According to data from the Federal Reserve Bank of Philadelphia we are about to enter another recession. Of course, one would be hard-pressed to convince the over 20 million Americans who remain unemployed or underemployed that the last recession ever ended. But, I suppose, according to economists it technically did. Given the circumstance we are in, what can be concluded firmly is what this commentator has maintained all along: that Keynesianism is a complete and utter failure. Yes, it made many Americans feel like the political class cared about them because it spent so much money on their behalf in an attempt to “stimulate” the economy back to good health. And all the money infused into the economy either by government appropriations, monetized debt, or artificially low interest rates did indeed forestall an economic collapse. But, like the old Chiffon margarine commercial which warned its viewers that impending doom would befall those who fooled Mother Nature, doom is now ours because Bush, Bernanke, Geithner, Obama, and many members of Congress dared to fool the Free Market.
Naturally, Keynesian diehards will claim that the problem is that not enough money was spent to revive the declining economy. Well, that is an easy out given that more money could always be spent. In any event, more money spent would have probably forestalled the next recession even further into the future, but it wouldn’t have solved the systemic problems in the economy: price fixing by the Fed, government spending crowding out private investment, and overregulation. In fact, with the spending we have had, an even worse recession than the last is on the horizon; if more money had been spent, the next downturn would be that much larger.
The fact of the matter is that since 2008, we have racked up close to six trillion dollars more in debt, with nothing to show for it. The big spenders responsible will blame the greedy rich who they say do not pay their “fair share” of the tax burden. But, according to the IRS, in 2007 the richest one percent earned 22 percent of national income while paying 40 percent of all personal income taxes; the top five percent earned 37 percent and paid 61 percent of all income taxes; and the top 10 percent earned 48 percent and paid 71 percent of all income taxes. Meanwhile, the bottom 50 percent earned 12 percent of the nation’s income but only paid three percent of the nation’s income tax. So, I am not sure what the president and his coterie are talking about when they claim the rich need to be taxed more in order for them to pay their “fair share”?