by Larry Magid
As a technology journalist I don’t generally comment on political or social issues but the aftermath of the debt ceiling debate and the Wall Street plunge and U.S. credit downgrade that followed has me seething in anger at both the Republicans for insisting on massive cuts without revenue increases and the Democrats for going along with them.
It strikes me that Congress’s decision to slash federal spending is not only tugging the heart strings of our country but is bringing us to the brink of possible economic disaster. The victims will not only be the poor and the middle class, but the affluent as well. No one wins except the ideologues for whom budget cutting is more of a religion than a means of improving the economy.
Even the wealthy will suffer as a result of the economic consequences of these policies. Sure their taxes will remain low, but investments are in jeopardy as we saw on Thursday when the Dow suffered more than a 4% one-day loss. On Monday, when the legislation was signed, the Dow opened at 12,239. Three days later it closed at 11,383 – a drop of nearly 7%. I’m not saying it might not swing back up, but Wall Street’s response to all of this slashing was not exactly a jubilant celebration.
And it’s not just rich people who suffer when the Dow tumbles. Pension funds and the IRAs and 401Ks of working Americans plunge as well. And while it’s great that people can borrow at historically low rates, people looking for secure ways to save are also earning historically low rates on their accounts. That hurts seniors and others who can’t afford to risk their money in the market as it encourages people who probably ought be making safe investments to take a riskier route in the hope of keeping ahead of inflation.
Slashing the federal budget will not just affect national programs but state and local ones as well. We’ll see more police, fire and teacher layoffs and likely major increases in local and state taxes and fees. To help cities make ends meet, those cops and parking officers that are still on the job will be encouraged to write more tickets as fines increase as a way of balancing the budget. In the mean time, vital emergency services and the people who need them will suffer.
What really amazes me about this is how many people are willing to support politicians whose policies actually hurt them economically. Insisting on keeping the tax rate for the wealthy below that of the Reagan era hurts the poor, the working class and the middle class while providing little if any real help to the rich. If you’re earning hundreds of thousands of dollars a year, paying a bit more taxes will have no impact on your discretionary spending. If you’re just making ends meet, any decrease in vital services could be economically devastating.
It’s time for rank and file Tea Party members to realize that they’ve being manipulated. Perhaps we need to form the “Coffee Party,” in the hopes that the more caffeinated beverage will cause Americans to wake up.
(c) 2015 Larry Magid