Posted by Herm on August 25, 2010 at 10:19:42:
Why Congress Must End Bush Tax Breaks for the Rich
by Robert Creamer Robert Creamer is a long-time political organizer and strategist, and author of the recent book: “Stand Up Straight: How Progressives Can Win,” available on Amazon.com. 28.07.2010
President Obama has proposed to eliminate the massive deficit-busting Bush tax breaks for the top 2% of Americans - while maintaining tax cuts for 95% of Americans. He is spot on.
The Bush tax breaks are set to expire at year's end, so there is real pressure on Congress to act. Congress should maintain the cuts for individuals earning $200,000 or less, and families earning $250,000 or less. And it should restore the Clinton-era tax rates to the very rich.
It is the right thing to do economically, politically and morally.
First the economics. When it comes to creating jobs, the last people who need more money in their hands are the wealthiest 2% of Americans.
The Republicans charge that eliminating these tax breaks on the rich - and returning them to Clinton-era levels -- would be a "job-killing tax hike in the midst of a recession." Let's recall that while the Clinton-era tax rates applied to the rich in the 1990's, the economy created more than 22.5 million jobs in less than eight years-the most jobs ever created under a single administration. Moreover, the Federal deficit had turned into a surplus for as long as the eye could see. The number of private sector jobs created during the Bush years: zero. The Republican position amounts to nothing more than baseless pandering to the greed of their many wealthy donors.
To create more jobs, our economy needs more economic demand. We need people who are willing to go out and buy products and services. Our economic problem is not that we lack enough people who will go out and work to create the products and services we need to have better lives. Our problem is that there is not enough demand to entice businesses to increase their work forces or buy new plants and equipment.
The economy's fundamental problem is a "demand deficit." There is less economic demand for products and services than the ability we have to produce them. Every day that goes by with plants and workers lying idle, we lose the output they would have produced forever - we squander precious resources that could go to build new homes, or produce more food or invent new sources of energy.
For three decades - from Ronald Reagan through George W. Bush -- the American right wing peddled the notion that by transferring more money to the wealthiest among us, we would entice them to invest more and that the economy would grow. That was the fundamental premise of "supply side economics." In fact, of course, "supply side economics" was really a rationale for why rich people should be richer still.
The "supply side experiment" turned out to be a colossal failure. For eight years, George W. Bush applied the theory in its purest form: increase tax breaks to the rich, eliminate regulations on Big Oil, insurance companies and Wall Street.
The results are there for everyone to see.
The New York Times reported last year that, "For the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period. The total number of jobs has grown a bit, but that is only because of government hiring."
In fact, since George Bush and the Republicans in Congress passed two massive tax cuts, we have seen a massive, secular decline in the creation of private sector jobs.
Of course it won't surprise anyone that this decline has been led by the reduction of American manufacturing jobs. There has been a decline of 3.7% in overall manufacturing jobs in the United States over the last decade.
Remember that we're talking here about an absolute lack of increase in private sector jobs - zero increase in actual jobs -- even as the population of the United States has grown. Economists tell us that the economy must create 150,000 new jobs each month just to stay even with population growth.
The failure of the economy to produce any private sector jobs at all would have been even more devastating had it not been for a small but significant growth in public sector jobs at the state, local and federal levels. Of course these are precisely the kind of jobs that the Republicans and Right decry at every opportunity and claim to want to cut. "Everyone knows," they say, "that job growth is really driven only by the private sector." Wrong…maybe in the imaginary worlds of the Heritage Foundation or Cato Institute, but not in the real world of Republican economic policy.
And let's be clear, the Bush tax cuts didn't just produce fewer jobs than advertised. They didn't produce any private sector jobs at all. The whole experiment in handing over money to the wealthiest people in America so they could use it to benefit the rest of us was a colossal - empirically verifiable - failure.
Now compare that to the Clinton administration where the rich paid Clinton-era tax rates. Of the total of 22.5 million new jobs, 20.7 million, or 92 percent, were in the private sector.
Turns out that when they were given all of those tax cuts, the top two percent of the population used them to speculate in exotic derivatives, to drive up the prices of high-end real estate, pay exorbitant prices to the designers of $4,000 blouses and $2,000 shoes. There is absolutely no evidence that they made any more investments in new manufacturing plants, or started up any more businesses than they would have had they paid the same tax rates that they did when Ronald Reagan took office and private sector job growth was 3% per year.
No, instead the rich used the Bush Tax Cuts to create the gigantic economic "bubble" that ultimately burst and caused immeasurable hardship and suffering to millions of average Americans and everyday people across the globe.
end part 1 of 2