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TOPIC: "Our Banana Republic" (11/6/10)


Diamond

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"Our Banana Republic" (11/6/10)
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Read @ NYTimes.com
(Emphasis added)
Op-Ed Columnist

Our Banana Republic

In my reporting, I regularly travel to banana republics notorious for their inequality. In some of these plutocracies, the richest 1 percent of the population gobbles up 20 percent of the national pie.

But guess what? You no longer need to travel to distant and dangerous countries to observe such rapacious inequality. We now have it right here at home — and in the aftermath of Tuesday’s election, it may get worse.

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.

That’s the backdrop for one of the first big postelection fights in Washington — how far to extend the Bush tax cuts to the most affluent 2 percent of Americans. Both parties agree on extending tax cuts on the first $250,000 of incomes, even for billionaires. Republicans would also cut taxes above that.

The richest 0.1 percent of taxpayers would get a tax cut of $61,000 from President Obama. They would get $370,000 from Republicans, according to the nonpartisan Tax Policy Center. And that provides only a modest economic stimulus, because the rich are less likely to spend their tax savings.

At a time of 9.6 percent unemployment, wouldn’t it make more sense to finance a jobs program? For example, the money could be used to avoid laying off teachers and undermining American schools.

Likewise, an obvious priority in the worst economic downturn in 70 years should be to extend unemployment insurance benefits, some of which will be curtailed soon unless Congress renews them. Or there’s the Trade Adjustment Assistance program, which helps train and support workers who have lost their jobs because of foreign trade. It will no longer apply to service workers after Jan. 1, unless Congress intervenes.

So we face a choice. Is our economic priority the jobless, or is it zillionaires?

Continues @ NYTimes.com
=========================

Terrific article .

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Democracy needs defending - SOS Hillary Clinton, Sept 8, 2010
Democracy is more than just elections - SOS Hillary Clinton, Oct 28, 2010

Madam Secretary Blog at ForeignPolicy.com
Project Vote Smart - Stay informed and engaged!


Administrator

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I am not a big believer of taxing the wealthy

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Diamond

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In an upswing economy where jobs are being generated in the country, tax cut for the wealthy may work.  But that is not where we are at.

U.S. has progressive taxation model, that in effect is more punitive to the poor already. On top of which, Pres.W.Bush gave very hefty tax cuts. That in addition to the highly costly wars has left the country bleeding beyond belief.

Unfortunately for the U.S., the 6+ years of tax cut for the rich has not produced jobs.

We are in a wage differential situation that is not advantageous to the country. The rich are sitting on the extra cash that the tax break is giving and not ploughing it back into the U.S. economy.

Meanwhile, the country is loosing jobs.

Perhaps the worst statistic I have seen is the one that looks at growth of hourly wages over the last 50 years. In 1972, the average worker earned 20 dollars an hour (inflation adjusted to 2008 dollars). In 2008, that had DROPPED to 18.50 per hour:

real-average-earnings-have-not-increased-in-50-years.jpg
Meanwhile, inflation has been up already...and even today, I noticed my grocery bill was higher than prior - it is noticeable in household spending on same goods on basics - veggies, fruits, milk, pasta, rice, milk, some cheese, stock popcorn, some butter - nothing grand.  Veggies and fruits prices in particular has more than doubled in just this last year.

And another chart that shows the income growth rate of the top strata. It is too ridiculous.  


Listen to David Stockman, Ronald Reagan's budget director in Deficits: Taxing The Rich.  Among the many things that Stockman says that are truly astounding is this tidbit: People in the top 2% of income bracket made more money ince 1980 than all of humanity combined before 1980.  This, as we have seen the above decline in true wages of thoe on payroll, not to mention heavy loss of jobs leading to total reduction of the count on payroll itself (denominator of the equation that computes the above graph).

Yes, there was a good reason why Pres.Bill Clinton's progressive taxation worked. He used the money to put it back into the economy for structural improvement and combined that with incentive payout to businesses that generated jobs.

I like expense reduction.  But it cannot come at the expense of education and health care at a tiem when the population is aging (average age is fast going up) and the skillbase of the country is not easily competing in the global economy. 

We simply do not have the luxury of letting things go the same course as last 6+ years on how the rich utilize their savings (from not paying taxes).

I favor tax cut for those with income below $250k, which is what Hillary had in her plans.  She too planned on utilizing the added tax income from bringing tax rate back upto Pres.Bill Clinton's tax rate and utilizing the additional income towards Universal Health Care and infrastructure and education.  She talks about that in this toward the latter part.


-- Edited by Sanders on Sunday 7th of November 2010 08:24:20 PM

__________________
Democracy needs defending - SOS Hillary Clinton, Sept 8, 2010
Democracy is more than just elections - SOS Hillary Clinton, Oct 28, 2010

Madam Secretary Blog at ForeignPolicy.com
Project Vote Smart - Stay informed and engaged!


Diamond

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Posts: 4567
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Also,  I would encourage people reading these two books by David Cay Johnston:

Perfectly legal: the covert campaign to rig our tax system to benefit the rich

and

Free lunch: how the wealthiest Americans enrich themselves at government expense



Patriotic re-investing in the U.S. economy is not what we have been seeing. 

Of course there are  great exceptions and wonderful people.

-- Edited by Sanders on Sunday 7th of November 2010 08:51:20 PM

__________________
Democracy needs defending - SOS Hillary Clinton, Sept 8, 2010
Democracy is more than just elections - SOS Hillary Clinton, Oct 28, 2010

Madam Secretary Blog at ForeignPolicy.com
Project Vote Smart - Stay informed and engaged!
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