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FlintConservative
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5 Myths About the Poor Middle Class
By Stephen Rose
Sunday, December 23, 2007; Page B03
The American middle class is fighting for its life -- or at least that's what Lou Dobbs would have you believe. The CNN anchor's rants about "the war on the middle class" are probably the most prominent examples of such economic doom-saying, but he isn't alone. Democratic presidential candidates pepper their debates with references to the assault; leading liberal thinkers argue that supply-side conservatives captured the Republican Party during the Reagan administration and implemented policies that continue to privilege the super rich today. They tell a compelling tale of middle-class decline. Pity it isn't true.
1. The middle class's standard of living stagnated while the dot-com boom made the super rich even richer.
Not really. In fact, the U.S. economy hands out wealth far more evenly. Per capita gross domestic product has increased by more than 65 percent since 1979 -- growth that translates to $26,000 per household. If all that money had gone to the richest 10th of the population, it would now hold more than 60 percent of the national income. That's nearly twice as much as the super rich actually have, according to the best census surveys available.
To be fair, demographic changes have sparked many misunderstandings about the economic health of the middle class. For example, Americans today are more likely to live in single-adult households than they were 30 years ago. Adjust incomes to take into account this shift, along with increasing employer contributions to retirement savings and to health insurance premiums, and you find that the real middle-class median income has risen 33 percent, or $18,000, since 1979. Of course, that's a third less than the $26,000 that those households would have gotten if the growth had been distributed equally. But the middle class didn't stand still, either.
2. The middle class is shrinking.
True, fewer people today live in households with incomes between $30,000 and $100,000 (a reasonable definition of "middle class") than in 1979. But the number of people in households that bring in more than $100,000 also rose from 12 percent to 24 percent. There was no increase in the percentage of people in households making less than $30,000. So the entire "decline" of the middle class came from people moving up the income ladder. For married couples, median incomes have grown in inflation-adjusted dollars by 25 percent since 1979.
3. The only way people cope with the middle-class meltdown is by falling into debt.
You've probably heard that the average U.S. household carries $9,300 in credit card debt. But that misleading statistic includes the debt of the self-employed and some small businesses. The 2004 Survey of Consumer Finances, which does not include business debt, showed that 54 percent of households had no credit card debt after paying their monthly bill and that the average household credit card debt was just over $2,300.
Mortgages, which represent 79 percent of all debt, are the more pressing concern. But even according to the most pessimistic estimates, only 1 to 2 percent of homeowners will be forced into foreclosure in the next few years. Assets have grown faster than debts for most middle-class families. Median net worth has grown 35 percent since 1989, according to the Federal Reserve Board, and only 15 percent of households have debt payments worth more than 40 percent of their income or are 60 days late on any debt payment.
4 With the rise in trade with China and India, the United States has become a nation of low-paid service workers destined for a high rate of unemployment.
The claim that automation and international trade will create a large class of permanently unemployed American workers remains as fuzzy as ever. Certainly, in the churn of the modern economy, more firms are closing or reducing their labor forces. Every week for the past several years, nearly 1 million workers either quit or lost their jobs. But a slightly higher number were also hired in a typical week. At the national level, overall employment has grown slowly but steadily. And Commerce Department data show that even at the state level, including in Midwestern "Rust Belt" states, employment is up at least 14 percent since 1993, the year the North American Free Trade Agreement was passed.
Blue-collar manufacturing job losses were offset by the rise in what I call the "office economy" -- jobs in administration, sales, finance and other business services that sprouted nationwide. The health care industry also created lots of new jobs, many of them filled by college graduates who have experienced the largest gains in earnings. Per capita income has increased by at least 15 percent in every state since 1993 -- a good sign that state economies are large enough to adapt to the changing economy.
5. Companies are walking away from their commitments to workers by cutting pension and health insurance benefits.
Yes, companies are requiring more co-pays and higher deductibles in health-care plans. But medical costs are also on the rise, and employer contributions for health insurance jumped from 3.5 percent of wages in 1979 to 7.2 percent in 2005, according to the Commerce Department.
