Wednesday, June 20, 2012
A broad swath of official economic data shows that America and its people are in much worse shape than when we paid higher taxes, higher interest rates and made more of the manufactured goods we use.
The numbers since the turn of the millennium point to even worse times ahead if we stay the course. Let’s look at the official numbers in today’s dollars and then what can be done to change course.
First, incomes and jobs since 2000 measured per American: IRS data show that average adjusted gross income fell $2,699 through 2010 or 9%, compared to 2000. ... Wages per capita in 2010 were 4.3% less than in 2000. ... In May, nearly 23 million workers, 14.8%, were jobless or underemployed, the Bureau of Labor Statistics reported. ... Now let’s look at debt per American since 2000 using Federal Reserve data:
Mortgage debt grew 51% through 2010, even though incomes and wages fell, which should result in steady or lower housing prices, not higher prices. ...And what of taxes? ... [M]easured per capita, the IRS data show a pattern of shrinking numbers, with modest upticks in 2010. Individual income taxes in 2010 averaged $2,995, down $1,654 or almost 36% from 2000. ...
The bottom line: less income, hardly any more jobs, sharply increased mortgage debt and Washington ledgers awash in red ink as voters are asked to endorse even more tax cuts.
How many years of evidence does it take to establish that a policy worked or failed? Will continuing our current tax, credit and trade policies produce favorable results in the future? Will they produce higher incomes?
My reading of this and tons more data is that the Bush tax cuts utterly failed, the Fed’s artificially low-interest rate policies under presidents Bush and Obama do far more damage than good (especially to savers), and that the United States is harmed both by the imbalance in the trade relationship with China and scores of trade agreements with South Korea and other low-wage countries that are deeply flawed at best.
We need to recognize that the tax cutters were snake oil salesmen, the Federal Reserve an enabler of damaging debts and that bilateral trade deals are written of, by and for global financiers, not workers.