Democrats are beginning to sound more and more like Ronald Reagan.
Sure, Mitt Romney and Republicans alike love to talk about their late leader and what he represented. And yes, he deplored the notion of big government and laid the foundation for what is now the Tea Party. But if President Reagan were still around, he would likely have trouble identifying with what today's Republican party represents.
In 1985, President Reagan spoke to a high school in Atlanta, telling a story of a letter received. The letter was from a man making six figures, Reagan said, who complained that he could legally pay a lower tax rate than his secretary. Sound familiar?
But unfortunately, Mr. Reagan is currently being framed as the unreasonable, anti-tax crusader that now defines the Republican party. In the midst of the Paul Ryan budget, which deepens the disastrous trend President Reagan identified, a crucial reality check is in order.
The Republican budget, authored by Representative Paul Ryan of Wisconsin, clearly outlines the party's priorities: concentrate as much wealth at the top as possible, while slashing all programs that disproportionately help the least well-off Americans. The rationale? We can't afford to spend, and when the rich are rich, we are all better off.
Let's tackle the spending part first. What no Republican will admit is that the rich benefit far more from government spending than the poor. After accounting for deductions and the extremely low rates on capital gains and dividends, it turns out that Americans in the top fifth of incomes receive more benefits from the government than those in the bottom fifth. But when it comes to spending, Republicans refuse to talk about the spending that benefits the rich. The only things they are willing to cut are programs like food stamps and Medicaid that keep people out of poverty and are actually much cheaper.
Thus, the logic simply does not add up: how can a party be so strongly opposed to government spending and still advocate to spend more on tax cuts?
To address the second point, that the richer the rich the better, all we need to do is look at history. President Bush tried out that theory, known as trickle down economics, by slashing tax rates for the rich, and look what happened -- we got the greatest recession since the Great Depression.
In fact, in 1960, the top tax rate was over 70 percent, and unemployment was around five percent. Since then, the top rate has fallen all the way to 35 percent. According to Republicans, that should have done wonders for our economy. It didn't -- unemployment has been around eight percent for months.
One can also look to the Clinton years for an answer. According to data from the IRS, the richest 400 Americans paid around 30 percent in taxes during President Clinton's first term, when over 11 million jobs were created. Now, the richest 400 Americans pay around 18 percent in taxes, and job creation is stagnated.
But will higher rates cause people to pack their bags and take their business elsewhere, as many fear? Not according to the economists Emmanuel Saez and Thomas Piketty. Their argument: we've had higher rates before and other countries currently have much higher rates. Economic output did not, and still does not, suffer at all -- in fact, it was even better.
In 2010, 97 percent of total income gains in the United States went to the richest one percent of Americans. Since 1960, tax rates on the wealthiest Americans have fallen over 100 percent, while their incomes have increased over 500 percent. Middle class families, on the other hand, saw an income increase of just 72 percent, and their tax rate essentially stayed the same. And to make matters worse, when we talk about government spending, we only talk about the spending that helps the lowest income Americans, neglecting the higher share of government spending that goes straight to the rich.
So when you are casting your vote for president next November, ask yourself this question: Do I really want an America where we shower the rich with benefits, allow their incomes to soar, and turn a blind eye to those who are less well-off? That's the vision Governor Romney called "marvelous," and the one President Obama rightfully called "social darwinism." And it's the vision that just may make Ronald Reagan a democratic hero after all.
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