Virtually every large company provides coverage and pays more than 75 percent of employees' premiums. The rise in the number of uninsured workers over the past decade comes from cutbacks by small businesses and the self-employed.
U.S. companies are being reasonably generous with retirement benefits, too. They've remained steady over the past 30 years; the difference is that employers contribute to 401(k) accounts instead of traditional pensions. Workers lose the security of a guaranteed income in retirement, but they gain the flexibility to carry their investments with them when they change jobs, which Americans do more frequently now than in the days of old-school pensions.
Just look at the ever-proliferating suburbs, the high rate of home ownership, and the thriving market for new cars, HDTVs and videogame consoles. Inequality is certainly up, but it's the bottom 20 percent of the population, not the middle class, that's really struggling. Just don't tell the presidential candidates.
Stephen Rose, an economist, is at work on "Mythonomics: Ten Things You Think You Know About the Economy That Are Wrong."
http://www.washingtonpost.com/wp-dyn/content/article/2007/12/21/AR2007122101556.html |
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Tue Jan 08, 2008 2:40 pm |
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Adam
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I've heard that my generation will be poorer than the previous generation. In addition oil and gold are skyrocketing which points to inflation. In addition it appears we are going into recession possibly sever which may negate some of this article.
According to Gaven Cade
http://digg.com/business_finance/5_Myths_About_the_Poor_Middle_Class
"Mr. Rose is Cherry picking facts and using old data. His argument is based on a 2004 Dept. of Commerce report. In those three conveniently ignored years, we saw the gains made in the 90s evaporate because of stagnant wages, the crashing value of the dollar, the housing market bust, inflation and the 325% increase in the price of oil." |
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Tue Jan 08, 2008 3:35 pm |
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last time here
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oh please... 
what a frikkin clown.. |
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Tue Jan 08, 2008 9:33 pm |
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Tegan
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So if the price of gold is skyrocketing... buy gold. haven't you heard the commercials?
Every generation has doom and gloom predictions. I really don't ever worry about whether I'm in the middle class, lower middle class. upper lower class. whatever. If I can eke out a living the best I can, then I'm doing pretty good. Do I wish I had a better job? yes. Do I wish I had more of an expendable income? yes. But as temporarily unemployed married person in a single income household (even when I am employed, its still pretty much a single income household), I feel that we are doing pretty good. We have a lot of material crap, I'm going to grad school, we have no debt, and we have very few bills. (other than school)
Like you said, FC, the bottom 20% are the ones who are struggling. But for us in the $50,000 a year range, life is good. |
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Wed Jan 09, 2008 10:35 am |
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Ted Jankowski
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I don't have my links with me here at work. Adam is correct. This guy has ignored the last 4 years. Some of which the data isn't available.
This guy is only quoting half of the truth. I found more charts and graphs from the department of labor to disprove much of his economic data. There was an intial influx when NAFTA was implemented. But, the long term affects are hitting us now.
The working class. People that do the manual labor, their wages have dropped, Consider in the 70's a bagger at Hamady's made 9 to 13 bucks an hour and had benefits. Today a kessel bagger makes minimum wage and no benefits. Same with Police officers. 20 years ago they regularly made wwell over 100,000 a year. Now, they are well under. unless your one of The Don's Republican Guard!
I'm taping a show this week with Gary Isham. We will be covering just this issue. And Yes i'll have plenty of resources and charts and graphs in my report. |
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Thu Jan 10, 2008 2:55 pm |
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FlintConservative
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quote:
Ted Jankowski schreef:
The working class. People that do the manual labor, their wages have dropped, Consider in the 70's a bagger at Hamady's made 9 to 13 bucks an hour and had benefits. Today a kessel bagger makes minimum wage and no benefits. Same with Police officers. 20 years ago they regularly made wwell over 100,000 a year. Now, they are well under. unless your one of The Don's Republican Guard!
