12/02/2010 10:01 am ET | Updated May 25, 2011

It's Not Raining, We're Getting Peed On (4): The Scam of the Deficit Crisis

Over the past three days, we've looked at the phony deficit crisis withe excerpts from my new book, "It's Not Raining, We're Getting Peed On: The Scam of the Deficit Crisis", here (from the introduction), here (a taste of the the very Stupid Statements made about the deficit and debt) and here (who is behind promoting the "crisis"). To wrap this up, let's look at how we can really get money to do the right things.

In the final chapter of the book, "Abracadabra, Trillions of Dollars At Your Service", I focus on a simple idea: we can have a lot of money to do a lot of good things, and lower the tax rates of working Americans--and it has nothing to do with Social Security or cutting money for roads...

From the book:

In four easy steps, we could have plenty of money ready to pay for everything we need:
• Ask the rich to pay their fair share;
• Be serious about health care costs;
• Reign in Wall Street; and
• Cut, to quote Dwight Eisenhower, the military-industrial complex.

We could do all the above and lower the tax rates of working Americans.

We should do this but not because of a government deficit or debt "crisis".

There is no government debt or deficit "crisis".

We should do all this because it's better to spend our money in other ways---better for the people in our country, better for the people around the world and better for the planet as a whole.

When I say plenty of money, I mean trillions of dollars over the course of the next decade. Yes, that is trillions with a "T".

We can do this if we accept three patriotic principles:

We have to share the great wealth of the country.

The unrestrained "free market" has hurt most of the people.

We can't run the world and we can't force people to bend to our will by using force and violence.

We can do a whole lot of things to make our country a better place to live. All I am doing here is suggesting four--just four--ideas that would give us a whole pile of dough.


We wuz robbed!

Here is a great way of thinking about this, courtesy of David Johnston, a writer on taxes. If you had to live only on the money you saved in the best year of the many tax cuts Congress has passed since 1964, how much would you have? If you were in the bottom 90 percent of the population: less than $800.

If you were in the top 400 of the wealthiest people in the country, your best year would bring a whole lot more: $66.5 million, which, if you invested it at just 5 percent, would give each of those 400 people $247,000 a month to live on. I think I could squeak by on almost a quarter of a million bucks per month. How about you?

We have a hole in our finances because the rich, as Bill Gates Sr. observed, do not want to pay a fair share---and they buy off our politicians who, in return for campaign contributions, give out tax breaks that the rest of the people could never get.

Until we stop the moronic rhetoric that says that every economic ill can be addressed by cutting taxes, our political debate will be stuck in an ideological straightjacket.

The tax cut discussion is a distraction from the far more important challenges facing American workers--as well as an unnecessary drain on our country's strength. Tossing workers a few hundred extra bucks hobbles our ability to make our country safer and healthier. It slows us from launching national health care, funding infrastructure projects and moving the economy towards a carbon-free future.

There is another way. Here's an alternative tax structure:

• Raise the top income tax rates to 40 percent and 45 percent (the top rate is now 35 percent for married taxable income above $351,000);

•Add a top rate of 50 percent for those people with taxable income higher than $1 million and--this is crucial--tax investment income as ordinary income (the proposal also assumes that Congress will fix the Alternative Minimum Tax, which costs the Treasury money).

We could--and should--raise the two new suggested top rates higher, with the top rate for the richest 1 percent set at least at 50 percent.

On, my god, he's a communist! Actually, from 1951-1964, the post-war era, which America's leaders and pundits like to point to as the beginning of a great boom and growth in the country, the top rate was 91% for married couples making $200,000 and up.


Maria Bartiromo Agrees: We Blew Health Care

When you talk about the undeniable economics of "Medicare for All", some people roll their eyes because they want to ignore the facts. But, even the most ardent "free market" cheerleaders are willing to concede.

On July 13th 2009, I was doing a "talking head" segment with CNBC's Maria Bartiromo. She had led off the segment by asking whether the health care debate had become "less about economics and more about class warfare", referring to a debate about whether we should hike taxes on upper-income people to help pay for national health care.

Me: "There is class warfare in the country and the working class is losing. But I think the problem with this tax issue is that we don't want to look at the real issue, which is if we actually had a single-payer "Medicare For All" system on the table this wouldn't even be an issue. If you took Model A of the health care system, which is a 25 percent, 30 percent inefficiency in terms of administrative cost, that's the way the health insurance industry works, and the 3 percent administrative cost that Medicare consumes, you basically would save $300 to $400 billion a year if we went for a single payer, "Medicare For All" system..."

After some back and forth, and comments from another guest, we got back to the issue:

Me: "If you had a single-payer system you would not have that burden on businesses...we put this burden on them when we could take that burden off business if we had a single payer system. The economics of it are clear. All we are dealing with really is politics."

Maria: "It makes perfect sense but why aren't we going that way?"

Me: "When President Obama campaigned as candidate Obama he said I'm in favor of a single payer system. He said however we can't start this system from the beginning and so what he really revealed was he was unwilling, as are too many Democrats, to take on a powerful industry, the insurance industry, on behalf of the American people. Sixty percent of the American people favor a single payer system, let's put that on the table now."

Maria: "What you're saying sounds like it is the most sensible but what we really want to do is figure out what is reality, what is going to be in that health care bill at the end of the day that we're all going to deal with."

There it was. Bartiromo, who takes no back seat to being an unabashed defender of business and capitalism, understood the economics. But, she and Barack Obama, coming from different agendas and different perspectives, both essentially said the same thing: politics and power--and I will add campaign contributions from lobbyists--would eventually triumph in the health care fight over logical economics.

And that is costing our government hundreds of millions of dollars.


Political Courage

See, that was easy.

Even though there is no deficit or debt "crisis", we can put our hands on trillions of dollars over the next decade to wipe away any debt that we might have and, more important, to do better things for the people.

This is not an economics problem.

This is a political problem.

It's not a deficit of money.

It's a deficit of moral leadership and a lack of guts to take on a dysfunctional, decaying ideology called the "free market" and the powerful players behind a bad system who don't want changes because real change--not rhetorical calls for change--will take a lot of money out of the hands of a small number of people.

The people deserve better.


If you want the book, you can buy it on Kindle and Nook, with more formats coming in the next day or so (ITunes should be available soon--just waiting for Apple approval). But, you can also just download it FOR FREE. All the links are here.

The book's Facebook page is here. "Like" it if you are so inclined. It would be much appreciated.