Category Archives: Economics

Extreme Income Inequality

During the three decades after World War II incomes in the United States rose rapidly and at about the same rate — almost 3 percent a year — for people at all income levels. America had an economically vibrant middle class. Roads and bridges were well maintained, and impressive new infrastructure was being built. People were optimistic.

By contrast, during the last three decades the economy has grown much more slowly, and our infrastructure has fallen into grave disrepair. Most troubling, all significant income growth has been concentrated at the top of the scale.

The share of total income going to the top 1% of earners, which stood at 8.9% in 1976, rose to 23.5% by 2007, but during the same period, the hourly wage declined by more than 7%.   Census data for the 100 most populous counties in the US show that the counties where income inequality grew fastest also showed the biggest increases in symptoms of financial distress: largest increases in bankruptcy filings & divorce rates.

Take a look at the stats here.

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Filed under Economics, Financial Rules & Regulations, Income Inequality

Guess they really, really should have read that study

The Republican National Committee really wanted to stick it to Democratic legislators for that time they totally punted on holding a vote on the future of the Bush-era tax cuts. And so, they armed themselves with a shiny new study from the Tax Foundation that they thought really aided their criticism. “What excuse will the Democrats use now?”

As it happens, the study compared the actual Dem plan with the GOP one. And it found that for a family of four with an income of $40,000, the Dem plan — continuing the low end tax cuts, plus the stimulus measures — would cause a 7.8 percent jump in after-tax income. That jump would only be 6.8 percent under the GOP plan to continue all the Bush tax cuts.



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Filed under Economics, Financial Rules & Regulations, Republicans, taxes

Where Do the Children Play?

“I know we’ve come along way.

We’re changing day to day.

But tell me, where do the children play?”

(Where do the children play?  –  Cat Stevens/Yusuf Islam  –  1970)

Much has been made this election cycle about the future of our children and grandchildren, mostly by the newly fiscally responsible Republicans that are suddenly and inexplicably against debt and deficits. Great! It is certainly encouraging that the Party of “Deficits Don’t Matter!” has finally seen the light.

Just don’t ask them why they didn’t do something about deficits and debt when they held power. That is “looking at the past and besides, the Democrats made us do it.”

In 1980, I briefly considered a vote for Ronald Reagan for President because he promised (!) to balance the Federal budget. I blame it on an LSD flashback from the Sixties. Of course, Reagan never came close to balancing the budget and, in fact, tripled the National Debt. The truth is, a Republican president has never even proposed a balanced Federal budget since Ike. Let me think, that is, let’s see, um, ………………………. a long damned time.

Debt and deficits have been hashed and rehashed ad nauseam, so we’ll not do it again here. When the “other side” rails against the “highest deficits and debt in history” feel free to remind them that while the deficit is approaching 10% of the GDP in 2010, it reached 30% during World War II. The debt shortly after the War was at 130% of GDP, far above the current level of less than 90%.

It is completely reasonable to remind people of those facts, given that the country is in the worst financial crisis since the Great Depression – an economic collapse that was not ended until the War was well underway. Unemployment reached 25% during the Depression. It topped out around 10% during the Great Recession.

The point is that we are not destroying the future for our children and grandchildren. Without TARP and the Stimulus Bill, the economy would have likely slid into another depression, and that would have left a horrible disaster for our heirs.

So, where do the children play? Well, if we want to truly focus on an answer to that question, we would do well to consider the state of our schools, environment and our place in the world. Bumper stickers slogans are handy for those in the bumper sticker industry, but they do little to address the problems of the nation. We need to take faux emotion out of the equation and use real-world facts and figures.

 

 

William Stephenson Clark

 

(Thread photo is the author’s grandson, Eli.)

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Filed under Economics

The more ‘things’ change, the more they stay the same

Here’s what Moonshadow has to say —  “I’m attaching the article I spoke of. I’d like someone that has more knowledge of our political/economic history to comment on it. I can see a lot that sounds just like the tea partiers. Saying that, how did things progress then and wouldn’t the same approach garner a similar outcome? Let me know what you think and turn it over to whoever can speak to this.”

Know who I think can speak to this?  YOU!

fnord

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Filed under Economics, History, Political Reform

Obama to GOP: ‘Drop the Blockade’

President Obama returned to the White House ready to get back to work, giving a brief speech on Monday about the U.S. economy. Obama said that his administration is planning to kick-start the economy with several quick measures: extending tax cuts for the middle-class, redoubling the government’s investment in clean energy, adding further tax cuts, and “making it easier for our small business to grow and hire.” A bill that’s been “languishing in Senate for four months,” as Obama put it, would help put these plans into motion. But the biggest obstacle, of course, remains garnering Republican party support. “I ask the Senate Republicans to drop the blockade,” he said.

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Filed under Economics, Playing Politics, The Economy

How the Stimulus Is Changing America

Creating Strategies for the 21st Century

The debate over President Obama’s $787 billion stimulus bill has mostly been about whether it has saved jobs — and most economists say it has — but that’s not the only thing it aimed to do.  The bill was also designed to help advance several Democratic goals — a green economy, computerization of the health-care system, education reform, and scientific research. Time saysAny of those programs would have been a revolution in its own right” and that the stimulus “may be President Obama’s signature effort to reshape America.”

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Filed under Economics, Liberal Government, Political Reform, Progressive Ideals

“It’s the economy, stupid!” Part II

“The sky is falling, the sky is falling!” – attributed to Chicken Little.

The sky is not falling. The world is not coming to an end and the Apocalypse is not upon us. We are in the Great Recession, one that began in 2007 and the worst since the Depression, but we’ve been there before and we will probably be there again, at some point.

(Your not so humble columnist’s advice – drink coffee, now.)

Numbers:

The economy (GDP) grew at a rate of 3.7% for the first quarter of 2010, 2.4% for the second, for an aggregate of 3%.

Imports in the second quarter are up 28.8% from the first (we’re buying) and exports are up 17%.

GDP growth numbers for 2007 – 1.9%, 2008 – zip, 2009 – <2.6%.>

Investments in equipment and software – up 20.4% in the first quarter of 2010, 22% in the second.

Despite brutal unemployment numbers, the economy has clearly turned the corner under President Obama. Clearly, also, the previous administration drove the car off the cliff. For those not versed in the numbers, a 3% growth in the GDP is considered the minimum for a healthy economy.

Does the downturn in growth in the second quarter of 2010 mean that we are headed for a “Double Dip” recession?  Nope. It could happen if consumer buying and confidence continues to remain stagnant or even drop. And why is consumer confidence so shaky? One word:

Republicans.

In the middle of a mid-term election year, it behooves Republicans to downplay the signs of recovery, in an effort to regain control of the Congress and various state offices.

Fortunately, there are signs that their message is not being accepted readily by Americans. Democratic numbers are slightly up, Tea Party disapproval numbers are up, as well, and Congressional approval totals still are at rock bottom.

Consumer spending drives two-thirds of the American economy. If Americans draw back from spending due to fear, Democrats will have no choice but to belly up to the bar and order another drink. Given the current political climate, that would be political suicide, but it would be the right thing to do.

While we teeter on the brink, now is not the time to be timid or to play politics. TARP and Stimulus saved us from Depression – now we need to be vigilant in ensuring that the economy continues it’s fragile recovery.


William Stephenson Clark


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Filed under Economics