Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Challenges Abound in Macro, Microeconomics

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Challenges Abound in Macro, Microeconomics

Article excerpt

It should come as no surprise that the ties between Wall Street's ongoing performance and the economy's health are inextricably linked. Therefore Wall Street is taking more than a passing interest in the newly minted budget proposal passed recently by the House of Representatives.

Akin to plucking profundities out of thin air, the budget proposal is portrayed as either a path to prosperity or a road to ruin, as it proposes to transform Medicare, cut domestic spending to levels not seen since World War II and order up a drastic overhaul of the tax code.

Yet the overhaul's details are unspecified, merely stating that the six existing income tax rates would be reduced to just two: 25 percent and 10 percent. The ensuing revenue loss would be made up by the repeal of unspecified tax credits and deductions.

Meanwhile, a report dated October 2011 by the nonpartisan Congressional Budget Office confirmed that income inequality has grown dramatically. During the past three decades, the top 1 percent of wage earners has seen its share of the nation's income more than double, while government policy has become less redistributive, meaning it has done less to reduce the concentration of income.

The CBO stated that from 1979 to 2007, the average inflation- adjusted after-tax income for the top 1 percent of wage earners grew by 275 percent. For the top 20 percent, it grew by 65 percent. In contrast, the poorest fifth of the population saw only an 18 percent increase.

As we suffer through the current economic conundrum, there is an outflow of deprecating comments that inflame and subsequently hinder efforts to effectively deal with the fiscal issues at hand. Nonetheless, do you really want to watch the hapless slide unmercifully into the abyss of obscurity and desolation as the continuing depredation, brought about by the unabashed lure of lobbyists' dollars, trumps all other considerations? …

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