The Lost Decade, a.k.a., The Tax-Cut Decade

Watch for lots of retrospective media commentary in the next couple of weeks, as we mark the end of one of the worst years in the economic history of Minnesota and the United States, but also one of the worst decades in modern times.  The pundits will offer us a  zillion theoretical causes for these hard times, from the 9/11 trauma at the start of this blighted decade, to dislocations from a more global economy, to the federal deregulation trends that presumed wealthy private interests would police themselves and act in the common interest.  

For a quick tutorial on the specifics of how bad the decade was, check these two sources:  a concise and authoritative  McClatchy Newspapers article by  Tony Pugh, published in September, and our good friends at the  Minnesota Budget Project, who published an excellent report earlier this year, The Lost Decade:  Taking a Closer Look at Minnesota's Public Investments in the 2000s.    The McClatchy analysis echoes the overhwelming consensus that those in the top 1 percent or the top 10 percent benefitted enormously and disproportionately from whatever economic growth occurred, and now have a greater share of wealth and income than the top tier has enjoyed since 1929, just before the Great Depression.   The Minnesota Budget Project analysis chronicles how cuts,  and then more cuts, dictated by the "no-new-taxes'' dogma,  affected our quality-of-life and our economy. 

Explaining how we lost this decade gets infinitely complicated,  and it's best not to get too invested in a simplistic single-bullet theory.   But let us not forget that this decade was ushered in with grandiose promises from anti-tax conservatives that we would achieve unprecedented prosperity as a result of signficant income tax cuts at both the federal level (capital gains cuts too) and the state level.   Those lost revenues are a huge factor in our mounting national deficit, as explained by this Center for Budget and Policy Priorities analysis of the deficit components, and our chronic state-local budget shortfalls in Minnesota.    And at least partially because  we shrunk our public sector by unprecedented levels this decade,  we have made college much more expensive, diminished the quality of our public schools, failed to invest in proven early childhood interventions, neglected our roads and bridges and public works infrastructure, and underinvested in health care and economic security for the middle- and lower-income households.  

Happy New Year!   Happy New Decade! And let us resolve _ in the smartest possible and cost-effective ways of course _  to reinvest for our common good.

Dane Smith

Comments

[Pat Davies]

Dane Smith's excellent column on The Lost Decade succinctly sums up what has happened to our beloved state - and how much the loss has hurt our citizens. I believe Minnesotans are ready for a leader who will help us recapture and renew our progressive policies.

[RJ]

Not to worry, the Obama regime has already spent enough non-existent money, that multiple decades will be lost just paying the trillions in interest. Just remember, government produces nothing without taking from someone else first. I'm sure you and your fellow Minnesotans look forward to exponential tax increases combined with a dollar that buys less and less every day. Hopefully you will be left with enough to pay your exorbitant cap & trade hiked heating bill next winter.

[JHH]

Dane,

If deficits are such a bad thing then why do politicians (clowns) always do the things that will exacerbate the problem. And I'm not talking about tax cuts "for the rich". I'm talking about:

1) Spending more money than you take in. If you cut taxes then cut spending, morons.
2) If you shove all of the income taxes onto the rich, then don't be shocked to learn that incomes taxes have fallen drastically during a recession. High income earners typically see their income fall by a greater percentage than other income groups. (Hello? There's a state called California that follows this model and it's a disaster.)
3) Don't decrease the pool of taxpayers. Over the last decade the pool of taxpayers has decreased by at least 5 percent. What do you think is going to happen when you exclude more people from paying taxes?

The point: Why should only the rich pay income taxes. Don't poor people have a stake in this country too? Why should rich people have to pay for poor people who don't contribute?

On a related note, no pundit that I know of has ever answered these questions. Obama says that he wants to reward work and not wealth. The average American works about 1900 hours a year (2080 hours if you work 40 hours/week for 52 weeks). For the past several years I have worked at least 2300 hours. For my extra work I am now in a higher tax bracket.

1) How exactly am I being rewarded by working more hours and having to pay more of my income in taxes?
2) Isn't the point of working to accumulate wealth so that you are not a burden on others?

I await your reply.