spreading the costs for health insurance across the whole spectrum of insured people, Republican brand health care allows insurance companies to stick seriously ill people with crippling, financially catastrophic bills. It's another erosion of the fabric of civil society, another result of people like the Bushes and Cheney sneering at the concept of all of us being in the same boat-- and of people like the Clintons winking and nodding and going along for the ride. You tell me, are Bill and Hill one of us? Or one of them?

And don't think the population doesn't notice. This morning Paul Krugman goes over the University of Michigan Survey Research Center's most recent findings: "Americans are more pessimistic about their situation than they have been for more than a quarter century." The Bush Economic Miracle, like the Bush tax cuts for the rich, haven't done squat for 90% of the population. "[T]he percentage of Americans saying that they’re better off than they were five years ago is at its lowest level in 44 years of polling." Krugman has some ideas about why there is so much glumness:

Our bleakness partly reflects the fact that most Americans are doing considerably worse than the usual economic measures let on. The official unemployment rate may be relatively low-- but the percentage of prime-working-age Americans without jobs, which isn’t the same thing, is historically high. Gross domestic product is up, but the inflation-adjusted income of the median family is probably lower than it was in 2000.

...A major reason we’re feeling so down now is that for working Americans the boom never did come back. Job creation in the post-2001 recovery was pathetic by Clinton-era standards; wages barely kept up with inflation. Instead, corporate profits and the incomes of a tiny elite surged-- sucking up so much of the economy’s growth that only crumbs were left for everyone else.

Now the boom that wasn’t has gone bust-- and Americans, understandably, have lost confidence in the prospects for a return to real prosperity.

They have also, I’d suggest, lost confidence in the integrity of our economic institutions.

Early this decade, when the great corporate scandals broke-- Enron, WorldCom, and so on-- I expected big-business corruption to become a major political issue. It didn’t, partly because the march to war had the effect of changing the subject, partly, perhaps, because Americans weren’t ready to take a broadly negative view of the system that brought them the previous decade’s boom.

But my impression is that the subprime crisis-- with its revelation that titans of finance were dealing in funny money and its tales of failed executives receiving hundred-million-dollar going-away presents-- has resurrected the sense that something is rotten in the state of our economy. And this sense is adding to the general gloom.

Krugman offers some hope, if we elect the right government in November. He's looking for pro-worker, pro-consumer policies from a Democrat, reasonable re-regulation from a Democrat. "A return to pro-labor policies could help raise real wages. Pro-competitive policies-- which are not the same thing as giving powerful businesses whatever they want-- could help America regain its leadership in information technology. In other words, there’s a lot that could be done to perk up our sagging confidence." On the other hand, the corporate media could actually get their candidate in and McCain will make Bush look like the good old days.

Bill Sher reminds us that even McCain has changed his mind-- again-- on the economy. He once said (way back in January) that the fundamentals of the economy are too strong for a recession. Now, months and months and months later, he has finally admitted what almost all Americans know all too well: we are in a recession. I asked rural development expert Bill McCamley, a progressive Democrat running for Congress in New Mexico's huge, rural 2nd CD, to talk about the economic dilemmas facing small town America. We'll have that up later today. Meanwhile, in the interest of fairness, here's a short and excellent video that sums up the Bush Economic Miracle: