Home > Politics > The truth shall set you free

The truth shall set you free

We are in the midst of one of the worst economic contractions in American history.  Meanwhile, if you turn on the TV you will hear that people are frustrated with our soaring deficits while at the same time wanting tax cuts and are desperate for employment.

Historical government spending by major functi...

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So what’s the problem with this picture? The truth is that while both tax cuts and increased government spending stimulate the economy/create jobs they also increase the national debt.

Personally, I am concerned for about both the state of our economy and our national debt.  I think it’s a time to evaluate both our tax structure and government spending programs and make some tough choices.

If we take a look at our national spending, the bulk of spending goes to do three things: national defense, Social Security and Medicare.  If you’re serious about cutting spending, you have to look at reforming those three areas and reform them and/or cut services.   So far I really don’t hear anyone in either party stating that truth and coming up with plans to tackle this reality.

On the revenue side, while it is true that the top 10 percent of Americans pay about 73 percent of all taxes, the top 1 percent of Americans also own a majority of the wealth in this country:

Here are some dramatic facts that sum up how the wealth distribution became even more concentrated between 1983 and 2004, in good part due to the tax cuts for the wealthy and the defeat of labor unions: Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the ’80s, ’90s, and early 2000s (Wolff, 2007).

Top US Federal income tax rate from 1913 to 2009

Plot of top bracket from U.S. Federal Marginal...

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Tough choices on both the revenue and spending side of the balance sheet are necessary  to avoid a very dire fiscal situation in the future.  I think both parties will have to give in: reform entitlement programs (yes, Social Security and Medicare), reform and cut wasteful defense spending (we’re not in a cold war anymore), but also we must realize that higher taxes for the richest Americans are unavoidable while we work on getting back to the years of surpluses.

In the meantime, we’ll have to prioritize what’s more important, stimulating the economy, tackling the issue of the national debt or a combination of a little bit of both.

What are your thoughts? Be sure to comment and share with your friends and networks.

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  1. Amy McMullen
    September 16, 2010 at 12:49 pm

    I refer you to the words of Nobel Laureate Economist Paul Krugman for my thoughts on this matter: http://www.nytimes.com/2010/06/18/opinion/18krugman.html?_r=1&hp

  2. September 16, 2010 at 12:56 pm

    I read a very similar article! I posted it on my facebook and it lead to a very very interesting exchange of comments, so it lead me to write my own entry about it. Glad you enjoyed!

  3. September 16, 2010 at 5:43 pm

    Social Security runs a budget surplus of about 150 billion anually and has done so since 1983. If it weren’t for this surplus, our debt would be much worse as politicians, specifically republicans, raid this surplus trust fund to pay for their spending. the surplus was used by both reagan and bush the lesser to help cover up the costs of their dissasterous tax cuts.

  4. John Marsolais
    September 16, 2010 at 8:30 pm

    I worry that all of this stimulus and debt will fuel inflation and higher interest rates over the next few years. I think we need to make the Bush tax cuts permanent (yes, even for that top 1%). Get the Republicans and wealthy busness people back in the game, investing in the market again, spawning new small business ventures, and getting people back to work. I know it’s like working with the devil, but let’s face it folks, we democrats are just not getting it done by flying solo. Reagan ran huge deficits with his tax cutting and elevated defense spending. Soon Jimmy Carter’s economy became yesterday’s nightmare and the economy was rolling again. I’m starting to scare myself, because I’m beginning to sound more like a republican —well, let’s call it a blue dog fiscal conservative democrat.

    • September 18, 2010 at 2:57 pm

      Yeah, that’s great except that it didn’t work during the bush presidency, what makes you think that after 9 years it’s going to start creating jobs now? Who said that the definition of insanity is continueing to do the same thing over and over, but expecting different results? Bush actually lost jobs while employing this tax cut strategy.

      Bloomberg just ran a peice showing that the wealthy are not reinvesting these tax cuts into the economy, they aren’t even spending it. they are keeping it. that is why the concentration of wealth in our country is at it’s highest point since just prior to the great depression. More and more of the money is going to and staying at the top. Trickle down supply side economics does NOT WORK. Never has and never will.

      • John Marsolais
        September 19, 2010 at 6:35 pm

        Check out today’s CNN article.
        Economists: Extend Bush Tax Cuts for Everyone.


        I’m not a Bush fan. I think it’s the right move at this moment. President Obama has done the hard work that Bush refused to do. It’s time to get the private sector back in the game. This is the only way to do it. Got any better ideas?

      • September 20, 2010 at 11:05 pm

        Yes, put millions of Americans to work on the vital infrustructure projects that NEED doing now. It will be publicly funded, but those dollars will be going back into the economy and can reduce the unemployment benefits being paid out. Start implementing tarrifs again and severely penalize American corps that send jobs overseas.

  1. September 18, 2010 at 11:35 am

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