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The Solution to Our Budget Problems Is So Obvious: We Need to Raise Taxes on the Rich, ASAP

The answer to many of our country’s domestic problems is obvious -- the rich need to pay their fair share.

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Following those victories, Republicans insisted that Bush’s tax cuts for the rich stay in place for at least two more years, a concession Obama and the Democrats granted in exchange for some additional spending on the unemployed. But the Bush tax cuts guaranteed that the deficit would stay high, opening the door for new GOP demands for more spending cuts.

The U.S. government is now hurtling toward a showdown in March when some Republicans say they will shut down the government if the Democrats don’t accede to more spending cuts, which, in turn, will assure further layoffs from public-sector jobs.

Joe the Plumbers

What is perhaps most puzzling about this political-media dynamic is how many average Americans still support Reagan-esque tax cuts even when those policies have amounted to the wealthy waging “class warfare” against the middle- and working-classes as well as against future generations who are getting stuck with the bills.

During Campaign 2008, this curious anomaly was personified by “Joe the Plumber,” a mid-30-ish Ohio man named Joe Wurzelbacher. Though Wurzelbacher wasn’t even a licensed plumber at the time, he became Sen. John McCain’s symbol of an American everyman, someone whom the 72-year-old Republican presidential nominee called “my role model.”

In the closing days of Campaign 2008, Wurzelbacher launched his strange rise to national stardom by chatting along a rope line with Obama about the Democrat’s tax proposals, specifically Obama’s plan to lower taxes on middle-class Americans and raise them on people earning more than $250,000.

Wurzelbacher said he was considering buying his boss’ company, which he thought might make slightly more than $250,000 and thus might see a rise in taxes under Obama’s plan.

Obama responded by noting that any tax increase in that case would be slight and arguing that his tax plan would help America’s embattled middle class because it would “spread the wealth.” (Later, Obama noted that the vast majority of small businesses don’t clear $250,000 and almost no plumbers do.)

Nothing in the Obama-Wurzelbacher exchange was very remarkable. In effect, Obama was reiterating the century-old case for a progressive income tax that assesses higher rates on the well-to-do than on those with modest incomes.

It was a concept famously advocated by McCain’s earlier Republican role model, President Theodore Roosevelt, who in his New Nationalism speech of 1910 sounded far more radical than Barack Obama did in 2008.

“The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means,” Roosevelt said.

“Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective, a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.”

However, McCain accused Obama of “socialism” because of Obama’s support for rolling back tax cuts for the rich. McCain’s campaign began labeling Obama the “redistributionist-in-chief,” a charge that the Democrats finessed during the final days of the campaign but appear to still fear.

In the first two years of the Obama administration, the “socialism” charge has been repeated over and over, even though Obama undertook extraordinary steps to protect American bankers.

Obama’s practical political decision during Campaign 2008 not to aggressively defend his “spread the wealth” idea and his reluctance to tackle the issue of tax increases since then meant that the argument about the need for a greater government role in diverting some wealth from the top downward was deferred. After Election 2010, it is effectively off the table.

 
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