Letter to the Editor: Runaway financial speculation damaged our economy

Sunday, July 25, 2010

To the Editor:

All politics has plenty to do with emotions, and Jack Leicester’s letter of 7/24 is no exception. He also proposes some highly questionable “Tea Party” style economics, which can be quickly refuted from a progressive point of view. The US debt and deficit are at a high point, it’s true, but not at their highest point in history – that was in the 1940s after World War 2 and the Great Depression. We’re currently in the worst recession since that depression, so running deficits to keep the economy moving is completely rational. We’re in no near-term danger of inflation; if we were, interest rates wouldn’t be at historic lows. As for being “owned by China,” the truth is that the vast majority of US bonds are held by US citizens. “Owing $50,000 in taxes”? This is an emotional scare tactic. Bonds come due gradually, and interest on them is paid just as gradually. It’s like having a mortgage. If your economy is basically sound, you can handle it. Ours isn’t right now, but that’s not because of government debt.

What’s damaged our economy is the collapse of an $8 trillion bubble in the housing market, basically caused by runaway financial speculation. That’s wiped out savings, home equity, and the construction industry, and with them the ability of people to consume at a normal level. Ending our endless wars and rescinding Republican tax cuts for the rich would solve any deficit and debt problems we have. We have the lowest taxes in many decades, especially on the rich, and far lower taxes than many other developed countries, countries with far better public services.

Jim McDermott is totally right in trying to revive single-payer health care. The medical industry has to be cut down to size (ours is the most bloated in the world), and it will take the power of democratic (small “d”) government to do it. It’s medical costs that most threaten our economy and the government’s fiscal health in the long run.

For a more progressive view on these issues, check out the Center for Economic Policy Research.

Chris Nielsen
Shoreline

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