I too have little doubt that the biggest danger to ordinary Americans is Washington Democrats responding to the GOP's $5-6 trillion proposal to ruin Medicare, etc. with Democratic,
... Beltway desire to prove oneself “serious” by courageously agreeing to hurt ordinary Americans to make the nation safe for high-end tax cuts.
I think Reich nails it. The central focus has to be on increasing the share of American wealth generation that goes to the middle class.
American (big) business is already supremely "competitive" having rebounded to record-breaking profits, but without that translating to American jobs and increased wages. If the middle class does better that provides a ladder up for others, it increases tax revenue without increased tax rates and it reduces the need for government programs to support the middle class. It would be far better for the economy and government goal to make being middle class self-supporting.
If, as the American economy doubled in size over the last thirty years the middle class incomes had also doubled, we would not be in the situation we find ourselves today.
... the president's failure to address the decoupling of American corporate profits from American jobs, and explain specifically what he'll do to get jobs back, not only risks making his grand plans for reviving the nation's "competitiveness" seem somewhat beside the point but also cedes to Republicans the dominant narrative...
The Great Recession wasn't due to America's loss of "competitiveness" relative to the Chinese or anyone else. In fact, American corporations are now enormously competitive, racking up some of their highest profits in history...
What the president should have done is talk frankly about the central structural flaw in the U.S. economy -- the dwindling share of its gains going to the vast middle class, and the almost unprecedented concentration of income and wealth at top -- in sharp contrast to the Eisenhower and Kennedy years.
Although the economy is more than twice as large as it was thirty years ago, the median wage has barely budged. Most of the gains from growth have gone to the richest Americans... So the central challenge is put more money into the pockets average Americans...
[This narrative] would give [Obama] a convincing counter-narrative to the Republican anti-government one. Government exists to protect and advance the interests of average working families. Without it, Americans have to rely mainly on big and increasingly global corporations, whose only interest is making money wherever it can be made.
Military hostilities for World War II ended in 1945. The fall of the Berlin Wall was a key turning point showing we had reached the beginning of the end of the Cold War which ended “officially” in 1991 with the dissolution of the USSR. I would argue that 20 years after the end of the Cold War and we are finally and truly in a new era.
After World War II, the United States embarked on a possibly unprecedented effort in human history, to rebuild not only the allies but also rebuild the enemies of the war, using tools like the Marshall Plan and a new constitution and investment in and economic inclusion of Japan. The goal was to raise the economic tide and thus lift all "country-boats". Based on a model of non-military expansion of states and on inter-country trade rather than on wars and on monopolization of resources. Russia declined to participate and with the advent of Communist China joining them in a bloc, the Cold War military and economic “containment” of their ambitions was sustained successfully for decades. Since then, economic integration has proceeded including them.
The fall of the Berlin Wall and declaration in 1991 of the end of the Cold War did mark a significant and and highly symbolic turning point.
But in 2010, we saw a remarkable economic economic situation: the United States economy struggling along with continued and expected unemployment near 10%, continued asset depreciation and many other weak signs from the Great Recession - the deepest economic slump with years forecast to recover housing and employment. Yet the stock market did quite well on the strength of very strong corporate earnings. Earnings that would normally be depressed by a high unemployment and thus lowered spending rate. Earnings that were instead driven by overseas growth in sales and profits ... and hiring overseas, not here, as a result. Earnings that are expected to continue in 2011 well above the weakly growing US economy.
A strong US economy can help earnings, but earnings aren't primarilty dependent on the US economic market.
The world economy is now largely, if loosely, integrated. Many weak economies representing the vast majority of people around the world have grown stronger. The most striking being the rise of China, which, in spite of huge numbers mired in deep poverty, now has a developing middle-class that is larger than the entire population of the United States.
And that worldwide integration of economies including Russia and China, lifting so many, is a great success, leveling the economic field by bringing others up. The true end of World War II.
And that wasn't achieved via tax cuts for the rich (a third of the rich inherited their money, not earned it) and wishful thinking about how unregulated markets and the superrich would buy things to make it happen, but rather through deliberate policy choices and government investment financed by a tax system where those that benefited most financially from our system paid that forward in higher taxes. (The United States has the 23rd lowest tax rate of the top 25 economies of the world, so the problem isn't that our taxes are too high -- they are arguably too low.)
In this era, after years of denials successfully blocking timely action, global warming is now moving unstoppably with only the options of mitigation and adaptation, oil reserves have almost certainly passed “peak oil” as we have to go to ever greater and more bizarre lengths to obtain supplies, we have an tax system that encourages corporation to off-shore jobs to countries that exploit labor and defile "their" environment as if it wasn't connected to "our" environment.
What got us from 1945 to 2010 will not get us from 2010 to 2075.
Willful progress? The Tea Party's reactionary retreat? Libertarian's laissez-faire wishful thinking? DC Republican's boorishness? Which will best carry the US forward to 2075?
There's no arguing the emotional appeal of the right when they complain that the individual mandate in the healthcare reform act amounts to, for the first time in human history, "taxing breathing" (although they use the phrase for other things they don't like too). They are so good at that kind of stuff. Wow, how "unfair"!
But let's be honest: Yes, you can "choose" to not pay income tax by not making any money, and you can "choose" to not pay property taxes by not owning real-estate and also not renting from someone who owns property, and you can "choose" to not pay sales tax by not buying anything, and you can "choose" not to pay fuel taxes by never going anywhere in motorized transport or using anything that used motorized transport.
