The National Debt has crossed the $14-trillion mark, with the largest increases arriving with the Bush tax cuts for the wealthy. It is obvious that we must reverse this trend, but we failed to commit enough money to stimulate employment two years ago, which would have been the surest way to increase tax revenue and ameliorate the financial slump.
We must somehow begin not only to stop increasing the debt, but begin paying it down. For that to happen, there must be two changes: tax revenue must be increased, and long-range costs must be reduced. Unfortunately, economic conditions for the middle class have stagnated, and the economic health of the nation relies on the middle class, not the rich. And so we are left with trying to solve our problems with austerity at the worst possible time, during high unemployment and the most severe recession since the Great Depression.
One of the biggest factors in our declining tax revenue is the prolonged economic inequality that has resulted from pursuit of conservative ideals in recent decades. Real income for working Americans has declined even as wealth for the very rich has increased to 70% of the nation’s wealth at the top 10%, and 42% at the top 1%. The Bush tax cuts for the rich caused the largest ten-year increase in the national debt ever, $1.7-trillion, following declining debt during the Clinton era. Promoted as the best way to increase business investment, the tax cuts have done the opposite. Nobel Laureate Joseph Stiglitz has shown that transfer of wealth to the wealthy simply does not benefit the economy in any way, and has in fact made it considerably worse.
Among the other causes of debt increase are war costs, $5,000 per second, $1.8-billion per week. We are still heavily involved in several unwise wars, including our tenth year in Afghanistan, which have cost nearly as much as the Bush tax cuts. Another cause is the sub-prime loan defaults and their appalling sequelae, and government expenses related to the crisis. The housing slump and mortgage default crisis are ongoing, with few signs of abating. Very little has been done to appropriately regulate Wall Street in order to avoid similar future problems. It is instructive to note that by 1992 there were 839 criminal convictions resulting from the savings and loan fraud, yet there have been no convictions at all in the real estate fraud.
Then there are the taxes the corporations mostly don’t pay; two out of three pay no US tax at all. Total corporate payments are 1.8% of GDP. Individuals pay 80% of the taxes. This ridiculous situation has arisen because corporations all have their pet congresspersons, who would certainly not mind inserting an innocuous-sounding sentence in page 574 of the latest legislation at their suggestion. Decades of this have given us loopholes by the gross, through which the money corporations should be paying to the US Treasury squeezes out and into the pockets of you-know-who.
Most agree that there must be changes in entitlement programs, specifically Social Security and Medicare, if there is to be a budget surplus with which to pay down the national debt. This is largely a result of the demographic progression to an older population, rather than strictly financial factors. Both Social Security and Medicare suffer from the increasing age of the population, which leaves fewer workers to pay for more retirees. This situation is further worsened by high unemployment, which means still less revenue to pay into Social Security.
While the overall effect of a national health care plan like that of France—consistently rated the best in the world—would without question lower our individual health care costs as well as improve national health and boost productivity, conservatives have made even thinking about such a thing seem like electing Joseph Stalin to the presidency.
Conservatives, pointing to Detroit, say that America’s well-paid union workers created economic decline. However, workers’ pay and benefits have steadily worsened since the 1970s, well before today’s economic problems, and they continue to worsen. This created a decrease of tax revenue, which was greatly exacerbated by the Bush tax cuts for the wealthy. Currently, the situation is yet further worsened by unemployment from the Bush era lingering near 9%, along with the fact that many new jobs are for low wage with no benefits, which also cuts tax revenue. The investment in jobs that conservatives promised if the wealthy were made even more wealthy has not materialized.
Without being able to even consider the best health care possibility, then, it is apparent that we must control health care costs to government by greatly increasing the already excessive cost to individuals as well as taking what steps we can to limit billing charges. Therefore, individuals can be expected to pay considerably more for health care in coming years as funding is slashed in austerity measures. Fortunately, the president has made it clear that he will not allow these changes to adversely affect those who today depend on Medicare and Social Security.
The end result will be that most Americans will be working for less pay, with higher costs for retirement and health benefits, little of which will be paid for by employers. Because future retirement benefits will very likely steadily diminish, it will be imperative for all Americans to save substantial sums during their entire working career. Obviously, for most it will be an era of diminished expectations. The future will bring larger Social Security tax payments, later retirement, and diminished benefit payments.
It would be great to be able to say that when we do all these things, everything will get better. The more probable scenario is that there will be a long period of retrenchment, accompanied by sharply reduced expectations, for most people. How quickly and how much this changes depends entirely on how well we are able to generate increased tax revenue. This will not be accomplished by continuing to favor the fortunes of the rich at the expense of everyone else.
There are four things we could do that would go the furthest toward salvaging the wreck our national budget has become: (1) Get the hell out of all the wars we are currently involved in, and stay out. Cut the Pentagon’s decade-long cost increase back to considerably less than FY 2000 level. (2) Eliminate Bush’s tax cut for the wealthy completely. This unearned bonanza for the rich has not only failed to live up to its promise as a generator of commerce, it has increased the national debt hugely, and would do even worse damage if allowed to continue. (3) Take numerous steps to improve the financial fortunes of the middle class, therefore increasing tax revenue. (4) Make corporations pay their taxes.
Conservative recommendations have been a failure in all ways, resulting in diminished tax revenue and greatly increased national debt. Austerity measures currently being considered may help somewhat, but could also make the situation worse over the long run.