The Tea Party has it right on two points: America has a deficit problem and the federal government is spending recklessly on things it should not be funding. But the solutions the Tea Party suggests are ones favored by its funders, the billionaire Koch brothers. Those are not solutions that work for most of us.
Fortunately, there are signs that the country is waking up to the need for solutions that promote the interests of the vast majority of Americans, not just those of the right-wing advocates of wealth concentration. In 2010, the tax-time conversation centered on complaints that Americans are overtaxed. This year the conversation centered on wealthy tax dodgers, including reports in corporate media such as The New York Times and Bloomberg BusinessWeek. Corporate tax dodgers like Bank of America have been the targets of lively protests across the country.
In simple truth the deficit problem can be readily resolved by eliminating tax giveaways to the rich and cutting government’s most wasteful and unnecessary spending.
History gives the lie to the story that taxing the wealthy destroys the economy. In 1961, the top U.S. income-tax rate was 91 percent. Our strong middle class made us the envy of the world, a single wage earner could comfortably support a family, we were the undisputed world industrial champion, Wall Street mostly financed real investment, and the federal debt was a bit under $300 billion.
Now, the top income-tax rate is 35 percent, wealth is obscenely concentrated, the middle class is badly eroded, we are no longer an industrial power, two wage-earners struggle to keep food on the table, Wall Street makes money gambling instead of funding real investment, and the growing federal debt tops $13 trillion. Advocates of wealth concentration who claim that taxing the rich is bad for the nation are on weak ground.
“Unnecessary Austerity; Unnecessary Government Shutdown,” a report by the D.C.-based Institute for Policy Studies, notes that in 1961 small business owners and individuals paid twice as much in federal income taxes as large corporations. In 2011, they will pay nearly five times as much. The report estimates that eliminating tax giveaways to the super-rich and the largest corporations would raise $4 trillion within a decade and largely resolve the deficit crisis.
On the spending side, the U.S. military is the number one example of wasteful spending. We face no credible conventional military threat, yet devote more than half of the federal discretionary budget to the military, an amount roughly equal to the military spending of the rest of the world’s governments combined. Most of our military establishment could be disbanded without compromising our real security and the resources could be redirected to reducing the deficit and dealing with far greater threats to our security, such as climate chaos and dependence on Middle East oil. Other obvious opportunities for cost cutting are expenditures for Wall Street bank bailouts and subsidies to the oil and pharmaceutical industries, among others.
So, yes: We have a deficit problem and a spending problem and there are obvious solutions to both. It is up to us as citizens to demand that politicians act on these solutions and to bring them to the fore of the political debates in the upcoming 2012 election cycle.
In a time of budget crises, debunking the arguments against taxing the very, very rich.
We can't go back, and we really don't want to. We're witnessing the birth of something better: a new economy where livelihoods that are just, sustainable, and meaningful will be available to all.