Wednesday, May 12, 2010

Both Greeks and Americans Want Something without Paying for It

Tags: Greeks, Americans, Need to Pay for It, Unequal Distribution of Wealth, Spirit Level, Debt,

We all pay much lower taxes than the Swedes, but the Rich and Affluent Get Most of the Benefits by using government as a bank without interest payments as we have seen in the Financial Thieves get Trillions of free dollars from the Federal Reserve, a Bank for the Rich. Richard Wilkinson and Kate Pickett from the UK spent ten years gathering economic statistics from many countries in the world covered in detail in their book The Spirit Level: Why Greater Equality Makes Societies Stronger, 2009, and I might add happier. Clinton's former Labor Secretary Robert B. Reich writes in the forward "The U.S. economy is far larger than it was in 1980. But where has all the wealth gone? Mostly to the very top. The latest data shows that by 2007, American's top 1 percent of earners received 23% of the nation's total income--almost triple their 8 percent share in 1980."

Jim Kawakami, May 12, 2010,
NY Times David Leonhardt May 11, 2010 ... The numbers on our federal debt are becoming frighteningly familiar. The debt is projected to equal 140 percent of gross domestic productwithin two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today.

The United States will probably not face the same kind of crisis as Greece, for all sorts of reasons. But the basic problem is the same. Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem. We, the people, are.

We have not figured out the kind of government we want. We’re in favor of Medicare, Social Security, good schools, wide highways, a strong military — and low taxes. Dealing with this disconnect will be the central economic issue of the next decade, in Europe, Japan and this country.

Many people, including some who claim to be outraged by the deficit, still haven’t acknowledged the disconnect. Just last weekend, Tea Partymembers helped deny Senator Robert Bennett, the Utah Republican, his party’s nomination for his re-election campaign, in part because he had co-sponsored a health reform plan with a Democratic senator. Economistsgenerally think the plan would have done more to reduce Medicare spending than the bill that passed. So, whatever its intentions, the Tea Party effectively punished Mr. Bennett for not being a big enough fan of big government.

Or consider the different fates of two parts of President Obama’s agenda. Mr. Obama has unrealistically said that taxes do not need to rise on households making less than $250,000, and this position has come to be seen as an ironclad vow. He has also called for billions of dollars in sensible cuts to agribusiness subsidies, tax loopholes and the like. The news media and Congress have largely ignored these proposals.

The message seems clear: woe unto the politician — in Washington, Athens or London — who tries to go beyond platitudes and show some actual fiscal restraint. This situation obviously can’t continue, as Robert Greenstein, perhaps the leading liberal budget expert, points out. Mr. Greenstein’s politics make him sympathetic to the worry that all the deficit talk will become an excuse to pull back on stimulus spending while unemployment remains high or to gut social programs. But he also knows the numbers well enough to understand that our Greece moment, whether it takes the form of a crisis or not, is coming. ...

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