To find most of the blame for America's unsustainable fiscal situation, one need go no further than George Bush's presidency.
The Bush tax cuts of 2001 and 2003 for higher income Americans have totaled US$2.9 trillion, according to the non-partisan Congressional Research Service. (This includes mortgage interest deductibility for two residences of up to $1 million apiece.) The two Bush wars, Afghanistan and Iraq, have cost at least US$1 trillion. And the bailout, caused by non-regulation of Wall Street and mortgage brokers, cost trillions more.
So why did American voters this fall hand over control of the House of Representatives to Republicans and Tea Party representatives? Why would Americans remain unperturbed about the shifting of the tax burden from high-income to low-income? Why are there no protests demanding military budget cuts?
These questions are pertinent as Congress and the White House cobble together another budget. But public opinion is starting to shift.
In April, a surprising poll by GlobeScan revealed disenchantment with America's sacred cow, the free market system itself. Some 59% of Americans in general agreed "strongly" or "somewhat" that the free market was the best system. While still a majority, the point is this response was down from the 80% of Americans who agreed "strongly" or "somewhat" that the free market was the best system back in 2002. Even more significantly, support for the system among "poor" or low-income Americans, a class that has jumped in size, fell from 76% to only 44%.
This shift was inevitable because tax cuts for very rich do not trickle down. But that notion, along with the American Dream myth that anybody can get to the top, has been why many US voters cast ballots against their own best interests. They believe they, or their kids, could be rich one day and also be able to pay low taxes and write off mortgages on fancy condos and ski chalets. So they vote against universal health care, against tax fairness and against leaders who want to chop military budgets.
This mentality, by the way, does not exist in Canada, Australia or Europe where tax cuts are desirable and granted, but never skewed simply to make rich people richer or to, as Bush once said, help "the haves and have-mores".
More research, by Michael Norton who is an associate professor at the Harvard Business School, reveals that Americans don't know that the richest 20% of Americans own 84% of all wealth. His polls showed that people, both Republicans and Democrats, thought the richest owned 59% and that they should only own 32%.
Information will change minds, but for those who don't read and think the sea change will occur when Congress is forced to default on entitlement obligations for Social Security and Medicare because it won't end the Bush tax cuts for the privileged or axe defense expenditures. Only then, will Americans wise up.
Cross posted at Financial Post
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