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Web letter by Tom Swinehart: Banks’ deregulation unacknowledged culprit in economic downturn

James Boomer’s Sept. 17 letter, “Democrats bear blame for downturn,” cites tax revenue under George W. Bush and then massively extrapolates their meaning. Boomer also misrepresents the effects of government-subsidized loans on the economic downturn in 2008.

It is a myth that there is hard data showing reducing tax rates leads to higher economic growth and thus greater revenue. Tax rates under President Bill Clinton were higher than under Bush, and revenue grew steadily under Clinton as well. This would seem to fly in the face of lowering taxes leads to higher revenue.

Tax rates are certainly a piece of the overall economic puzzle, but they are far from the only factor one could look to when finding out why our economy waxes and wanes. Not to mention that if taxes were such an important factor of economic growth, why did we have the largest downturn in the economy since the Great Depression after eight years of lower tax rates?

Boomer goes on to blame Democrats for causing the economic downturn because they supported Fannie Mae and Freddie Mac. Those entities certainly had to deal with toxic loans, but their share of those toxic loans was far less than the private banking institutions that Republicans work so hard at not regulating.

The unregulated banking industry has shown little care for either the people they loan money to or the world economy. Banks have been knowingly packaging up and selling off large groups of bad loans. Banks have turned investing truly into a crapshoot, and obviously the American people were left with the tab.

Republicans point to lower taxes as leading to higher revenue, forgetting to mention that over the past 60 years tax revenue has overall increased along with the economy despite tax rates. Deregulation of the banking industry is almost the sole culprit of the economic downturn in 2008, and sadly very little has been done to change it.


Fort Wayne