Listen, I don't know the guy...didn't research it (my bad)...not arguing totally the validity of his argument. BUT: Kessel's is long gone, but even when they were still around the full-timers were making more than minimum wage and had benefits. To the best of my knowledge, Kroger has taken over most, if not all, of the former Kessel stores and they're union.
I've known a lot of cops over the years, they're all union, and none of them are hurting. I've never seen one make $100k without some overtime, but they're not hurting. Every one of them I know gets full pension at 20 and out and health care for life. And the retired ones that I know are drawing more on pension than I am working for a living. |
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Thu Jan 10, 2008 3:38 pm |
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FlintConservative
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quote:
Adam schreef:
I've heard that my generation will be poorer than the previous generation.
I've heard?
I've heard that your generation is lazy, but that doesn't make it true (and I don't believe it). This is America. Whether you personally do better or worse than your parents is pretty much up to you. |
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Thu Jan 10, 2008 4:07 pm |
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Public D
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Consersative, Ted, some good stuff here:
http://www.salon.com/mwt/feature/2006/02/21/generation_debt/
http://www.latimes.com/news/politics/la-na-chamber8jan08,0,4301350.story?coll=la-home-center
http://www.vanityfair.com/politics/features/2007/12/bush200712
The Economic Consequences of Mr. Bush
The next president will have to deal with yet another crippling legacy of George W. Bush: the economy. A Nobel laureate, Joseph E. Stiglitz, sees a generation-long struggle to recoup.
by JOSEPH E. STIGLITZ December 2007
The American economy can take a lot of abuse, but no economy is invincible.
When we look back someday at the catastrophe that was the Bush administration, we will think of many things: the tragedy of the Iraq war, the shame of Guantánamo and Abu Ghraib, the erosion of civil liberties. The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this page.
I can hear an irritated counterthrust already. The president has not driven the United States into a recession during his almost seven years in office.
Unemployment stands at a respectable 4.6 percent. Well, fine. But the other side of the ledger groans with distress: a tax code that has become hideously biased in favor of the rich; a national debt that will probably have grown 70 percent by the time this president leaves Washington; a swelling cascade of mortgage defaults; a record near-$850 billion trade deficit; oil prices that are higher than they have ever been; and a dollar so weak that for an American to buy a cup of coffee in London or Paris—or even the Yukon—becomes a venture in high finance.
And it gets worse. After almost seven years of this president, the United States is less prepared than ever to face the future. We have not been educating enough engineers and scientists, people with the skills we will need to compete with China and India. We have not been investing in the kinds of basic research that made us the technological powerhouse of the late 20th century. And although the president now understands—or so he says—that we must begin to wean ourselves from oil and coal, we have on his watch become more deeply dependent on both.
Up to now, the conventional wisdom has been that Herbert Hoover, whose policies aggravated the Great Depression, is the odds-on claimant for the mantle “worst president” when it comes to stewardship of the American economy. Once Franklin Roosevelt assumed office and reversed Hoover’s policies, the country began to recover. The economic effects of Bush’s presidency are more insidious than those of Hoover, harder to reverse, and likely to be longer-lasting. There is no threat of America’s being displaced from its position as the world’s richest economy. But our grandchildren will still be living with, and struggling with, the economic consequences of Mr. Bush.
Remember the Surplus?
The world was a very different place, economically speaking, when George W. Bush took office, in January 2001. During the Roaring 90s, many had believed that the Internet would transform everything. Productivity gains, which had averaged about 1.5 percent a year from the early 1970s through the early 90s, now approached 3 percent. During Bill Clinton’s second term, gains in manufacturing productivity sometimes even surpassed 6 percent. The Federal Reserve chairman, Alan Greenspan, spoke of a New Economy marked by continued productivity gains as the Internet buried the old ways of doing business. Others went so far as to predict an end to the business cycle. Greenspan worried aloud about how he’d ever be able to manage monetary policy once the nation’s debt was fully paid off.
