The Solution to Our Budget Problems Is So Obvious: We Need to Raise Taxes on the Rich, ASAP
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So, to take action to restore the United States to the more stable middle-class structure that reigned from the end of the Second World War until Reagan’s presidency would seem to be a no-brainer.
And, the key to that restoration would be to raise the top marginal tax rates on the highest levels of income for the richest Americans from today’s 35 percent to, say, 50 or 60 percent. Those marginal rates were as high as 90 percent under Eisenhower.
But today’s U.S. political/media dynamic makes any discussion of higher taxes on the rich a non-starter. Instead, the debate is all about handing out more tax breaks to the rich, slashing government spending, canceling transportation projects, abandoning environmental goals, and busting unions that represent teachers and other public workers.
The test of political courage, according to the mainstream U.S. news media, is whether you’re ready to go even further and cut Social Security and Medicare. But the real “third rail” of American politics is whether you’ll consider higher taxes on the rich.
How hard that is was made apparent earlier this month as the nation wallowed in a sentimental remembrance of the late Ronald Reagan, the father of what his own Vice President George H.W. Bush once called “voodoo economics,” the notion that reducing taxes would increase revenues.
Reagan also elevated the worship of private wealth and stoked the demonization of the public sector with his famous line: “Government is not the solution to our problem; government is the problem.”
Yet, as misguided as Reagan's policies have proved to be, a new Gallup poll shows that Americans rate him the greatest president ever, ahead of Abraham Lincoln and George Washington.
Inspired by Reagan
Just this week, when Wisconsin’s Republican Gov. Scott Walker thought he was talking by phone to right-wing billionaire David Koch, a key financial backer, Walker reminisced about his thoughts before he dropped “the bomb,” his bill to strip public employees of collective bargaining rights in Wisconsin.
Walker told a David Koch imposter who was taping the call: “I pulled out a picture of Ronald Reagan, and I said, you know, this may seem a little melodramatic, but 30 years ago, Ronald Reagan, whose 100th birthday we just celebrated the day before, had one of the most defining moments of his political career, not just his presidency, when he fired the air-traffic controllers.”
In other words, Reagan’s legacy is still inspiring a young generation of Republicans and right-wing operatives to press ahead on an approach to the nation’s economic ills that would continue low taxes on the rich, fewer regulations on corporations, structural budget deficits that compel cuts in government spending, and pressure to break unions.
Yet, over those three decades that Walker cited, Reagan’s right-wing policies have savaged the middle class and shoved more people into poverty, creating an income inequality not seen since the Gilded Age of the 1920s, an inequity that contributed to the Stock Market Crash of 1929 and the Great Depression.
Another factor in today’s job crisis has been the dramatic advances in technology, creating a huge surplus of labor in the United States, from factory workers to bookkeepers. And, if technology doesn’t get you directly, it might still put you in the unemployment line because modern communications let your company off-shore your job halfway around the world.
So, even if today's weak recovery isn’t stalled by higher Middle East oil prices or more gridlock in Washington, many Americans who lost their jobs or had to take severe pay cuts are not likely to make up lost ground. Unemployment and under-employment are almost certain to stay high, and those lucky enough to have jobs will have to work harder, faster and longer than before.