The Economy Is Broken And It Will Be Tough To Fix

Fall seems to have arrived all at once last week. The change of the seasons, marked by the colors of the leaves on the trees in Fairmount Park, exploded upon us finally, and all at once seemingly. I suppose that the unusually warm weather in October is responsible for this. In any event it was a joy to walk and take photographs around Thanksgiving. The rains today will no doubt knock off the majority of the colorful leaves that were so pretty just last week.

If the economy is so good then why are Americans pessimistic about it when they are asked? Paul Krugman, writing in today's New York Times, thinks that the good times enjoyed by the wealthy are simply not trickling down to the masses. Workers' salaries are not keeping up with inflation. This, combined with the worsening health care situation, is why we are not feeling good about the economy. Krugman thinks this will be tough to fix no matter who is elected the next president:

The next president won’t be able to deliver another era of good times unless
he or she manages to tackle the longer-term trends that underlie today’s
economic disappointment: a collapsing health care system and inexorably rising
inequality.

Of course, the Iraq debacle is also part of the problem. We spend enough on that war to fix health care, I believe. By the way, the recent reports that "The Surge" is working should not make us feel good about an illegal war that should never have been started in the first place. It ought to end now by the start of a full withdrawal of American troops. It's about oil, and we should address the oil problem responsibly and not by invading other countries.

Jim

If It's Sunday, It Must Be About Taxes

I've been reading about taxes this morning. I followed a few links on some of my regular sites and I ended up focusing on a couple of tax proposals that are new to me. One is something called the "Fair Tax." This proposal would end all federal income taxes on everybody and everything, including corporations, it would repeal the 16th Amendment, and do away with the IRS. The replacement tax would be a national sales tax of 23 percent with a rebate to taxpayers on their spending up to the poverty level. The rebate is supposed to add progressivity to the plan. I'm always suspicious of plans like these, which tend to be wildly popular with right wingers and extreme libertarians, so I looked around for some critical reviews of the "Fair Tax." I didn't have to look very far. It seems as though it would be tough on the middle class, unfair to baby boomers, and if passed by Congress, it might not eliminate the IRS. Instead, we could possibly end up with both an income tax and a consumption tax. My own critique of the "Fair Tax" is that it ends taxes on corporations and shifts the burden totally to consumers. The plan has more support than the blatantly regressive "flat tax," but it seems unlikely to actually pass, according to what I've read. Personally, I'm for keeping the current setup, albeit with simplifications, and restoring the pre-Reagan progressive tax rates that had the wealthy paying a bigger share of the total taxes collected. But then I'm for levelling, redistribution of wealth, and against the ever rising gap between the rich and the poor in this country.

Photo: another Pines beachfront palace

Jim

What's Wrong With This Picture?

7:00 AM: Bush throws a "white tie" dinner for the Queen complete with all the trimmings, while the governor of Kansas attempts to deal with the aftermath of a disastrous storm without the national guard resources that Bush has squandered on Iraq. Bush's 200 year verbal gaff was telling. This is indeed reminiscent of 200+ years ago - in France. Will heads soon roll?

On education, one reader wrote: "So long as we fund education with property taxes, no underprivileged child will ever get an equal (or even decent) education. (And that is probably the most fundamentally unfair public policy we allow.") So, what's the answer? Where does the money come from for education? Maybe if we funded the war from property taxes and education from income taxes, the public would finally rise up and demand an end to the war.

Jim