COMMENTARY: The Economy: Why Romney is wrong

Timothy Jones

Currently, the unemployment level is at its lowest level since President Obama took office, but 7.8% unemployment isn’t what the nation had in mind when they elected him. So what path led us down this road?

Most people in the United States have typically invested their savings into their homes. Home values had consistently risen since the Great Depression, so it appeared a wise investment. After paying for their homes, more wealthy individuals also chose to invest in stocks and bonds to the point that the home could become relatively minute.

However in the mid-2000s, banks and lenders gave sub-prime mortgages to tens of thousands of Americans. Lenders and homebuyers falsified income numbers on mortgage applications, which allowed homebuyers to purchase homes more expensive than they could afford. Eventually, lenders foreclosed on millions of homes bought with these sub-prime mortgages.

What’s the big deal? Most of these homebuyers knew they couldn’t afford these houses. Why should we care about the poor choices that a small percentage of Americans make? We should care because tens of millions of families took a huge hit to their savings when the few million foreclosed homes dropped home values across the United States by 34%. These were families like yours and mine who suffered the consequences of actions they had no part in. 

As a result of this housing crisis, the wealth of the middle class shrunk drastically, while the upper class was relatively unaffected because their wealth focused on stocks and bonds rather than investment in homes like the masses’.

How do we help the middle class thrive again? We tax the rich. The resulting tax revenues are then invested in healthcare, education, welfare and other social services that elevate the middle and lower class in order to give them the same opportunities to succeed that the rich already possess.

Some argue that taxing the wealthy would inhibit job growth; however, evidence indicates otherwise. Since 1940 to present day in the United States, the magnitude of the highest marginal tax rate directly correlates with job growth in the United States. The higher the wealthiest Americans are taxed, the more jobs are created. That is true whether the people in the highest tax bracket were taxed 35% or 75%. 

In 2010, President Obama responded by signing into law the Dodd-Frank Act.  Gov. Romney, however, wishes to repeal the Dodd-Frank Act, which set up financial regulations after the housing crisis to prevent middle class families from a repeat of that suffering, and wants to extend the Bush-era tax cuts for only the middle and lower classes.

When Romney talks about extending the Bush-era tax cuts for everyone, including the wealthiest Americans, as well as eliminating the capital gains tax, all he’s doing is promoting inequality and the same principles that got us in this mess. 

Timothy Jones

Owensboro senior