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TMFFlushDraw (84.64)

What's Really Holding the U.S. Back

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July 17, 2011 – Comments (5)

Politicians in Washington DC are fighting over the deficit, corporate America (with buckets of cash) isn't hiring anyone, and the economy appears to be stalled again. What in the world is going on?

The biggest problem right now is our instant gratification society. If you can remember back that far in 2009 we were in the midst of a financial meltdown and people thought the world was going to end. THAT WAS TWO YEARS AGO!

There's never been a recovery from a major recession that took only two years. And while the unemployment rate hasn't gotten better it hasn't gotten worse, which is exactly what happened in the first two years of Reagan's presidency. Then, from a peak of 9.7% in 1982 it took until 1988, SIX YEARS, to get unemployment below 6% again. Take a deep breath people, we're going to be all right.

And taxes were not only higher, they were ALOT higher back in those days. In 1980 if you make $250k+ you were paying 70% of that income in taxes. So don't give me the excuse that taxes are keeping us from growing. We're fine, we just need time.

The other thing we need to get out of our heads is that housing is somehow magically going to begin appreciating at 8% a year again. We're headed for a decade of flat housing prices, live with it, accept it, stop wishing for a miracle. That's going to be a drag but give it time. It was only four years ago that this bubble popped. How long did you expect it to take to get to some type of normal?

So politicians, investors, media members, and everyone else please chill out. This is a recovery. There are bumps in the road but it's going to take a while. If we get back under 6% unemployment rate by 2016 it would be on par with the recovery in the 80s, and this recession was much worse. It's not going to happen overnight but we'll get there. There's no such thing as instant gratification when you have the biggest economy in the world. The only certainty is that change will be slow. But we'll get there so take a chill pill, please.

TMFFlushDraw 

5 Comments – Post Your Own

#1) On July 18, 2011 at 9:55 AM, djemonk (< 20) wrote:

This is why we should only elect mothers to serve in Congress.  My mom remembers crap I did 30 years ago.

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#2) On July 18, 2011 at 12:38 PM, leohaas (32.73) wrote:

+1 rec for this one!

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#3) On July 18, 2011 at 1:15 PM, Jbay76 (< 20) wrote:

djemonk

Too funny, but so true!

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#4) On July 18, 2011 at 8:43 PM, JakilaTheHun (99.94) wrote:

Good post. 

In regards to the tax issue, however, it isn't as true as it seems.   In some ways, the Reagan tax cut wasn't a "cut" so much as it was an implementation of a more efficient tax scheme.  Many high earners found so many loopholes in the old tax code that they were paying virtually nothing. 

I think the Reagan tax cut simply made things more straightforward and fair.  Lower rates, less loopholes.  I'd like to see another reform of this type; and simply do away with all the complex deductions in exchange for lower, flatter rates. The amount of wealth that Americans spend every year on tax compliance is absurd --- that's money thrown down the drain if you ask me. 

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#5) On July 19, 2011 at 12:53 PM, garyc27 (< 20) wrote:

Excuse me but didn't Reagan cut the marginal top tax rate from 70% to 28%?

I'll grant you he closed loopholes that allowed people to evade taxes but, he also provided more generous tax breaks to business.

Regarding the comment about "flat housing prices"---I don't think so. 

Prices continue to decline, banks continue to hold a significant amount of shadow inventory, and the government is attempting to prop up prices and mortgages through various programs. 

I live in the 9th wealthiest county in the country and prices are still in decline.

What we are seeing today is a replay of the "Great Depression" and until we get government out of meddling we'll continue on with minimal improvement. 

 

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