[A-List] Roll Back the Reagan Tax Cuts

[Bill Totten]

Our bridges are falling apart (among other things), and its Ronald
Reagan's fault.

by Thom Hartmann

CommonDreams.org (August 06, 2007)


A few hours before the bridge collapsed in Minnesota, a news release
landed (among hundreds) in my email inbox. It was from the right-wing
"Heartland Institute" and a Minnesota conservative group calling itself
the "Taxpayers League of Minnesota". It read:

Minnesota Governor Tim Pawlenty (R) issued twenty full or partial vetoes
of tax hikes and spending increases in May, giving taxpayers reason to
smile ...

May 1, Pawlenty, in a move that took everyone by surprise, vetoed an
entire $334 million "emergency" capital investment bill. Pawlenty said
in his veto message the bill authorized "more than four times more
spending on projects than I requested and is simply too large".

Two weeks later Pawlenty announced another important veto, this one to
block a transportation bill containing more than $5 billion in tax and
fee increases ...

"Buying down property taxes through local government aid programs has
never proven to be a long-term solution to property tax pressures",
Pawlenty said in a May 30 veto message.

Phil Krinkie, president of the Taxpayers League of Minnesota, agreed.

"Relying on the benevolence of local units of government to restrain
their spending and lower property taxes when the state drops sacks of
money in their lap is simply foolish", Krinkie said. "Thankfully,
Minnesota has a governor that recognizes this".

The transportation bill veto is the only one the DFL (the Democratic
Farm and Labor party which controls the Minnesota legislature) tried to
override. The attempt came with less than twenty minutes remaining in
the session and was defeated by House Republicans, led by Minority
Leader Marty Seifert (R-Marshall).

"Democrats made too many campaign promises to win their seats and are
now learning they can't pay for them", Marshall (Seifert) said after the
failed override attempt.

Ultimately, it was the DFL's inability to override any of Pawlenty's
vetoes - particularly of the transportation bill - that resulted in a
comparatively small $3 billion increase in state spending with no new taxes.

Said Krinkie of the 2007 session, "Minnesotans really need to thank
Governor Pawlenty and Representative Seifert's House Republicans. These
guys stood strong in the face of overwhelming pressure and came through
for taxpayers when they really needed them."

If by "taxpayers" one means "millionaires, billionaires, and
corporations", the news release was accurate. And now its authors have
blood on their hands.


After the Republican Great Depression, FDR put this nation back to work,
in part by raising taxes on income above $3 to $4 million a year (in
today's dollars) to 91 percent, and corporate taxes to over fifty
percent of profits. The revenue from those income taxes built dams,
roads, bridges, sewers, water systems, schools, hospitals, train
stations, railways, an interstate highway system, and airports. It
educated a generation returning from World War II. It acted as a cap on
the rare but occasional obsessively greedy person taking so much out of
the economy that it impoverished the rest of us.

Through the 1950s, though, more and more loopholes for the rich were
built into the tax code, so much so that JFK observed in his second
debate with Richard Nixon that dropping the top tax rate to seventy
percent but tightening up the loopholes would actually be a tax increase.

JFK pushed through that tax increase to take us back toward FDR / Truman
/ Eisenhower revenue levels, and we continued to build infrastructure in
the US, and even put men on the moon. Health care and college were cheap
and widely available. Working people could raise a family and have
security in their old age. Every billion dollars (a half-week in Iraq)
invested in infrastructure in America created 47,000 good-paying jobs as
Americans built America.

But the rich fought back, and won big-time in 1980 when Reagan, until
then the fringe "Voodoo economics" candidate who was heading into the
election trailing far behind Jimmy Carter, was swept into the White
House on a wave of public concern of the Iranians taking US hostages.
Reagan promptly cut income taxes on the very rich from seventy percent
down to 27%. Corporate tax rates were also cut so severely that they
went from representing over 33% of total federal tax receipts in 1951 to
less than nine percent in 1983 (they're still in that neighborhood, the
lowest in the industrialized world). {1}

The result was devastating. Our government was suddenly so badly awash
in red ink that Reagan doubled the tax paid only by people earning less
than $40,000 per year (FICA), and then began borrowing from the huge
surplus this new tax was accumulating in the Social Security Trust Fund.
Even with that, Reagan had to borrow more money in his eight years than
the sum total of all presidents from George Washington to Jimmy Carter
combined.

In addition to badly throwing the nation into debt, Reagan's tax cut
blew out the ceiling on the accumulation of wealth, leading to a new
Gilded Age and the rise of a generation of super-wealthy that hadn't
been seen since the Robber Baron era of the 1890s or the Roaring 1920s.