But no one willingly chooses that life of extreme poverty, privation and isolation to not make money, not buy anything, not live anywhere and not use anything.
So, take a deep breath, the "moral" argument they are making simply does not hold water.
Today, in a column grandly entitled, "A Tax Reform Vision," [David] Brooks celebrates the growing beltway consensus on tax reform, suggesting that a bipartisan accord could be built around lowering tax rates, simplifying the code, and erasing most tax deductions and loopholes.
...
Only we really have played this game before. In the mid 1980s, under Ronald Reagan, civic minded Senator Bill Bradley joined with reformers to fashion a similar deal -- lower rates, eliminate egregious tax loopholes and deductions, in a revenue neutral fashion. The establishment rallied; the bill passed.
Only while the deductions were eliminated, the lobbies that created them were not. They went to work. The loopholes, tax expenditures, various dodges returned. Now the tax code is so riddled with them, that beltway pundits can call for playing the same game once more.
Only while the loopholes returned, the lower rates stayed largely in place.
Not surprised. But disgusted.
President Barack Obama's top adviser [(David Axelrod)] suggested to The Huffington Post late Wednesday that the administration was ready to accept an across-the-board continuation of steep Bush-era tax cuts, including those for the wealthiest taxpayers.
Maybe someone can explain to me why the Democrats in Congress couldn't have put together a middle class tax cut and let Republicans either (a) fail to amend it to give goodies to the rich or (b) have killed it via filibuster and it be their fault middle class tax cuts were cut?
The chart below conveys the central point: people think the distribution of wealth is more equal than it actually is; and they think it should be much more equal than their already unrealistically-equal notion of its current state. Eg: the top 20% of the US wealth distribution actually controls nearly 85% of total wealth; people think the top 20% controls under 60%; and they think it should control just over 30%
Similarly: people feel that the bottom 20% of the economic pyramid "should" have about 10% of the total pie; they think it actually has about 3% or 4%; in fact, its share appears to be too small to show up on the chart.
Obama shouldn't be fooled into thinking Bill Clinton was reelected in 1996 because he moved to the center. I was there. Clinton was reelected because by then the economy had come roaring back to life.
... For the next two years Republicans will try to paint Obama as a big-government liberal out of touch with America, who's responsible for the continuing bad economy.
Obama won't be able to win this argument by moving to the center -- seeking to paint himself as a smaller-government moderate. This only confirms the Republican's views that the central issue is size of government, that it's been too large, and the economy can improve only if it's smaller.
On the Republican playing field, Republicans always win.
Obama's best hope of reelection will be to re-frame the debate, making the central issue the power of big businesses and Wall Street to gain economic advantage at the expense of the rest of us. This is the Democratic playing field, and it's more relevant today than at any time since the 1930s.
The top 1 percent of Americans, by income, is now taking home almost a quarter of all income, and accounting for almost 40 percent of all wealth. Meanwhile, large numbers of Americans are losing their homes because banks won't let them reorganize their mortgages under bankruptcy. And corporations continue to lay off (and not rehire) even larger numbers.
... The relevant political lesson isn't Bill Clinton in 1996. It's Franklin D. Roosevelt in 1936.
... FDR shifted the debate from what he failed to accomplish to the irresponsibility of his opponents. Again and again he let the public know whose side he was on, and whose side they were on. Republicans stood for "business and financial monopoly, speculation, and reckless banking," he said over and over.
And he made it clear they wanted to prevent him from helping ordinary Americans. "Never before have these forces been so united against one candidate as they stand today," he thundered. "They are unanimous in their hate for me -- and I welcome their hatred."
If Obama heads into 2012 with double-digit unemployment, he will lose. End of story. Voters have a terrible view of Republicans, and they just sent over 60 new Republicans to Washington because Obama didn't bring down the unemployment rate. Those results prove that Democrats' backs are already up against the wall on 2012. Fixing the economy takes time, and we need strong, serious action as soon as possible, or we are headed for political calamity.
...Showing that they can work with Republicans won't save Democrats in 2012. Only real economic results will. Aggressive PR about how you really actually did fix things won't convince people who are out of a job or in foreclosure. They know the economy still sucks, and even worse, they know you're not telling the truth.
...So Obama has to fight hard for policies that actually bring the unemployment rate down, and he must be willing to defend his policy proposals from Republican attacks, making a clear moral case for why spending to support jobs is a good idea. Republicans know that they can win the White House in 2012 by simply blocking Obama and letting the economy fall apart. They'll do it. They already have. Obama has to hold Republicans rhetorically accountable so they fear the electoral consequences of obstruction enough to vote in favor of policies that actually work.
From conservative, Bruce Bartlett, former budget director for Ronald Reagan:
What I think is indisputable is that we could raise the top rate quite a bit [to at least 50% tax rate] before any significant Laffer Curve effect kicked in. I would also add that the main effect insofar as revenues are concerned has to do with legal tax avoidance and changing the composition of income rather than having rich people just stop working or investing. It's pretty obvious from the experience of other countries that rich people will pay very considerably more taxes than they do here before they withdraw from the labor force.
For a series of takes on this question, see Ezra Klein's round-up of opinions, which tend toward 60-70% with a few oddities at 20%.
Even at 50%, that is quite a bit more than today's top rate.
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