Americans calm in face of economic disaster
Do you remember–or have you heard of–the panic that gripped many Americans as the year 2000 approached?
Americans had tons of electric equipment with timers, and many panicked thinking about all that could fail when we went from year 99 to year 00?
Nothing happened.
Today people remain detached as the media points out daily that, if the Republican-controlled U.S. House won’t allow an increase in the nation’s debt limit, we will suffer worldwide economic chaos, plus job losses and recession at home.
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In 2011, when Republicans tried similar blackmail during President Obama’s first term, the debt ceiling was raised just two days before default. Stocks had already fallen 19% and the credit rating for the U.S. dropped permanently. The government has had to pay higher interest rates ever since.
Are people calmer now because they trust our elected officials to find a solution? Or because they’re resigned that what will be, will be?
I’ve found comfort in knowing that the Fourteenth Amendment to the U.S.Constitution says, “the validity of the public debt of the United States, authorized by law…shall not be questioned.” Doesn’t that mean there’s nothing legal about our government approving an expenditure and then blocking payment for it?
Not so long ago Republicans believed in raising taxes when needed to prevent increases in the national debt. President Reagan is praised for insisting that the rich getting richer was good for the economy. But his tax cut in 1981 was followed by five tax increases approved by a Republican-controlled U.S. House between 1982 and 1987.
Republicans embraced “no new taxes” to block programs of President Clinton. Then, Presidents George W. Bush and Donald Trump touted the “biggest tax cuts ever,” adding to a $5.85 trillion increase in the U.S. debt during Bush’s eight years and a $6.7 trillion increase during Trump’s four. Time after time Congress dutifully raised the debt ceiling.
A 2020 RAND Corporation study found that the “changing economic distribution systems of the past forty years” (aka, tax cuts for the rich and interest rate increases whenever wages rose) have moved $50 trillion “up out of the hands of the bottom 90% of Americans.”
President Biden is proposing reducing the federal deficit by $3 trillion over the next decade by restoring some taxes on the top 10%. He would raise the top tax rate from 37% to 39.6%; tax capital gains at rates close to other income; and raise corporate tax rates from 21% to 28%. He’d also fund more tax audits on the rich.
Republicans in the U.S. House have demanded cuts in Biden’s programs plus an additional $3.2 trillion in unspecified cuts. House Speaker Kevin McCarthy promised that Republicans wouldn’t cut social security, health care or programs benefiting police, fire fighters, etc. So they’re not calling for cuts in those programs– they’re just demanding so much that such cuts would have to be made.
Historian Heather Cox Richardson argues that spending isn’t the problem. Government “discretionary spending has fallen more than 40% in the past 50 years as a percentage of gross domestic product, from 11% to 6.3%.”
And the Center for American Progress claims that the U.S. tax rate is far below that of the 37 other democratic nations in the Organization for Economic Development. The U.S. would have an additional $26 trillion in revenue every decade if it taxed at average OECD level; an additional $36 trillion if we taxed at the average rate of the European Union nations.
That may explain why we have deficits year after year.
