A Bailout for the People
by Richard B. DuBoff
In possibly the worst debasement of public discourse in recent years - no mean feat - George W. Bush stated last fall, and repeats as President, that when you look at taxes or the government surplus, "it's not the government's money. It's your money."
And yet the Bush administration plans a multibillion-dollar bailout for our airlines, already in financial trouble even before Sept. 11. So it's not your money - it's the airlines' money?
America's airlines do need help - how much is something that must be carefully considered - without which there could be bankruptcies and declining capacity in the face of growing long-term demand for air travel.
But if the national government can step in and help a private industry and its shareholders at a moment's notice, why is it wrong, or wasteful or a threat to "freedom," for government to provide increasing and long-term support for our economic and social infrastructure?
"It's not the government's money. It's your money." It is also your dilapidated public school. Your frayed national parks. Your traffic jam. Your increasingly costly and inadequate medical insurance.
And your catastrophically inadequate airline security system. No comparable country relies on privately hired and supervised workers to carry out basic security check-ins at airports. Our lives depend on such people - who receive barely a few hours of training, earn minimum wage, and rarely last more than six months on the job.
Our lives also depend on those who teach us to read, calculate and think - and few comparable nations pay their teachers as poorly. Among high-income nations, the United States ranks far from the top. Average salaries of teachers with experience, as a percentage of per capita income, is very low in the United States - 99 percent compared to 136 percent on average for 30 countries surveyed by the Organization for Economic Cooperation and Development.
Amtrak is now coping with large increases in ridership on all its lines - and we are on the verge of telling it to fold up shop if it fails to become "self-sufficient" by 2003. Instead, it should be subsidized to the tune of $2 billion to $3 billion per year. No other country imposes a private-profitability standard on its railroads, for good reason: They are part of national capital and are needed, more than ever, to support transportation systems under enormous and essentially irreparable strain on their motor vehicle and airway modes.
Social Security is alive and well. Even under the most pessimistic projections for "financial adequacy" over the next 75 years, Social Security will claim an additional 2.5 percent of our gross domestic product. Guess what: Social Security benefits have been paid over the past 61 years, and they have taken an additional 4.2 percent of our GDP - and over that period our nation's economic productivity has been below what it now is, far below what it will be in future decades.
Social Security's real problem is - can you guess? - its inadequacy compared to its counterparts abroad. For workers with average earnings, the U.S. replacement rate is less than half those of the French and Dutch systems, less than two-thirds those of the German, Belgian, Spanish and Italian systems.
The first order of business should be repeal of the Bush tax cuts - backloaded for 2005-2010 and overloaded in favor of the richest households. Then we can begin to reverse two decades of Reaganomics and the purposeful shrinkage and starvation of the federal government. If Washington can bail out a private industry - and not for the first time - it can certainly begin to reinvest in our livelihoods, our well-being and our futures.
Richard B. Du Boff is professor emeritus of economics at Bryn Mawr College.