This tremendous confidence took the Dow Jones index higher and higher. The rich did well, but so did the not-so-rich and even the downright poor. The Clinton years were not an economic Nirvana; as chairman of the president’s Council of Economic Advisers during part of this time, I’m all too aware of mistakes and lost opportunities. The global-trade agreements we pushed through were often unfair to developing countries. We should have invested more in infrastructure, tightened regulation of the securities markets, and taken additional steps to promote energy conservation. We fell short because of politics and lack of money—and also, frankly, because special interests sometimes shaped the agenda more than they should have. But these boom years were the first time since Jimmy Carter that the deficit was under control. And they were the first time since the 1970s that incomes at the bottom grew faster than those at the top—a benchmark worth celebrating.
By the time George W. Bush was sworn in, parts of this bright picture had begun to dim. The tech boom was over. The nasdaq fell 15 percent in the single month of April 2000, and no one knew for sure what effect the collapse of the Internet bubble would have on the real economy. It was a moment ripe for Keynesian economics, a time to prime the pump by spending more money on education, technology, and infrastructure—all of which America desperately needed, and still does, but which the Clinton administration had postponed in its relentless drive to eliminate the deficit. Bill Clinton had left President Bush in an ideal position to pursue such policies. Remember the presidential debates in 2000 between Al Gore and George Bush, and how the two men argued over how to spend America’s anticipated $2.2 trillion budget surplus? The country could well have afforded to ramp up domestic investment in key areas. In fact, doing so would have staved off recession in the short run while spurring growth in the long run.
But the Bush administration had its own ideas. The first major economic initiative pursued by the president was a massive tax cut for the rich, enacted in June of 2001. Those with incomes over a million got a tax cut of $18,000—more than 30 times larger than the cut received by the average American. The inequities were compounded by a second tax cut, in 2003, this one skewed even more heavily toward the rich. Together these tax cuts, when fully implemented and if made permanent, mean that in 2012 the average reduction for an American in the bottom 20 percent will be a scant $45, while those with incomes of more than $1 million will see their tax bills reduced by an average of $162,000.
The administration crows that the economy grew—by some 16 percent—during its first six years, but the growth helped mainly people who had no need of any help, and failed to help those who need plenty. A rising tide lifted all yachts. Inequality is now widening in America, and at a rate not seen in three-quarters of a century. A young male in his 30s today has an income, adjusted for inflation, that is 12 percent less than what his father was making 30 years ago. Some 5.3 million more Americans are living in poverty now than were living in poverty when Bush became president. America’s class structure may not have arrived there yet, but it’s heading in the direction of Brazil’s and Mexico’s.
The Bankruptcy Boom
In breathtaking disregard for the most basic rules of fiscal propriety, the administration continued to cut taxes even as it undertook expensive new spending programs and embarked on a financially ruinous “war of choice” in Iraq. A budget surplus of 2.4 percent of gross domestic product (G.D.P.), which greeted Bush as he took office, turned into a deficit of 3.6 percent in the space of four years. The United States had not experienced a turnaround of this magnitude since the global crisis of World War II.
Agricultural subsidies were doubled between 2002 and 2005. Tax expenditures—the vast system of subsidies and preferences hidden in the tax code—increased more than a quarter. Tax breaks for the president’s friends in the oil-and-gas industry increased by billions and billions of dollars. Yes, in the five years after 9/11, defense expenditures did increase (by some 70 percent), though much of the growth wasn’t helping to fight the War on Terror at all, but was being lost or outsourced in failed missions in Iraq. Meanwhile, other funds continued to be spent on the usual high-tech gimcrackery—weapons that don’t work, for enemies we don’t have. In a nutshell, money was being spent everyplace except where it was needed. During these past seven years the percentage of G.D.P. spent on research and development outside defense and health has fallen. Little has been done about our decaying infrastructure—be it levees in New Orleans or bridges in Minneapolis.
Coping with most of the damage will fall to the next occupant of the White House.
