Thursday, August 14, 2014
"Starving to death in the Land of Plenty"
Have you heard that saying before? It means while some are holding on for dear life, others are doing very well. And it's a topic that polarizes like no other.
It's more commonly known as "income inequality". The "have's" say they deserve their privileged position as they went to school, studied hard, and have diligently worked their way up "the ladder". But over the past 20 or so years the "have not's" haven't seen a pay raise after factoring in inflation, and they are the ones that make up the consumer base that drives 2/3 of our economy.
Here's the problem: This situation can't go on forever. Eventually the system will implode, just like it did back in 1929 leading us into the Great Depression. When we kill the goose that laid the golden egg, we're screwed.
They say we have a HUGE public deficit that requires us to cut spending, and at the same time the well off want their taxes cut, which would leave the deficit essentially unchanged. The wealthy justify their requested tax cut by saying this tax saving would enable them to create more jobs.
That argument makes sense on paper, but in the real world it just isn't so. Case in point: Today I read a piece originally published in INC magazine that states large corporations can't find enough good projects to invest their $1.64 TRILLION cash cushion in that they're currently sitting on. Even more money in a "job creation" fund won't create any more jobs. More demand for goods and services will create more jobs, but until consumers have more money, they aren't in any position to buy. It's a giant Catch 22.
If we're ever going to make a meaningful dent in our massive accumulated debt we're going to have to raise taxes on the wealthy because they are the only ones with any excess money. Note I'm not saying it's "fair", or "right", just "necessary". These are just pragmatic facts. And "raising taxes" doesn't necessarily mean raising the tax rate. It can also mean eliminating special tax treatment, and that just might be politically possible.
Wonder what the Vegas odds would be on that?