Credit Card Reflux; Reagonomics Redux

Dan Flikkema: Re: its taking an hour to eat a meal and 39 years to pay it off, if your credit card charges 19.8% interest and you pay just the minimum each month . . .

‘Actually I come up with 501 months to pay off the $3,000 credit balance — 41.75 years. If you were ever late or missed a payment, it would quickly increase to 45 years. But hey, 39 or 41 or 45 years, I suppose your point would really be the same wouldn’t it? My no-annual-fee Visa card works the opposite way (Wells Fargo 1-800-642-4720). Instead of paying interest (I pay the balance in full each month), I get 1% cash back. This month, I will get roughly $300. Wow, that means I spent over 30,000 on my credit card last year! What did I buy? Now I’m depressed again. I need to cut back.’

Bob Eatho: Re: our racking up $4 trillion in debt during the Reagan/Bush years, the last time we tried a massive tax cut for the rich . . .

‘Yeah . . . Darn that Reagan/Bush era. Let’s return to the Carter era where the economy was a mess, and inflation was a whopping 17%. Give me a break!!!!!!!!!!’

☞ Why go back to the Carter era? What’s wrong with sticking with the Clinton era? We had the best economy in history. We found a balance that seemed to work just great. Under this balance, the top 1% – despite their hiked tax bracket – found their after-tax income increasing way faster than everyone else’s . . . which is fine with me, being in that top 1%. But need we tilt the balance further in the favor of the top 1%?

Under Carter, the top federal tax bracket was 70%. Likewise, under Ford, Nixon, LBJ, and Kennedy. Way too high! Crazy! (Not to mention poor old Ike, who gave us a 90% bracket.)

But the current 39.6%? I’m not saying it’s fun to pay taxes, or that it’s easy to rack up after-tax wealth with a tax burden like that. (Once you do rack up some wealth, you can put it to work at a substantially lower capital gains rate, or at a zero municipal bond rate.) But I am saying that the top 1%, and most of the rest of America, have done great with the current balance. Why mess with it?

We seem now all but certainly headed toward a huge shift of wealth in favor of the top 1%. The Republicans are geniuses at getting the rest of America to go along with that at the expense of things like a prescription drug benefit for seniors, money to renovate dilapidated old schools, incentives to develop and deploy sources of alternative energy, or, simply, a faster pay down of the national debt. (I know some of you are worried we’ll pay it down too fast. Fat chance. But if that problem ever did present itself, that might be the time to enact a massive tax cut for the top 1%.) How do they do it?

Tomorrow: A House of Cards – and a Plain Old House