Wealth and income as a percent have been shifting from the bottom to the top since about 1980:
View attachment 67210620
Things were in decline before 2008, but you can see the massive falloff from 2007 to 2010.
But when looking at the economy as a whole, it would appear things are doing really well, but when you break them out by quintile, you see a slightly different story. The only quintile that has gained is the top 20%.
Lots of people point to the top 1%....I point to the shift to the top 20% (I reside here btw). In my opinion, that's MUCH worse. The top 1% are about 3.2 million people. The top 20% represents about 60 million people. That has caused a shift in the way companies chase profits. They market very high end very high margin goods....But I digress, I'm getting off point.
View attachment 67210621
Here we see that the top 20% (as supported by the first table I posted) saw HUGE gains as we exited the recession in the early 1990's. In 2000 Clinton and the Congress that backed him, thought it a good idea to run a surplus. I don't care how he achieved it, it took massive amounts of money out of the economy. in 2001 we saw a dip in our economy equal to 6.7% of GDP if you include the trade deficit. If the government spends 1 out of ever 4 dollars and it decides to spend less, it will decrease incomes and that decrease in income will cause a decrease in demand for goods and services AND at the same time cause a decrease in overall private savings (savings drain) AND an increase in private sector credit (borrowing), especially to those in the bottom 80% who, if the economy doesn't turn around, many will end up paying diproportionaly for the credit they took.
Here we see what happens when the deficit goes negative (also called surplus):
View attachment 67210622
So government goes into surplus private sector must now find that lost income via a decrease in savings and an increase in debt. Which is why we see GDP continue to rise during this period. The underlying trends had shifted to an extremely unsustainable model, but the the average Joe, looking at the GDP numbers assumed everything was cool.
(I assume you can find a GDP chart yourself and see that GDP rose even though the government was taking money out of the economy. By my estimates, GDP should have fallen by almost 7%, but the US private sector made up for the government's spending shortfall by increasing debt and decreasing savings.
Ok so here we are today....2 recessions later. What's wrong? Remember the massive wealth shift from 1990-2000? The bottom 80% of the economy still has not recovered. I'm not going to look up the exact figure, but that 80% represents about 200-240 million working-aged people who have been in a recession since 1998. In the aggregate, the bottom 80% cannot generate the kinds of demand for goods and services unless they, as a group, have more disposable income.
The problem is that the wealthy have convinced our Congress and now a staggering number of people that they would create more jobs if they could just keep more money. That's BS. They won't hire more people until aggregate demand rises and aggregate demand won't rise until the people in the bottom 80% of America have more money.
In the meantime, the top 20% will look for fiscal gains in markets and speculation, Companies will keep money off-shore and engage in stock buybacks as a way to meet target earnings, rather than expand their business' via plant and equipment and training.
This is already too long and I'm just begining to scrape the iceberg.
Democrats are wrong, we don't have a revinue problem.
Conservitives are wrong, we don't have a spending problem.
The problem is, our ECONOMY (not the budget) is out of balance.