For years American’s wages have been increasing at a rate around the reported annual inflation rate of 2 to 3%. But like the unemployment rate, this number is the product of trickery. Inflation is derived from the Consumer Price Index (CPI). The measurement of the CPI excludes volatile items like food and energy. So as prices have climbed beyond the inflation rate, our spending power has diminished.
70% of what America produces is consumed by Americans. If they don’t have the money to purchase as much as they have in the past, then the economy suffers.
Trickle-down economics is a myth. If you put money into the upper end of the food chain (rich people or rich companies) it sticks there. Voodoo trickle-down has starved the consumer, the consumer drives the economy, the economy has been weakened.
In support of the Voodoo POV, as of 2007 the number of Millionaire households had grown for the fifth consecutive year. While growth rates have slowed, the number of millionaires has nearly doubled in these 5 years. While the rich got richer, the majority have held their ground or slipped behind.
Then, the war in Iraq has had a double effect. First, 2% of the world’s oil supply was disrupted and lower supply led to higher prices. (In June of 2008 it was announced that Iraq’s oil exports, most of which come from southern oil fields around Basra, had risen above 2 million barrels a day for the first time since the invasion in 2003. The peak production from Iraq during the 1980s was closer to 3.5 million barrels per day.) Then, $10 to $11 billion a month of unfunded spending has been supporting the war. That, in addition to the rest of the $250 billion budget deficit, weakens our dollar. The result is that imports, including oil, cost more.
Department of Defense spending, for the military and the War on Terror®, has ballooned to between $600 and $700 billion per year–well over half of the government’s discretionary funding. It’s time to rethink the idea that military solutions best serve the nation and start cutting the DoD budget. We can also stimulate the economy with the development of new industries like alternative energy and green living and spend well-deserved dollars on infrastructure improvements. By spending tax money more wisely, we can direct government spending into areas that benefit the consumer thus benefitting the economy.