Republicans offered Democrats two more weeks before the doomsday shut-down. Democrats countered with four. Republicans held their ground. Democrats agreed to two.
This is what passes for compromise in our nation's capital.
Democrats have become irrelevant. If they want to be relevant again they have to connect the dots: The explosion of income and wealth among America's super-rich, the dramatic drop in their tax rates, the consequential devastating budget squeezes in Washington and in state capitals, and the slashing of public services for the middle class and the poor.
It is not a complicated story. Begin with what's happened to the typical American, whose wages have been stagnant for thirty years. Today's typical 30-year-old male (if he has a job) is earning the same as a 30-year-old male earned three decades ago, adjusted for for inflation. (Although women are doing better than they did 30 years ago, their wages still trail men's.)
The bottom 90 percent of Americans now earn, on average, only about $280 more per year than they did thirty years ago. That's less than a 1 percent gain over more than a third of a century. Families are doing somewhat better but that's only because so many families now have to rely on two incomes.
But wait. The American economy is more than twice as large now as it was thirty years ago. So where did the money go? To the top. The richest 1 percent's share of national has doubled -- from around 9 percent in 1977 to over 20 percent now. The richest one-tenth of 1 percent's share has tripled. The 150,000 households that comprise the top one-tenth of one percent now earn as much as the bottom 120 million put together.
Given this explosion of income at the top you might think our tax system would demand a larger share from them. But you'd be wrong. You're not taking account of the power of the super rich. As income and wealth have risen to the top, so has political power. As a result, their taxes have plummeted.
From the 1940s until 1980, the tax rate on the highest earners in America was 70 percent or higher. In the 1950s, it was 91 percent. Even if you include deductions and credits, the rich were paying a far higher share of their income than at any time since.
Under Ronald Reagan the top rate dropped to 28 percent. Under Bill Clinton it rose to 39 percent and then under George W. Bush dropped to 36 percent. As you recall, Republicans have managed to keep it there. Their avowed aim is to keep it there permanently.
Meanwhile, estate taxes (which hit only the top 2 percent) have been slashed, as have taxes on capital gains -- which comprise most of the income of the super rich. In the late 1970s, capital gains were taxed at well over 35 percent. Under Bill Clinton, the capital gains rate was 20 percent. Now it's 15 percent.
So who's going to foot the bill for everything we need? Even before the Great Recession, the middle class's share of the nation's total income had shrunk. Yet their tax burden had grown. They were paying a bigger chunk of their incomes in payroll taxes, sales taxes, and property taxes than decades before.
Then came the Great Recession -- and with it, lower tax revenues. That means all levels of government are squeezed. Obviously, the middle class can't pay more in taxes. But because the Democrats seem to lack the intestinal fortitude to suggest the obvious - that taxes need to be raised on the super rich -- we're left with a mess.
Teachers are being fired, Pell grants for the poor are being slashed, energy assistance for the needy is disappearing, other vital public services shriveling. Regulatory agencies don't have the budgets to pay the people they need to enforce the law. Even if it wanted to the Securities and Exchange Commission couldn't police Wall Street.
All of which is precisely where Republicans want the nation to be. It sets them up perfectly to blame government, blame public employees, blame unionized workers. It lets them pit workers against one another, divide the Democratic base, and promote the false idea that we're in a giant zero-sum game and the nation can't afford to do more.
It diverts attention from what's happened at the top -- so no one sees how well CEOs and Wall Street bankers are doing again, no one views the paybacks and tax giveaways engineered by their Republican patrons, and no one focuses on the tide of money flowing from the likes of billionaires Charles and David Koch into Republican coffers.
Where are the Democrats? Shuffling their feet, looking at the floor. "Please oh please give us four weeks before you shut us down," they ask. "No," say the Republicans, "you'll get only two." "Well, alright then," say the Democrats.
Here's what Democrats should be saying:
Hike taxes on the super-rich. Reform the tax code to create more brackets at the top with higher rates for millionaires and billionaires. Absurdly, the top bracket is now set at $375,000 with a tax rate of 35 percent; the second-highest bracket, at 33 percent, starts at $172,000 for individuals. But the big money is way higher.
The source of income shouldn't matter -- salary, wages, capital gains, other unearned income -- all should be treated the same. There's no reason to reward speculators. (Don't penalize true entrepreneurs, though. If they're owners who have held their assets for at least twenty years, keep their capital gains low.)
And while you're at it, raise the ceiling on income subject to Social Security taxes. And bring back the estate tax.
Do this and we can afford to do what we need to do as a nation. Do this and you prevent Republicans from setting the working middle class against itself. Do this and you restore some balance to a distribution of income and wealth that's now dangerously out of whack.
Do this, Democrats, and you have a chance of being relevant again.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Meanwhile, as we say nothing, or just whisper it to the choir, repugs Stay on Message. They don't quit. We never start.
I would absolutely love it if Obama and the Dem leaders would start to tell it like it is - repeatedly, publically, and not just to the choir - with an On Message spiel as loud as the repugs use. But they won't. They just refuse to. Even when it loses them elections. It baffles me.
If you read sites and forums like this one, you see plenty of Democrats with the fortitude to state the obvious. Why are the spineless ones the ones who keep getting elected?
The answer: nothing. It would only serve to enrich government. You would think Mr. Reich should be able to present a logical argument instead of the same old socialist propaganda we have come to expect from his writings.
Common sense.
As the Federal government has more money to spend, it will spend it on things like roads and bridges and schools and other infrastructure improvements. Those construction jobs employ the 30 year old male in some capacity, females as well, whether in the actual construction or planning or engineering or waiting on the construction workers in the local diner.
Jobs get created when the government spends money. It's that simple.
Bill Clinton had a nice surplus so he was able to spend money and look how robust the economy was, save for the internet bubble which was fueled by Wall Street speculators and not by the government. The government created the infrastructure that allowed the internet to be built and with it hundreds of thousands of jobs.
Government spending is the true trickle down economics.
Never mind that not doing so will punish middle and especially lower class kids by taking away WIC and increasing class sizes.
But isn't it better to punish children who haven't done anything wrong....you know, because they are children, or punish our "betters" for simply having more money than they know what to do with?
The Democratic Party has shown itself to be incapable of fashioning an effective alternative, tethered as it is to the same financial life-support line as the so-called "opposing" party. Until the problems illustrated in this article become critical to wide segments of the population and so fundamental that even elements of the right begin to realize they are being had as naive tools, little will happen through exercise of suffrage within the confined parameters of Dem/Repub.
As Rachel Maddow pointed out on her program last night: if the choice is
between a Real Conservative and a want-to-be Conservative, People will
chose the real thing...why chose the water down version than the real
thing?
Unfortunately, the wheels of America have come off, long ago. The
solution of fixing the problem has not yet clearly dawned on us.
The wealthy conservatives and corporations in this country have purchased a very powerful machine, and it is proving to serve them very well, but selfishness and inequality have never been admirable American values. This needs to be explained and framed in a fair but very powerful way. The American dream was not meant to be for just the powerful and those who have a talent for making money. It will be a far better America when the Dream can be restored and again realized for all.
Prof. Reich's analytics and messages need to be adopted by the Democratic leadership, starting with the President. Progressives have the facts and the issues...they just need the organization and energy!
From the Center On Budget and Policy Priorities report Feb. 28, 2011