The American Economy:
Why It is Broken, and How We Can Fix It
(Last revised 8-26-2013)
This article is fairly comprehensive, covering most of the factors that effect the American economy, what caused the problems, and how we can fix them. And we, the people, can fix them.
See, the American economy in 2007 was much like it was in 1929, and in both instances it resulted in a devastating economic crash caused by the rampant greed and corruption of very rich people who were given free license to do as they pleased without government "interference."
The difference is that President Roosevelt fixed it in the 1930s, saved the country, and enabled the American middle class to gradually grow large and great. But, since 2008 the only things and the only ones that have been saved are the banks, corporations, and the wealthiest few who caused the problems in the first place.
That's because money now rules absolutely. No matter which party has "control," that control is an illusion, because it is the wealthiest few who hold 95 percent of the nation's wealth that have the control.
That is why during President Obama's first term and even after he won a second term convincingly, Republicans have ignored the will of the majority of the people. And they are able to get away with it because Mr. Obama is no Roosevelt, and no Jefferson. He does what is politically expedient, pays lip service to moral and humanitarian values, and will not rock the boat. Consequently, the whole political economic system continues to be rigged in favor of the rich, at our expense.
For example, Republicans, Libertarians and "Tea Partiers" resist the overwhelming call to require the wealthiest few to pay at least a little more toward a fair share of taxes, and they persist in their insistence that there must be cuts in "spending" and "Entitlements" like Social Security and Medicare.
They ignore and deny the truth, however, because much of what they call "spending" is in fact what we need now to invest in the people and in the country, and Social Security and Medicare are not "Entitlements." They are insurance programs and the people pay a lot in premiums for them.
The Republicans finally had to admit that there must be a significant increase in revenue to reduce the debt that the Bush Regime created, but even then they still insisted that along with an increase in revenue there must be cuts in social services, Social Security and Medicare.
The problem is that they do not want to reform Social Security and Medicare properly or fairly, so that those who really need it can benefit sufficiently from the retirement insurance that they have paid for all their lives. Furthermore, they do not want to reform Social Security and Medicare so that it is solvent and ample, such as by ensuring that only those who really need it may take advantage of it. Instead, independently wealthy elderly people take the most out of the trust fund even though they do not need it.
Instead of establishing proper and fair reform, Republicans and even some Democrats say that "reform" means simply cutting and reducing the benefits of all the recipients, including the poor who are desperately in need. And the amazing thing about it is that the Republicans, Libertarians and "Tea Party" members have been so vehement and so successfully misleading about it, that even most media pundits agree that revenue increases must be accompanied by cuts in social services and "Entitlements."
That, however, is simply not true. In fact, that would be grossly unfair, not merely because it would cause even more severe hardship to the poor and the working poor, but because the wealthiest few have so much more than they need or can possibly use, it is incredible.
Consider that during the last 30 years the wealth of the nation has been redistributed so that the wealthiest 20 percent of the population now own 95 percent of the total financial wealth of the nation, while 80 percent of the population now owns only 5 percent of it.
Now also consider that during that same period of time, while the wealthiest few have been enabled to get incredibly richer, everyone else has become less financially secure, the middle class population has shrunk, more and more people fall into the working poor population which is rapidly growing, and more and more people fall into poverty, are hungry, and even homeless.
In fact, 20 percent of American children live in poverty, because while the wealthiest few get richer, the median (average) household income keeps falling. The incomes of the richest 20 percent of the population grew by 30 percent during the last two decades while the incomes of the lowest paid 20 percent of us declined by more than 20 percent in the same time period, and the buying power of the minimum wage declined significantly.
Politicians may want you to simply forget or ignore all that. But we cannot. We need to be sane, reasonable, honest, and fair. We need to have sufficient revenue to make necessary investments in our people and in our country.
Furthermore, to cut social services and Social Security would be a crime. And the only "Entitlements" we need to cut are those that have been going to the wealthiest few, since we have entitled them to pay far less than their fair share of taxes and deprive the national treasury of what it should have because of their taking advantage of tax breaks, loopholes, deductions, shelters, havens, subsidies and other "welfare for the rich" that we have been allowing them to take.
