America's Economic Woes

The main problem with solving our economic problems is that Tea Party-supported House members became beholden to the Tea Party platform, which in part means no new taxes even if the taxes are on the rich.

Courtesy: Bizarrocomics.com

(SAN FRANCISCO) - As we all now know, the United States is in economic and political turmoil. The Dow Jones Industrial Average is down 9.5 percent in August, partly because of concern about the health of the U.S. and European economies. Some of the causes of our economic woes are well known: eight years of deregulation or lack of regulation of the economy; Wall Street greed; dollar draining wars in Iraq, Afghanistan, and Libya; the growing income disparity in this country; a $14.6 trillion deficit; and the Standard & Poor's downgrade.

What we need now is jobs, jobs, jobs. And not just low-paying jobs that are unlikely to provide sufficient wages to live on.

The following is a brief summary of where we are now.

According to the Bureau of Labor Statistics, in July 2011, the unemployment rate in the U.S. -- seasonally adjusted -- was 9.1 percent or 13.9 million unemployed persons. This figure does not include 2.8 million persons who wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

The unemployment rate for teenagers is 25 percent and 8.2 percent for Asians. An Ohio State University study on unemployment and race showed the unemployment rate for Black Americans at 16.6 percent and Latinos at 12 percent.

The crisis in unemployment can only be overcome by more, not less, government stimulus beyond the recent one, which just matched the decline in state and local spending. But even that limited stimulus probably saved millions of jobs.

The U.S. income gap between rich and poor is the greatest among Western industrialized nations. According to U.S. Census data, the top 20 percent of American earners -- those making more than $100,000 annually - received 49.4 percent of all income generated in the country, compared with the 3.4 percent earned by those below the poverty line. That is a ratio of 14.5-to-1, up from 13.6 in 2008 and almost double the low figure of 7.69 recorded in 1968.

Crime, ill-health, imprisonment rates, mental illness are far more common in unequal societies than ones with better economic distribution and less gap between the richest and the poorest.

A Washington Post-ABC News poll showed that a large majority of the population favor addressing the deficit by taxing the very rich (72 percent, 27 percent opposed). Cutting health programs is opposed by an overwhelming majority (69 percent Medicaid, 78 percent Medicare). The public also favored more spending on job training, education, and pollution control. The Pew Research Center for the People and the Press poll found that 60 percent of respondents want to keep Social Security benefits the way they are. Clearly, Congress is out-of-touch with the American public.

The economy is growing albeit at a very slow rate; it will take decades to bring us back to where it was before the economic crisis. The unemployment crisis can only be overcome with significant additional government stimulus. Given the current makeup of Congress, it is extremely unlikely that additional stimulus will be approved.

The main problem with solving our economic problems is that Tea Party-supported House members became beholden to the Tea Party platform, which in part means no new taxes even if the taxes are on the rich. House members are up for election every two years. Thus, a vote for taxes on the rich would probably lose them Tea Party support in the next election and jeopardise their reelection chances.

In the August 11, Republican presidential debate, all eight of the candidates said they would refuse to support a deal with tax increases, even if tax revenues were outweighed 10-to-one by spending cuts. At a time when the richest 1 percent of Americans have a greater collective net worth than the entire bottom 90 percent, there are other ways we could raise money while also making tax policy more equitable. Yet, Republicans are refusing to close tax loopholes -- not to help create jobs -- but to protect some of America's wealthiest financiers.

And Defense Secretary Leon Panetta convinced Congress to raise taxes and cut Social Security and Medicare before reducing the Pentagon budget beyond defense cuts already called for in the debt-ceiling deal. The budget deal actually adds $5 billion to the Pentagon's budget.

Meanwhile, Tea Party members of Congress are against regulation that might prevent future financial fraud. The House Appropriations Committee cut the budget of the Securities and Exchange Commission, and are determined to defang the new Consumer Financial Protection Bureau.

Part of the latest budget deal, a bi-partisan, 12-member Congressional deficit "Super Committee" was established, which is supposed to deliver at least $1.2 trillion in across the board cuts or increases in income by November 23, 2011. The Committee's proposals must be voted on by December 23. If the Committee fails to produce a debt reduction plan, as much as $1.2 trillion in across the board cuts kick in evenly divided between defense and non-defense spending.

It should be noted that Rep. Jeb Hensarling (R. TX), Sen. John Kyl (R. AZ), Sen. Pat Toomey (R. PA), and Rep. Dave Camp (R. MI) -- members of this Super Committee -- are on record as no-taxers. Thus, the chances of new taxes on the rich and closing tax loopholes are unlikely to be iproposed by this Committee. Thus, across the board cuts will be the likely result. Across the board cuts will likely mean more reductions in the safety nets for the poor, unemployed, the elderly, and the sick.

As the final blow, Standard & Poor's Ratings Services announced that it lowered its long-term sovereign credit rating on the U.S. to "AA+" from "AAA".  S&P lowered the rating because it does not believe the U.S., in the near term, will likely get its economic house in order.  <www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563>  While S&P's downgrade is controversial, its assessment of the state of the U.S. economy and the lack of political will to act responsibly is accurate. This downgrade may effect credit card and mortgage rates and consumer loans.

As you enter the Humphrey Building, the headquarters of the U.S. Department of Health and Human Services, these words are written there on a wall: “…the moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life—the sick, the needy, and the handicapped.” So far, we as a country are flunking this moral test.

The U.S. has a chance with this Super Committee to raise our moral test score. I am hopeful, but not optimistic.

