Paying For Tax Cuts At The Top By Cutting Pensions For The Rest

Today's new York Times has a front-page story (really an editorial) that promotes cutting the Social Security pensions of Americans and other things that we as citizens are entitled to.

Many analysts say the president and Congress could send a strong signal to global markets by agreeing this year to a package of both long-term tax increases and spending reductions, especially in the popular entitlement programs, that would not take effect until 2012.

Let's remember how we got here.

For decades following the depression and WWII the country had operated with a budget that was in or nearly in balance while maintaining our infrastructure and investing in our future. Past concentrations of wealth were decreasing, the middle class was expanding, and we led the world in growing prosperity.

The trouble all started when we dramatically cut taxes on the rich. For decades the top tax rate was 90%. Then we cut it to 70% and then 50% dramatically from there all the way to around 30%. The budget immediately went completely out of balance. The tax cuts created a "structural deficit."

At the same time as we cut taxes for the rich we raised taxes on everyone else, saying the money would be used to pay for peoples' retirement. However, that money instead was used to defer the damage caused by the tax cuts for the rich.

And we started to dramatically increase the military budget. Today we spend about $1 trillion a year on military, veterans, intelligence, nukes, and the share of debt interest from past military spending -- more than every other country in the world combined.

And we started cutting everything else back. We cut back investing in R&D, schools, transportation, you name it. We stopped even maintaining the existing infrastructure. The very investment that could have led to economic growth was cut because of those tax cuts.

And now because the debt and continued borrowing -- caused by those huge tax cuts for the rich and huge increases in military spending -- has gotten so bad, the corporate and media elite demand that we ... cut back the pensions of old people, further decrease infrastructure maintenance and investment, etc. ? As the SNL Church Lady used to say, "Isn't that conveeeeenient?"

They are trying very hard to keep the public from noting that we spend more on military than the rest of the world combined, and that the budget and economy worked so much better when tax rates at the top were very much higher. If you want to fix the borrowing you need to fix the cause of the borrowing. You need to get the money from where the money went.

This post originally appeared at Campaign for America's Future (CAF). I am a Fellow with CAF.

 

Follow Dave Johnson on Twitter: www.twitter.com/dcjohnson

Comments

[jhNY]

02:15 PM on 02/17/2010

Golly. It's almost as if there's a crowd of plutocrats working behind closed doors in DC to get every penny still theoretically directed at ordinary Americans to go into their own pockets, from whence it will reappear on the gambling tables of high finance and from there, who knows? Having devoured the wealth of the middle class by tanking the real estate biz and everybody's 401k through exotic financial products of mass destruction and then running up interest rates on credit card debt, there really is no wealth left for them to grab, apart from social security and health care. Oh yeah, and oil. Which will be going up and up. As they have entirely gamed the procurment and contract process for military expenditure, and as they need a gargantuan military force to guarantee their wishes will be done worldwide, you cannot expect that miltary budgets will ever get a haircut. So far they aren't even getting a light trim around the ears.

[TheFriendlyAtheist]

12:05 PM on 02/17/2010

During the Bush years the richest 500 families in America say their wealth increase by 700 billion dollars, that's billion with a b, while there was not one new net job created in those eight years and millions of American workers saw a fall in wages.
Not only should the Bush tax cuts be repealed, taxes on the rich should be increased to at least 50% and the cap on social security tax should be lifted.

[Eggsackley]

06:18 PM on 02/17/2010

That's a step in the right direction, but 50% is not enough. It should start at 90%for anyone making a Billion dollars a year and drop about 1% for every 100 million drop in income until someone making 100 million a year would pay 80%. It should then drop another 1% for every drop of 10 million a year in income until someone making 50 million a year pays 75% and someone pulling in a million a year pays 70%. Then it should drop faster so that someone making 500 thousand a year pays only 55% and someone making 300 thousand a year pays only 35%. There should be no tax increase for anyone making less than 250 thousand a year. Such a tax table would look something like this:

$1,000,000,000 90% Tax: $900,000,000 After tax income $100,000,000
$ 100,000,000 80% $ 80,000,000 $ 20,000,000
$ 50,000,000 75% $37,500,000 $ 12,500,000
$ 1,000,000 70% 700,000 $ 300,000
$ 500,000 55% 275,000 225,000
300,000 35% 105,000 195,000