"Third World America": as Arianna Huffington says in her video about the book, it's a tough phrase to swallow when it comes to how we perceive America's powerful economy. But one of the characteristics of a third world country is that there is no middle class, and that's what's happening here.
It's been a long time coming and probably began during the Reagan years. The 90s saw a steep decline--when we look at how many kids who went off to college only to return home to live with their parents because they couldn't find jobs, or their work didn't pay well enough for them to live on their own.
Then came the precipitous decline of this decade, the credit crisis, the housing bubble, the extreme unemployment.
As usual, there were visionaries who saw this coming and wrote about it. Here are eleven books that predicted the situation we're in now.
Let us know what you think. Is a "Third World America" the new normal, or is there something we can do about it?
Paul Krugman also notes that Carmen Reinhart and Ken Rogoff have an alarming paper on parallels between the United States and countries that have experienced financial crises in the past. The bottom line of the paper, which has already gotten a lot of attention, is that we look an awful lot like those other countries — and that if their experience is any guide, things could get really, really bad.
Rightardia has been discussing the cause for this economic collapse for along time. Essentially the Democrats under FDR financed the recovery after the depression and world War 2 with a 90 per cent tax rate on the affluent.
After World War 2, only one in thirty Americans was wealthy, but a vast middle class developed due to VA home mortgage loans and VA education benefits that sent many veterans to college. For many American families, this was the first family member to complete college.
When Reagan was president, he used discredited Supply Side economics to lower taxes for the most affluent Americans to the 28 per cent level. According to the Federal Reserve, this fractured the middle class.
Bush cut the Income Tax on the most affluent Americans to 35 per cent. Bush also cut the capital gains tax to 15 per cent and suspended the Estate Tax. The Estate Tax only affects the top 5000 American families.
Some Americans don't understand that regressive tax policies increase the national deb and the deficit. During the Bush administration, the national debt went up $4 trillion and Bush also doubled the deficit.
The regressive tax policies coupled, the two middle Eastern wars and the Bush Ownership Society tanked the economy. When the SEC let five of the biggest investment banks off the hook for maintaining reserves for failed mortgages in 2004, a rapid decline of the middle class started.
Many middle class Americans don't understand how taxes work. When the federal government collects taxes is a specific fiscal year, it is obligated to put every dollar back into the economy before the end of the fiscal year (September 30).
This means if the government has revenue shortfalls, the deficit and the national debt will go up or the government has to raise taxes to pay for shortfalls or eliminate government programs in subsequent years. If the affluent get a tax break, then taxes may go up for the middle calls which is what happened when Bush was president.
The question is what government program will be eliminated: school lunches, defense procurement, funds to build roads and bridges, subsidies to farmers and so forth. Most people don't mind cutbacks to government programs except when it is one of their programs.
Should a middle calls person support tax cuts for the affluent? No, not unless you are brain dead. The top one per cent of the affluent suck up 50 per cent of the income in the US and own 90 per cent of the wealth. The US has the economics of a banana republic due to GOP misinformation and the Republican noise machines like talk radio and fox News.
Bold emphasis mine
No comments:
Post a Comment