Salem-News.com writer Ralph E. Stone was born in Massachusetts. He is a graduate of both Middlebury College and Suffolk Law School. We are very fortunate to have this writer's talents in this troubling world; Ralph has an eye for detail that others miss. As is the case with many Salem-News.com writers, Ralph is an American Veteran who served in war. Ralph served his nation after college as a U.S. Army officer during the Vietnam war. After Vietnam, he went on to have a career with the Federal Trade Commission as an Attorney specializing in Consumer and Antitrust Law. Over the years, Ralph has traveled extensively with his wife Judi, taking in data from all over the world, which today adds to his collective knowledge about extremely important subjects like the economy and taxation. You can send Ralph an email at this address stonere@earthlink.net

---

Politics | Taxes | History | Fraud | Most Commented on

Salem-News.com Top Stories

2025: Hope for the Best, Prepare for the Worst

Two Wars with No Way Out

No One Owns the Future

The Ugly Origins of Trump's America First Policy

A One-State Solution Could Transform the World

Comments Leave a comment on this story.

Name:

All comments and messages are approved by people and self promotional links or unacceptable comments are denied.

---

COLLI August 28, 2011 3:04 pm (Pacific time)

Ralph: I apologize if I was not clear. What I disagree with is the premise that "The main problem with solving our economic problems is that Tea Party-supported House members became beholden to the Tea Party platform, which in part means no new taxes even if the taxes are on the rich". The problems we currently face started long ago and raising taxes on the rich is a good start toward straightening this mess out but in my opinion, it is but a small step toward the miles we have yet to travel. There is no way that the Tea Party stance against raising taxes on the rich is the biggest problem we face. The Republican and Democrat parties have both been instrumental in bringing about the damage done to our economy. The Tea Party is a late entry in the "Trash the Economy" game they all seem to enjoy so much. Raising taxes on the rich would help some but at best, we would be treating a symptom rather than the cause. What we are witnessing is potentially the beginning of the "End-Game" for a plan initiate long ago by a group of huge international banks. In my opinion, Big Banking is and always has been our biggest threat. Here is a quote from Nathan Mayer Rothschild: "I care not what puppet is placed upon the throne of Englans to rule this Empire on which the sun never sets. The man who controls Britian's money supply controls the British Empire, and I control the British money supply". Do not for one minute believe that this view has changed. The millions they contribute to politicians purchases great sway.

---

Ralph E. Stone August 27, 2011 7:03 am (Pacific time)

Colli, you say you disagree with me and then agree with me that tax loopholes must be closed, the tax code must be revised to tax the richest at a higher rate. and the poorest among us are getting the short end of the stick.

---

Hank Ruark August 26, 2011 10:19 am (Pacific time)

Colli et al: Your thoughtful statement demonstrates solid, ethical, informed use of First Amendment, C ! Thank you for its tone, texture, content and the amazing array of useful points for further departure, via even more open, hones, small-d demo dialog. Ralph's even-toned somewhat-milder framework provided precisely the further-push needed for what you then supplied. moesoon via mine own Op Eds...see current one re really remarkable "Republicans" now on offer...that is, for the Presidency; Next one in this series will be on UNElected ALEC furnishing faciltation and law-text for too damned many legislators...

---

COLLI August 25, 2011 7:47 pm (Pacific time)

Ralph: I must disagree with your basic premise that the biggest obstacle to solving our economic problems is a refusal to tax the rich. First, let me say that I also believe that the tax code needs to be restructured and that the richest 5% or 10% should be taxed at a higher rate than they currently are. They were in the past and the Republic did not crumble so it makes sense that it would not crumble now if their taxes were raised. The single biggest problem is as I see it is that so many corporations have shipped jobs off shore to take advantage of cheaper labor and these very same corporations have been given tax breaks for doing so. This is exactly the reverse of what should have been done. Another problem, which is nearly as large, is the fact that the dwindling supply of jobs was noticed at least 4 or 5 years ago and neither Bush nor Obama has given that issue more than lip service. All the while, the flow of jobs out of the country has increased. Now we find ourselves in a job deficit almost as big as the federal deficit. By the way, the Tea Party was not even around when NAFTA was pushed for by George Bush Sr. and signed into law by Bill Clinton. One more thing to think about is this: Every time we give politicians more money, they spent it and then some and we find them back wanting to dig a deep hole in what remains of our paychecks. If every citizen ran their lives the way the politicians run the Federal budgetary process, most of us would be living under a bridge somewhere. Give a teenager a credit card and more often than not they will get into financial difficulties but if they are forced to pay off the debt they incur, they will have learned a lesson. Our problem is that politicians spend our tax dollars far more quickly than we earn them and they never have to pay off the debt they incur to buy votes and repay campaign contributions, therefore, they never learn a lesson about spending more than you have. I would not point fingers at the Tea Party for refusing to increase taxes, I think we need to hold up a mirror to ourselves and ask why in the hell we ever allowed the financial slight of had to continue so long and still keep re-electing the greedy, self-centered, leeches! As for solving the problem, it is simple – vote the current herd of leeches out of office and refuse to allow any pork barrel to be added to anything coming out of Congress or the Whitehouse. There is no painless way out of this mess Ralph . . . not for anyone who does not work in the Whitehouse or Congress there isn’t! The problem is that everyone will suffer and those that will suffer the most are those who can least afford it. Don't forget that Congress voted to refuse a COLA increase for Social Security recipients earning an average of $11,874 per year, then turned around, and gave themselves a $10,000 per year increase. None of these members were tea partiers. Does it really matter to you whether it is a Tea Party, Democrat, or Republican hand that is picking your pocket Ralph? The end result is the same . . . they leave you only pocket lint!

[Return to Top]

---

©2025 Salem-News.com. All opinions expressed in this article are those of the author and do not necessarily reflect those of Salem-News.com.

Articles for August 24, 2011 | Articles for August 25, 2011 | Articles for August 26, 2011