In the year 2001, the national debt stood at $5.8 trillion. Today that figure has more than doubled to $14.3 trillion. This $9 trillion increase over the past ten years can be attributed to government expenses, particularly with the 2001 and 2003 tax cuts, additional interest costs, and also the war in Iraq and Afghanistan. Why is it then that we constantly hear politicians and Wall Street bankers going after Social Security payments as a key way to balance the debt? Compared to the aforementioned expenses, Social Security hardly factors into the $9 trillion in question. Out of the top three contributors to the increase in debt, the only item being discussed, albeit rather quietly, is taxes. The 2008 financial industry bailout added an additional $200million, although the Federal Reserve partook in a shadow bailout of its own totaling over $2.8 trillion on their balance sheets.
The fact of the matter is that both political parties have set up a system where money is filtered to the top one percent, while the middle class wilts on a vine. This new economic system distributes wealth by political will, while backstage of this farcical theatre the working class is being forced into debt serfdom, finding it virtually impossible to buy a home or even get an education without racking up onerous amounts of debt in loans. The velocity at which the national debt has grown in this country is stunning. When comparing annual changes in GDP and government debt over the past 50 years, the rate at which our debt is growing has far surpassed our growth in GDP. This is clearly not a good thing; as a country you do not want to accumulate debt faster than your economy can develop and compensate for this number. For the most part, during the 1980’s or the era of “deficits don’t matter,” is when we really notice this change. This trend has continued through the years, with little of the $9 trillion having trickled back down into the hands of the middle and working class. The only group seeing solid income growth is at the top and much of their growth is secured by government favoritism and welfare for the rich.
Not convinced? In this new kind of system we live in, hedge fund managers pay taxes at a much lower rate than your typical construction worker. Additionally, one out of three Americans have no savings to their name, so financially they have nothing to protect. A majority of the population has bought into the notion that political parties are out to help them, but the current distribution of wealth alone should be enough to shatter this idea. Tax breaks are of little use, especially since they tend to benefit only the extremely wealthy. Were this all free market based, it would be a different story. Bailed out companies now invest overseas and create jobs in other countries with U.S. taxpayer dollars while our economy suffers. Most Americans would rather have a healthy economy instead of seeing their tax rates fall and having an economy that is producing low wage capitalism jobs. We have spent so much in so many areas, all with no significant, positive impact on the middle class. Do you think we have spent $9 trillion wisely over the last decade?
Even with all of this negativity in the political realm and the major implications it has on our economy, there is light at the end of the tunnel. While we climb out of this giant debt bubble and major financial changes occur, there is going to be more opportunity to gain wealth than ever before. If you are able to keep your eyes open as things change, instead of putting your head in the sand and hiding, you will be on the winning side of this financial storm.
Comments(3)