And, most tragically, Reagan's tax cuts caused America to stop investing
in infrastructure. As a nation, we've been coasting since the early
1980s, living on borrowed money while we burn through (in some cases
literally) the hospitals, roads, bridges, steam tunnels, and other
infrastructure we built in the Golden Age of the Middle Class between
the 1940s and the 1980s.

We even stopped investing in the intellectual infrastructure of this
nation: college education. A degree that a student in the 1970s could
have paid for by working as a waitress at a Howard Johnson's restaurant
(what my wife did in the late 1960s - I did so working as a
near-minimum-wage DJ) now means incurring massive and life-altering debt
for all but the very wealthy. Reagan, who as governor ended free tuition
at the University of California, put into place the foundations for the
explosion in college tuition we see today. {2}


The Associated Press reported on August 4 2007, that the president of
Nike, Mark Parker, "raked in $3.6 million (in compensation) in 2007".
That's $13,846 per weekday, $69,230 a week. And yet it would still keep
him just below the top seventy percent tax rate if this were the
pre-Reagan era. We had a social consensus that somebody earning around
$3 million a year was fine, but above that was really more than anybody
needs to live in America.

In the worldview Americans held in the 1930-1980 era, Parker's
compensation was reasonable. But William McGuire (aka in the business
press as "Dollar Bill") {3} taking over $1.6 billion - $1,600,000,000 -
from the nation's second largest health insurance company (you wonder
where your health care dollars are going?) would have been considered
excessive before the "Reagan Revolution".

There is much discussion of what the floor on earnings should be - the
minimum wage - but none about the ceiling. That's largely because
effectively there is no ceiling, and those who control vast wealth in
America are happy to have Americans fight over "How poor is too poor?"
just so long as nobody asks "How rich is too rich?"

When Reagan dropped the top income tax rate from over seventy percent
down to under thirty percent, all hell broke loose. With the legal and
social restraint to unlimited selfishness removed, "the good of the
nation" was replaced by "greed is good" as the primary paradigm.

In the years since then, mind-boggling wealth has risen among fewer than
20,000 people in America (the top 0.01 percent of wage-earners), but
their influence has been tremendous. They finance "conservative" think
tanks (think Joseph Coors and the Heritage Foundation), change public
opinion (Walton heirs funding a covert effort to change the "estate tax"
to the "death tax"), lobby congress and the president (who calls the
"haves and the have-more's" his "base"), and work to strip down public
institutions.

The middle class is being replaced by the working poor. American
infrastructure built with tax revenues during the 1934-1981 is now
crumbling and disintegrating. Hospitals and highways and power and water
systems have been corporatized. People are dying.

And Bush, following closely in Reagan's footsteps, is making things
worse. As Senator Bernie Sanders pointed out at recent hearings for the
confirmation of Bush's new nominee for the Office of Management and Budget:

Since Bush has been president:

* over five million people have slipped into poverty;

* nearly seven million Americans have lost their health insurance;

* median household income has gone down by nearly $1,300;

* three million manufacturing jobs have been lost;

* three million American workers have lost their pensions;

* home foreclosures are now the highest on record;

* the personal savings rate is below zero - which hasn't happened since
the great depression;

* the real earnings of college graduates have gone down by about five
percent in the last few years;

* entry level wages for male and female high school graduates have
fallen by over three percent;

* wages and salaries are now at the lowest share of GDP since 1929.


The debate about whether or not to roll Bush's tax cuts back to
Clinton's modest mid-30% rates is absurd. It's time to roll back the
horribly failed experiment of the Reagan tax cuts. And use that money to
pay down Reagan's debt and rebuild this nation.

_____

Thom Hartmann (thom at thomhartmann.com) is a Project Censored
Award-winning New York Times best-selling author, and host of a
nationally syndicated daily progressive talk program on the Air America
Radio Network: www.thomhartmann.com

His most recent books are The Last Hours of Ancient Sunlight, Unequal
Protection: The Rise of Corporate Dominance and the Theft of Human
Rights, We The People, What Would Jefferson Do?, Screwed: The Undeclared
War Against the Middle Class, and Cracking The Code: How to Win Hearts,
Change Minds, and Restore America's Original Vision. See thomhartmann.com.


References:

{1} The Decline of Corporate Income Tax Revenues by Joel Friedman,
Center on Budget and Policy Priorities (October 24 2003)
http://www.cbpp.org/10-16-03tax.htm

{2} The Educational Legacy of Ronald Reagan by Gary K Clabaugh, Summer
2004 educational Horizons (edited July 25 2004)
http://www.newfoundations.com/Clabaugh/CuttingEdge/Reagan.html

{3} "McGuire's payday is a shame, if not a crime: High executive pay at
United Health Group has had ripple effects throughout the health care
industry, critics say" by Neal St Anthony, Star Tribune (April 21 2006)
http://www.startribune.com/1069/story/386343.html

http://www.commondreams.org/archive/2007/08/06/3003/


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