Friday, September 23, 2011

Is Financial Collapse Inevitable

As our national debt approaches 100 % of GDP, I would just like to point out that in many respects we have been here before. After WWII we had a crushing debt of 120% of GDP. Many thought it was an impossible situation that would inevitably lead to financial collapse. But, after a couple decades of high taxes on the wealthy (90-70%), GDP growth and modest inflation, that debt dwindled in the rear view mirror into a fairly insignificant amount.
Republicans, with great wailing and gnashing of teeth, like to tell us we are in an impossible gloom and doom situation, the world is going to end, we have to cut spending and make the economy smaller (which by-the-way makes the debt bigger in relation to the economy). They tell us we can't accomplish big things; we need to aim lower and do less.
The real problem is 30 years of tax cuts, after more tax cuts, after even more tax cuts for the wealthy which has left the government starved of revenue, thus creating huge deficits. The wealthy in America pay the least taxes they have since just before the Great Depression. The resulting wealth disparity means that a bigger and bigger piece of the pie goes to a smaller and smaller group at the top leaving that much less for everyone else. Malcom Gladwell make an excellent point about how America has previously sliced up the pie in this video.
The solution is simple; raise taxes on high incomes to the levels they were after WWII. It worked before and it can work again but the problem is uncompromising, unrelenting Republican obstructionism. Almost every Republican in congress has signed a pledge of allegiance to Grover Norquist. If you don't know who Grover Norquist is, he is the guy who hates the U.S. Government so much that he famously said his goal is to starve the government of revenue to the point that he can “drag it to the bathtub and drown it.” Republicans have become so consumed with protecting every penny of tax cuts for the wealthy that they have lost all sense of perspective and will go to every extreme to obstruct raising revenue, even if it means destroying the country. The only solution that remains is to remove from office every Republican (or Democrat for that matter) who has signed the pledge of allegiance to Grover Norquist or any other special interest group, and replace them with folks who pledge allegiance to the United States, in-other-words, folks that put country before ideology or party.

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