The Intent of the Founding Fathers
America is in deep trouble economically because too many Americans have either forgotten or denied some very valuable lessons of American history --- not only the lessons we should have learned from the 1920s, ‘30s, ‘40s and ‘50s, but the lessons provided by the Founders during the early decades of the nation’s formative period.
Therefore, to start at the beginning, all Americans should realize that most of America’s Founding Fathers intended to establish a government of, by and for the people, rather than a government that would produce and perpetuate plutocratic rule by the wealthiest few.
John Adams wrote: “Government is instituted for the common good; for the protection, safety, prosperity and happiness of the people; and not for the profit, honor, or private interest of any one man, family, or class of men. Therefore the people alone have an incontestable, unalienable, and indefeasible right to institute government and to reform, alter, or totally change the same, when their protection, safety, prosperity and happiness require.”
In a letter to James Madison in 1785, Thomas Jefferson suggested that taxes could be used to reduce "the enormous inequality" between rich and poor. He wrote that one way of "silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise." And Madison then said using laws to "reduce extreme wealth towards a state of mediocrity (referring to the middle) and raise extreme indigence towards a state of comfort."
In Thomas Jefferson's writings he showed he felt strongly about providing the average citizen with equal opportunity. He even wanted to establish publicly funded higher education so that all citizens, regardless of their personal or family wealth, could fulfill their highest potential. Of course, he was unable to do that (as is painfully evident now since higher education is rapidly becoming out of reach for the majority), but Jefferson tried to make public education complete because believed in equal opportunity for all.
Interestingly, regarding taxation, the Founders originally established a government that relied mainly on tariffs to collect revenue, because they recognized that wealthiest people bought most of the imports and they thought it only fair that the wealthy should pay most of the taxes.
Even in 1811 Jefferson wrote: “The rich alone use imported articles, and on these alone the whole taxes of the general government are levied.”... “The poor man, who uses nothing but what is made in his own farm or family, will pay nothing. (With) our revenues applied to canals, roads, schools, etc., the farmer will see his government supported, his children educated and the face of his country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings.”
Regarding banks and corporations, as president in 1801, Jefferson warned against the unregulated and unchecked power of banks and corporations. He realized they had already created a wealthy ruling class of men in America, and he recognized the terrible threat that insufficiently regulated or unlimited banking and corporate power represents.
Unfortunately, the Hamiltonian “Royalist” view regarding economics, banks and corporations prevailed over the Jeffersonian view. For while most people admired and respected Jefferson’s views on democracy and freedom from Theocracy, the wealthiest European Americans still preferred the aristocratic British traditions that heavily favored and benefited the very rich property and land owners. Therefore, banks and corporations thrived and still enjoyed a great deal of power and free rein to exercise it.
That had inevitable consequences, and finally by 1929 the consequences of plutocracy and unbridled greed, self-interest and corruption became painfully apparent and nearly ruined the nation’s economy. There was a terrible stock market crash. Tens of thousands of banks failed and $140 Billion of depositor money disappeared – all of which caused the Great Depression which made millions of Americans jobless, poverty stricken, and homeless.
Roosevelt's New Deal Establishes Fairness, But Not For Long
In 1932 Democratic President Franklin D. Roosevelt provided a New Deal and began implementing needed reforms and regulations on the banks and corporations, provided a safety net and Social Security for those who needed it, and by 1947 he had won World War II and made America the greatest nation in the world by making its middle class large and great.
Then, however, between 1947-1957 McCarthyism or the “Second Red Scare” began to turn the tide of progress and advancement. Republicans like Senators Joseph McCarthy and Richard Nixon and Hollywood collaborator Ronald Reagan resorted to the strategy of “red-baiting” and calling New Deal Democrats “socialists” and “communists.”
That was a very dark period in which many good, conscientious people were “black listed” and treated very badly simply because they had shown concern for the poor and the least of their brethren. And that misleading, slanderous, mean-spirited tactic has been revived again during the last five years by Republicans, Libertarians, and "Tea Party" politicians.
During the last 40 years Republicans have sporadically but consistently resorted to that strategy to slander and denigrate Democrats and progressives. Nixonian and especially Reaganite Republicans, Libertarians and “Tea Party” members have nearly destroyed Roosevelt’s legacy and the New Deal. They have caused the middle class to shrink, the working poor population to grow, and increased the rates of unemployment, poverty, hunger and homelessness. And Democrats have been either unable or unwilling to do much about it.