Although it railed against entitlement programs for the needy, the administration enacted the largest increase in entitlements in four decades—the poorly designed Medicare prescription-drug benefit, intended as both an election-season bribe and a sop to the pharmaceutical industry. As internal documents later revealed, the true cost of the measure was hidden from Congress. Meanwhile, the pharmaceutical companies received special favors. To access the new benefits, elderly patients couldn’t opt to buy cheaper medications from Canada or other countries. The law also prohibited the U.S. government, the largest single buyer of prescription drugs, from negotiating with drug manufacturers to keep costs down. As a result, American consumers pay far more for medications than people elsewhere in the developed world.
You’ll still hear some—and, loudly, the president himself—argue that the administration’s tax cuts were meant to stimulate the economy, but this was never true. The bang for the buck—the amount of stimulus per dollar of deficit—was astonishingly low. Therefore, the job of economic stimulation fell to the Federal Reserve Board, which stepped on the accelerator in a historically unprecedented way, driving interest rates down to 1 percent. In real terms, taking inflation into account, interest rates actually dropped to negative 2 percent. The predictable result was a consumer spending spree. Looked at another way, Bush’s own fiscal irresponsibility fostered irresponsibility in everyone else. Credit was shoveled out the door, and subprime mortgages were made available to anyone this side of life support. Credit-card debt mounted to a whopping $900 billion by the summer of 2007. “Qualified at birth” became the drunken slogan of the Bush era. American households took advantage of the low interest rates, signed up for new mortgages with “teaser” initial rates, and went to town on the proceeds.
All of this spending made the economy look better for a while; the president could (and did) boast about the economic statistics. But the consequences for many families would become apparent within a few years, when interest rates rose and mortgages proved impossible to repay. The president undoubtedly hoped the reckoning would come sometime after 2008. It arrived 18 months early. As many as 1.7 million Americans are expected to lose their homes in the months ahead. For many, this will mean the beginning of a downward spiral into poverty.
Between March 2006 and March 2007 personal-bankruptcy rates soared more than 60 percent. As families went into bankruptcy, more and more of them came to understand who had won and who had lost as a result of the president’s 2005 bankruptcy bill, which made it harder for individuals to discharge their debts in a reasonable way. The lenders that had pressed for “reform” had been the clear winners, gaining added leverage and protections for themselves; people facing financial distress got the shaft.
And Then There’s Iraq
The war in Iraq (along with, to a lesser extent, the war in Afghanistan) has cost the country dearly in blood and treasure. The loss in lives can never be quantified. As for the treasure, it’s worth calling to mind that the administration, in the run-up to the invasion of Iraq, was reluctant to venture an estimate of what the war would cost (and publicly humiliated a White House aide who suggested that it might run as much as $200 billion). When pressed to give a number, the administration suggested $50 billion—what the United States is actually spending every few months. Today, government figures officially acknowledge that more than half a trillion dollars total has been spent by the U.S. “in theater.” But in fact the overall cost of the conflict could be quadruple that amount—as a study I did with Linda Bilmes of Harvard has pointed out—even as the Congressional Budget Office now concedes that total expenditures are likely to be more than double the spending on operations. The official numbers do not include, for instance, other relevant expenditures hidden in the defense budget, such as the soaring costs of recruitment, with re-enlistment bonuses of as much as $100,000. They do not include the lifetime of disability and health-care benefits that will be required by tens of thousands of wounded veterans, as many as 20 percent of whom have suffered devastating brain and spinal injuries. Astonishingly, they do not include much of the cost of the equipment that has been used in the war, and that will have to be replaced. If you also take into account the costs to the economy from higher oil prices and the knock-on effects of the war—for instance, the depressing domino effect that war-fueled uncertainty has on investment, and the difficulties U.S. firms face overseas because America is the most disliked country in the world—the total costs of the Iraq war mount, even by a conservative estimate, to at least $2 trillion. To which one needs to add these words: so far.
