I must respond to the “Other voices” article in The Union Feb. 4 by Claudia Taylor. Her statements are another example of the Republicans being out of touch with reality and pursuing an economic agenda that is devoid of empirical facts and history. There are three statements I would like to dispute.
First, “Democrats only want to squeeze money out of the sources (wealthy people and large corporations) that are producing (jobs).”
The Reagan revolution first promoted this idea — Reaganomics — give money to the rich (tax cuts) and the money will trickle down to everyone else. George W. Bush and the Republican-controlled Congress in both houses passed two large tax cuts, mainly benefiting the rich. They also cut the capital gains tax to 15 percent and reduced the estate tax, thus putting more money in the hands of the investor class — the rich. The results of all this money being given to the rich through Republican tax policies has resulted in the top 1 percent of individuals in this country now owning wealth equal to the bottom 90 percent. Where is the trickle down? Where are the jobs?
So if individuals with great wealth are not creating jobs, it must be corporations that need more money so they will create jobs. Right? In the last 30 years, corporations, through deductions, exemptions and loopholes, have seen their taxes greatly reduced. From 2008 to 2010, more than 30 large companies not only paid no income tax but actually got tax rebates. A classic example is Exxon. In 2009, Exxon made more than $19 billion and paid no income tax and actually received $156 million in rebates. Twenty-five percent of large corporations paid no income tax over the last five years. Corporate profits are at an all time high. They are sitting on more than $2 trillion in assets. CEOs’ pay has increased 725 percent from 1978 to 2011. Workers’ pay during that same time rose 5.7 percent. In 1960, the ratio of CEO to worker salary was 20:1; now it is 209:1. Where are the jobs?
By all objective measurements, the wealthy are doing just fine. They are hardly being squeezed. Yet they are not creating jobs. The Bush presidency saw the worst job growth in 50 years. The economy, as measured by GDP, saw the worst growth in 50 years. If anything, the economic plan of the Republicans — the Ryan Budget — would squeeze money out of the poor and middle class by cutting such programs as Social Security, Medicare, unemployment insurance, food stamps and Head Start.
Second, “Obama’s version of sacrifice is economic suicide.”
Let’s look at history for the answer. From 1940 to 1960, the top progressive income tax rate was 70 to 90 percent. Corporate taxes accounted for, on average, about 40 percent of the total tax revenue of the federal government. (Now it’s about 10 percent). All income groups increased their income fairly equally. We had shared prosperity. The growth of the middle class during that time was the envy of the world. And what did we, the people, through our government do with this revenue? We paid down the huge debt incurred during World War II. We had the G.I. Bill that helped veterans go back to college. We had investment in our education systems, building schools and hiring teachers. We had strong unions that helped raise the average wages of the middle class. We had investment in infrastructure, building roads, the interstate highway, bridges, dams, levees, sewage treatment plants and rural electrification. We invested in research and development. We went to the moon. We created programs to ensure our elderly could retire with dignity by creating Social Security and Medicare. We created social safety net programs like unemployment insurance, disability insurance, food stamps and Medicaid.
Today, all Democrats want to do is bring some fair taxation and economic balance to our economy by asking the wealthy to pay their fair share — but also realizing the government must be more efficient stewards of taxpayers’ money by reducing waste in government. This plan is hardly economic suicide.
Third, “the real problem — overspending.”
According to the CBO, government spending as a percentage of GDP is the lowest it’s been in 50 years: 1.4 percent under Obama, 7.5 percent GW Bush, 3.5 percent Clinton, 6.8 percent Reagan. So the real problem is not over-spending but under-taxation (revenue). Since the private sector is not producing enough jobs for a healthy economy, the government should “prime the pump” and get our economy growing again by passing Obama’s Jobs Bill.
Republicans, please help instead of hindering our economy.
Nancy Eubanks is chair of the communications committee for the Nevada County Democrats.
By all objective measurements, the wealthy are doing just fine. They are hardly being squeezed. Yet they are not creating jobs.