During the Reagan administration, government regulations were
minimized; and taxes were lowered. The economy grew faster than 7% in real
terms for five quarters in a row starting in the second quarter of 1983. Gross
domestic product grew on average 4.6% per year in real terms during the 1983-88
expansion while real median incomes grew 2.1%
Since the Reagan years, growth in the economy has faded while the
government has increased its control over the economy and national income. Top
federal income tax rates have risen to 44% today from 28% in 1988. The dollar
has weakened and consumer prices have doubled in the past 25 years. Federal
nondefense spending has nearly quadrupled to $2.8 trillion in 2013 from $750
billion in 1988. This has caused a huge increase in national debt, because the
population is not paying its way in the economic world.
New businesses are not being created at the usual rate according
to the Labor Department’s Employment Dynamics report. Real GDP growth has
averaged a weak 2.3% over the past three years, while real median incomes have
fallen 0.6% per year.
Government expansions have harmed individuals with modest incomes
while exempting or benefiting people with higher incomes. These include federal
takeover of the mortgage industry, siphoning the profit from Fannie Mae and
Freddie Mac directly to the government, because the government has purchased
housing-related bonds from those entities. Money to run the government has also
come from money printed by the Federal Reserve, presently in the amount of $85
billion/month. These money windfalls are promptly used to further accumulate
wealth and income for those people hired directly or indirectly by the
government. The money certainly does not come to people hiring and running
small businesses!
The Affordable Care Act is the latest huge government insult. Of
course, the government knows how patently unfair the ACA is. This can be seen,
because it carefully insulates Congress, government corporations, and unions
from having to buy into that big program.
The recent budget deal cooked up by Congress and the
Administration has divided up $1.1 trillion, much of which will benefit those
with high incomes while the extra debt falls on the middle class.
Personally speaking, Nancy and I have some of our money invested
in the equity market; and, as a result, the recession has not hurt us much. We
have seen our net worth remain steady. But…the net worth of others in the
economy who have less capital has not fared so well. We greatly fear that our
children and grandchildren are going to suffer from this “progressive,”
liberal, economy. It will take more than good luck for this economic situation
to turn in their favor!
(Redacted from the Wall Street Journal opinion pages 1/17/14.)
Posts