It is natural to wonder, What would this money have bought if we had spent it on other things? U.S. aid to all of Africa has been hovering around $5 billion a year, the equivalent of less than two weeks of direct Iraq-war expenditures. The president made a big deal out of the financial problems facing Social Security, but the system could have been repaired for a century with what we have bled into the sands of Iraq. Had even a fraction of that $2 trillion been spent on investments in education and technology, or improving our infrastructure, the country would be in a far better position economically to meet the challenges it faces in the future, including threats from abroad. For a sliver of that $2 trillion we could have provided guaranteed access to higher education for all qualified Americans.
The soaring price of oil is clearly related to the Iraq war. The issue is not whether to blame the war for this but simply how much to blame it. It seems unbelievable now to recall that Bush-administration officials before the invasion suggested not only that Iraq’s oil revenues would pay for the war in its entirety—hadn’t we actually turned a tidy profit from the 1991 Gulf War?—but also that war was the best way to ensure low oil prices. In retrospect, the only big winners from the war have been the oil companies, the defense contractors, and al-Qaeda. Before the war, the oil markets anticipated that the then price range of $20 to $25 a barrel would continue for the next three years or so. Market players expected to see more demand from China and India, sure, but they also anticipated that this greater demand would be met mostly by increased production in the Middle East. The war upset that calculation, not so much by curtailing oil production in Iraq, which it did, but rather by heightening the sense of insecurity everywhere in the region, suppressing future investment.
The continuing reliance on oil, regardless of price, points to one more administration legacy: the failure to diversify America’s energy resources. Leave aside the environmental reasons for weaning the world from hydrocarbons—the president has never convincingly embraced them, anyway. The economic and national-security arguments ought to have been powerful enough. Instead, the administration has pursued a policy of “drain America first”—that is, take as much oil out of America as possible, and as quickly as possible, with as little regard for the environment as one can get away with, leaving the country even more dependent on foreign oil in the future, and hope against hope that nuclear fusion or some other miracle will come to the rescue. So many gifts to the oil industry were included in the president’s 2003 energy bill that John McCain referred to it as the “No Lobbyist Left Behind” bill.
Contempt for the World
America’s budget and trade deficits have grown to record highs under President Bush. To be sure, deficits don’t have to be crippling in and of themselves. If a business borrows to buy a machine, it’s a good thing, not a bad thing. During the past six years, America—its government, its families, the country as a whole—has been borrowing to sustain its consumption. Meanwhile, investment in fixed assets—the plants and equipment that help increase our wealth—has been declining.
What’s the impact of all this down the road? The growth rate in America’s standard of living will almost certainly slow, and there could even be a decline. The American economy can take a lot of abuse, but no economy is invincible, and our vulnerabilities are plain for all to see. As confidence in the American economy has plummeted, so has the value of the dollar—by 40 percent against the euro since 2001.
The disarray in our economic policies at home has parallels in our economic policies abroad. President Bush blamed the Chinese for our huge trade deficit, but an increase in the value of the yuan, which he has pushed, would simply make us buy more textiles and apparel from Bangladesh and Cambodia instead of China; our deficit would remain unchanged. The president claimed to believe in free trade but instituted measures aimed at protecting the American steel industry. The United States pushed hard for a series of bilateral trade agreements and bullied smaller countries into accepting all sorts of bitter conditions, such as extending patent protection on drugs that were desperately needed to fight aids. We pressed for open markets around the world but prevented China from buying Unocal, a small American oil company, most of whose assets lie outside the United States.
Not surprisingly, protests over U.S. trade practices erupted in places such as Thailand and Morocco. But America has refused to compromise—refused, for instance, to take any decisive action to do away with our huge agricultural subsidies, which distort international markets and hurt poor farmers in developing countries. This intransigence led to the collapse of talks designed to open up international markets. As in so many other areas, President Bush worked to undermine multilateralism—the notion that countries around the world need to cooperate—and to replace it with an America-dominated system. In the end, he failed to impose American dominance—but did succeed in weakening cooperation.