Now most American may not know all those facts. However, most Americans do know what the basic problem is regarding the economy.
Most Americans know very well that the wealthiest few rule at our expense. The trouble is, very few office holders in the U.S. Government will admit it or do what needs to be done, and those who should be telling the most relevant and crucial truths are not. Commercial journalism has become tabloid journalism, focusing on fluff and sensationalism rather than reporting the truth the people should know.
The vast majority of the people know the most essential and basic truth, though, in spite of all the distractions, rhetoric and propaganda. We know that the political economic system in America has been rigged to favor and benefit the wealthiest few at the expense of the vast majority — regardless of whether a Democrat or Republican sits in the oval office of the White House.
That's why it could be said that in the 2012 election "the lesser of two evils" won again. And, while that will surely help a little bit more, it will not bring the reform and progress we need. Just as very little changed in the last four years, very little will change in the immediate future because the basic problem remains.
The Cause and Impact of Insufficient Regulation of Banks,
Financial Institutions and Lenders
Thomas Jefferson said that “banking institutions are more dangerous to our liberties than standing armies.” He warned of the danger of private banks getting too big and having too much power, and he warned that they could “deprive the people of all property until their children wake-up homeless.”
Jefferson also criticized “the aristocracy of our monied corporations” and said they were in “defiance to the laws of our country.” He said they would create government “founded on banking institutions and moneyed incorporations” that would operate under a “guise and cloak.”
Jefferson was absolutely right. And America should have heeded his words then, and in the 1920s, and especially during the last 30 years, because that guise and cloak is feigned patriotism and religiosity, which people put on to gain or maintain political power.
But Jefferson’s words fell on deaf ears even back then. The Hamiltonian ideology regarding banks, corporations and the economy still dominated. And despite the fact that it inevitably proved divisive, damaging and destructive, and despite the fact that Roosevelt New Deal then saved the country and made it great, along came the Nixonians, the Reaganites, Libertarians and Neo-Conservatives who revived the Hamiltonian ideology, which was sold under the cloak of Reaganism and the Reaganite “Gospel of Prosperity” in collusion with the "religious right."
The consequences of that are painfully obvious to the 80 percent of the population that now owns only 5 percent of the financial wealth of the nation, while the wealthiest 20 percent of the population owns 95 percent of the total wealth.
More incredible is the fact that one percent of the population owns 42 percent of the financial wealth of the nation, and the next wealthiest 19 percent of the population owns 53 percent of the total wealth.
That is the consequence of what’s been happening for a long time, beginning in the 1950s when Republicans began to wage war on the ideals and principles of President Franklin D. Roosevelt’s New Deal. However, it is especially the consequence of what Reaganomics has accomplished in 30 years due to Ronald Reagan’s skill as a television pitch man.
But, Reaganomics did not just impact America. The whole world was impacted by Reaganomics, and by the similar policies of British Prime Minister Margaret Thatcher. Consequently, it's not just America that is plagued by the consequences of Laissez Faire government and the unrestrained, unbridled greed, self-interest and corruption that it fosters and allows. That is why the largest banks, financial institutions and multi-national corporations are still raking in record profits even after nearly ruining the American and world economies.
The misguided theory of "supply side, trickle down Reaganomics" is the main problem (which was concocted by two Libertarians from the Cato Institute that Ronald Reagan trusted and hired as part of his economic advisers). However, the mentality and attitude that Reaganomics spawned infected the whole economic system, because it was based on the idea that the wealthy were more superior, smarter, more virtuous and therefore more entitled to power, and that enabling them to get richer would benefit everyone and the whole country.
Unfortunately, some people get wealthy because they are greedy, ruthless and far from virtuous, and Reaganomics inevitably backfired. For example, it enabled American jobs to be outsourced, and it enabled corporations and banks to run wild. It brought about the re-invention of mortgage-backed securities and the growth of sub-prime lending. It also enabled corruption of the culture of Wall Street, and Fannie Mae and Freddie Mac. Even worse, the key players also deliberately weakened the means to measure risk and did not utilize other financial management tools, and thereby enabled greedy, self-serving exploitation and abuse of the system.
