Fairness is crucial to economic growth

[erdawiro]

Robert Reich in SF Gate:

Fairness isn't inconsistent with growth. It's essential to it. The only way the economy can grow and create more jobs is if prosperity is more widely shared.

For years, conservative "supply-side" economists have told America not to be worried about widening inequality. They have said tax cuts for corporations and the rich will lead to more economic growth and jobs.

It has been a cruel hoax. Nothing has trickled down. The Bush tax cuts of 2001 and 2003 - the lion's share of whose benefits went to the wealthy - ushered in an era of slow growth, fewer jobs, declining wages and mammoth budget deficits.

You want to know the real reason the economy crashed in 2008 and why the recovery has been so anemic? Because so much of the nation's income and wealth have become concentrated at the top that America's vast middle class doesn't have enough purchasing power to keep the economy going.

This was masked when members of the middle class borrowed billions of dollars against the rising values of their homes. But after the housing and debt bubbles burst, borrowing on that scale no longer was an option.

...

So when the top 1 percent rakes in more than 20 percent of total income - twice the share it had 30 years ago - there's insufficient demand for all the goods and services the economy is capable of producing at or near full employment. Without enough demand, the economy can't grow or generate nearly enough jobs.

[Cajuncowboy]

Bwahahahahaha! That's a good one.

[Supply Sider]

Fun fact: The Bush tax cuts actually shifted a larger portion of the tax burden to the wealthy. To wit, before the Bush tax cuts, the top 10 percent paid 67 percent of total income tax revenue. After the Bush taxs, cuts the top 10 percent shouldered over 72 percent of the burden. In fact, Bush exempted the bottom 48 percent of wage earners from even paying federal income taxes.

http://www.taxpolicycenter.org/taxfa....cfm?Docid=558

[trickblue]

Is Reich talking about the Bush Economy that averaged a 5.2% unemployment rate? The one that averaged a 3.5% growth rate through 2006 (the year that the Democrats gained control of congress)?

Liberals attacked Bush for a poor economy that wasn't really poor at all. Once they got into office, they proceeded to wreck the economy to prove their argument.

When Bush was president and the unemployment reached 4.5% all we heard from the Democrats was how bad everything was. We're in a recession... Worst economy in 40 years... Pelosi famously asked "where are the jobs, Mr. President"? Now that unemployment is around 10% what do we hear? Depending on what day, it's either "The economy is improving" or "It's Bush's fault"...

[erdawiro]

Fun fact: The Bush tax cuts actually shifted a larger portion of the tax burden to the wealthy. To wit, before the Bush tax cuts, the top 10 percent paid 67 percent of total income tax revenue. After the Bush taxs, cuts the top 10 percent shouldered over 72 percent of the burden. In fact, Bush exempted the bottom 48 percent of wage earners from even paying federal income taxes.

http://www.taxpolicycenter.org/taxfa....cfm?Docid=558

While tax rates can contribute to and mitigate inequality in different ways, they aren't a very good metric for identifying and tracking actual inequality.

[erdawiro]

Is Reich talking about the Bush Economy that averaged a 5.2% unemployment rate? The one that averaged a 3.5% growth rate through 2006 (the year that the Democrats gained control of congress)?

Liberals attacked Bush for a poor economy that wasn't really poor at all. Once they got into office, they proceeded to wreck the economy to prove their argument.

When Bush was president and the unemployment reached 4.5% all we heard from the Democrats was how bad everything was. We're in a recession... Worst economy in 40 years... Pelosi famously asked "where are the jobs, Mr. President"? Now that unemployment is around 10% what do we hear? Depending on what day, it's either "The economy is improving" or "It's Bush's fault"...

Yes, that roaring Bush economy that, even in 2005, was identified as such:

By virtually every measure, the economy has performed worse in this business cycle than was typical of past ones, including that of the early 1990s, which saw major tax increases. The single area that has excelled in the current cycle, housing, has actually done so despite reduced tax incentives since 2001. And the tax cuts certainly didn’t boost investment levels: the expiration of over $60 billion a year in business tax cuts at the end of 2004 had virtually no observable negative effect on investment.
In fact, over the last four-and-a-half years, nearly every indicator—from job gains to economic output to spending—have fallen far short when stacked against comparable periods in past cycles.

That single positive area, housing...yeah, about that...

Link

[Cajuncowboy]

Yes, that roaring Bush economy that, even in 2005, was identified as such:



That single positive area, housing...yeah, about that...

Link

Do you really want to talk about the housing issues? Two words for you....Barney Frank.

[JBond]

Do you really want to talk about the housing issues? Two words for you....Barney Frank.

Bill Clinton and the new CRA regs he created are the true cause of the housing crisis. Everyone is agreed on that. Facts cannot be denied.

[erdawiro]

Bill Clinton and the new CRA regs he created are the true cause of the housing crisis. Everyone is agreed on that. Facts cannot be denied.

Yeah, everyone but like The Fed: "The Federal Reserve Board has found no connection between CRA and the subprime mortgage problems." But whatever.

Link

[JBond]

The Fed...Sigh...same clown category as the the CBO.

The same fed the guaranteed $6.4 trillion in toxic assets? The same Fed that converted their investments in hundreds of banks to gain ownership?

Of course your are familiar with the Federal Housing Enterprises Financial Safety and Soundness Act. That act that forced government entities to buy bad loans forced by Clinton and the regulators.