The administration’s basic contempt for global institutions was underscored in 2005 when it named Paul Wolfowitz, the former deputy secretary of defense and a chief architect of the Iraq war, as president of the World Bank. Widely distrusted from the outset, and soon caught up in personal controversy, Wolfowitz became an international embarrassment and was forced to resign his position after less than two years on the job.
Globalization means that America’s economy and the rest of the world have become increasingly interwoven. Consider those bad American mortgages. As families default, the owners of the mortgages find themselves holding worthless pieces of paper. The originators of these problem mortgages had already sold them to others, who packaged them, in a non-transparent way, with other assets, and passed them on once again to unidentified others. When the problems became apparent, global financial markets faced real tremors: it was discovered that billions in bad mortgages were hidden in portfolios in Europe, China, and Australia, and even in star American investment banks such as Goldman Sachs and Bear Stearns. Indonesia and other developing countries—innocent bystanders, really—suffered as global risk premiums soared, and investors pulled money out of these emerging markets, looking for safer havens. It will take years to sort out this mess.
Meanwhile, we have become dependent on other nations for the financing of our own debt. Today, China alone holds more than $1 trillion in public and private American I.O.U.’s. Cumulative borrowing from abroad during the six years of the Bush administration amounts to some $5 trillion. Most likely these creditors will not call in their loans—if they ever did, there would be a global financial crisis. But there is something bizarre and troubling about the richest country in the world not being able to live even remotely within its means. Just as Guantánamo and Abu Ghraib have eroded America’s moral authority, so the Bush administration’s fiscal housekeeping has eroded our economic authority.
The Way Forward
Whoever moves into the White House in January 2009 will face an unenviable set of economic circumstances. Extricating the country from Iraq will be the bloodier task, but putting America’s economic house in order will be wrenching and take years.
The most immediate challenge will be simply to get the economy’s metabolism back into the normal range. That will mean moving from a savings rate of zero (or less) to a more typical savings rate of, say, 4 percent. While such an increase would be good for the long-term health of America’s economy, the short-term consequences would be painful. Money saved is money not spent. If people don’t spend money, the economic engine stalls. If households curtail their spending quickly—as they may be forced to do as a result of the meltdown in the mortgage market—this could mean a recession; if done in a more measured way, it would still mean a protracted slowdown. The problems of foreclosure and bankruptcy posed by excessive household debt are likely to get worse before they get better. And the federal government is in a bind: any quick restoration of fiscal sanity will only aggravate both problems.
And in any case there’s more to be done. What is required is in some ways simple to describe: it amounts to ceasing our current behavior and doing exactly the opposite. It means not spending money that we don’t have, increasing taxes on the rich, reducing corporate welfare, strengthening the safety net for the less well off, and making greater investment in education, technology, and infrastructure.
When it comes to taxes, we should be trying to shift the burden away from things we view as good, such as labor and savings, to things we view as bad, such as pollution. With respect to the safety net, we need to remember that the more the government does to help workers improve their skills and get affordable health care the more we free up American businesses to compete in the global economy.
Finally, we’ll be a lot better off if we work with other countries to create fair and efficient global trade and financial systems. We’ll have a better chance of getting others to open up their markets if we ourselves act less hypocritically—that is, if we open our own markets to their goods and stop subsidizing American agriculture.
Some portion of the damage done by the Bush administration could be rectified quickly. A large portion will take decades to fix—and that’s assuming the political will to do so exists both in the White House and in Congress. Think of the interest we are paying, year after year, on the almost $4 trillion of increased debt burden—even at 5 percent, that’s an annual payment of $200 billion, two Iraq wars a year forever. Think of the taxes that future governments will have to levy to repay even a fraction of the debt we have accumulated. And think of the widening divide between rich and poor in America, a phenomenon that goes beyond economics and speaks to the very future of the American Dream.
