With income inequality at record levels, Bush's legacy lives on
Filed under: Economy
Income inequality pierced its previous record high in 2008 -- a fitting legacy for President George W. Bush. Fresh census figures reveal that the ratio of the incomes of the top 10 percent of Americans -- over $138,000 a year -- to those at the poverty level -- $12,000 -- was 11.4 times. (The previous record was 11.22 in 2003.) Bush's $1.3 trillion worth of tax cuts -- 32.6 percent of which went to the top 1 percent of earners -- have hit their mark.
The political miracle is that Bush was able to get nearly half the vote with policies that helped his base -- the top 1 percent. By 2007, the U.S. savings rate, at -0.7 percent, had reached its lowest level since 1928, right before the Great Depression. And with the price of oil rising to its July 2008 peak of $147 a barrel, Bush won the battle to help his buddies in Houston and Saudi Arabia. One measure of that help: Between January 2001 and August 2006, the W-Industrial Complex Index (WIC) -- a group of energy and defense stocks -- rose 184 percent, while the S&P 500 fell 4 percent.
Too bad things were so much worse for the other 99 percent of Americans. With median incomes unchanged since 1997 and prices rising, consumers made up the difference by borrowing on their homes and credit cards. Then, at the end of the year, the current recession kicked off, throwing millions out of work. This drove median income down from $52,163 in 2007 to $50,303 in 2008, wiping out a decade's worth of gains and bringing median income down to its lowest level since 1997.
And so the deflationary spiral began. Those out of work could no longer borrow to spend, and with 70 percent of GDP growth coming from consumer spending, that meant fewer purchases and more unsold inventory. That, in turn, led companies to reduce excess capacity by firing workers. And with fewer people employed, the cycle continued, and the economy sank further.
The big question is what to do about this situation. I'm not a fan of the reverse Robin Hood approach used under Bush, which tilted the economic playing field to favor the richest 1 percent. I think it would be better to use the power of the government to help boost the odds of success for technology-based start-ups.
After all, new technology -- such as clean tech -- is what creates new wealth. It is the people who take a chance on starting new companies and creating new products who give society better ways of living and conducting business. The American system of taking new ideas from the lab to the market is our greatest economic strength.
Rather than focusing on redistributing a shrinking pie, we ought to devote ourselves to creating new pies that enlarge opportunity for a broader cross-section of our country. We're still cleaning up after the previous administration, but we must create something better to replace its failed policies.
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Reader Comments (Page 1 of 1)
9-29-2009 @ 10:38AM
luke said...
Are we REALLY allowed to blame past presidents for current problems!? WOW! i guess you are REALLY desperate for arguments to justify Obama's failures.
Reply
9-29-2009 @ 11:26AM
Bob Gifford said...
Where you been Luke? Your head stuck in the sand somewhere? Maybe you can put politics ahead of this
country but somewhere you run out of Country.
You may one of the airheads who believe everything Limp-
Baugh says, but he said he hopes Obama loses.
If you believe that then you are not a good American.
Bush is by all means the cause of this depreciation this country is going through and the Republicans can't get out
of it.
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9-29-2009 @ 12:03PM
brooks said...
sometimes i wonder where they get these writers from i guess they have the pen so that gives them the right to spew their misguided opinions. but when you think about it, they probably slowly go crazy sitting there doing nothing but writing about things they know absolutely nothing about. if we the readers keep in mind that these people get a little stir crazy and most of their articles are fiction we can view them as entertainment. these guys probably drive expensive imports which not only bankrupted our car industry and sent the profits out of the country devaluing our dollar,they also helped elect the worse pres. of all time. unless you like socialism. personally i like our country the way it was free, not perfect but free. good luck to us all.... we are going to need it. respectfully yours
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10-11-2009 @ 12:21AM
Sara said...
interesting. you blame the writer for supposedly buying expensive imports that bankrupted our car industry. then in the same breath you denigrate socialism.
wouldn't a socialist govt tell the consumer what he or she is allowed to buy? (buy american or buy nothing.)
in a capitalist economy, doesn't the consumer buy the highest quality product for the best price? so if more consumers choose imports, doesn't that imply that US car industry is simply not competing well enough? are we supposed to buy american even though we won't get the best bang for our buck?
so which do you want? buy american or buy nothing? socialism or capitalism?
maybe its not quite as bad as the guy shouting 'keep govt out of my medicare', but its close.
9-29-2009 @ 1:13PM
GT said...
Top 25% of all income earners in this country pay 86% of all Federal Income Taxes.
Top 50% of earners pay 97% of all Fed. Income Taxes.
Top 1% of earners pay 39% of all Fed. Income Taxes. Up 2% from when Bush took office in 2000. This politically slanted article fails to mention that. This data was collected from the IRS. By the way, Limbaugh did not say he hopes Obama loses, he said he hopes his policies fail. So do I. I pray that his Leftist/Marxist Ant-America policies fail. I think that makes me a great American.
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9-29-2009 @ 2:01PM
David said...
RIGHT ON!
9-29-2009 @ 12:09PM
bottomsubgaijin2 said...
Bob Gifford, in the future please do your research first, the freedom of information act is a wonderful thing, look at the law that deregulated Freddie Mac and others, you will see a familiar signature making it law, but it isn't Bushs, it's none other then Bill Clintons
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9-29-2009 @ 1:02PM
Jeff said...