Exacerbating the problem, every president since Ronald Reagan has served the interests of the wealthiest few, Wall Street, and predatory lenders, and that was especially the case during the presidency of George W. Bush (2000-2008). But the warnings that many economists, state attorneys general and consumer protection advocates made during Bush’s first term about predatory lenders were simply ignored.
Those economists, state attorneys general and consumer protection advocates had noted a marked increase in predatory lending practices by mortgage lenders, who were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, tempting them with deceptive initial rates that later increased beyond ability to pay, sneaking in undisclosed charges and fees, and even paying illegal kickbacks.
These and other practices were having a devastating effect on home buyers even during Bush’s first term, but warnings that if those tactics were unchecked it would threaten our financial markets were simply ignored by Washington. The Bush Regime, which took Reaganomics to new heights of corruption, chose instead to align itself with the banks and lending institutions that were victimizing consumers (and not much has changed since then in that regard, even with so-called "financial reform" the Obama administration initiated).
Over the last 30 years politicians have enabled predatory lenders and given them free licence to put their own excessive profits ahead of customers’ financial security, and ahead of public good. And while Reaganite Republicans blame the sub-prime mortgage crisis on "irresponsible" home buyer-borrowers for "getting in over their head," we should understand where the blame lies.
The fault lies in unchecked greed, and in the corruption enabled by deregulation and a terrible lack of proper government regulation and oversight, which enabled corrupt predatory lenders to get away with making shady deals and enabled corrupt corporations and insurance companies to take advantage of a Liaises Faire government’s enabling permissiveness. That is what enabled and caused the “housing bubble” that inevitably burst in 2008.
Now, President Obama’s efforts at financial and economic reforms have not fixed the problems. That’s partly because of Republican obstruction, slander and deception, which they resort to in an effort to prevent reform and protect to status quo. But, it’s also because President Obama unwisely and obligingly chose Wall Street insiders to make up his economic team. That’s one reason so little progress has been made toward making the changes and reforms we really need to establish economic equity and fairness.
In fact, it’s one of the reasons things have gotten worse, such as in the housing market in which predatory hedge fund managers and other profit seeking holders of great wealth have been buying up homes either as investments or as rental properties, making money with money while gradually decreasing the ability of average people to own their own homes.
Despite the truth, politicians and the corporate commercial television media avoid it and refuse to face it, and most people rely on corporate commercial television and pay no attention to the most honest and truthful sources, so the general public remains in the dark. Consequently those who have caused the problems remain powerful and influential. That’s why Americans need to learn the truth.
“At one time, calling the large multinational banks a ‘cartel’ branded you as a conspiracy theorist. Today the banking giants are being called that and worse, not just in the major media but in court documents intended to prove the allegations as facts. Charges include racketeering (organized crime under the U.S. Racketeer Influenced and Corrupt Organizations Act or RICO), antitrust violations, wire fraud, bid-rigging, and price-fixing. Damning charges have already been proven, and major damages and penalties assessed. Conspiracy theory has become established fact.” – Ellen Brown
Ms. Brown is an attorney, president of the Public Banking Institute, and author of 11 books including Web of Debt, and that quote is the lead paragraph in an article she wrote titled Titanic Banks Hit LIBOR Iceberg: Will Lawsuits Sink the Ship?
Ms. Brown is not alone by any means. Many conscientious and honest economists (like those at The Public Bank Project and The Public Banking Institute) and other scholarly experts realize that the obvious solution is in banks and lending institutions that are publicly owned and non-profit.
That’s because with public banking systems, governments can keep the interest and reinvest it locally. That benefits the public and reduces costs across the board. Taxes can be cut, services increased, and market stability established.
An example is North Dakota’s state bank, even though it is the only publicly owned depository bank in the country today. It contains all the state's funds, and was originally established by the state legislature to free farmers and small businessmen from the control of profit-making bankers and railroad companies. The bank is very successful and continually produces big budget surpluses, and North Dakota is the only state to have escaped the 2008 banking crisis. It has the lowest unemployment rate in the country, the lowest foreclosure rate, and the lowest default rate on credit card debt.
In Ms. Brown’s August 26, 2013 article, The Leveraged Buyout of America, she states that: “Giant bank holding companies now own airports, toll roads, and ports; control power plants; and store and hoard vast quantities of commodities of all sorts. They are systematically buying up or gaining control of the essential lifelines of the economy.”
