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Sequester as a Form of Austerity in the United States
We welcome economics professor and radio host Rick Wolff back on the show to discuss the current multi-billion-dollar cuts known as the sequester. The sequester is a massive reduction in US military and domestic spending of up to $85 billion dollars. This is a massive austerity policy that will send ripple effects throughout the US economy. Meanwhile, our guest Professor Rick Wolff points to corporations continuing to use cheap labor that is substituted for “costly” workers in the US and Europe. Professor Rick Wolff has exposed the flawed system of modern capitalism for many years. He joins us today to discuss the new austerity measures, as the inequalities of wealth continue to widen. Rick Wolff and Bill Moyers Interview.
- We’ve had basically the same story for most of the last five years. This crisis technically started in the last quarter of 2007.
- If you are an employer, at least a big one, and if you are an owner of shares of stock, you’ve now come back. It’s taken six years to do it, but you’ve now recovered to where you were.
- No one predicted a crisis of this depth.
- They are a tiny portion of the American people, those employers and those share holders.
- The unemployment rate before this began averaged under five percent.
- At the worst moment of this crisis in 2009, 2010, unemployment hit 10 percent. Where are we today? Barely under 8 percent.
- Every single family in the United States, on average, has a person in it, that is going through a period of unemployment and is therefore becoming a burden to the rest of the family.
- This is a stock market that seems to believe that it doesn’t have to worry about where the mass of people are, doesn’t have to worry about their diminished purchasing power.
- The United States is pursuing an austerity policy.
Austerity is a very simple idea. It has two parts. You raise taxes on average-income people, and you cut government spending throughout the economy.
That’s what they’ve been doing in Greece for the last 3 years. That’s what they’ve been doing in England and France, and Portugal and Italy and on and on and on…and we’re doing it too.
- Austerity has been agreed to by Republicans and Democrats alike. There is no debate in this country at least as far as the two parties are concerned about austerity.
- The only disagreement Republicans and Democrats have is about what tax increases and cutbacks are going to be done.
- We have this crazy behavior in which people who can’t agree punish themselves for not agreeing by agreeing to do something they couldn’t agree to do.
- Fiscal Cliff: All couples that earn more than $450,000 a year, that was the cut off–that’s the top 1% of the US–here’s what happened to them: instead of the 35 percent rate they paid in 2012 under the deal that was struck it was raised to 39.6 percent.
- No rich person in that category will do anything but laugh all the way to the bank, that this was called an attack on the rich.
- You’re not taxing the rich, not even close.
- Payroll tax increased to 6.2 percent, Social Security tax.
- Sequester: All it meant was if the government didn’t reach an agreement, the way they did it at the last minute for taxes, these automatic cuts that were written in 2011, when this whole thing was set up, would kick in. Well, they failed to reach an agreement, and this sequester went into effect on March 1.
- You should be aware that at any time, Congress can make an agreement which supercedes all of this.
- The military does not want or need a good bit of the spending geared up to be given to it.
- It’s not the military that wants it, it’s the Congressional representation from the companies with the military contracts who want it. So we have this bizarre display, we’ve had it for years, in which the military gives testimony saying, we don’t need this program.
- The Congressmen and women sit there and listen and vote it in anyway. They want the jobs and prospects of the defense contractors who are funding their political campaigns to be protected.
- If you raise payroll taxes, which they did, you are damaging the economy in a straightforward, obvious way.
- With more people unemployed, they don’t earn income, they don’t pay an income tax.
- This is the policy that was followed in Greece; they’ve been collapsing ever since.
- Last weekend was the largest demonstrations in the history of Portugal, in Lisbon.
- Nobody on Wall Street knows what’s going to happen 3 months from now.
- We are not going to escape the turmoil. Occupy was the first sign of that.
Guest – Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst, where he taught economics from 1973 to 2008. He is currently a visiting professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan.