Open Forum: Don’t repeat the wreck
Posted: October 25, 2012
Regarding the election, here is a simple summary of the relevant economic facts.
I can speak to this with some authority because, in so far as I know, I’m the only one who understood the economic collapse so clearly that I foresaw it in 2004, and sold my speculative houses in 2006 when I realized that it was imminent. Then, immediately after the stock market peak in October 2007, I warned all around me of the impending crash, and I accurately predicted the amount of the stock market collapse. Therefore, I hope people will like to hear what I have to say.
The argument over whether President Obama is fixing the economy fast enough is misleading. The budget was balanced in 2000, but George W. Bush reduced taxes on the wealthiest from 39.6 percent to 35 percent in 2001, lowered taxes on dividends and capital gains from income level to 15 percent in 2003, and started two very expensive wars, thereby sending the budget down into extreme deficit.
The simple general reason for the broad economic collapse is obviously the economic leadership of President Bush. The best way to continue fixing it is with the clearly proven policies which worked producing a balanced healthy economy paying down the debt from 1998 through 2000, raising taxes slightly on the rich, reducing spending, and promoting the economy, not with the vague promises of Mitt Romney that are very similar to the ones that wrecked our economy.
Gov. Romney has already said repeatedly and put it in writing, even though he is now disavowing it, that he will give big tax breaks to the wealthy, essentially disregarding everyone else. This is practically the same as George W. Bush did, and it would again be very harmful to the economy. That is because the wealthy would again largely pack away those further trillions into their bank accounts, whereas the middle class and poor would spend it. This packing into savings takes money out of circulation, thereby pinching the economy.
The specific reason for the collapse was the irresponsible mortgage lending by the banks under President Bush to millions of people who couldn’t really afford them. It’s true that this provided a brief business boom, yielding good wages and huge profits. It’s also true that this guaranteed a catastrophic collapse when all the millions of bankruptcies flooded the market with foreclosed homes.
This produced trillions of dollars of losses to the banks and scared everyone when their house values dropped, causing them to cut back all spending. This was obviously most harmful to the many who lost their jobs, and this further hurt because it caused unemployment compensation to soar.
Gov. Romney has emphasized repeatedly that he doesn’t care about the non-rich. Quoting his own words:
“I don’t care about the poor, they have their own safety net.” And also: “It’s my job to not worry about the 47 percent who don’t pay [income] taxes.”
Not only is this arrogance very elitist, but it’s also very harmful to the economy. This reality was emphatically reinforced last November when the patriotic 250 multi-millionaires pleaded for their taxes to be raised. They pointed out that their paying a lower rate was not only grossly unfair, but stupidly impractical economics.
Reassuring and enabling the 98 percent is what boosts the economy, not further padding the richest 2 percent. President Obama understands the economy, being poor, and being worried about making your next payments. Gov. Romney has no understanding of what that would be like.
President Obama is making major progress getting the economy back healthy again from that massive catastrophic wreck caused by President Bush. The ridiculously lax lending rules have been removed, greatly diminishing bankruptcies. The housing glut has been reduced and prices are rebounding strongly. Banks have paid back nearly all their bailout monies with interest, and the automobile industry has revived with robust production.
Unemployment has been steadily declining for two years from 10 percent to 7.8 percent. The collapse has been halted and in only two short years a major recovery, even though much more is needed, is solidly taking place.
The worst thing that we could do is repeat those policies which caused it. Remember the facts; the economy was balanced and healthy when Bush changed the rules, very similarly to what Romney is now proposing in order to benefit the wealthy.
Repeating the wreck is never good continuing therapy. Let’s rely instead on simple proven policies which work, not vague general promises which are known to be very questionable. For the good of America, let’s stick to the facts.
Doug Thomas is a resident of Winchester.