Yea he did sign it but it was Newt Gingrich and the Republican dominated Congress of the time that brought it to him! And if you ask any progressive they will tell you Bill Clinton was really a moderate republican as President.
9-29-2009 @ 12:11PM
Don said...
Does Mr. College Professor get it? No 'cause he can't, that is why he teaches. We are 9 months into a new administration and it is getting worse instead of better. It is called a recession........You can't spend your way out. Ask me if I was better of during the last admistration than this one.
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9-29-2009 @ 12:29PM
Wayne said...
Here's my take on this article. "MAGBAC" My family did just fine during the 8 years of Bush. Our investments grew and my wife and I looked forward to the next 4 years working hard to continue adding to our nest egg. Then comes the election of 2008 and we like most of America fell for the charm and smooth talking of a NEW CHANGE. Well let me tell you what has happen to our happy little family since the DEMO's took office in the 3 branches of Govn't the house, senate and the Whitehouse. Both of us have lost our jobs to major cut backs. Our investments have taken a nose dive. We are both on unemployment and living day to day. Oour dream of retirement in 4 years has gone with the wind. Had we only known this would be our fate 9 months later I do believe in my heart of hearts we would have voted the other way. Now we just hope we will make it through to the next election. This time around we will really be voting for change and the DEM's will not like our position.
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9-29-2009 @ 12:45PM
Oma said...
I've never responded before, but couldn't help myself this time. President Bush's war into Iraq was begun due to the supposed presence of "weapons of mass destruction." Everyone thought that....Saddam Hussein even said he had them. He kept kicking th UN inspectors out of the country. So after the invasion, should we have just left? Hindsight is such a useful tool.
But we have learned from that. President Obama is now having to deal with Iraq. What is the solution there? Sanctions? Invasions? I would feel more comfortable is our President were at lest talking with his general instead of traveling to Denmark. But maybe making no decision is the best decision. Time will tell as will our friend "hindsight."
As far as Mr. Limbaugh, I, too, wish President Obama's actions for more government, more taxation and one payor health care fails. If President Obama turns around and favors less taxes on the American people, especially small business, health care reforms that include allowing the evil insurance companies to sell products across state lines and tort reform, then I am in his corner and want him to succeed.
Does anyone remember why we have HMO's? It was because of the 'greedy' doctors. Now once again, the doctors are good and the insurance companies are evil. IF we only wait long enough, our turn will come to be the "evil."
Now really is the time to stop playing politics with our country. Stop the name-calling. Stop the 'blame-game.
Most Americans want to be kept safe from outside forces, to have the freedom to work and prosper, to support our families, and not bankrupt the future generations.
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9-29-2009 @ 1:12PM
Jeff said...
Yea good work there honey keep supporting the giant HMO's and those corporations that send jobs overseas while calling themselves American companies! "Protect us from what?" Some ad hoc terrorist who got lucky?
No you wouldn't want any alternative to Blue Cross, Allina, GHI, Kaiser Permanente, HIP etc etc you know companies who take 30% of every insurance premium dollar you pay. Oh and the average HMO CEO and I use that word loosely makes 3.3 million dollars a year! Where do you think that money comes from? You that is who!
Oh and now you guys all have the budget religion and future generations BS. Where were you when Bush raised the national debut from 3 trillion to 10 trillion. MIA is where you were hypocrites one and all!!!!!
9-29-2009 @ 12:53PM
Gary Novak said...
Mr. Cohan began by lamenting increased inequality and ended by lobbying for advantages for technology start-ups. Technology does indeed create new wealth-- but not for the high school drop-outs whose inability to participate in its creation contributes more to inequality than does "social injustice."
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9-29-2009 @ 4:39PM
John said...
Tell me, Mr. Cohan,
When we elect a new president in 2012, will we still be blaming George W. Bush for our
1. dollar worth nothing
2. Our debt gone through the roof. (Only count the trillions.)
3. Our national bankruptcy known to all the world, ending foreign investments.
4. Our status in world affairs that of a third class nation.
Reply
9-29-2009 @ 1:03PM
Jeff said...
I love the right wingers the second they don't have the microphone/camera/blog/ it is all a conspiracy! But Fox News 24/7, CNBC, ABC, Disney run all manner of crap that is nothing more than spin and takes the public's eye off the real issues and no one says a damn thing!
Reply
9-29-2009 @ 1:34PM
Iridium said...
You know the top 1% of Americans are 99% liberals so Bush helping them out would really make Bush a liberal.
Wall Street is really run by liberals and it is Wall Street that drives income inequality. Liberals seek ever increasing income inequality so they have a greater percentage of poor people to control for votes.
True conservatives seek income equality through fostering competition and low taxes. The greatest threat to income equality is big business and big government, the two things liberals strive to create.
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9-29-2009 @ 1:59PM
Andy said...
Jeff?? where did you get those thoughts. Kennedy created the HOM's to start with. Then condemed them. That's ALWAYS been the problem with the left. (and this article) They just make stuff up. As far as the shape of the country. Don't blame G.W. Look at Barney and Clinton and Acorn and the house oh which by the way has been in total charge for the last 3 years. You talk about being stupid. I didn't want to comment but I hate stupid
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