There are, reports Brown, reasonable legislators who are so concerned they have written to the Fed Chairman about their concern that “large banks have recently expanded their businesses into such fields as electric power production, oil refining and distribution, owning and operating of public assets such as ports and airports, and even uranium mining."
Brown cites other experts who realize that these financial services companies have become global merchants and renters, using the “legal” authority in the Graham-Leach-Bliley banking deregulation “to subvert the ‘foundational principle of separation of banking from commerce.’"
Ms. Brown concludes that “All this helps explain why the largest Wall Street banks have radically scaled back their lending to the local economy. It appears that their loan-to-deposit ratios are low not because they cannot find creditworthy borrowers but because they can profit more from buying airports and commodities through their prop trading desks than from making loans to small local businesses.”
“Small and medium-sized businesses are responsible for creating most of the jobs in the economy, and they are struggling today to get the credit they need to operate. That is one of many reasons that we the people need to own some banks ourselves. Publicly-owned banks can direct credit where it is needed in the local economy ...”
An ironic fact is that public banks were actually what the Founders of America preferred. In fact, one of the reasons the American Revolutionary War was fought was because of the order by the British King George for American colonists to use only British currency and shut down the public banks. The king’s order was issued after Benjamin Franklin had told the British how well the colonies were thriving because they were issuing their own currency and using public banks.
The public bank in North Dakota is like the 40 percent of banks in the world that are publicly owned in countries that also escaped the 2008 banking crisis. Unlike European and North American countries, those countries grew economically by 92 percent in the last decade, while European and North American economies have been plagued with problems and have been failing the majority of the people.
Why is that? It's because Ronald Reagan and Margaret Thatcher lauded and touted “privatization” and business and industry for profit. And even though profit-making free enterprise certainly has its place, it must be regulated and kept on a tight rein, which Reagan and Thatcher did not do. In fact, they practically gave business and industry free rein, and in that respect Reagan insisted that government is best that governs least, and the "government is the problem."
Regardless of their intentions, the effect and consequences of Reagan’s and Thatcher’s policies have been devastating, because many of the wealthiest few who loved them and still love their ideology became more and more corrupt, as did the culture of their banks and financial institutions. And in America their greedy and corrupt operations have been "cloaked," just as Thomas Jefferson warned.
In America that happened mainly because the Reaganites, in collusion with the theocratic “religious right,” sold their Gospel of Prosperity under the guise of patriotism and religiosity. Thus they were able to convince many Americans that wealth is a reward from God and that the poor deserve to be poor because the are lazy and lack ambition. The Reaganites justified themselves by pointing to what Jesus said about the "haves and have nots,"but in fact their claims are a distortion of Christianity, and it is not what Jesus of Nazareth or preceding prophets taught (which is explained in the articles on Poverty: America's Greatest Shame, and About Christianity).
That is why Republicans for the last 30 years have been parroting Reagan, claiming that allowing the rich to profit and prosper freely and getting government “off their back” would benefit the whole country and was the “right” thing to do. And despite the fact that by 2008 it was obviously clear that claim was false, Reaganomics and Reaganism still thrive, even as Democrats now control the Senate and the White House.
Another way the operations of banks, financial lending institutions and private equity companies have been "cloaked" is because much of their profits come fees, charges and interest rates that are deliberately hidden or made difficult to understand. And the interest that we pay to bankers, financiers and bondholders is really the thing that robs us and provides them with unjust profits.
To make that point, Professor Margrit Kennedy, in her new book, the subtitle of which is Creating an Economy Where Everybody Wins (published October 30, 2012), reports that bankers, financiers and bondholders take 35 to 40 percent out of our Gross Domestic Product (GDP) in interest.
Dr. Kennedy reports that this interest is accrued not merely because of the interest charged on loans and credit purchases. It is also accrued in other ways, since everyone along the chain of production adds interest to production costs which are passed on to the consumer. And we pay that kind of interest for most commodities and services, on almost everything we pay for.
In financial sector profits in the United States, 40 percent of profits in 2006 were from interest. That was five times the 7 percent made by the banking sector in 1980 (before Reaganism kicked in), since bank assets, financial profits, interest, and debt grew exponentially between 1982 when Ronald Reagan became president to 2008 at the end of George W. Bush’s presidency, when it became painfully obvious that greed and financial corruption caused our current crises.
