With the Grand Bargain silly season upon us, most celebrity pundits, along with too many Democrats are talking about what cuts to make. Never mind that this is a completely artificial ‘crisis’, unlike, let’s say, a wall of water from a tropical storm. Just to pose a hypothetical situation.
While I support some deficit reduction measures, such as raising taxes on the wealthy are good for their own sake (reduction of high-end inflation, lessening the political power of the wealth, favoring wage income over interest income), the four trillion dollar target over ten years is a number pulled out of someone’s ass. Why not 3.85 trillion over nine years? With unemployment at 7.8 percent, underemployment double that, and workforce participation still circling the bowl, reducing government purchasing power over the next decade, especially with all sorts of unmet infrastructure needs, is fucking moronic.
That said, if one wants to make a serious proposal to get to four trillion over the next decade, Robert Reich’s proposal is a good one (boldface mine):
First, raise taxes on the rich – and by more than the highest marginal rate under Bill Clinton or even a 30 percent (so-called Buffett Rule) minimum rate on millionaires. Remember: America’s top earners are now wealthier than they’ve ever been, and they’re taking home a larger share of total income and wealth than top earners have received in over 80 years.
Why not go back sixty years when Americans earning over $1 million in today’s dollars paid 55.2 percent of it in income taxes, after taking all deductions and credits? If they were taxed at that rate now, they’d pay at least $80 billion more annually — which would reduce the budget deficit by about $1 trillion over the next decade. That’s a quarter of the $4 trillion in deficit reduction right there.
A 2% surtax on the wealth of the richest one-half of 1 percent would bring in another $750 billion over the decade. A one-half of 1 percent tax on financial transactions would bring in an additional $250 billion.
Add this up and we get $2 trillion over ten years — half of the deficit-reduction goal.
Raise the capital gains rate to match the rate on ordinary income and cap the mortgage interest deduction at $12,000 a year, and that’s another $1 trillion over ten years. So now we’re up to $3 trillion in additional revenue.
Eliminate special tax preferences for oil and gas, price supports for big agriculture, tax breaks and research subsidies for Big Pharma, unnecessary weapons systems for military contractors, and indirect subsidies to the biggest banks on Wall Street, and we’re nearly there.
End the Bush tax cuts on incomes between $250,000 and $1 million, and — bingo — we made it: $4 trillion over 10 years.
And this would mean Grandma–or you down the road–doesn’t have to buy catfood as an entree. It means that we wouldn’t have to cut Pell grants, plunging students even further into debt. It means that Medicare recipients wouldn’t have to pay more in co-payments many already can’t afford.
And what all of that means is that, with the leftward pole of acceptable discourse being Rockefeller Republicanism, the elderly, the poor, and children are screwed.