Why the economy doesn’t work for the 99%

Today’s New York Times has a really good picture of what’s happened to America’s economy over the past 50 years.

Please take a few minutes to look at it, and pay particular attention to what’s happened since the Bush tax cuts started going into effect in 2001.

  • Corporate profits are at their highest level ever.  After-tax corporate profits were 5% when the Bush tax cuts started taking effect — now they’re at 9.7%.
  • Wages are at their lowest level level ever.  When the Bush tax cuts started taking effect, 46.7% of the gross domestic product was paid to workers as wages — now it’s 42.6%.
  • Corporate taxes are at almost-record lows.  Corporations paid 30% of their profits as taxes, when the Bush tax cuts started taking effect — now they pay 21.6%.
  • Personal taxes have also dropped.  Taking all taxpayers together (the 1% as well as the rest of us), individuals paid 17.8% of their incomes as taxes when the Bush tax cuts started taking effect — now, it’s 14.1%.

Remember, the Bush tax cuts were supposed to be temporary.  They were supposed to “stimulate the economy” and then expire in 2011.

Instead, the Republicans in Congress have used one fiscal crisis after another to keep most of those tax cuts in place.

Top Tax Rates 1952-2008And now they’re talking as if those Bush-era tax rates are a ceiling, not a floor.  (Read “Corporate Tax Cuts are almost twice the Sequester cuts” here.  Read about the $161 billion annual cost of the dividend and capital gains tax cuts here.)

Republicans in Congress keep agitating about the federal debt — but they’re not willing to raise revenues by returning to historical tax levels.  No, the GOP keeps insisting that the only way to address the debt is by cutting “entitlements”.

Let’s use real words, here, so everyone knows what the choice comes down to.  Translated from GOP-speak, “entitlements” are Social Security, Medicare and Medicaid.  (Remember, you have paid into the Social Security and Medicare trust funds with every paycheck, for as long as you’ve been working.)

So here’s the choice:

  1. Congress can continue to let the federal debt grow.
  2. Congress can return taxes to historical levels.
  3. Congress can cut Social Security, Medicare and Medicaid.

Congress is going to be making this choice over the next two and a half months.  The current federal budget expires on September 30th — about the same time that the federal government will hit the debt limit (again).

Go back and look at those New York Times “what happened to the economy” charts again.

Don’t you think it’s time to finally end the Bush tax cuts?

 

The House GOP Is Acting Like Teenagers, As President Obama Submits His Budget

This Wednesday, President Obama is expected to file his budget proposal for the next fiscal year.

Are you wondering why his budget is expected to include

Straight from an observer in DC, here is the best explanation I’ve heard so far:  Having President Obama support these policies is a guaranteed way to get Republicans to oppose them.

“Yes, we have reached that level of adolescence on Capitol Hill.”

By U.S. Navy photo by Photographer’s Mate 2nd Class Nathanael T. Miller [Public domain], via Wikimedia Commons

Here’s the thing about teenagers: they don’t always think ahead to the consequences of their actions.

Promises, promises…

A lot of promises were made, back when the Bush tax cuts were first enacted.

Back in 2001, the Heritage Foundation projected that:

  • “Under President Bush’s plan, an average family of four’s inflation-adjusted disposable income would increase by $4,544 in fiscal year (FY) 2011, and the national debt would effectively be paid off by FY 2010.”
  • “The plan would save the entire Social Security surplus and increase personal savings while the federal government accumulated $1.8 trillion in uncommitted funds from FY 2008 to FY 2011.” (“Uncommitted funds” is a fancy way of saying “surplus”.)

Did your family’s disposable income increase by $4,544 last year? (Wondering how the top 1% are doing? Browse through “How to Spend It” here.)

Has the national debt been paid off?
Is the Social Security surplus “safe”?
Has your family been able to increase your savings?

What happened to the $1.8 trillion federal surplus that was supposed to appear, after the tax cuts stimulated the economy and the “job creators” created jobs?

Lots of promises were made, back when Republican Leadership was forcing the Bush tax cuts through Congress. [Historical footnote: both the 2001 tax cuts and the 2003 tax cuts were passed in a way that made them exempt from Senate filibuster. In 2003, the Senate vote was 50-50 after Republican Senators John McCain, Lincoln Chafee and Olympia Snowe voted “nay”; and Vice President Dick Cheney cast the deciding vote to enact the bill.]

Those promises never panned out. But now, Republican leaders in Congress are acting as if high-income taxpayers are somehow entitled to the low tax rates they have been enjoying for the last decade

What’s up with this idea of “entitlement”?

Millions of American workers have paid into the Social Security system for decades, based on the promise that we would get Social Security benefits when we retired. Isn’t it reasonable for all of us workers to think we’re entitled to the benefits we contributed to? But now, Congressional Republicans are insisting on “adjustments to eligibility and benefits in the Social Security and Medicare programs.”

One man – Dick Cheney – cast the deciding vote to give the wealthy their tax cuts; but now Congressional Republicans think those tax cuts are somehow sacred. Just two days ago, Senate Minority Leader Mitch McConnell told a hometown newspaper that any “fiscal cliff” deal “must not raise taxes on wealthy.”

Sense of “entitlement”?

“Gifts” from the government?

The Bush tax cuts were supposed to “jump-start” our economy. They were supposed to “trickle down” and enrich working families. They were supposed to eliminate the country’s debt. They didn’t do any of that – but now Congressional Republicans want us to pay the price, through cuts to our Social Security and Medicare benefits.

Didn’t they get the memo? Romney-Ryan lost.