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Why refuse to recognize what's behind our economic woes?

February 17, 2008 12:16 am

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AN OVERWEIGHT man with heart issues collapses and seems barely alive on the floor. In rush the medics to apply a defibrillator. His eyes open up and he's breathing. After a couple of minutes, his color returns, he's helped to his feet, and he gets on with the rest of his day. No concern about what's causing his problems; no trip to the hospital for tests and a closer look.

That's the approach Congress and President Bush have taken with their economic stimulus package: a stopgap measure that fails to address the economy's serious flaws. It's a classic case of trying to solve a problem by throwing money at it, orchestrated by so-called statesmen who figure their ratings might go up if they pay off their constituents.

The president on Wednesday signed the measure, which was sent to his desk by backslapping congressmen singing their own praises for a bipartisan job well done. You'd think they'd diverted an asteroid from colliding with Earth.

How short do they think our memories are? Do they think that simply sending us money with the assumption we'll spend it will make everything rosy again?

Believe it or not, many Americans will use the money wisely. Of course, some will behave like the federal government: spend it on something twice as costly and put themselves deeper in debt.

The stimulus plan will cost an estimated $168 billion, which will be automatically added to the deficit because there is no actual money to pay for it. The deficit for fiscal 2007 was $163 billion, and it was expected to swell to $250 billion this year thanks to the wars in Iraq and Afghanistan, and ongoing hurricane recovery. Tack on the stimulus package and it soars well above $400 billion.

put on thinking caps

While most Americans, myself included, will welcome the bonus tax rebate that's coming our way, let's also remind our "leadership" that it's not yet time to remove those economic thinking caps. Let's look at the causes of our economic woes and the unhealthy habits we need to change.

Economic experts saw this downturn coming: Wouldn't it have made sense to invest that $168 billion, perhaps in the infrastructure improvements we need, and prime the economic pump that way?

Or maybe it could pay for a study to learn why the U.S. poverty rate goes up under Republican administrations. That's so easy that there would be enough left over to build housing for the poor, and to send their kids to college. A government with vision could see the dividends that would pay.

A developing consensus suggests that the nation's wealth gap is a main cause of chronic economic illness. In 2004, the top 1 percent of U.S. households held more than 34 percent of the wealth. In broader terms, the top 40 percent hold about 96 percent of the wealth while the bottom 60 percent account for only 4 percent. Feeling a little left out?

While capitalism is designed to breed competition, it also leads to a concentration of wealth that demands government intervention and regulation to maintain the fairness and equal treatment promised by the Constitution. There is no guarantee of wealth in the Constitution, but wealth clearly undermines equality.

tilted toward the rich

No matter what your view of governmental regulation, it helps prevent the rich from accruing every last penny and leaving everyone else penniless. But because money buys political power, government policies are always tilted to favor the rich.

The difference between Republicans and Democrats? Republicans expect us to believe that what is good for the rich is good for the rest of us, while Democrats try to look out for the average Joe but can never overcome the power of wealth. The current administration's skewed tax policies and corporate favoritism illustrates the lopsided division of wealth.

Taxes are the primary tool available to the government to regulate wealth, but they are rarely imposed properly. The idea is to even things out by heavily taxing the extremely wealthy, while giving a break to the poor and middle class. Income taxes don't accomplish that. They are considered progressive because they increase based on how much you earn. But total salary and wage income realized by the ultra rich and by working stiffs isn't dramatically different because there are so few of the former and so many of the latter.

Tax cuts, the kind President Bush wants to make permanent, help only the rich and large corporations because few enjoy the benefits of gobs of money. The value of these tax breaks to the masses is so subtle they hardly even notice it.

By taxing wealth, or net worth, instead of income, the government would be more able to zero in on the disparity. While that doesn't account for someone who makes $200,000 a year and blows it all on maintaining a lifestyle, he or she is not accruing the wealth that will provide a high standard of living in retirement or when that high-paying job otherwise disappears.

Edward Wolff, noted New York University economics professor and author of "Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done About It," says there are two ways of looking at the situation, both of them bad.

Some view the disparity as morally and ethically wrong, that having so few haves and so many have-nots is divisive and unfair.

The other view is that the wealth gap stunts future economic growth. It begins when the bright, but poor, student is denied the opportunity to go to college because rather than helping to pay college expenses, his government thinks it's better to provide tax cuts that make the rich richer.

And that's why the government's economic stimulus plan won't do any good.

Richard Amrhine is a writer and editor with The Free Lance-Star. ramrhine@freelance star.com





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