In short, there’s a momentum here that will require a generation to reverse. Decades hence we should take stock, and revisit the conventional wisdom. Will Herbert Hoover still deserve his dubious mantle? I’m guessing that George W. Bush will have earned one more grim superlative. |
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Thu Jan 10, 2008 4:43 pm |
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last time here
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here here!!!  |
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Thu Jan 10, 2008 6:41 pm |
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FlintConservative
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quote:
Public D schreef:
Consersative, Ted, some good stuff here:
http://www.salon.com/mwt/feature/2006/02/21/generation_debt/
http://www.latimes.com/news/politics/la-na-chamber8jan08,0,4301350.story?coll=la-home-center
http://www.vanityfair.com/politics/features/2007/12/bush200712
Dude, first off, I've got A.D.D. Can we keep the posts slightly more manageable? (That's ok...I know you're not writing them solely for me).
Second, I know we've had this discussion before, but I say again: I'm conservative, but I don't use Rush Limbaugh as a source.
From wikipedia: "Salon, is a progressive online magazine."
http://en.wikipedia.org/wiki/Salon.com
On Mr. Stiglitz: "Stiglitz moved to Washington in March 1992 to join the Clinton Administration, first as a member, and then as Chairman of the Council of Economic Advisers, in which capacity he also served as a member of the cabinet. He became deeply involved in environmental issues, which included serving on the Intergovernmental Panel on Climate Change, and helping draft a new law for toxic wastes (which was never passed). "
http://en.wikipedia.org/wiki/Joseph_Stiglitz
Bias, bias, bias.
I'll agree that GW hasn't been the most fiscally responsible president we've had, but I challenge you to show my any signs of a real surplus (without using excess social security receipts). Show me where our national debt has not increased year over year in my lifetime.
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm |
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Thu Jan 10, 2008 9:34 pm |
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Public D
F L I N T O I D
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Sorry about your 'progress' phobia.
FYI -
Joseph Stiglist is a Nobel winning economist and former VP of the World Bank. He is not vanity fair columnist.
To dismiss him or the other writers I posted because wikipedia abstractly validates your unfounded fears is dumb, dumb, dumb. |
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Fri Jan 11, 2008 1:52 pm |
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last time here
Guest
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(quietly backing out the door)..............  |
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Fri Jan 11, 2008 4:27 pm |
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FlintConservative
F L I N T O I D
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quote:
Public D schreef:
Sorry about your 'progress' phobia.
FYI -
Joseph Stiglist is a Nobel winning economist and former VP of the World Bank. He is not vanity fair columnist.
To dismiss him or the other writers I posted because wikipedia abstractly validates your unfounded fears is dumb, dumb, dumb.
I never suggested he was a Vanity Fair columnist. I suggested, again, that you use left wing sources to back up your left wing beliefs. |
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Fri Jan 11, 2008 5:31 pm |
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FlintConservative
F L I N T O I D
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quote:
Public D schreef:
dumb, dumb, dumb.
And, of course, rather than proving me wrong you have to resort to calling me dumb.
I guess we'll have to chalk up my stupidity to my public school education and that degree from U of M-Flint. |
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Fri Jan 11, 2008 5:57 pm |
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Opinionated
F L I N T O I D
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quote:
FlintConservative schreef:
Dude, first off, I've got A.D.D. Can we keep the posts slightly more manageable?
OMG, FC, you're killin' me!
quote:
FlintConservative schreef:
Second, I know we've had this discussion before, but I say again: I'm conservative, but I don't use Rush Limbaugh as a source.
Simply cracking me up, FC!
quote:
FlintConservative schreef:
And, of course, rather than proving me wrong you have to resort to calling me dumb. I guess we'll have to chalk up my stupidity to my public school education and that degree from U of M-Flin
That's it, I'm at the "actually rolling on the floor" stage! If I ever get a debate team together - I want
you
on my team, FC! |
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If you can imagine it, you can create it. If you can dream it, you can become it. |
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Fri Jan 11, 2008 8:42 pm |
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