Robert ReichBack to OpinionRobert Reich

Stop the austerity train wreck

Photo: AP Photo/Cliff Owen

The biggest question right now on Planet Washington is whether the congressional supercommittee will reach an agreement.

That’s the wrong question. Agreement or not, Washington is on the road to making budget cuts that will slow the economy, increase unemployment and impose additional hardship on millions of Americans.

The real question is how to stop this austerity train wreck, and substitute the following:

FIRST: No cuts before jobs are back – until unemployment is down to 5 percent. Until then, the economy needs a boost, not a cut. Consumers, whose spending is 70 percent of the economy, don’t have the money to boost the economy on their own. Their pay is dropping and they’re losing jobs.

SECOND: Make the boost big enough. Fourteen million Americans are out of work, and 10 million are working part time and need full-time jobs. The president’s proposed jobs program is a start but it’s tiny relative to what needs to be done; it would create fewer than 2 million jobs. We need a big jobs program – rebuilding America’s crumbling infrastructure, and including a WPA and Civilian Conservation Corps.

THIRD: To pay for this, raise taxes on the super-rich. It’s only fair. Never before has so much income and wealth been concentrated at the very top, and taxes on the top so low. Go back to the 70 percent marginal tax we had before 1980. And include more tax brackets at the top. It doesn’t make sense that any income over $375,000 is taxed at the same 35 percent, even if it’s a billion dollars. And tax all sources of income at the same rate, including capital gains.

FOURTH: Cut the budget where the real bloat is. Military spending and corporate welfare. End weapons systems that don’t work and stop wars we shouldn’t be fighting to begin with, and we save over $300 billion a year. Cut corporate welfare – subsidies and special tax breaks going to big agribusiness, big oil, big pharma, and big insurance – and we save another $100 billion.

Do you hear me, Washington? Do these four things and restore jobs and prosperity. Fail to do these, and you’ll make things much, much worse.

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

  • Pj_b

    If everyone has to tighten their belt it’s only fair that the “Bush” tax breaks be abolished & all Corporate subsidies & tax breaks, tax also Capital gains.  The belief that Corporations will stop creating jobs is a reality now, they send their jobs overseas not to employ Americans.  I guess no one remembers when Bush gave 1 Billion to big Pharma then stopped Medicare from being able to negotiate better prices for drugs. Why do you think the wealthy from other nations move here – to avoid high taxes. We have the lowest tax rate for the super wealthy in the world. After all, the wealthy wouldn’t be so rich if they didn’t get their start in this country.

  • huckfinn

    It is strange how the people clamoring for more tax cuts now were the same ones pushing for Bush’s tax cuts, and wars in Afghanistan and then Iraq, all withut paying a dime for them.  It is apparently OK to run up a deficit on your own watch for the things you want, but not when we are fixing the damage you caused. It is time to tell them that they need to prove their country comes before self-interest.

  • Drpeoples

    Tax increase, tax reduction…it is all Washington DC speak,  Our tax system is out of touch and makes us non-competitive on the global market.  Even Obama’s commission on economic growth conclude we needed to fix our corporate tax structure.  It is simple, get rid of the 75 special interest tax avoidance in the federal tax code, reduce the corporate tax from 35% tp 20% and we will collect more tax revenue and increase investments in the US and jobs in the US.  It worked under the Kennedy administration and it will work now.  Tell our lazy scared politicians to stop worrying about getting re-elected and give us a chance for employment. 

  • CalNative

    Bush didn’t “give” 1 billion to the drug companies, he gave a new prescription benefit to Medicare beneficiaries and then prevented HHS from using volume discounting; this was worth tens of billions. BTW Obama did exactly the same thing with so called “reform”. They both work for the same masters, differing only in their marketing schemes. The actuaries project Medicare is bankrupt by 2017, necessitating either tax increases or benefit cuts; do you see anyone who acknowledges any this (Dr. Ron Paul does).

  • CalNative

    As usual Reich whines about tax rates while ignoring the root of the problem, which is globalization itself. Hey Bobby what happened to the “export jobs” Bill Clinton promised us when he was shilling for the Chinese and Mexican trade sell-outs.Perhaps another case of Bill mixing up his nouns and verbs.

     His lack of specificity about budget cuts is unworthy of freshman composition–Afghanistan? How about Korea?  Why are we even still in Europe? So that we get sucked into whatever trouble breaks out. Strange how Al Queda never attacks the Council on Foreign Relations, seeing as how the policies that seem to upset them so much are made there (they make the policy no matter who is elected).

    The only people who ever paid that 70% rate were a few show biz types that weren’t smart enough to hire slick accountants and lawyers. Think the Kennedys, Rockefellers, etc. didn’t find ways to shelter their income? Today there is a stampede to the offshore banks, completely outside the reach of U.S. law. The U.S. Justice Dept. showed its priorities when they prosecuted the UBS whistleblower (see “60 Minutes” episode on the subject) and let thousands of confirmed tax cheats go–protecting their identities, apparently including numerous recognizable figures from entertainment and sports, and some of the politicians themselves.

  • Levine

    Robert Reich is prescribing compassionate common sense to a completely out of control and corrupt ruling class and their employees, none other than the government of the U.S.A.  How do you change a system like this?  Hopefully the 99%  will persist and persist.

  • http://outputbasedmoney.info Jgelles3

    Austerity NOW is insane. Inadequate aggregate demand NOW is insane as well. Keynes explained how supply must be balanced by demand for full employment to be achieved — a must today to save democracy from itself. Taxes must be zero’d out — they never fund government ; sovereign money funds government. Later, if inflation-protected savings cannot prevent hyper-inflation, taxes will do it. Output Based Money (to supplement debt based money is essential. Google it.

  • Fortom Jf

    I agree with everything, but the biggest is taxing corporations, and/or putting a tariff on companies that move over-seas.  this need to stop!