Furthermore, President Barack Obama has been unable or unwilling to do what needs to be done. By 2010, one percent of the population owned 42 percent of the financial wealth, while 80 percent of the population owned only 5 percent. As Dr. Kennedy points out, the bottom 80 percent of the population still pays the hidden interest charges that the wealthiest 10 percent collect, which makes interest a strongly regressive tax that most of us pay to the wealthiest few.
(By the way, Dr. Kennedy’s most famous book, Interest and Inflation Free Money, Creating an Exchange Medium that Works for Everybody and Protects the Earth, was published in 1987 in response to the economic policies of U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher. That book has been revised several times and translated into 22 languages because she is not afraid to tell the truth that everyone should know. Kennedy holds a Masters Degree in Urban and Regional Planning and a Ph.D. in Public and International Affairs from the University of Pittsburgh.)
Unfortunately, even though many Americans bought into the huckster's claim that borrowing, debt, and living beyond your means were okay, and even though some Americans therefore bear some of the responsibility for their financial problems, the focus of the corporate commercial media pundits is to lay the entire blame on the victims of predatory lenders.
In fact, blaming the victims is a typical Republican tactic, and it has become the popular thing to do rather than point out the culpability of banks and lending institutions that indulged in predatory lending practices, misrepresented the terms of loans, made loans without regard to consumers' ability to repay, tempted them with deceptive initial rates that later increased beyond ability to pay, sneaked in undisclosed charges and fees, and even paid illegal kickbacks.
The Cause and Impact of Insufficient Regulation of Corporations
In 1902 about a hundred years after Thomas Jefferson, James Madison and other Founders had issued warnings about allowing plutocratic rule by the wealthy few, Republican President Theodore Roosevelt tried to initiate a progressive movement to rein in the power of corporations. And the following sums it up pretty well:
“We are not attacking the corporations, but endeavoring to do away with any evil in them. We are not hostile to them; we are merely determined that they shall be so handled as to subserve the public good. We draw the line against misconduct, not against wealth.” – Theodore Roosevelt
Notice that he made it clear he was not against corporations, but merely wanted to prevent malfeasance and misconduct by properly regulating corporations to protect the public good.
Unfortunately, his progressive reform movement failed, and the rich and their corporations weren't bothered and continued out of control until their economic bubble burst in 1929 and Theodore Roosevelt's cousin, President Franklin D. Roosevelt (FDR), had to save the country.
Unfortunately, between 1947 and 1957 McCarthyism and “Red Baiting” had damaged the progressive movement FDR had established and instead empowered and enabled the wealthiest few, despite the presidency of relatively moderate Republican Dwight D. Eisenhower.
That’s why in 1961 when President Eisenhower left office he too issued a warning, realizing the dangers of the abuse of power. He even warned against allowing the U.S. Military Industrial Complex to get out of hand. But, few listened, and it did get out of hand, right along with the banking and financial industries.
Democrat John F. Kennedy followed Eisenhower as president and his intentions were noble and fair, but President Kennedy was assassinated in 1963. Then, even though his successor Lyndon Johnson waged a “war on poverty” because he recognized that a nation is judged by how it treats the poor and the least of our brethren, he was beholden to rich Texans and did nothing to really change the status quo.
Since then there have been five Republican presidents and three Democratic presidents, including Barack Obama, and while the Republicans made things worse, the Democrats have basically done what has been politically expedient, and even they have perpetuated Reaganism.
That is why today the wealthiest 20 percent of the population owns 95 percent of the total wealth of the nation, due to the policies and legislation created by both Republicans and Democrats.
Moreover, even though those who have benefited most are the top executives in banks, lending institutions, hedge funds and others in the financial services industry, top executives in other huge corporations, oil companies and military contractors have shared in the enormous profits, and in all the government "welfare for the rich" that Reaganism and Reaganomics provides — which is why there is such an enormous income gap between the wealthiest multi-billionaires and the working poor.
However, in spite of the losses and suffering some of their actions have caused to other people due to their greed, corruption and malfeasance, the wealthiest 20 percent have not suffered. In fact, they are even wealthier now than ever before.
