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- iHaveNet.com: Politics
by Robert Reich
Who deserves a tax cut more: the top 2 percent -- whose wages and benefits are higher than ever, and among whose ranks are the CEOs and Wall Street mavens whose antics have sliced jobs and wages and nearly destroyed the American economy -- or the rest of us?
Not a bad issue for Democrats to run on this fall, or in 2012.
Republicans are hell-bent on demanding an extension of the Bush tax cut for their patrons at the top, or else they'll pull the plug on tax cuts for the middle class. This is a gift for the Democrats.
But before this can be a defining election issue in the midterms, Democrats have to bring it to a vote. And they've got to do it in the next few weeks, not wait until a lame-duck session after Election Day.
Plus, they have to stick together (Ben Nelson, are you hearing me? House blue-dogs, do you read me? Peter Orszag, will you get some sense?)
Not only is this smart politics, it's smart economics.
The rich spend a far smaller portion of their money than anyone else because, hey, they're rich. That means continuing the Bush tax cut for them wouldn't stimulate much demand or create many jobs.
But it would blow a giant hole in the budget --
And the Republican charge that restoring the Clinton tax rates for the rich would hurt the economy -- because it would reduce the "incentives" of the rich (including the richest small-business owners) to create jobs -- is ludicrous.
Under Bill Clinton and his tax rates, the economy roared. It created 22 million jobs.
By contrast, during George Bush's eight years, commencing with his big 2001 tax cut, the economy created only 8 million jobs. And as the new Census data show, nothing trickled down. In fact, middle-class families did far worse after the Bush tax cut. Between 2001 and 2007 -- even before we were plunged into the Great Recession -- the median wage dropped.
It's an issue that could also be used to expose the giant chasm that's opened between the rich and everyone else -- aided and abetted by Republican policies. As I've noted before, in the late 1970s, the top 1 percent got 9 percent of total national income. By 2007, the top 1 percent got almost a quarter of total national income.
These figures don't even count in taxes. The
And, again, nothing trickled down.
As I've emphasized, the U.S. economy has suffered mightily from the middle class's lack of purchasing power, while most of the economic gains have gone to the top. (The crisis was masked for years by women moving into paid work, everyone working longer hours, and, more recently, the middle class going into deep debt -- but all those coping mechanisms are now exhausted.) The great challenge ahead is to widen the circle of prosperity so the middle class once again has the capacity to keep the economy going.
In other words, this is the right issue. It's the right time. It allows Democrats to explain what the Bush tax cuts really did, why supply-side economics is bogus, and the economic challenge ahead.
Even if Democrats feel they have to respond to the Republican charge that taxes shouldn't be raised on anyone when the employment rate is 9.6 percent, they have a powerful fallback: Extend the Bush tax cuts for everyone through 2011, then end them for the rich while making them permanent for the middle class.
Get it, Democrats? Please don't blow it this time.
Robert Reich, former U.S. Secretary of Labor, is professor of public policy at the
Available at Amazon.com:
The Backlash: Right-Wing Radicals, High-Def Hucksters, and Paranoid Politics in the Age of Obama
The Disappearing Center: Engaged Citizens, Polarization, and American Democracy
The Virtues of Mendacity: On Lying in Politics
Bush on the Home Front: Domestic Policy Triumphs and Setbacks
The Political Fix: Changing the Game of American Democracy, from the Grassroots to the White House
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