The income tax rate for 2004 was based upon the economy at that time. Looking back the unemployment rate was low. Crime was down (people had jobs). And there wasn't the threat of raising taxes at every corner. If the federal government isn't threatening to raise taxes then the states are pulling the tax card. If taxes keep getting raised at the current rate no one will be able to afford it.
When the banks started defaulting and then the American car manufacturers starting laying off thousands of workers and closing plants people happily remember times from just a few years ago. It seems that it all completely snuck up on everyone. But that isn't quite true. All of the money that companies were borrowing to be able to keep operations running would have pointed it out if anyone cared to look. That is similar to the individual person living paycheck to paycheck. If one minor thing happens and you can't cover your expenses you are dead in the water and everything starts to unravel.
Banks did get an insurgence of money from the government which was nationally televised to display the many argument congress had in giving it to them. The limits that would be protected by the government by defaulted banks were raised from $100,000 to $250,000. But instead of helping remedy the situation it only became worse. Banks didn't use the funds they were provided to provide loans to those that needed it. They simply took the money and used it for their own benefit. All of the bad loans that they had on their books were wiped out or improved. This was the biggest scandal. Worse of all were the banks that continued to pay large sums to executives when they weren't making any money. They were not used to being told what to do. Many stipulations were not placed on the money when it was sent to prevent it from happening.
Everyone is now asking how long it is going to take to dig ourselves out of the hole that we are in. No one knows for sure but we cannot spend our way out of it this time like it was done in the past.