Wednesday, November 23, 2011

Where Is All the Money Going?

The idea that the richest country in the world cannot afford a decent living for working people, the elderly, or the infirm, and provide easy access to higher education, or even to maintain the past level of public schools and public safety, is preposterous. But governments at every level are strapped for cash. Where is all the money going?

In the late ‘70s, the top 1% were able to afford their mansions and yachts on less than 10% of all incomes. Now they are taking almost 25%. The 15% increase in their share amounts to about $2 trillion per year, or $20 trillion over the next decade.
The US spends about 17% of its GDP on health care, and rising. Other countries have government-run systems that cost less than half of what we spend, cover all of their citizens, and produce better results. If we had a system as cost-effective as those countries, we would save well over $1 trillion per year.

Cutting military expenditures by $500 billion annually would still leave us spending more than twice what any other country spends and completely safe from invasion from any quarter.

That’s where over $3.5 trillion is going. That’s over $10,000 per year for every U.S. resident, or over $40,000 for a family of 4. The power elite like it that way, and are working to decrease taxes on the super-rich and emasculate Medicare and Social Security. The rest are struggling just to get by, and poverty is increasing in the richest country in the world. But the way we are headed, we won't be for long!
Redistribution of wealth is what has been happening for last several decades, with the super-rich taking from the middle class. They appear to have enough political power, aided by an effective propaganda machine, to continue to take even more and expand the numbers of idle rich until it is impossible for the workers to support so many. The head of a large hedge fund (which produces nothing people can consume) had income after taxes (at the capital gains rate) of 35,000 productive workers last year. It's like the pharaohs who produced nothing having thousands of workers build pyramids for them.
With the much more progressive income tax schedule that existed in the decades after WW II, the economy was healthy. It was fueled by the spending of the growing middle class, which had money to spend. Now, with so much going to the super-rich who can't possibly spend it all, the economy is sick. The layoffs of so many government workers and spending cuts are adding to the problem and driving the economy into another recession. That’s where even more money will be going.

Monday, September 05, 2011

Is Big Government Evil?

These days, most Americans are finding it difficult just to get by, to say nothing of affording adequate health care or sending their kids to college. Is big government to blame? Or have we allowed the super-rich to undermine the functions of government to serve their own ends, leaving the rest of us to struggle?

Big government can work! People in other industrialized countries use their governments to make their lives better. They live longer have better access to good health care and higher education. Some other countries have already passed the U.S. in income and college graduates per capita. Recent studies indicate that in Western Europe, young people have more opportunity to rise economically than do those in the U.S. By almost any measure, people do better in countries with relatively larger governments and higher taxes than do those in the U.S.

To make our government to work, we can use our votes to make our government serve all of the people rather than just the wealthy. Given the billions they are spending to reduce the power of government, that will be a tall order.

Elections: To get the government to serve all of the people, we need election reform to stop big money from having so much influence on our political process. Organizations should not be allowed to spend to influence elections. Contributions to candidates, campaigns, or political advocacy should be limited to $1000 per person or less. Representatives’ terms should be extended to 4 years so as to eliminate the need for constant campaigning. Election campaigns should be limited to 8 weeks.

Taxation: To achieve a fairer distribution of income, the tax structure should be changed drastically. It should be greatly simplified. Rates should be much more progressive, so that increments of incomes over $5 million would be taxed at 90% and increments over $100 million at 99%. Capital gains should be taxed as ordinary income. Taxes on estates larger than $50 million should be taxed at 90%, and on those over $100 million at 99%. Incomes below $30 thousand should not be taxed at all. Such changes could yield the federal government over $2 trillion each year, eliminating the deficit, and leaving hundreds of billions for investment in education, infrastructure, and social programs. The super-rich would still have more than enough for their yachts and mansions.

Health Care: The government should provide free access to health care to all. A single payer health care system as cost-effective as those in some other developed countries would reduce health cost in the U.S. by over $1 trillion each year.

Education: Our economic progress, past and future, depends on having an educated work force. Higher education ought to be easily available to all. The super-rich are taking so much that there isn’t enough left for good public education.

Wars: The U.S. should not enter any war except when attacked. It should withdraw from the wars it is currently fighting. It should close all military bases on foreign soil. It should reduce spending on the military by more than $500 billion per year.

Financial regulation: The government should enact strict regulation of banks and other financial institutions as it did in the ‘30s. Until deregulation of the financial system, beginning in the ‘70s, the economy performed well, was stable, and the middle class thrived. Now instability has returned.

The Environment: The government should be much more aggressive in protecting the environment.

Civil rights: Abridgement of civil rights should end. Torture, imprisoning without charges or trials or access to legal help should be absolutely prohibited.

Income: Laws should provide for workers to get a living income. Minimum wage laws help. Limiting the total income of top executives to perhaps 40 times what the lowest wage-earner in a company receives would make for more fairness.

Immigration: Provision should be made for children of illegal immigrants to become U.S. citizens. Adult illegal aliens should also be given that opportunity by meeting stiff requirements that don’t give them a significant advantage over legal immigrants.

Global cooperation: As the world grows smaller, more and more problems are international in scope. The U.S. must cooperate with the rest of the world in addressing common problems, such as the use of land mines, global warming, dumping toxic wastes, and supporting the International Criminal Court.

Economic stability: The federal government should do much more to stabilize the economy through fiscal policy and to assist those suffering from downturns, such as those who have lost their jobs and homes.

Leadership: The U.S. needs political leaders who will put the well-being of the population ahead of getting reelected.

Enemy of the people: The rich and powerful in the U.S. want to be free of governmental regulation to be able to continue to increase their wealth at the expense of the rest of us and of our future. They spend billions promoting the myths that big government is bad and that the rich provide for the economic well-being of the rest. They use their wealth to influence elected officials to do their bidding. They have managed to increase their share of GNP enormously at the expense of the middle class and the poor.

Rather than emasculating our government, we need to prove its effectiveness to provide more opportunity for all. No good end will come from a small group dominating our society as the nobility once did in Europe.