We have entered the Age of Austerity. It's already arrived in Europe and is destined for the United States. Governments throughout Europe are cutting social spending and raising taxes -- or contemplating doing so. The welfare state and the bond market have collided, and the welfare state is in retreat. Even rich countries find the costs too high, but the sudden austerity could perversely trigger a new financial crisis.I think this is correct, but to avoid political radicalization in the US, I think the rich who have benefited so magnificently durng the last 30 years, while the ordinary person has either just gotten along or has declined economically, need to do more than their 'fair share' of the tax increases. Hence, the sensibility of the Democratic proposal to return the tax rates of the wealthy back to the year 2000 (about a 4% increase). I think even more would be better, but wouldn't ever get through Congress.
Also, somehow we've got to help those who are really struggling with the very basics of life--employment, a house, food, and basic health care--get by, because, again, if we don't, you could see a political radicalization that won't be good. This would seem to argue for more 'welfare state' initiatives, I know. Part of the answer, it seems to me, is pulling back from the huge expenses associated with our foreign military adventures, and getting health care costs under control. But neither of those things are going to be easy.
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