James K. Galbraith is Chair of Economists Allied for Arms Reduction and a Vice President of Americans for Democratic Action. He teaches at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin, and is senior scholar with the Levy Economics Institute. The following is the text of a speech delivered at the Take Back America conference in Washington, D.C. on June 5.

You've sung the hymns and heard the readings. This is the sermon. To begin on a somber note, the bubble and the bust of high technology, the debt build-up of American households, the obsession with a strong dollar -- all of this existed before we got George Bush. The late 1990s were a fine time, but they set the stage for a slump which began in late 2000, from which we have not recovered, and will not recover soon.

Today almost nine million are unemployed. Many millions more are underemployed, and most of all, underpaid. That is our economic problem. Bush and company did not entirely create these conditions, but they have done nothing to make them better and much to make them worse. We have lost well over two million jobs since he took office, and almost half a million just since the last election.

Full economic recovery is going to be hard. It is not only a matter of spending more. Excess capacity affects the future of business investment no matter what. The reputation of American financial markets has been damaged by fraud and abuse. American households know they are in financial trouble. If you give them more income they will use it, in large part, to reduce debt. This is not a bad thing, but it does not promote recovery right away. And quite a bit of what households do spend, with extra income, drains away to imports.

In the near term, it is true that new tax cuts and more military spending may bring another false dawn. Alan Greenspan -- does anyone remember him? -- will do his best to keep the housing bubble blown up. Mr. Greenspan knows about blowing bubbles, but not even he can forever prevent them from popping. These measures will not bring us back to full employment.

The men in charge talk about growth, but actually they like stagnation. Do they really want full employment and strong labor unions and rising wages? I doubt it. Stagnation helps to justify more tax cuts. Their goal is plain: that financial wealth should be freed of tax. Two years ago, estate and income taxes were cut. This year it was capital gains, dividends and again the top tax rate. Next year the sunset provisions in these measures will be removed. Quite soon, taxes will fall mainly on real estate, payrolls and current consumption. Which is to say that taxes will be paid mostly by the middle class, by the working class and by the poor.

As financial wealth escapes tax, neither states, nor cities, nor the federal government can provide vital services -- except by taxing sales and property at rates that will provoke tax rebellions. Every public service will fall between the hammer of tax cuts and the anvil of deficits in state, local and federal budgets. The streets will be dirtier; so will the air and the water. Emergency rooms will back up even more than they have; more doctors will refuse public patients. More fire houses and swimming pools and libraries will be closed. Public universities will cost more; the public schools will lose the middle class. Eventually federal budget deficits will collide with Social Security and Medicare, putting privatization back on the agenda. I am from Texas, where you can see this future happening now.

We need to talk about the world outside. To the men in charge, it appears that the world outside is not really a partner or an ally. It is mainly a supplier. Cheap labor and cheap oil. I want to stop short of saying that we went to Iraq for the oil. We don't know that. But we do know that when we got there, we found that the oil was there, and the weapons of mass destruction were not.

The fact is, we are acquiring an empire. But the men in charge do not want to pay for it. They have no serious interest in providing security, infrastructure or civil administration to the territories they have conquered. And indeed none of these things are being provided. Yet the burdens of empire can only grow as time passes. Sooner or later, we will have to choose between leaving our conquered territories or putting in the full force required to control them. One way we lose control, while the other can only add to the miseries of our balance of payments. How can the cost be met, especially, if the coin of our realm, the U.S. dollar, is at the same time losing its position? It won't be easy. The problem of empires, historically, is not military defeat. It is bankruptcy. Empires do not tend to business at home, and they tend to lose out to rivals who do. As once with Britain and America, so now with America and Europe? That could be how it will turn out. Do we want this? Much as we may admire and like our European friends, I don't think we do.

There is irony here for America's wealthy. While Bush may leave them untaxed, he will not leave them rich as they were. Already their stocks are off by trillions. Soon it will be their houses (and ours). And finally, as the dollar declines, it will be their cash holdings. An economy that fails for working Americans cannot work, in the long run, for the wealthy.

What then is our alternative? This is not a moment for "me-too" politics. If you accept the Bush administration's agenda on taxes, or on empire, the game is up. You can't escape from the rest. This is a moment for serious alternatives or none at all.

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