Even worse, the most needed reforms and regulations have not been put in place to prevent further unfairness, fraud and malfeasance. In fact, the U.S. Government has gone backward in that respect. Very crucial regulations on banking and financial institutions that had been put in place in 1933 and '34 during President Franklin D. Roosevelt’s first term were repealed in 1999 by a Reaganite Republican dominated Congress, and they have not yet been restored.
One of the regulatory laws established in 1934 was the Glass-Steagall Act, which separated investment banking from depository banking. Prior to that, the banks were making foolish investments with money taken from the depositors' funds. The Act prevented that, and for a long time things went pretty well. But in 1999 Congress repealed Glass-Steagall, which unleashed and enabled corrupt banking practices that inevitably led to the 2008 economic crash and the continuing crises.
Consequently, all the people victimized have suffered, and growing numbers continue to suffer, while those responsible are still enabled to indulge themselves and exploit us. The wealthiest few, in fact, have rigged the system so that we pay for their mistakes.
For example, look at this video by Robert Reich, an American political economist, professor, and author. He served in the Ford, Carter and Clinton administrations. He is a Chancellor's Professor of Public Policy at the University of California, Berkeley, and has been a professor at Harvard University's John F. Kennedy School of Government and professor of social and economic policy at Brandeis University. In 2008, Time Magazine named him one of the Ten Best Cabinet Members of the century, and The Wall Street Journal in 2008 placed him sixth on its list of the "Most Influential Business Thinkers.")
Mitt Romney, a Reaganite Republican, was a co-founder of Bain Capital in 1984, taking advantage of the political climate created by Reagan. Bain Capital is not a business or manufacturing firm but rather an asset management and financial services company specializing in private equity, venture capital, credit, and public market investments. However, Bain is notorious for simply keeping profits rather than put them back into businesses it acquired. It’s about making profits. That’s why one of the main criticisms of it is that it has been the bane of existence to the many actual business firms which it absorbed, downsized and even dismantled, eliminating thousands of jobs, simply for profit.
That is but one of many examples of how Reaganite Republicans have made things more unfair and more inequitable, and they did it especially between 1995 and 2009. And ever since Barack Obama won the presidency in 2009 they have tried to obstruct his attempts at reform and they have justified their agenda to maintain all the tax cuts, tax breaks, deductions and loopholes with the constant, repetitive, misleading Reaganite mantra against “job killing taxes!”
In reaction to President Obama’s call for those with incomes over $250,000 too pay more of their fair share of taxes, Republicans claimed that would “destroy small businesses.” But that is grossly misleading and disingenuous.
For example, personal income tax is on individuals and therefore on the individual owner of small businesses. Moreover, most very small business owners who have annual personal incomes of between $250,000 and $500,000 have been allowed to pay nothing in income taxes because they been able to deduct all their “business expenses” (most of which are for personal use as well, like vehicles, home office equipment, travel expenses, etc.). Consequently they are able to pay zero income taxes.
No politician is talking about that, but the fact is that very small business owners with personal incomes like that can certainly afford to pay a fair share of taxes.
Now, President Obama’s plea to require those with incomes over $250,000 to pay their fair share of taxes has actually been very clever, because he has cited "The Buffet Rule," which is based on Billionaire Warren Buffet's statement that he should not be able to pay a lower percentage of his income than his secretary.
Mr. Obama's plea has also not only been clever, but also ironic, even though the commercial media has ignored it. For Mr. Obama has used words very similar to the Republicans' biggest hero, Ronald Reagan, in insisting that the wealthy pay their fair share of taxes -- as you can see in a video in the article on Reagan's Legacy -- because Reagan said very clearly that "a bus driver should not have to pay a higher percentage of his income in taxes than a millionaire."
Republicans ignore that, of course, and instead focus on all the things that Reagan said and did that benefited the wealthiest few at the expense of everyone else, and unfortunately that was Reagan’s main agenda. He had to pretend otherwise of course, as most Republicans do. And since then the cunning deception of the Reaganites has been incredibly successful in their war on labor unions and everything else that restrained corporate power and profit, and that has had a devastating effect on labor unions, worker’s rights and benefits, the environment, and the economy.
(Continued at The American Economy, Part 2, which discusses the Cause and Impact of the Reaganite War on Labor and "Big Government," the Reaganite "Gospel of Prosperity," and further discusses how we can progress and advance and leave all this hypocrisy, unfairness, inequity and conflict behind us.)