Wednesday, January 2, 2013

A Few Simple Charts That Describe The State Of The Union In 2012

Stephen Rattner provides several charts which provide a picture of the economy, and the polarization of Congress.  There are lots of things that need to fixed, but our political system is becoming increasingly dysfunctional.  Neither of our political parties is blameless, but the radicalization of the GOP, and changes to campaign finance laws, have been the major sources of political dysfunction. The polarization of our political system has also amplified the regional differences in our nation.  Rural America and Urban America no longer share the same value system, and many Americans cannot accept the results of national elections.

One part of the story is the decline in median family income.  Almost all of the growth in income has gone to our wealthiest families. Most families have seen a decline in their standard of living and they are less able to invest in their future or in the future of their children.  Governments suffers from a similar problem.  Tax revenues are growing slower than mandatory spending on entitlements.  Spending on healthcare is the major problem area.  Costs are driven by price inflation and by an aging population. Our political system is not capable of doing much about price inflation.  It is a very inefficient system that is well protected by politicians who serve the interests of those who benefit from its current structure.  Social Security is less of a problem and I have a problem with the way that it is described in this article. One graph shows the spending on Social Security is growing faster than family income.  That is true, but part of the explanation is that median family incomes have been shrinking as well. The majority of income growth has gone to households with incomes above the $113, 000 (2013) cap on payroll taxes


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