***. “A sound economy is a sound understanding brought into action. It is calculation realized; it is the doctrine of proportion reduced to practice; it is foreseeing contingencies and providing against them; it is expecting contingencies and being prepared for them.” [ Hannah More ]
This post BEGINS to examine how the American economy, which was fairly sound in 2000. – IS NOT in 2006. We BEGIN to examine reasons WHY. We begin to examine Edward Lotterman’s question: “..why did we throw it away?” That answer begins in 1981. The U.S. national debt was LESS than $1 trillion. President Reagan nearly TRIPLED it. – and laid the framework for future national debt problems: Reagan cut the top marginal tax rate from 70% to 28%; plus there are other tax maneuvers by which the rich escape taxation. We’ve gone from the most equal to THE most unequal income distribution. – and that might be “our” biggest problem: America no longer shares income as it did from 1947-73, during the U.S. middle class STATISTICAL golden age. Greed and selfishness has its costs….
Read and THINK on the following excerpts from: “Ah, the good old days of balanced budgets” [ Edward Lotterman; St. Paul Pioneer Press; 6/7/26 ]: “..understand how adversely our nation’s economy has turned in the past three decades.”
12] “We had a balanced budget as late as 2001 but we passed four tax cuts. There is no foreseeable chance those will be undone. We had deregulated banking and Wall Street and got the 2007 financial meltdown as one result. Timid regulation designed to correct that was passed, but was erased once control of the White House passed.” [ He just told YOU one reason how & why Republicans are GUILTY of sabotaging YOUR financial future. ]
9]. “Countries such as Germany, Switzerland and Norway with incomes near that of the U.S. spend $9,000 to $10000. Note that all these countries have longer life expectancies and better health indicators in several regards than we do. [ WHY are Scandinavians every year “the happiest people on earth”? ]
5] “A key problem was in the assumption that the fraction on income subject to FICA, long about 85% of total income, would stay the same. The problem was that we were going through a radical transformation of our economy to one in which most of the increase in income would be in the form of interest, dividends and, especially capital gains…None of this income that was driving the growth was subject to FICA.”
6] “Given the special ‘step-up basis” treatment of capital gains held until death and increasing legal craftiness in keeping funds off-shore or in multi-generational trusts, a high percentage of this wealth was never hit by income taxes either.” [ WHY NOT??? Are YOU seeing CORRUPTION in action here ??? ]
***. “The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities, that is, in proportion to the revenue which they respectively enjoy under the protection of the state.” [ Adam Smith: “The Wealth of Nations” ]
1] “..compared with our most pressing problems today, U.S. federal finances were on a solid footing. The national debt in June 2000 was $3.495 trillion…As a proportion of the value of all national output, the debt was at 34.1%, the lowest level since 1985. Compare those figures to the $31.2 trillion, and 100% of GDP, that hit this past February.”
2] ‘..there were problems lurking underneath the surface. Some were demographic. Some were changes in the structure of the U.S. economy. Some were a change in the dynamics of U.S. politics. Some were were changes in the international order. Some of these were our own fault or failings and some completely outside our control.”
3] “a bipartisan panel appointed by President Ronald Reagan did an admirable job overall of renovating Social Security, although a key reform they made would instead turn into a ticking time bomb that is exploding now.”
4] “THe FICA tax on earnings for the old age, survivors and disability sections of Social Security had been raised periodically…The commission stepped that up to 12.4% of income by 1990. It has stayed at that level for 36 years even as the demographic and economic assumptions on which the commission based its decisions did not hold up.”
***. “I need to pay higher taxes. I’ve paid, in absolute, more taxes over ten billion [dollars], than anyone else, but, you know, the government should require people in my position to pay significantly higher taxes.” [ Bill Gates Then – consider billionaire Warren Buffett’s statement that his secretary pays taxes at a higher rate than he does….. ]
7] ‘..while the trust fund for eventual old age retirement grew, it did not do so rapidly enough to cover inflation-adjusted payments to baby boomers…A relatively modest increase in FICA rates 30 years ago, or a re-definition back then of what income was subject to FICA, would have solved the problem, but politically, Democrats had been burned repeatedly by GOP charges that they always wanted to raise tax rates.” [ Double Good for Repubs – they win elections, they protect their rich donors from tax increases !!!!! ]
8] “Total spending on health care, including households, employers and government, totaled 8.9% of GDP in 1980. It was nearing 10% when the 1984 Social Security reforms stair-stepped the Medicare portion of FICA to 2.9% of earnings by 1990 – where it has stayed ever since…But in 2000, few anticipated this increase would approach $15,000 per capita and 18% of GDP by 2025. Such growth in U.S. costs has outrun levels in other industrialized nations that average about $6,000 per capita and 9.3″ of GDP.” [. SO – WHAT do THEY do that “WE” do not do ??? ]
10]. “Also lying latent was a decline in the bipartisan functioning of Congress. In the 1990s, there was genuine deliberation across party lines on most issues and confirmations.” [ Then – tribal conformity and “no compromise with the libs” steadily increased; tribalism; Trumpism; Repubs scorched earth political warfare in Congress, etc. ]
*** “After the 1994 victories, GOP Congressional leaders implemented a series of measures to institutionalize partisan warfare…conservatives had succeeded in shattering bipartisanship and cooperation in Congress..” [Geoffrey Kabaservice: “Rule And Ruin” ]
11] “Riegele Neal, a key banking deregulation act in 1993…The 1999 Gramm-Leach-Bliley Act that abolished most New Deal-era limits on Wall street institutions….these financial deregulatory bills…were negative in setting the stage for the financial sector debacle that would unfold in 2007-2009..”
13] “Birth rates have plummeted. The cut-off of immigration..reduced the number of working-age people that will be available to produce and contribute for baby boomers who retire.” [ REpubs sabotage, again ]
14]. “The Trump administration wants an increase in defense spending unheard of since the Civil War.” [ NOTE: money that will NOT be available to deal with various American economic, social, infrastructure, etc. problems. Bedside the question of WHICH weapons will be purchased – more corruption? Cheap drones, anyone??? ]
***. “Like Gingrich, McConnell had found a serious flaw in the code of American democracy. our distinctive political system gives an antigovernment party with a willingness to cripple government an enormous edge…they made government less functional..” [ Jacob Hacker, Paul Pierson: “American Amnesia…How The War on Government Led People To Forget What Made America Prosper” ]. [ NOTE: to understand what Repubs have done to YOUR democracy – read this book ]
Donald Trump continues the Republican war on government. – firing 322,000 workers, crippling agencies that discipline business; defunding government by obscenely cutting taxes on the rich and corporations. [ those who have benefited most since 1981 ]; and deliberately running up the u.S. national debt – which WILL provoke a crisis. – which Repubs WILL attempt to use to cut YOUR benefits. Check the NUMBERS. – which party has enacted policies and laws to benefit the rich and corporations ??? WHO cut top marginal tax rates??? WHO has attempted to cripple the I.R.S. ???]
With Justice For All 