Robert ReichBack to OpinionRobert Reich

A fight worth having

President Barack Obama in the Rose Garden of the White House in Washington, Monday, Sept. 19, 2011. Photo: AP Photo/Evan Vucci

So the really big fight — perhaps the defining battle of 2012 — won’t be over Medicare. It won’t even be over Obama’s jobs program.

It will be over whether the rich should pay more taxes.

The president has vowed to veto any plan to tame the debt that doesn’t increase taxes on the rich. The Republicans have vowed to oppose any tax increases on the rich.

It’s a good fight to have.

In a Rose Garden ceremony yesterday morning, Obama proposed new taxes on the wealthy — including a special new tax for millionaires, the closing of loopholes and deductions for people making more than $250,000 a year, and an end to the portion of the Bush tax cut going to higher incomes.

Republicans accuse the president of instigating “class warfare.” But it’s not warfare to demand the rich pay their fair share of taxes to bring down America’s long-term debt.

After all, the richest 1 percent of Americans now takes home more than 20 percent of total income. That’s the highest share going to the top 1 percent in almost 90 years.

And they now pay at the lowest tax rates in half a century — half the rate they paid on ordinary income prior to 1981.

(Unfortunately, the president isn’t proposing to raise the capital-gains tax — which, now at 15 percent, creates a loophole large enough for the super-rich to drive their Ferrari’s through. About 80 percent of the income of America’s richest 400 comes in the form of capital gains. Here’s where billionaire hedge-fund and private-equity fund managers make out like bandits. As I’ve noted, I also wish he aimed higher — for more brackets and higher rates at the very top. But at least he’s drawn a line in the sand. The veto message is clear.)

Anyone who says the American economy suffers when the rich pay more in taxes doesn’t know history. We grew faster the first three decades after World War II than we have since.

Trickle-down economics has been a cruel joke.

On the other hand — given projected budget deficits — if the rich don’t pay their fair share, the rest of us will have to bear more of a burden. And that burden inevitably will come in the form of either higher taxes or fewer public services.

If anyone’s declared class warfare it’s the people who inhabit the top rungs of big corporations and Wall Street (and who comprise a disproportionate number of America’s super rich). They’ve declared it on average workers.

The ratio of corporate profits to wages is higher than it’s been since before the Great Depression. And even as corporate salaries and perks keep rising, the median wage keeping dropping, and jobs continue to be shed.

You’ve got the chairman of Merck taking home $17.9 million last year. This year Merck announces plans to boot 13,000 workers. The CEO of Bank of America takes in $10 million, and the bank announces it’s firing 30,000 workers.

Maybe I’m old-fashioned, but the way I see it we’ve got a huge budget deficit and a giant jobs problem. And under these circumstances it seems to me people at the top who have never had it so good should sacrifice a bit more, so the rest of us don’t have to sacrifice quite as much.

According to the polls, most Americans agree.

Published by arrangement with RobertReich.org.

Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written 11 books (including his most recent, “Supercapitalism,” which is now out in paperback).

 

Comments

  • Orlando SEO

     The middle class is quickly evaporating as America struggles.

  • Sanduchi13

    So the president is not changing the capitol gains tax so as you say you can still drive a Ferrari through it and that angers me and don’t even go to that webiste on Republicans TOTALLY supporting the richest 1% getting the highest share of income in ninety years- That is why I am not a Republican anymore and I will be looking for somewhere else to go unless Obama gets his ca ca together to do the right thing ALL the through for taxes on the rich.    I totally agree with Robert Reich and everything he has written here and I think we are ALL getting to the saturation point.  Everyone is just so tired of this crap.

  • http://growthisnotsustainable.blogspot.com/ Growth is not sustainable

    I am sick of the term “job creators” as if they were creating jobs out of the goodness of their hearts.
    They create jobs to support their business… so they can make money.

    Without workers the economy comes to halt.
    Without buyers (re middle class) the economy comes to a halt.

  • george

    robert reich, the socialist, has failed to include one important fact in his article, which is that the richest 1% pay 38% of all federal income taxes! Yeah, maybe they should gave a little more, like say 50%? Robin Hood stole from the rich and gave to the poor, sounds like the federal government is playing the role of robin hood, the poor are playing themselves and the rich are going to get robbed again. And people like reich want to be one of Robin Hood’s marry men!

  • http://www.facebook.com/shon.jimenez Shon Jimenez

    Obama only dreams of doing anything positive. He is a failure as president and will go down in history as the worst president, Jimmy Carter used to own that.