Tuesday, June 12, 2012 By Aaron Brown
The net worth of Americans is now at the same level as it was in 1992. That's not referring to income, which has continued to increase slightly, but rather the total accumulation of income, property and portfolio value. The housing bubble's collapse and the shock to traditional stocks that occurred just a few years ago has created a lasting effect that might take a very long time to fix. NPR also talked about this recently.
These kinds of stories are seldom reported without a political context. And though I normally try to stay out of the day-to-day partisan bickering, I'd argue this. Some want to pin these problems on President Obama, who took office as the worst effects of the Great Recession were setting in. Some would argue he did too much or too little in the year after he took office to address the issue. I'd argue that he had few choices but to try to stabilize the markets and nation, which he did accomplish even as it doesn't "feel" particularly good. What he contributed to the fiscal mess was not nearly as bad as what he inherited.
No, I'd look to the causes of our fiscal instability in this country first, a blame that knows many culprits. The housing "bubble" was called that because prices were inflated beyond their actual value. When people began counting on their inflated values as equity, trouble ensued. People ran up private debt that mirrored, perhaps even eclipsed the national debt. Wall Street exuberance overinflated the value of companies and funds in much the same way. Voters sometimes elected politicians to cut taxes but then quickly elected others to protect beloved public spending programs, never anyone to raise taxes or actually cut meaningful spending. Or at least, never in enough numbers to form lasting political initiative.
I found this post by Andrew Sullivan to be staggering. Though former President Bush was not the only culprit in our fiscal woes, he did turn an opportunity to eliminate the national debt into a fiscal crisis that vexes us still, and that will follow not only President Obama to the end of his term or terms, but a potential President Romney and anyone else that happens into the job in foreseeable future. Just, wow.
Hey, the world is going to be OK. I do think that. But it is going to be different and we're going to have to wrap our heads around the idea that we might need to rethink the nature of what "prosperity" means, particularly for a vast majority of the country not buffeted from this ongoing storm. A slow recovery will take time, but bit by bit the country can get back on track -- if we manage to avoid a war in Iran, spending without tax increases, tax cuts without spending cuts, and degradation of our creative sectors. These are the parts that require college degrees, which now cost more than nice houses.
I'm sticking with the president (my choice; you're entitled to your own), but another president would face the same circumstances with the same dwindling options. All of those options preclude artificial bubbles that create rapid, euphoric growth, something we've gotten fat on for 30 years. Literally fat. I need to go for a walk now.