[p2p-research] Post-Depression first: Americans get more money from government than they give back | csmonitor.com

Ryan Lanham rlanham1963 at gmail.com
Mon Nov 23 01:35:59 CET 2009

We are in the 23rd month of recession in the US.  The usual recession lasts
about 9 months.  The implications of this are that government revenues have
been in a much longer decline than normal.  Spending cannot generally follow
suit...even if you aren't a Keynesian, most policy makers are wise enough to
know that cutting government spending in a recession isn't a great idea if
you love a stable society.

Consequently debts have increased rapidly.  Something must give.  Usually we
return to growth and tax revenues on the rich increase fairly fast.  Now
with deep cuts on capital gains and lower general revenue levels, government
revenues will rise more slowly.  As such, the capacity to survive future
shocks will be lessened.

What is more, we have very sick state budgets...California, Oregon, Rhode
Island and many others are well past where they can easily maintain given
current budget realities.

The obvious answer is to tax the rich more--even many of the rich realize
this, but that is political suicide and also unlikely given the nature of
the US Senate and its veto capacity on all financial legislation.  So it
won't happen.

If the US double dips into more recession...say another 6-12 months of it,
which is reasonably likely, the damage will be systematic and a generation
of the economy will basically be lost in a decade of trying to recover.
Deflation will likely continue and the US will drift into a long, slow
sickness that will decay its social capacity and eventually limit greatly
its role in the global political sphere.  Innovation will slow and move to
Europe and Asia much more from which it will diffuse more slowly (think
Samsung, Nokia or Blackberry versus iPhone).  Less US money will flow to
nonprofits and free options...and this will again hammer innovation but may
well accelerate global localism.

>From a public policy standpoint, the US is in about as serious a state as it
has ever been. It is effectively trapped in expensive wars with an aging
population and the need for better and broader healthcare...while being
politically unable to grow taxes.

The net result will be a slower growing US that will shift the world economy
more quickly to Asia--China and India are going to have to start towing the
world in terms of new ideas, technologies, modes of expression.

The only thing that will alter this relatively rapid transition is the quick
rise of some unforeseen industry where the US has competitive advantage like
it had in computers, software and financial services.  That's not likely in
my view.

On Sun, Nov 22, 2009 at 6:22 PM, Paul D. Fernhout <
pdfernhout at kurtz-fernhout.com> wrote:

> http://features.csmonitor.com/economyrebuild/2009/11/09/post-depression-first-americans-get-more-money-from-government-than-they-give-back/
> """
> For the first time since the 1930s, personal taxes paid by Americans aren’t
> enough to cover the payments that the government sends out through transfer
> programs like Social Security and food stamps. The trend, visible in
> government data on personal incomes, reflects both a deep recession and
> government efforts to prop up the economy.
> """
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